You need to rest easy, I was refering to traders who trade big lots and consistently make lots of money.Originally Posted by ;
You need to rest easy, I was refering to traders who trade big lots and consistently make lots of money.Originally Posted by ;
That seems somewhat odd. Why wouldn't brokers enjoy FXsol and FXCM would like you to generate income. They have paid a commision if you win or lose right?
Brokers take the opposite side of your transaction so when you win, they lose.
Unless they are hedging using a counterparty but the majority of the time they didnt scam since they know that most traders get rid of money so that they keep the transaction in house. Your loss becomes their profit.
Http://www.fxsolutions.com/trading/a...-execution.asp
This means 99 percent of the time they take the opposite side of your transaction and should you lose they win. Notice how they dont say 99 percent of trades move right to banks. If customers make a transaction that FXSol does not wish to keep the other side of they have the ability to offset together with their LP's to get a far better price they then provided the customer. However, they appear to have clients that like trading together and if you are only then stick with whatever you like. I dont attribute FXSol for doing so if traders still wish to trade together. There is enough on FXCM onnigeriaforextradingwhere I dont have to say anything but I dont think that their practices are substantially different but they've got better spreads but I still doubt FXCM has improved execution.
OK. Let's say I am a broker with 10,000 customers. 500 are trading profitable. I leave them alone to exchange and only produce the spread/commission and choose the other side of the transaction on another 9500. I can see who is aware of what they are doing and those who don't. Is it a realistic situation?Originally Posted by ;
Yes and most brokers run two books; A Novel (profitable traders) and B Novel (non-profitable traders). If their technology allows it they can place those traders directly through into the banks plus they must cancel their postions with banks.Originally Posted by ;
I understand that some brokers do bank off of losing traders but would not this hurt their company?
If their clients are departing then they can not make money from spreads because nobody is trading together. If this is the case then we'll start to see more retail Currency Market brokers running from company in the near future.
These retail brokers will need to understand that they're not the only method to exchange currency. The CME Futures currencies is a mouse click away.
No. They feed off newbies and there are plenty of these around. People who dismiss their accounts are easily substituted by lots of new eager Foreign Exchange traders on their way to dismiss off their new account.Originally Posted by ;
Just think. How does a casino make money? Same for your Foreign Exchange retail broker.