Where does the money come from?
- Thread starter olusola4u
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cowmadagan
Sergeant
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- 393
Hello.
That really depends on what money you're talking about. If you're talking about housing, it really does disappear into thin air, just because the value of a house is part accounting on projections of similar houses that are actually being bought and sold currently and part the amount that's sunk into it.
If you're talking about stocks, a lot of it goes to those who shorted or sold them, but they'll be slippage based on when there are no buyers, and that slippage is another word for disappearing into thin air.
If you're talking about forex, the money goes to the other trader, the spread goes to the broker, part of the loss of margin goes to a company that insures debt, and the part that's left of what you lose goes to your broker. When you make a trade, the broker still remains responsible for the lot itself, and that's what they insure against.
Some unethical brokers simply assume that you won't be right, and then when you're wrong they just raid your margin and keep it for themselves. All unethical brokers gain your margin by somehow not taking your orders to market.
That really depends on what money you're talking about. If you're talking about housing, it really does disappear into thin air, just because the value of a house is part accounting on projections of similar houses that are actually being bought and sold currently and part the amount that's sunk into it.
If you're talking about stocks, a lot of it goes to those who shorted or sold them, but they'll be slippage based on when there are no buyers, and that slippage is another word for disappearing into thin air.
If you're talking about forex, the money goes to the other trader, the spread goes to the broker, part of the loss of margin goes to a company that insures debt, and the part that's left of what you lose goes to your broker. When you make a trade, the broker still remains responsible for the lot itself, and that's what they insure against.
Some unethical brokers simply assume that you won't be right, and then when you're wrong they just raid your margin and keep it for themselves. All unethical brokers gain your margin by somehow not taking your orders to market.
Thanks,I'm talking about forex here.But i'm still confused on how people make their money.Is it like betting where people face each other one on one or their are some traders waiting for whoever is willing to go against them in their bid.Pls my question might sound somehow,i'm just really learning and want to know how the biggest market in the world operates.Though have started since 2007,but left when I lost all my money due to ignorrance.I really want to start again but in a slow and cool manner.Pls help me.
purplepatchforex
Recruit
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- 2
In effect yes it's like you said, you have to have a buyer for each seller, so it is everybody against each other, but to trade and make a profit you just don't have to think about that side of it.
If you are re-embarking on the Forex adventure as I like to call it, I would go down the simplest route possible, you'll probably find that this is very hard, Forex is just like anything else in some ways, if you don't understand why simple doesn't work it's going to be even harder trying to work out why something more complex won't work.
I think!
If you are re-embarking on the Forex adventure as I like to call it, I would go down the simplest route possible, you'll probably find that this is very hard, Forex is just like anything else in some ways, if you don't understand why simple doesn't work it's going to be even harder trying to work out why something more complex won't work.
I think!
ernest8fingers
Master Sergeant
- Messages
- 488
Today, my money was "lost in space"-lol. Maybe though, it will fall back down into my account? As I blissfully slept(those dam Brits(lol)-and all others who trade that time were picking my pockets.Now, if I could just conquer sleep?
Ricex
Sergeant
- Messages
- 358
That's quite a big complicated subject to cram into a forum post, but briefly the majority of the money is banks exchanging money between each other, roughly 2/3rds of the market is made up of that.
If you happen to be in a successful trade, say for example you sold EUR/USD @ 1.4560, the profit that you have gotten from that trade is made up of other traders losses. Their money has gone to you via a broker who also takes a slice of the pie as cowmadagan said.
There is so much liquidity in the forex marketplace that we don't have to wait around to find a buyer/seller like you do in other markets, at least not with major currencies.
If you happen to be in a successful trade, say for example you sold EUR/USD @ 1.4560, the profit that you have gotten from that trade is made up of other traders losses. Their money has gone to you via a broker who also takes a slice of the pie as cowmadagan said.
There is so much liquidity in the forex marketplace that we don't have to wait around to find a buyer/seller like you do in other markets, at least not with major currencies.
