i understand that dealing desks just calculate the difference of profit or loss on your “trade”…but Best ECN / STP Forex Brokers - As Preferred By Traders " STP / ECN brokerage doesn’t interfere with a trader’s order but simply place the trade with a counter party. " this would suggest that you in fact are trading something with someone with the “true” stp/ecn guys so how does it work? are you trading real money with stp/ecns ore are they all just dealing desks? also if you are trading with someone, I repeat my question
I’ve bought 10 000 euros at 12 000 dollars initially than the quote moved up to 12010…so I decided to sell in exchange for 10 008.3 euro (or something like that)…the person that buys now because he/she thinks it’s a good idea…probably does so at 10 000 not 10 008…so how do I get my 8 euro?
also in the link it says " if one trader using the ECN wants to go long, the brokerage can often match the order with another trader who wants to go short. "
on further reading " Most liquidity providers incorporate a ‘last look’ feature on every trade which allows the provider a final confirmation of the trade terms before making the decision to accept or reject the order." so I guess your trade is squared off against a larger trade of the liquidity provider and he can accept your part of the trade …and the liquidity provider closes SOME of his position, if he choses to do so…
so one one hand you could get paired up with another trader (who may be more stupid or not) and this can work only if he is happening to trade the exact value you are trading but in the other currency witch would be very rare and highly Improbable
either you are passed on to the liquidity provider who trades a much larger size than you and can accept to close his position partially against your…but if your trade is a winner…and the liquidity is all that smart (the smart money right) why would he?
I still can’t understand how true liquidity is provided in the “true” ecn/stp because there are only to possibilities when you are on a winning trade
a) the other party is a lesser trader , than you could get paid but what are the chances both of you are trading the same value after price variation for both of you…(highly improbable like I’ve discussed already why in a previous post)
b) the other party is a SMART liquidity provider , a bank , hedge fund etc that is trading a much large sum and can accept to partially close his position …but if you are on the winning side and he is a smart bank/hedge fund why would he
heither a nor b is possible