Forex.com employee confirms that it's rigged... I think

Trading Discussion News and Economy
1

It often felt that all my technical analysis fell to the ground when I traded on a live account with Forex.com… I thought I was being paranoid when my position seemed like a resistance barrier that suddenly could not be crossed, especially when I traded later in the day (NY time). Then I chatted with one of their employees… and boy was I chocked!! :mad:

How can we make money if they do this?!? :frowning:
Can anyone explain this?!? :confused:

Please wait for a site operator to respond.
You are now chatting with ‘Peter’
you: hi]
you: hello
Peter: Hello, welcome to FOREX.com. May I have your email address to better assist you?
Peter: or your account number?
you: <[email protected]>
you: when I lose in a deal, does Forex.com take my lost money or does it vanish and disappear?
Peter: One moment please.
Peter: We offset trades with our liquidity providers in accordance with our risk management policy.
you: I don’t understand what that means
Peter: We are a market maker as such we offset our clients trade with our liquidity providers in the interbank market.
you: so when I go long on a position on your system, Forex.com does the opposite and goes short on the interbank market?
Peter: At certain times we will follow this procedure and at other times we will offset a clients position internally with another client who is taking the opposite position simultaneously. As stated before we offset trades in accordance with our risk management policy.
Peter: Is there anything else I can assist you with?
Peter: Hello?
you: yes
Peter: Thank you for visiting. Should you have further questions or comments please log on to chat, email, call us at 1-877-FOREXGO (367-3946) or internationally at 1-908-731-0750.
Chat session has been terminated by the site operator.

2

This is exactly what retail brokers do and are expected to do - that doesn’t make it a problem though. What I think you’re driving at is that if they’re a market maker, are their prices comparable to the big market makers? And the answer is yes they are.

Next time you lose check your broker charts with those of another broker. You’ll find surprise surprise they’re identical to within a pip or two.

3

Forex.com is a market maker, like most other retail Forex “brokers”. Just like in the New York Stock Exchange or the Chicago Board of Trade, market makers basically “make markets.” They match customer orders together, and if there isn’t an order that they cannot match to a market order, by law they have to take that position into their books. They’ll take an opposite position to offset their risk, because they’re not in the business of speculating market direction, they’re in the business of making markets and taking the spreads. That’s how market makers work. Basically, how the customer service rep explained to you.

Can I say that everything a broker or market maker does is legit? I don’t know, but think about it… why would a broker want you to lose and stop trading? then they lose their customer and make money on the spreads. It’s not in their best interests for customers to stop trading.

4

It’s my understanding that if a forex, “market maker,” takes your trade and they don’t have something to offset it, and you win, they will lose money. I’ve read reports of traders who have had no problems executing trades when they were losing, but when they were up their client would stop working right, give them pop up screens saying the order wasn’t filled as requested or just disconnecting.

I’ve read that some desk deal/market maker brokers have an A & B list. The A list gets their trades in with little to no problem because they statistically slowly lose their money to the broker. The B list is the well capitalized, skilled traders who statistically earn good profits on their account. To slow them down or cause them to lose their trades are caused to have problems disquised to look like client malfunctions or unexpected market movements.

I’ve recently been scouring both this forum and a dozen others on this very subject.

While I’m sure there is good share of them that are just badly skilled traders taking to high a risk, losing and then complaining, the number of reports leads me to believe that some market makers/desk dealers do indeed intentionally screw up profitable traders execution.

Also, market makers do in fact make lots of money from new traders losing, even if it is a small account. Hell, look at how much capital Oanda claims. Think about it, some guy opens up a micro account with $200 dollars, over leverages, gets lucky and turns into into $5K. Then loses it back. $5200, they didn’t have before. Sure that $5200might go to someone trading the opposite end besides the market maker. Even if the market maker didn’t get that $2500, the lucky trader will probably think, "Meh I only really blew $200 and almost turned it into 5K, I’ll try again a few more time, or even try with a larger account. The thing is, they don’t want you to stop trading, but they know there are always more new traders looking to make a quick buck and traders who have lost multiple accounts that treat trading more like gambling.

IMO, why even take the chance that a desk dealer/ market maker is going to screw with your execution purposely if you make it to the B list, just go with a ECN who gets paid a reasonable commmision and has a vested interest in your continued trading, not losing. Also, IMO, if your reasons for going for a desk deal broker is because of an extremely small margin requirement, and the ability to fractionalize pips and trade rediculously small lot amounts (to the point where even if you get a lot of pips out a day of trading it can’t buy you coffee), then you shouldn’t bother, or demo until you can at the very least open up an account with a few hundred dollars.

5

I didn’t know things work like this!!
where does fxcm stands? how do they work their trades?

6

What Triphop said is true. This is exactly how a market maker work. If you need more info, type “market maker” into search engine and you will find lots of info. As i’m also with forex.com, i remembered myself having to sign a form that makes you aware of this conflict of interest. If you have deposited money with them, you should have signed that form.

Anyway, what i can say is that you do not have to worry. When i trade, i use Alpari’s demo server (MT4), or sometimes Crown’s Server for charting purpose. But when i enter a trade, i use Forex.com’s java platform. Meaning to say i have 2 monitors and the price between these 2 companies always tally or if not just differ by <1 pip.

The resistance that you have experienced was created by the market. I used to have the same suspicion when i started out. But after some reading, esp Fibonacci, Pivot, Resistance, Support etc, you will understand why the price suddenly stops.

7

I find that logic. Everytime you sell someone�s gotta buy and viceversa, so why was this going to be different? The broker is just doing what a broker does I guess, acting like a bridge between the seller and the buyer.

8

The problem with market makers/deal desks, IMO, is that you are not trading on the real market, you are trading on the market they create in their favor. Add the fact that they can control the responsiveness of a their service to your client and it’s recipe for disaster.

That and the fees you spend on pips can be quite large. I demoed oanda and MB side by side and compared the MB commission to what oanda would have made on me by taking pips from the spread as payment. MB ended up being way cheaper and it made it easier to get ahead pip wise in a trade. (“no commission,” is really a lie when they take a fee from the spread anyway." Just gives them incentive to mess with the spread too) I would much rather have a predictable commission fee as long as it’s reasonable.

The commsion on MB for the pair I was trading came out equal to a pip and half. So, if you want to talk about losing pips to fees MB already has Oanda beat.

Does anyone here who hasn’t had problems with their market maker broker and are live have a large account, like over 100k, and is a skilled trader who wins most of their trades with the same execution as when they started?
I ask that question honestly, because a couple of the people who have responded seem to be demo traders or newly live traders.

9

Indeed one who for many years carries accounts over 100K and trades a NYS registered financial holding corporation.

While there are many shennanigans a “broker” will supply, inevitably they HAVE to hit within a few pips of the “REAL” price as set by Barclays or the other interbanks — there just aint nothing they can do about it.

With newbs, what happens a lot is they see their position reverse (which may or may not be happening with Barclays) and they panic, and the panic leads to selling and the selling leads to losses !

Then a while later, up (or down) goes the price, right to where it should have gone and the newb is the willing victim of the good old “head fake”, APTLY NAMED !

If one is watching direct feeds from Barclays, one can see that most trades against you are coming from their hallowed halls, and the broker is simply “following” the interbank feed, which means the broker is simply the middleman in the transaction, and not your prime and direct competitor.

I trade through Oanada, MB and an overseas broker and use them for differing reasons, as they all are a bit different – i use the broker because i can maintain hedge trades or simply hold a CORE position that will not finish before the EOD and then i can scalp the one or 5 minute chart, going long or short without affecting my core — this I cannot do with Oanda or MB, which i usually use for 15 min or longer timeframe trades, as one cannot hedge with Oanada or MB without a subaccount, which slows the process down due to the constant opening and closing of accounts, or having to move from one account to another !

I have not noticed “time outs”, “offlines” or incorrect prices trading the higher figures then when i traded mini lots – theyre gonna happen and happen they do, but thats all part of the game. Even MB and OANDA go down from time to time and they obviously have nothing to gain from that activity !

Its how I do it and the rest of the conversation as to what mm’s do or dont do is kinda meaningless — yes they will attempt to get you out of a trade if possible, BUT where they really make their money is in the spread, through the reversal trades (being short while youre long and the currency moves downward many a pip) and you sell out at the bottom.

If one has the EXPERIENCE to trade (and this is a newbie forumn and i dont believe many here have that experience), you will find you can trade against many of the real and imagined problems with brokers AS LONG AS YOU TRADE THE MAJOR TREND cause they cant EVER wipe you out if you do that !

enjoy and trade well

mp

Does anyone here who hasn’t had problems with their market maker broker and are live have a large account, like over 100k, and is a skilled trader who wins most of their trades with the same execution as when they started?
I ask that question honestly, because a couple of the people who have responded seem to be demo traders or newly live traders.[/QUOTE]

10

FXCM is one of the oldest companies, they also are one of the biggest, they also have some very bad reviews,and yes it does work like this…I was shocked when I learned as well!!!