Leverage... brokers... eSignal

OK, in no particular order:

  1. Does anyone else here use Forex eSignal? It comes free with my account but I haven’t the slighest clue… is it supposed to give you arrows (a.k.a. signals) like red when it thinks a pair is going down and green when it thinks it will go up? Or is eSignal rather a fancier platform for complicated technical analysis?

  2. I read a lot here about brokers being out to get you (e.g. forcing stop orders… banning scalpers… etc, etc.) OK, I’m wondering, why the heck would brokers care if you make or lose money? Don’t they just make money either way from the spreads? I can’t understand how it’s in their interest for their customers to lose on their trades…do they somehow make more if you lose and less if you win?

  3. Who provides the leverage? When you can buy/sell 100k with 1k of your own money, who puts forth the other 99k… the broker, the big (inter?)banks or someone else altogether?

I thought I had more but they escape me at the moment so thanks in advance to anyone who can help clarify.

hey, im gonna do my try to answer your questions to the best of my knowledge. hope this helps.

im not too familiar with eSignal.but im trusting that you downloaded and read the user manual, right? im sure someone will be around to help you with it. i dont think that esignal give actual signals of weither to buy or sell. but if thats is what you are looking for then i have to earge you to be careful with following signals from other people. most signal programs offered dont give consistant short term profits. its better to develop your own system and trading plan then to rely on others. anyways , this is what im seeing http://www.forex.com/forex_charting_esignal.html. it seems to be a system that connects to esignal charts so you can trade and put in stop,limit, entry etc orders and watch them on the charts. the esignal charts are given free with the opening of a real account (at least 1000 bucks) but you can sign up for direct execution on the charts.

I belive with many MM brokers (most brokers are Market makers) actually are the main counterparty to your trades. so when you loose they make money so there is alot of benifit for them if they chose to stop hunt, knock you out then take over your positions.they also have the ability to manipulate the data feed for their benifit. if you check forextown i give a whole list of sites that are worth reading that can explain this whole thing better then i can. its almost like gambling with some brokers. some traders even coin them bucketshops. when your brokers is the house, you are the gambler then chances are you will loose. so far you dont need to be too alarmed by brokers. if you are an long term or an med term trader then all the scandleouse activities wont affect you much. if you are a news trader or a scalper then you need to listen up.Market Makers Vs. Electronic Communications Networks (read the cons of MMs)

the leverage comes from your broker. i believe your leverage is just a pooling of margins from other traders to make up the 100K. im not too sure. but i know that its your broker that give you the leverage. not the interbanks.

i hope i did a good job of explaining things.

Wow, that is crazy… that your own broker is the main counterparty to your trade I mean. I thought it was in their interest for you to do well in forex to keep you as many ppl trading as possible and profit form the spreads… but I guess there are enough new customers coming in that it losing old ones doesn’t matter?

This is just silly… isn’t there any way whatsoever to trade forex without your own broker being your enemy? That does sound, as you put it, like gambling in a casino against the house, the latter having the big edge.

Also, how does one know if one’s broker is MM or ECN and is are they both counterparties to your trade?


i had a little talk with a rep from Oanda in the “rate my broker” section of the forum. this rep claims Oanda doesnt trade against its clients but rather takes the same postion so if their clients are profitable they are too… i dont know if its true. i have just enough confidence in this broker to put my just a little bit of my hard earned cash with them. there still seems to be some shady practices on their part but all in all i hope what the rep wrote is true. most other brokers do seem to have their own interests at heart and if it means you have to loose then so be it.

its really hard to protect yourself against brokers. first of all we all need one if we want to trade and they know that. good brokers are regulated by different agencies that are suppose to monitor their activities. but like i said in another thread, this doesnt protect your money very well. the forex is not as heavily regulated and centralized as other trading markets so pretty much, your broker makes all the decisions and you just get to go for the ride. the best way to protect yourself is to research your broker extensively, dont keep your all you eggs in one basket, and find the right broker for your trading style style. if you are a long term trader then MMs with a variable spread is a good choice. if you trade the news then an ECN would probably be in your best interest. if you are some where in between both a day trader and a swing trader then you might want to consider a fixed spread MM (but they are still notourious for requoting and locking out people during volatile sessions).

as for knowing the difference between a ECN and MM. this is very important to be able to distinguish the two because many MM like to pretend that they are ECNs. first of all most ECN have variable spreads and you pay a commission to trade. ECN take quotes form multiple interbanks and they pass on the best prices to you. when you place an order your order goes directly to the bank. ECN shouldnt trade against you because they already get paid throught the commission. you also need a much larger initial margin to open an account. MMs only ask for about 200 bucks to open mini account but ECNs ask for about 7000-10000 bucks (so ECNs are really designed for the “big boys”). most ECNs only allow you to trade with 100K but some will allow you to trade 10K. there are no micro accounts so far with ECNs. anyways, finding an ECN isnt hard. there are only a handful genuine ECNs. Forex Brokers | Forex Brokers | ECN | Forex MetaTrader Broker. there are a few more but i cant quite remember. i know forex factory has alot of discussions about ECN brokers on their forum so maybe ask people there for a more comprehensive list.