Romeo
Sergeant
- Messages
- 239
We have seen this scenario happening again and again. A broker refuses to pay the profits and many times also the deposits of a trader.
Let's analyze very briefly how brokers work:
1. Before you start trading, they need to have your money in their pocket. They don't have any credit expenses.
2A. If they are an STP, they want their traders to make volumes, since they are earning on each trade. The bigger the volume, the bigger the profit. A real STP broker would love to see their clients earning money, because the clients will open larger positions and they will increase their profitability.
If they have issues with their liquidity providers, they can increase the spread of specific clients. That will increase their profitability and make the life of profitable traders difficult (Because the liquidity provider might instruct them to do it)
2B. If they are a bucket shop, according to the statistics, 90% of the traders are losing. They benefit from the lost money of the traders and they profit from the spread as well. They can also widen the spreads, if a trader is very profitable and give the trader a lot of re-quotes. In that way they can reduce the profitability of the trader to a degree, where he might choose to change the brokerage.
The way I see it, the brokers always have the upper hand and can twist the cards to their convenience. Why do so many brokers go bust? And why are there so many brokers that decide to disappear with their clients money? WHY?????
We would appreciate it if the reps of the brokers give us their point of view on this subject as well.
Let's analyze very briefly how brokers work:
1. Before you start trading, they need to have your money in their pocket. They don't have any credit expenses.
2A. If they are an STP, they want their traders to make volumes, since they are earning on each trade. The bigger the volume, the bigger the profit. A real STP broker would love to see their clients earning money, because the clients will open larger positions and they will increase their profitability.
If they have issues with their liquidity providers, they can increase the spread of specific clients. That will increase their profitability and make the life of profitable traders difficult (Because the liquidity provider might instruct them to do it)
2B. If they are a bucket shop, according to the statistics, 90% of the traders are losing. They benefit from the lost money of the traders and they profit from the spread as well. They can also widen the spreads, if a trader is very profitable and give the trader a lot of re-quotes. In that way they can reduce the profitability of the trader to a degree, where he might choose to change the brokerage.
The way I see it, the brokers always have the upper hand and can twist the cards to their convenience. Why do so many brokers go bust? And why are there so many brokers that decide to disappear with their clients money? WHY?????
We would appreciate it if the reps of the brokers give us their point of view on this subject as well.