How can a broker work against you??
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Thread: How can a broker work against you??

  1. #1
    I read briefly last week somewhere (can not recall where) how an individual reckons a broker might work against a trader should they seem to be earning too much money....is this possible?

  2. #2
    I have always had a lot of difficulty with this proposal. I can understand where a fly-by-night operation employed as a market maker can do that for some quick profits from their clients but as a sustained business practice? It doesn't make any sense.

    Say you have a trader with $10,000 in capital who transactions three times every day. Each time the trader transactions, the broker can make let us say. . .oh I dunno...5 dollars. That's 15 dollars daily. At three transactions a month and approximately 20 trading days in the month, that's $300 a month which a broker could make from the 1 client. Jam 100 customers to the exact same can and that's $30,000 a month from that basket of customers. Within a year, that's $360,000 in charges raked from just 100 customers.

    Rather however, let us presume that the broker tears traders off and hunts their stops. At 10,000 for each trader, let us presume that the broker is really as bad as it could get and wishes to really just blow your account. That's $10,000 from each customer in 1 soda right? Jam 100 customers into that, and also the broker rakes in $1,000,000. Appears to be a lot. It's three times as much as what they'd have gotten in simple operating fees from their 100 customers in the 1 year but over three decades, it's less.

    Within three decades, their customers will pay more to the broker, generate referral business and add more to their liquidity pool if they're successful. Brokers lick their resumes in compounding rates of recurrence also you know. If they could promote the achievement of those 100 customers, the fees they accumulate over time increase exponentially and yearly profits will blow that $360,000 from the water. If those 100 customers are able to double the size of the typical account holdings, annually will see $720,000 accumulated in fees. Double it and the broker then collects $1,440,000 in charges. Unexpectedly, destroying a customer's account in a 10,000 pop doesn't look so sensible when alternatively, the broker could be attempting to help traders become successful.

    I'm not saying that there aren't greasy brokers out there. Traders should do their study except to say a broker is quit hunting I think needs some fairly significant evidence to back up the claim because when I look at forex brokers as companies, the notion doesn't make a lot of sense to me, especially for the bigger players.

  3. #3
    Quote Originally Posted by ;
    I've always had a lot of difficulty with that proposal. I can know where a nimble functioning working as a market maker could do that for some quick profits in their clients but as a continued business clinic? It doesn't make any sense.

    Say you own a trader with $10,000 in capital who trades three times every day. Each time the trader trades, the broker can make let us say. . .oh that I dunno...5 dollars. That is 15 dollars daily. At three trades per month and about 20 trading days in the month, that's $300 per month that a broker...
    Let's say you operate a Poker area from your house.

    Let us also assume you can view all the player's cards through some key mirrors. What's more profitable for you in the long run: Gather a fixed entrance fee from every player ($20 for instance ) or collect the whole pot a couple of times per night through some accomplices?

    Consider that...

  4. #4
    I've thought about that. It doesn't make sense because over the longer term, (and many reputable brokers seem to stick around for more than only a year or two) a broker can collect rediculous amounts in fees provided that the average success rate of their clientele is as high as you can. The more equity a broker's customer base can assemble, the more in fees that the broker can accumulate.

    Hampering that the rise of customers' accounts has a negative impact on future earnings. It needs to be obvious to even a business school drop out that you're reducing your profits exponentially by simply taking profits off the table for your clients.

    The entire point of a brokerage is to make money by offering a station for trading currency. Even though a broker could conceivably manipulate a price feed on purpose with the objective of screwing their customers, it simply does not make sense for a broker that wants to stick around for more than a year.

    EDIT:

    Oh, and if you operate a crooked poker house that does not shut down and move places every day, you are officially retarded.

  5. #5
    Quote Originally Posted by ;
    The more equity a broker's customer base can build, the more in fees the broker can accumulate.
    This is precisely what they would like you to trust!

    In reality, Forex brokers rely upon a continuous supply of fresh meat (err...I mean new clients ) to remain in business.

    Don't forget, 90% of traders lose money in under 3 to 6 weeks and simply disappear from the trading arena, so that they need new victims to remain in business.

    PS: No I don't run a poker room and I despise any sucker match of that nature, I earn enough money just day-trading the Forex market thank you.

  6. #6
    You understand. . .THIS:

    Quote Originally Posted by ;
    This is precisely what they want you to believe!

    Actually, Forex brokers rely on a constant supply of fresh meat (err...I mean new customers) to stay in operation.

    Don't forget, 90% of traders lose money in less than 3 to 6 months and just disappear from the trading arena, so they need new victims to stay in operation.
    Is indeed very very often followed closely by:

    Quote Originally Posted by ;
    I earn enough money only day-trading that the Forex market thank you.
    A sign that maybe you're more prone to making negative assumptions is that you've pulled that popularized 90% figure. Do you have any idea where it came out because I can not for the life span of me really find any confirmation of it and just how on earth could we? After all pulled straight in the ars, it is! And hey, if it's true, how do you figure you and so many individuals here onnigeriaforextradingtout themselves as being among those one in ten? American brokers have to now release data about profitability and Oanda's idiocy on that count apart, we found that about 35 percent of traders make money. I am sorry but that is a tad bit more than 10%. Is it a good situation? No, it might be a lot easier for fx brokers and traders alike but seem further and begin studying studies on who wins money most often and it's more active traders. The more active the trader, the more likely it is that they will lose money. A study in Taiwan found that about 80 percent of active traders lost money. The less disciplined you are, the more often you are likely to trade and the more likely you are to lose money.

    Look, bottom line, the FX markets generate profit for retail traders about as often as the stock markets. Lots of individuals lose money. . .and lots of individuals are individuals who'd most likely be better off not trading.

  7. #7
    Quote Originally Posted by ;
    It's after all pulled straight from your ars!
    I don't like or even tolerate vulgarity, so let's stop this discussion right there, shall we?

  8. #8
    Ars is vulgarity? And I thought we Canadians were so considerate. *chuckle*

    you'll be able to stop if you so please . however, it's either because you are as fragile as a tulip in sunlight or as you are not big enough to acknowledge you, in the warmth of protecting a questionable position, pulled a horse puke quality statistic out of where you pulled it to support your own position.

    Surewe could stop but it is not out of any regard to your argument or your own sensibilities. Ars? Really?


  9. #9
    Didnt go through your post but ive had this chat before and I dont believe a broker works contrary to its client I believe in the market which is demand and provide credit and debit
    if a broker worked against his client that you wouldnt have a broker

  10. #10
    Quote Originally Posted by ;
    I read temporarily last week somewhere (can not recall where) how a person reckons a broker might operate against a trader if they seem to be earning too much cash....is this possible?
    Should they allow you to open an account, they are not your buddies.

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