Thread: Is your money safe with your broker?

Originally Posted by ;

where is the money.

Ok, this might be a really newbie question, but I am wondering where the money comes out of?

Allows asumme that I deposit 100 usd using a ECN broker and I make those 100 dollar to 10000 usd. Who will pay me my profit ? Can it be the brokers money or can it be a several traders with other brokers who lost the 9900 usd? If yes then I asumme there must be heaps of wire transaction every day from 1 brokker to another? Can it function?

And lets assume I would start a brokerage, will then need to have lots of millions...

The money stems from the ECN's https://www.google.co.uk/search?q=ec...dity providers.

Originally Posted by ;

where's the cash.

Okay, this may be a really newbie question, but I am wondering where the money comes out of?

Allows asumme that I deposit 100 usd with a ECN broker and I earn people 100 dollar to 10000 usd. Who will pay me my profit ? Is it the brokers money or can it be a several traders with different brokers who dropped the 9900 usd? There must be heaps of cable transaction every day from 1 brokker to another if yes then I asumme? Or how does this function?

And lets assume I would open a brokerage, will then must have lots of countless...

Does not work that way Kalas.
That is like any other regular company that buy something with financing. Brokers lend you a lot with your with your deposit because they also
hold in their Banks what you bought.

In character, once you purchase a currency, whoever buys it out of you pays your own profit.
Example: with your $100 you can buy around $10 000 worth of currency. Say you buy 2000 dollars (sell eur/usd 0.02 lot) in the event the price has been
1,3120 you currently own $2000 dollars and owe the broker 1524,39 euros. ... so, your 2000 purchase (the broker has them) your deposit of 100
cover the debt quite well. Say you sell the dollars when price is 1.3020. Meaning you got 1536,09 euros , pay the debt of 1524,39 and have
11.67 euros profit. They exchange these euros to dollars and earn a profit of $15.19.

No Broker, MM or not, need tens of thousands of dollars to operate. Sufficient to satisfied requirement in their liquidity provider.
Additionally, no Broker MM or not, Hold all clients orders. They would go the first day of surgery.

J.

I believe the important issue is to guarantee the broker uses liquidity providers.

.
Only Banks can offer the support of liquidity supplier. ASAIK every country of the planet regulate banks.
Obviously there are Banks and Banks.

J.

Originally Posted by ;

.
Only Banks may provide the support of liquidity provider. ASAIK every single state of the world regulate banks.
Clearly you'll find Banks and Banks.

J.

That is wrong - not all of liquidity suppliers are banks.

Originally Posted by ;

That is incorrect - not all of liquidity providers are banks.

mmm. . thinking.
Probably, we're both right.

I am talking about the Institution that will execute settlements and reports to the Banks
of settlements at the end of the day. Only banks may do that. Every Brokers or anyone that exchange
cash digitally that is not a bank must have one of them.

Now... all Brokers, hedge funds, retail traders like us , etc.. Provides liquidity to the market to some extent
using their/ours orders... So, in this regard you are correct. Not all that provide liquidity to the market need to be a bank.

J

Originally Posted by ;

mmm.. thinking.
I am talking about the Institution that does execute settlements and reports to the Banks
of settlements in the end of the day. Only banks can do that. Every Brokers or anyone who exchange
money digitally that isn't a bank should have one of them.

Are you certain?
http://www.cmegroup.com/trading/fx/fx-otc.html
https://www.theice.com/otc_fx.jhtml
http://www.lchclearnet.com/foreign_exchange/

Originally Posted by ;

Are you convinced?
http://www.cmegroup.com/trading/fx/fx-otc.html
https://www.theice.com/otc_fx.jhtml
http://www.lchclearnet.com/foreign_exchange/

yes.
The companies you mention supplies services to the forex market. They handle, reduce risk and act as short term financiers
for player in forex.

The risk that arise is explained in this link.
http://www.bis.org/publ/qtrpdf/r_qt0809x.htm

J.

Originally Posted by ;

yes.
The companies you say supplies services to the Currency Market market. They handle, reduce risk and act as short term financiers
for participant in Currency Market.

The risk which arise will be explained in this link.
Http://www.bis.org/publ/qtrpdf/r_qt0809x.htm

J.

Wow I wish I was never wrong

Originally Posted by ;

If you are trading with serious money try your local trusted banks.They usually offer very low leverage of 1/20-25 max.Your money is going to be 99.9% secure unless the bank proceed bust.They even pay you attention.

I actually agree with this also.
Anyway, all this law matters if you are investing serious money, but if by way of instance you are trading with, say, $100 law seems to be not so important. Because even if there is a compensation fund and the broker is controlled if anything happens that the settlement will be given to accounts.