Brokers vs Traders

[John_Davy]

At the end of every trading transaction in Forex who are the real
winners would that be brokers or traders?

 

[Enivid]

Every trading transaction is different. It is easy for trader to lose on a deal, but for broker it is also not impossible if they fail to provide the latest quote or if their spending connected with transaction is greater than their earnings from spread/commission.

 

[John_Davy]

That means it's more likely for a brokers to profit than traders?

 

[Enivid]

Of course, it is.

 

[John_Davy]

So this will be a battle of who earn a lot and who earn less. But both still wins.

 

[miles]

Both of them are winners in the forex market but I think brokers do benefit much more than clients because even if clients make profit in their trade or not, brokers will still get their commission from any deal made by clients.

 

[Emibluz]

I think this is where different types of brokers come in. The STP brokers are winners an any situation, so they do not care whether traders gain or lose. While market makers are on business, they trade against traders and lose when traders win.

 

[UMAF]

@John: I agree both can win

Here is a possible explnation for those new to Forex:

Theoratically, the relationship between broker and traders is mutually beneficial as brokers usually get their profit from spread. However, there is a tendency for brokers to go against you if they dont have the capital to hedge net positions of their client. This is precisely how bucket shops started in Russia back in 90s. However, these days large brokers try not to stop-hunt as fierce competition among brokers doesnt make it a viable profitable stratagy for large brokerage firms. Furthermore, brokers also fear regulators. For popular brokers in less regulated emerging economies, mantaining good reputation is the only way to compete with brokers regulated in developed economies ie USA, UK etc. Yes, broker can cheat if they want to and the end of the day, even liquidity providers are match-makers.

 

[John_Davy]

@UMAF well said. Thanks for sharing your thought on the thread.

I believe that it is us who are making our own path in Forex.
We can choose whether how we can create winning strategy or to take the same path like the 95% who fail their first quarter in Forex world.

Good Luck also to me

 

[Fxpipper]

More often than not it is the brokers and by that logic, the big guys..
Not that we don't make money but when it comes to the amount, these guys rake it in by the bushel..

 

[John_Davy]

Definitely! There's a high chance that big players can somehow manipulate financial markets.

I just wish i am wrong.