Who pays the trader?

[Teekay]

Guys please i want to know if it's the brokers that pays profit to traders from their commission and spread. Because someone also told me that the market pays the trader which I don't fully understand. So guys what do you think?

 

[tacet]

in a nutshell, a successful trader gets profits from unsuccessful traders. Nothing wrong with it - this is a marketplace...

 

[Teekay]

in a nutshell, a successful trader gets profits from unsuccessful traders. Nothing wrong with it - this is a marketplace...

What if in a whole month about 80% of traders proves successfully trading. How will the market pays then?

 

[tacet]

well it's never happened before (bar a slightly different Alpari UK case). Usual numbers: 80% - no profit, 20% - profit (Pareto principle by the way). If, hypothetically, it happens in one broker then extra money will be borrowed from banks to cover the loss. Of course in reality it's all a bit more complicated like existence of broker's A-Book, B-Book etc.: Regulated broker have their risk management in place - don't you worry!

 

[Teekay]

Thanks for the explanation.

 

[Thoris]

Traders get profits from winning in the market, brokers don't pay traders, as they take comission or spread from each trader for brokerage services. Also, successful traders may earn money offering copy-trading or trading signals. Phrase "market pays to the trader" means that each trader get money from the market, that's okey.

 

[Teekay]

Well explained thanks. Again what about binary options trading or others offered by brokers do the market also pays traders or its the brokers?

 

[Akimuro]

That's right.
And the most important thing is to make the profit stable. This is the result of our hard work.

 

[Granigamand]

The main thing is to have a reason to make a profit.

 

[ele020]

No, the profit or loss is borne by the liquidity providers who execute your trade in the real market. The broker only has the ability to charge you commission or spreads (as they provide you the trading platform) and your profits and losses are carried out in the real market if your broker is ECN/STP type of broker. However, if you all dealing with a dealing desk that is a B book broker or market makers that the profits and losses are entitled by the broker itself.