Another newbie here, therefore, this might be a stupid question:-).
As we all know, in forex market, which is a zero sum game, there are losers, then there must be winners.
With that being said, each time when we open a trade, most of the time, it is a negative value, rarely you get a positive one, if you are a day trader as I am, you will get a list of negative values of all the trades you entered.
Now, my question, as most of us have a window full of negative values, there must be someone whose window is full of positive ones.
Your broker. The reason your trades start off with a slight negative (unless you happen to get positive slippage, which is rare) is the dealing-cost. That’s largely because you’re using a counterparty market-maker as a broker, rather than a genuine broker who charges separately, by commission, for each transaction.
Thanks for that. But, besides the the spread, after awhile, all the negative should be gone if you are in trend.
While most of us remain in negative, then there must be someone who has a list full of positive values.
This really isn’t so. If your trades are remaining in negative territory, after discounting the spread, even if you’ve traded in the trending direction, then something is indeed seriously wrong. If you can provide some examples, and perhaps post a chart or two to illustrate the problem(?), people may be able to advise you. I can’t tell what’s going wrong from your description above.
I suspect (but can’t be sure) that your question arises from some kind of misunderstanding of the mechanics of trading, who holds the other side of your trades, or something like that. Are you familiar with the difference between a broker and a counterparty market-maker?
I’m guessing (but please correct me if I’m wrong) that you’re not yourself trading directly in the interbank market? So I don’t see where “the bankers” are relevant to what you’re asking? Sorry not to be more helpful, but it’s a little difficult to understand from what facts your questions arises.
If all retail forex positions are in perfect balance - meaning every retail long is matched by a retail short - then if you’ve got one group that is losing, then you must have another group that’s winning. This is excluding the bid/ask spread already discussed.
Retail positions are rarely, if ever, perfectly balanced, though. Some of that imbalance is absorbed by the brokers. What isn’t is absorbed by the banks who provide liquidity to the brokers. The banks can hedge away in the inter-bank market, but my understanding is they mostly don’t because they know the probabilities work in their favor. Thus, the banks are the winners when the retail market is losing.
