Hey pcb
How did they go against you with the VDP plugin? explanation in an example of a trade would be the best.
So , lets say that im winning , and im opening a short in EUR at 1.3116 , how will the VDP go against me?
Curious , its the first time i come across that.
Hi Lorio,
I'll do my best to explain.
VDP stands for Virtual Dealer Plugin. It means that there are no real human dealers, but virtual(that would automatically act upon certain conditions detected by the software algorithm - i.e. a step-by-step procedure for calculations to determine if the desired condition is met).
When a broker openly declares that they are a dealing desk broker(also known as Market Maker), they are telling you that their trading structure is setup to have their own people trading on the opposite of the trade you take. However, these days Dealing Desk brokers will also use software to counter your trades - no real human traders anymore.
This is a short description extracted from
Different Types of Brokers | Brokers 101 | Learn Forex Trading
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Forex brokers that operate through Dealing Desk (DD) brokers make money through spreads and by trading against their clients. Also called market makers, Dealing Desk brokers literally create a market and artificial forex exchange rates for their clients. While you may think that there is a conflict of interest, there really isn't. Market makers provide both a sell and buy quote, which implies that they are indifferent to the decision of the trader.
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I urge you to read more details in there to find out how the image of Dealing Desk brokers has become so bad these days, thus opening up the opportunity to increasing number of unscrupulous brokers claiming that they are Non-Dealing Desk brokers, but secretly have the MT4 VDP installed to do worse things than the Dealing Desk brokers.
In your example of shorting EUR at 1.3116, let's say you have been winning >80% of your trades consecutively for the last 3 days, then this is how the VDP can turn the tide against you.
The VDP could have already been setup to do the following when a certain condition is met, and can also be adjusted anytime when the trading environment changes.
Example:
IF EUR = BEARISH
FLAG ALL Accounts having >=80% of Winning Trades the last 2 days
LIST all Profitable EUR Opened Position of Short trades
IF Profit >= 10 PIPS
Forbid CLOSE trade
IF Profit <= -10PIPS
Requote Price = Price1+5 PIPS
Display choice 'Accept', 'Cancel'
IF Choice='Accept'
Requote Price = Price2+5 PIPS
ELSE
CLOSE trade at Price1+5 PIPS
END IF
END IF
END IF
END IF
So, since you have already won >80% of all your trades consecutively for the last 3 days your account will be flagged.
Next, if you had Opened your Short trade at 1.3116 and assuming that the current Price is now at 1.3016, then if you want to Close your position now, you'll have 100 PIPS profit. But the algorithms know it in a split second that you are disallowed to take profit that's more than 10 PIPS, so the system will forbid any trade Closing attempt, and will then look out for the next IF condition to be met before acting again.
Next, if you tried closing your position again after 5 secs, and the price suddenly surged to 1.3130, you'll be at 14 PIPS negative. So since your trade meets the condition of <= -10 PIPS, you get to see a Requote Price at 1.3135 (that's Current Price at 1.3130+5 PIPS as instructed) and you'll get to select 'Accept' or 'Cancel'
Even if, despite that you are annoyed by the requote, you still decide to go ahead to Close your position, the system has been instructed to throw you with another new requote(Price2+5 PIPS). So, you still can't close yet.
However, should you decide to Cancel rather than going head to Close now, your trade will still be Closed but at Price1+5 PIPS (as instructed by the algorithm).
You'll scratch your head and start wondering what's going on, and you end up with losses.
You'll write to complain, but the broker will respond with their canned script that after investigation, blah, blah, blah.... they found everything to be normal at their end. So, it is your connection problem and all the **** stuff.
When you complain further that you suspect them of playing some dirty tricks etc..
They'll again respond with another canned script: We are registered with XXX and we will not do this and that......
Note: Price1 and Price2 can be any new current price or the broker's self made price(so they also secretly become a market maker without making it known in the first place).
This is only a simple example. It is actually much more complex with many more varied conditions included.
One single condition of IF can contain many more sub-conditions of IFs, and more sub-sub conditions of IFs and so on.
But still, the algorithms can follow the instructions and act accordingly in a split second!
That is why when your account is flagged and you start to see all hell broke loose, you can NEVER beat the speed of their VDP. You'll be absolutely helpless. You can only let them eat up all your trades and stop opening new position.
Hope this helps.
