Who exactly pays my profits in forex?

Hi guys, I’m kind of new and learning about the market, a question came in my mind, I hope I can find clarification thanks to this great community here :slight_smile:

Say I deposit a large amount and make few million dollars for few days, when I decide to cash out from my broker to my bank account, where exactly the money I won are coming from? I guess it’s not the broker… I mean, I guess there will be an answer, you are getting the money from somebody or a group of people that lost on the same trades (were the opposite side of your trade) ? But still, how does the whole process happen even if that is the case? My broker gets the money from the people that lost in his account and then transfers the money to my account?

Thank you for your answers! :slight_smile:

Someone like you is the one who pays for your earnings but most of the time you will be paying for the profits of others.

If your broker is an ECN/STP in theory your profit/ loss is taken from traders on the opposite side of your trade i.e. a zero sum gain. However, read your brokers small print. In many cases, even a ECN/STP broker will elect to use ‘dealing desk’ to pool your trades with other like minded individuals, especially micro accounts.


You will receive the money directly from your broker. At the retail level the broker is the counter party for all your trades. Acts as your middleman, buyer/seller agent, so you’ll never have any direct contact with anyone other than the broker.

Whether your broker passes the trade off or holds it in house, the withdrawal check :smiley: will be from the broker.

PS please ignore “Mr Gone”, starting to look like he’s “gone” off the deep end!

He he

The truth is, someone has to lose it. And retail traders where do you think gets their profits? If I make some, someone has to lose it. Sorry guys this is not for those who believe in fairy tales.

Hmm, just got confused a little bit more with this thingy ‘‘the broker is the counter party for all your trades’’ , I thought that this is the case only with Market Makers not with ECN Brokers, where they are supposed to pass my trade directly to the network and this is how conflict of interests is avoided. Or may be I’m not getting something… :frowning:

So ok, the check will be from the broker, but that is not his money from his own capital, that’s the money of somebody who lost and the broker just acquires them for the purpose to put it in my account, right ? :slight_smile:

Yeah, with a “real” ECN broker “counter party” might not be the right word, something along the lines of buyer/seller agent might be more appropriate.

With both retail market makers and retail ECN brokers when you enter a trade it is seen as a legal contract with the broker. For example, if you place a million unit trade through a ECN and they pass it off to a big bank or dealer, the legal contract/deal is still between you and your broker.

My understanding is, at the top interbank level, when “big bank Blue” trades with “big bank Green” then the contract/deal is between “big bank Blue” and “big bank Green”, a bit different than when a retail broker is involved.

hope this makes sense…

Correct D-pip, ‘big bank blue’ and ‘big bank green’ trade at level III (Investopeadea for the deatails of Level I, II and III for those that don’t know).

Sorry BabyPips,

it depends on leverage. is it?

It happens, everyone lose their nerves, even do I.

I have to be pesimistic with new ones, If someone wold tell me at the begining all the stuff I trow to newbies, well, the results would be lss painful.

Some brokers offers a platform where you trade against others like investors/traders. In this case, your profit is coming from them, but your broker will do the paying. On the other hand, some brokers helps you forward your trade to interbank and in turn collect small profit, so, while exchanging currencies, you get profit, which your broker pays to you after taking their commission.

This is why we have market maker brokers & ECN brokers.

Hmmm, I am not really sure that there is a broker no matter ECN or Market Maker or whatever that actually pays from his own capital, that would be simply suicidal …

That is actually what happens with MM. With ECN it is somebody elses problem, they pass it to a liquidity provider. Both Liquidity provider and MM broker rely on the fact that most people lose money.

Hah, so in theory if most players were winning( no matter this won’t happen), MM wouldn’t exist? Only ECN would remain ?
But still what bothers me is a scenario with a lot of money, money more than the MM capital, some crazy billionaire dude deposits and wins…how can MM pay him from their own capital, they will go bankrupt… ?

Sort of. That seems to be logic. Financial is nothing more than a legal scam.