Do Retail Brokers benefit from profitable traders?

[Carles3]

If you are a retail trader with a Market Maker, then you broker lose money from your trades when they are profitables, and their income comes from bad (most) traders.

Okay, but if you are profitable in the long run, do they use strategies to make profits from your trades (Such as copying your trades with their own accounts or something like that)?

Or they just keep losing when you trade successfully (they keep being your enemies)?

Should I be worried with my broker as soon as I start making good profits? Is my profitable limit the amout my broker is willing to lose?

Do they have strategies to make money with both profitable and non-profitable traders?

Thank you guys for your time!

 

[arigoldman]

It depends how profitable you are, but the general rule for market makers is that they need you to lose, otherwise they don't need you. So if you start hurting them by making big profits (four, five digits) they will either politely ask you to leave or will start hitting your stops and trying other tricks to make you lose. If you are worried, find a good regulated ECN broker with billions of dollars of customer equity.

 

[Carles3]

It depends how profitable you are, but the general rule for market makers is that they need you to lose, otherwise they don't need you. So if you start hurting them by making big profits (four, five digits) they will either politely ask you to leave or will start hitting your stops and trying other tricks to make you lose. If you are worried, find a good regulated ECN broker with billions of dollars of customer equity.

Hello Arigoldman, and thank you for answering my doubt.

That sounds very sad. I hope the future for Forex retail brokers will be a more controlled environment. How can they be allowed to scam people that way?

Forex Market is full of scams, everywhere, and brokers take part of this scammers crowd, and it is really sad. As Forex is something relatively new when it comes to popularity, and nowadays millions of people are joining with small investments due to Internet, I hope Forex brokers will be controlled by authorities, more than now at least.

How to detect if a Forex Broker is a Scam, I mean if they hunt good traders?
Since Forex is full of begginers, they said broker scammed them when they may be didn't, because most people behave like everything bad is beacause of my broker, you don't know who says the truth. The more popular a Forex Broker is, the more bad comments you hear about them, no matter if they were legit or not :/

 

[scott_miller]

Hello Arigoldman, and thank you for answering my doubt.

That sounds very sad. I hope the future for Forex retail brokers will be a more controlled environment. How can they be allowed to scam people that way?

Forex Market is full of scams, everywhere, and brokers take part of this scammers crowd, and it is really sad. As Forex is something relatively new when it comes to popularity, and nowadays millions of people are joining with small investments due to Internet, I hope Forex brokers will be controlled by authorities, more than now at least.

How to detect if a Forex Broker is a Scam, I mean if they hunt good traders?
Since Forex is full of begginers, they said broker scammed them when they may be didn't, because most people behave like everything bad is beacause of my broker, you don't know who says the truth. The more popular a Forex Broker is, the more bad comments you hear about them, no matter if they were legit or not :/

If you are one of the few lucky ones that manage to make a profit then one way to protect those profits can be just moving from one regulated broker to another. Just like arigoldman said: ECN brokers manage larger amounts of cash and wouldn't be too worried by those profiting.

 

[Whitesnake]

I am somehow not convinced by the market makers and thus its always best for the profitable traders to invest their hard earned money into well regulated forex broker so they can be at great relief.

 

[iMusingKiMi]

I am somehow not convinced by the market makers and thus its always best for the profitable traders to invest their hard earned money into well regulated forex broker so they can be at great relief.

Absolutely agree on this. Some trader prefer to choose their broker by bonus, contest etc instead of the most important, a well regulated broker.

 

[Pharaoh]

What you want is a well-regulated broker and an ECN/STP account.

One funny thing I've seen over the years. People report getting perfect executions while losing money and then getting worse executions once they become profitable as a sure sign the broker is a scam. Yes, a market maker could be using the VDP to encourage a profitable trader to go elsewhere. What they never think of is that a broker could also be moving a profitable trader from b-book (in-house, market maker, bucketshop) and have finally started passing that person's trades onto the real market, where slippage and requotes are more common than on a market maker.

 

[Whitesnake]

Absolutely agree on this. Some trader prefer to choose their broker by bonus, contest etc instead of the most important, a well regulated broker.

True, because above all we are risking our hard earned money to the forex market and forex broker plays a vital role for retail traders like us. Thus, well regulated broker is the only go.

 

[EURUSD]

If you're using no deposit bonus from the brokers, then the brokers didn't get any benefits from your money but they got benefits from your testimonial when you could withdraw some of your profits. But generally, retail brokers didn't execute your order into real market directly but they will trade in the market and you're trading in 'their' market. So, your open position won't affect anything in the real market because it's too small amount.

 

[Whitesnake]

If you're using no deposit bonus from the brokers, then the brokers didn't get any benefits from your money but they got benefits from your testimonial when you could withdraw some of your profits. But generally, retail brokers didn't execute your order into real market directly but they will trade in the market and you're trading in 'their' market. So, your open position won't affect anything in the real market because it's too small amount.

I guess until and unless we are trading with atleast millions of money there would be no much effect on the forex market. But certainly few thousand dollars makes a lot of difference for us and the forex broker, its either they make the money or we make the money.