Silly Question? How Broker Gets Benefits/Profits? - page 2
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The common ways for the broker to profit are the following:
- Spread: The difference between the bid and ask price, it's usually charged when you close position
- Comission: What the broker charges you at the beginning of the position, this one is usually fixed
- Swap: The cost of money in time, depends on the leverage you are using the brokers act as banks when a day passes by charging you interest and charging a light difference between the bonds of the currencies you are operating
The non-common ways for the broker to profit that I know so far are the following:
- Guaranteed stop: They charge you a percentage of the trade in order to make sure volatility don't burn your account by giving your max SL a fixed rate, so you won't lose more than what you placed in your SL even if market doesn't accept that price, the difference is paid by the broker.
- Monthly fee: Some brokers charge their customers to have a demo account opened, this is very rare because it is way to obvious you can open one for free but they 'abuse' of the people that lack this knowledge.
And then the illegal ways for the broker I better not tell them, just let's call it scam.
That seems interesting. Do you already have some ideas about the altered tick flow ?
I was going through some other topics, and accidentally found this one, which is highly related to question: http://forum.mql4.com/ru/6557 Its in Russian, but in short its related to distribution of broker tick data, like delays, value deltas, etc. One of topic points is that cheating brokers have high amount of ticks with zero delta value (new tick bid price is same like the previous one).
Algorithm to do some research is like this:
1) process tick data using expert, find tick deltas - subtract new tick bid value from previous tick bid value
2) make pivot table, by counting of each delta value
3) check for amount of 0-delta ticks
I did this test for two brokers. One I trust, but other seems quite shady. Result is in attached picture, ticks were processed from vps with around 20ms latency to broker server.
So, amount of tick deltas is almost the same in both cases, except those 0-delta ticks. Shady broker has around 50000 of them, which is almost twice more than other broker. Also, they both are not ECN, if this matter.
This doesn't prove anything, but gives some ideas. For example cheating broker can actually spam fake ticks with 0-delta values, which can trigger scalper buy and sell orders. But broker will execute them with some slippage which matches real price, leading to trader losses.
There are brokers recruiting successful traders. You share your profits with them and they give you money to trade with.
The way to assess the quality of a broker is to compare its quality of service with others, in real time.
Michele Lazzarini:
they give you money to trade with.
There are brokers recruiting successful traders. You share your profits with them and they give you money to trade with.
The way to assess the quality of a broker is to compare its quality of service with others, in real time.
Yes. please give me more explained details