Hello everyone) I have a little confusion which i want you to answer.
The brokers which are market makers benefits from our losses because they are risking their own money.I am clear about it.But lets say i am a client of a ECN broker and i lost $500 on the short trade of EURUSD then where that $500 goes to? Goes to the liquidity provider of that ECN broker or simply the broker will put that $500 in his pocket?Waiting for your valuable replies)
Thanks
Happy Trading
your loss is the profit of another trader on a fair platform. However many brokers do target traders who who “don’t know how to trade” and trade against them. Otherwise, it should go to a liquidity provider in an ideal world. Well unless your trade is over 1000 USD margin, then you can be pretty sure, it’s going to the broker’s pocket
Spot FX is the most liquid market meaning there are huge amounts of orders all over the price range, so if you bought
a EURUSD with a loss (stop loss hit on a short for example), well someone else sold it to you! This “someone” may have [B]initiated a short[/B] with your buy order, or [B]closed a long[/B] in profit with the same order!
Don’t think of it as a win/loss scenario, think about it from an order flow perspective…
Noone cares about your 500$, they just care about your position size and the price you’re buying/selling!
hi spiperman) thanks for the reply but i just asked about how an ECN broker deals with our losses?
If they are true ECN they shouldn’t care at all! They just provide the liquidity for you and get the spreads…
So, yes, your 500$ go to the liquidity provider that provided the exit price of your trade, as you said!