I would never trade with a market maker!
these brokers actually profile there clients into 3 groups; those that make money, those that lose a little and those that lose everything (also known to them as "useful idiots"), they will only hedge group 1, the other 2 groups go un-hedged and they not only collect their manipulated spread but also your losses, great business model for them, all the while the trader actually thinks he stands a chance
Have you ever wondered how Forex Brokers make their money? Do they always tell you that their profits come from the spreads? But why? Why would brokers do that? Actually they are not brokers any more, they are market makers. So why do they do that? To make more money! It is known that many traders lose lots of money, and if the market maker does send the trades to banks, then if the trader loses, the market maker gains nothing, instead only a commission or the spread.Market making is basically when a broker holds the clients positions in house. In simple words, the broker is the house. The trades are not transmitted to banks or to liquidity providers or to other brokers at least. Your broker is taking the other end of the trade. This is market making. It is called like this, because it is the broker who is the one who makes the market. The broker is deriving the prices from sources, and simply feeding the price to the traders. The trader is trading on he feed and not on the exchange. And since the broker has the other end of the trade, this means that if the trader loses money, then the broker makes money and vice versa. In simple words again, this means that the broker is trading against the client. I have a friend who works in the risk management department of one of the big international Forex companies in the world. He was telling me last time, that the best thing is not to hedge or cover any positions, all the profits of the company is coming from losses of clients.Now here rises the conflict of interest. Once the market maker starts getting serious clients, the company will start taking more actions towards maximizing the profits of the company. The dealing department will make sure that trades will lose every cent they have in their accounts. This is the only way for the company to maximize profits with existing business. A simple method of maximizing profits for the company is making the trading conditions more and more difficult. Read the below list, and think twice, have you ever experienced the below?1. Huge spreads during news2. Platform freezing during news3. Inability to place STOP BUY and STOP SELL orders near market4. Inability to change Stop Loss or Take Profit during market movement5. Inability to close your deal during active maket movement6. Stop loss being hit and then immediatley market retraces7. Take profit not being hit, although market went there 8. Open positions freezing and inability to modify them9. Huge Slippage10. Orders taking a long time to be filledand the list is growing!Buttom line, I would never trade with a market maker!
You thoroughly did a nice job with your educative and well sorted post. Truth be told, i can't really recommend markets makers to someone i know. Before i opened an account with Profiforex, i made sure that they are not market makers. Am really enjoying them right now, taking orders to liquidity providers. Man i really like this post, keep it up.
You thoroughly did a nice job with your educative and well sorted post. Truth be told, i can't really recommend markets makers to someone i know. Before i opened an account with Profiforex, i made sure that they are not market makers. Am really enjoying them right now, taking orders to liquidity providers. Man i really like this post, keep it up.
Same thing that endeared me to this broker, another thing that makes it all interesting is their execution speed, it is superbly fast. But sometimes i wonder: If market makers are still existing, it means traders do use them, so what is it that makers them strive till now?
Same thing that endeared me to this broker, another thing that makes it all interesting is their execution speed, it is superbly fast. But sometimes i wonder: If market makers are still existing, it means traders do use them, so what is it that makers them strive till now?
Yes man!
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use
Have you ever wondered how Forex Brokers make their money? Do they always tell you that their profits come from the spreads?
But why? Why would brokers do that? Actually they are not brokers any more, they are market makers. So why do they do that? To make more money! It is known that many traders lose lots of money, and if the market maker does send the trades to banks, then if the trader loses, the market maker gains nothing, instead only a commission or the spread.
Market making is basically when a broker holds the clients positions in house. In simple words, the broker is the house. The trades are not transmitted to banks or to liquidity providers or to other brokers at least. Your broker is taking the other end of the trade. This is market making. It is called like this, because it is the broker who is the one who makes the market. The broker is deriving the prices from sources, and simply feeding the price to the traders. The trader is trading on he feed and not on the exchange. And since the broker has the other end of the trade, this means that if the trader loses money, then the broker makes money and vice versa. In simple words again, this means that the broker is trading against the client.
I have a friend who works in the risk management department of one of the big international Forex companies in the world. He was telling me last time, that the best thing is not to hedge or cover any positions, all the profits of the company is coming from losses of clients.
Now here rises the conflict of interest. Once the market maker starts getting serious clients, the company will start taking more actions towards maximizing the profits of the company. The dealing department will make sure that trades will lose every cent they have in their accounts. This is the only way for the company to maximize profits with existing business.
A simple method of maximizing profits for the company is making the trading conditions more and more difficult. Read the below list, and think twice, have you ever experienced the below?
1. Huge spreads during news
2. Platform freezing during news
3. Inability to place STOP BUY and STOP SELL orders near market
4. Inability to change Stop Loss or Take Profit during market movement
5. Inability to close your deal during active maket movement
6. Stop loss being hit and then immediatley market retraces
7. Take profit not being hit, although market went there
8. Open positions freezing and inability to modify them
9. Huge Slippage
10. Orders taking a long time to be filled
and the list is growing!
Buttom line, I would never trade with a market maker!