im pretty new to this but very excited, just started trading a cents account with $20 and getting better, thanks to the school here…
but ive been wondering a question,
firstly my understanding (which may need correction) is that when you trade with most forex companies your transactions are “in-house” and only with-in their server, ie when u place an order they dont really buy that money for you ??
i quote:
[B]Am I buying actual currencies when I trade? [/B]
No. With your margin account, you are buying the right to trade one “lot” of a currency. Each lot equals a different amount of currency, depending on the currency being traded versus the US dollar.
ive also read and been told that these companies only profit comes from the spread they charge…
so, as the title of this thread asks, who pays the profits and who takes the losses ? is it all in house, or do the forex companies place trades on a bigger market than their own ?
The Foreign Exchange market, also referred to as the “FOREX” or “Forex” or “Retail forex” or �FX� or “Spot FX” or just “Spot” is the largest financial market in the world, with a volume of over $2 trillion a day.
Top ten brokers account capital.
Interbank FX $21,367,000
GFT Forex $64,288,000
Gain Capital $66,314,000
FXCM $73,603,000
Rosenthal Collins $76,571,000
Oanda $163,136,000
So taking into account this information you can see that most
retail traders accounts are very small indeed in comparison & there
is always a trader going long when you are going short & vice versa.
so a company saying it only makes profits from the spread is not the full story, as they keep and don’t need to pass on anything they take for losses, so as long as they have enough people loosing enough money regularly , often(?) largely at fault to leverage and inexperience , they can pay out wins, take profit, and possibly play/influence the market themselves … ???
but the humble retailer can make a profit as thats why were all still here ;p
ps can u/i a retailer trade on the “open market” ? is/what/who is the market/brokers that are in the global trade happening outside the forex brokers small term retailers deal through,
if so what would be the pros cons of trading through them ? (higher up the food chain)
is/what/who is the market/brokers that are in the global trade happening outside the forex brokers small term retailers deal through,
Sorry do not understand this question???
i was just asking who are the scene / market brokers for the bigger global markets which all the “franchise” forex clones base their prices on and would trade with if theywere to make / pass on orders ?
and who does / how is the global price agreed apon or is it decentralised and dependant on broker ?
The fundamentals drive the market, interest rates, jobs, cost of living, etc.
of one country against another. The central banks & large institutions then
trade with one another to form a market, the brokers have “live” feeds from
them, then form their own mini market with the spread.
From Investopedia’s site.
The market in which participants are able to buy, sell, exchange and speculate on currencies. Foreign exchange markets are made up of banks, commercial companies, central banks, investment management firms, hedge funds, and retail forex brokers and investors. The forex market is considered to be the largest financial market in the world.
Because the currency markets are large and liquid, they are believed to be the most efficient financial markets. It is important to realize that the foreign exchange market is not a single exchange, but is constructed of a global network of computers that connects participants from all parts of the world.