help me with this question
I’m afraid for most traders it’s all too real.
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Most retail forex trades do not reach the real (interbank) market. They are offset internally either by the retail brokers with whom they are placed, or by the liquidity providers one level above those retail brokers. In this sense, retail trades do not impact the real market, and it can be said that they are “not real”. They are simply bets placed by retail traders, and taken by retail brokers.
If you trade in the retail forex market, your profits or losses will certainly be real, as far as you are concerned.
And the profit your broker earns handling your business will certainly be real, as far as he is concerned.
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well, actually not always it is real. There are many Forex brokers who are dealing desk brokers, also known as market makers. They make money through spreads and providing liquidity to their clients usually by taking the opposite side of their trades. In other words, they make a market by filling your buy or sell orders with counter-trades.
On the other side, there some Non Dealing Desk forex broker who provides direct access to the inter-bank market. It can be an STP or ECN broker. they offer real forex trading.
The foreign exchange market itself is certainly real, where participants buy and sell actual currencies. But retail trading is not physically part of that market.
When you buy/sell via your broker you do not actually buy or sell any currencies at all. If you did then you would always have to confirm your bank account details for each currency in the pair, together with settlement date, possible transfer charges, etc, This is not the case.
Retail trading is just like betting on a horse race. The race is real and the horses are real but you do not own any of it. You just take a bet on how you think events will turn out.
Your broker is your betting shop, your micro/mini/standard lots define the size of your bet, and your leverage determines how much of your money the broker reserves against your bet size.
The prices offered by your broker/betting shop closely follow the actual prices in the actual foreign exchange market (otherwise they would be vulnerable to arbitrage trading, and they need to be able to offset their own risk with their LPs in the interbank market)) except their spread between bid and offer will be wider and possibly directionally biased according to their own internal policies.
This is pretty much what I was about to post, and I am glad you used the word “bets”.
I am a UK-based forex trader using a spreadbetting account and I occasionally get snotty remarks from other traders that I am not really trading and this is just betting like on the horses or on the lottery and its purely gambling, not business. Well thank you Clint for backing me up when I tell them ALL trading is just gambling.
I’ve finished ranting now thank you.
An interesting read here!
Is Forex trading real?
Of course it is real. We are talking about currency exchange. How can currency exchange not be real? Unless you have never visited another country or never purchase stuff online, then perhaps you have yet to experience exchanging your own country’s currency for another country’s money.
What matters in forex trading is this.
- Are you able to become a CONSISTENTLY profitable foreign currency exchange trader?
- And when you do make money, does your broker allow you to cash out or is your broker is a fraudulent company?
- Should you deliberately show your friends or close ones the way to forex, knowing that what works today may not work tomorrow, and knowing the time and effort that your closed ones will have to trade-off in return for an opportunity to get rich, and knowing they may not be up to the task causing them tremendous psychological pain and misery and you may have to bear the guilt of causing them to lose lots of monies.
Showing an individual the path to a destination is completely different than walking the path themselves. Forex trading is akin to rock climbing without a safety net, showing someone how to rock climb is very easy, rock climbing itself is not so simple.
Since that the path is so perilous. Who dabbles in forex trading then?
- The greedy
- The gambler
- The gullible
- The guilty
…
…
…
etc
and the list goes on…
Thank you everyone for reply, So I can invest in Forex trading then,
yes forex trading is real. This is the largets active trading market in the world. Just be careful how you invest your money here and associate with reliable brokers only.
All Spot currency Dealers today use ECN, (electronic communications Network) or (Trading Platform). STP is Straight Through Processing, which is obviously different to ECN. An ECN can have STP, or not. STP means there is no dealing desk, but, in retail, most order’s are filled by dealer inventory.
Direct Access to the"interbank" market, facinating, anyway, this has nothing to do with the terms ECN, STP. It has to do with directly executing against Prime Brokers, this can be had from most brokers for a 100k account and a minimum of four standard lots per trade.
See how civil I can be, now if they post this same crap again, well thats another story.
The Ever Civilized VIPER
Why do ppl still make this so difficult. They (your broker) is either warehousing risk (you) because that’s where the sauce is (at least if that is their core model. And that’s fine, nothing wrong with sauce) or they are not. Not, meaning here they are ECN/STP’ing you as an individual/position, or all clients for that matter. Or whatever secret formula they have figured out. That’s it, everything else is fluff.
If you’re trading on a live account it’s definitely very real. Take trading seriously, take studying and practising seriously, aim to understand the market, not to gamble.
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Yes sometimes I wish it wasn’t it’s a whole new world in there
In some sense it is real, as the exchange rates you see in the platform are real exchanges rates derived from real foreign exchange markets. But regarding trading itself I can say that you don’t actually buy or sell currencies, you enter into OTC contract which is very similar to betting on exchange rate movements. To make profit you don’t need to sell or buy currencies, it is enough to find a counterparty (market maker) that is ready to bet in the opposite direction.