I’m just not fully comprehending the forex market. I guess thats why I asked if people actually make a lot of money in this market.
In the equity/futures/bond markets, there is a centralized exchange. There are market makers whose duty is to maintain liquidity in the market. In effect, if you enter in a trade your guranteed to have a regulated institution take the other side.
The forex market, does not have a centralized exchange. I use a broker that states they get quotes directly from banks and stream them onto their platform. They also state that they are not a dealing desk.
If I decide to put on a trade and it gets filled almost immediately, who is on the other side? What effect does my buying have on the actual market?
Hypothetically, say I decide to buy $10,000,000 of the EUR/USD pair. Will my purchase through my retail broker have any effect on the movement of the pair. Let’s just assume that 10,000,000 is an amount that would normally move the pair.
Usually in a trade, there is a winner and a loser. There is always two sides. Who provides the instant liquidity in the retail forex markets?
Theoretically, my concern is that brokers can stream whatever quotes they so choose, and in doing so, if a trader takes a big position, the broker can move the pair against their trade, causing that trader a loss.
I’m not saying this happens, but if there are traders that are making millions in the retail forex market, than my concerns would not be valid.
I’d like to state that I have a lack of knowledge, so if my post is ridiculous I apologize to all the experienced forex traders.