You seem to have overlooked the fact that @Shariku has “been trading on a simulator”. We take that to mean a demo account where no real money is at stake. Even an unscrupulous broker would have no motive to manipulate prices in order to steal a trader’s demo dollars.
Furthermore, it’s important not to blame market makers for the problems caused by bad brokers. Not all market makers are bad. Not all bad brokers are market makers.
If your forex broker is not a market maker themselves, that only means they must offset your trades with another firm that is a market maker. This is because market makers perform a vital function, not only in forex, but in other financial markets, including the major futures and stock exchanges.
Consider what the world’s largest stock exchange says about how their market model works:
The cornerstone of the NYSE market model is the Designated Market Maker (DMM). DMMs have obligations to maintain fair and orderly markets for their assigned securities. They operate both manually and electronically to facilitate price discovery during market opens, closes and during periods of trading imbalances or instability. This high touch approach is crucial for offering the best prices, dampening volatility, adding liquidity and enhancing value.
DMMs apply their market experience and judgment of dynamic trading conditions, macroeconomic news and industry-specific intelligence, to inform their decisions. A valuable resource for our listed company community, DMMs offer insights, while making capital commitments, maintaining market integrity, and supporting price discovery.
Since market makers provide a valuable service used by retail traders and retail ECN brokers alike, rather than trying to avoid market makers altogether, it would be more productive to identify the reputable ones. For example, forex brokers regulated in the US are required to adhere to strict rules governing their finances and trade execution. Below is a quote from the CFTC site:
The final rules include financial requirements designed to ensure the financial integrity of firms engaging in retail forex transactions and robust customer protections. For example, FCMs and RFEDs [retail foreign exchange dealers] are required to maintain net capital of $20 million plus 5 percent of the amount, if any, by which liabilities to retail forex customers exceed $10 million. Leverage in retail forex customer accounts will be subject to a security deposit requirement to be set by the National Futures Association within limits provided by the Commission. All retail forex counterparties and intermediaries are required to distribute forex-specific risk disclosure statements to customers and comply with comprehensive recordkeeping and reporting requirements.
Full disclosure: FOREX.com is a market maker, but that’s not why we defend this model. It’s worth noting that for institutional traders, our parent company, GAIN Capital, offers ECN solutions through the GTX marketplace. However, at the retail level, we have always been open about our role as the market maker for the trades placed by our clients.
We feel no reason to hide this fact, because at retail trade sizes, we believe market making is the best way to provide customers with reliable pricing while effectively managing our own risk. We are fully accountable for every execution and don’t outsource that responsibility to a third party.
While it’s not our intention to make this discussion about ourselves, anyone who has questions about us specifically is welcome to send us a private message or post in our discussion thread in the Broker Support section of BabyPips.