market makers

Forex Brokers Market Maker. Myths And Realities

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The problems with the Market Maker Brokers has been written to the unspeakable.

A Market Maker Broker works as a counterpart to the open positions of its customers. And there are many traders who are wary of this type of Brokers, although in practice, a good broker, is a good one anyway. Whether Market Maker or not. Well, that it is a myth, and there is a certainty that attest that all Market Maker Brokers will act against their clients. It is called a conflict of interest.

market maker

It is a fact that the Market Maker Brokers makes money when you lose money. That’s why we have the false impression that the Broker is going to be tempted to manipulate the prices, to provoke losses to their customers. It is also a fact that there are brokers who fall into the “unethical”, to put it mildly. And gives the same impression that Market Maker, ECN, STP or DMA, anyone of this, can manipulate the game as they please.

We just need to see the recent scandal of fxcm. In which the firm providing liquidity to the Broker, was their own property, indirectly. Therefore, was operating as a Market Maker, but in a disguised form.

This is not the same to say that their clients have suffered in the operational, whereby merely hiring a Broker ECN. But in practice, it was a Market Maker. In the U.S., the Market Maker Brokers have many limitations to operate.

The Market Maker Brokers live out of the commissions of their customers, and in addition, out of their losses. But they do not need to manipulate the platforms, or prices to get that.

We are going to think for a moment, if the majority of the investors lose money in the Forex market. If there is a famous rule (90-90) which is that 90% of the new investors will lose all their money in the first 90 days.

Why in the world they are going to complicate their life by manipulating prices and the platform?

It is better to go through an honest Broker or at least legit, and get many linnets every month. And not to be marked as a fraud and having accounts that are to leave. Yes or yes, their money in your game table.

Problems with the Market Maker Brokers, Books.

market maker

The Market Maker Brokers creates a market for their customers. Although the prices are similar to those you will find in a ECN, STP, DMA Broker…

The transactions of the traders who uses Brokers with direct access to the market. Are between them and the market, the Broker is just an intermediary and takes a commission to do that.

The price is which it is, there may be a few pips above or below. But there are no major differences between the quotes that you can get in your Metatrader 4 XM. Or you are going to receive in your Pepperstone MT4 platform.

Prices dipped in the different pairs, are received in the same way in the platforms and that traders are going to or not to the market.

Then, where is the question?

Are There Brokers who persecute traders who make money consistently?

It is possible, I have no doubt that there are dubious practices. But unless the Trader is moving hundreds or thousands of dollars a day and generating profits out of the ordinary. I do not believe that a Broker is going to persecute the traders who earn a few hundred dollars a day. When there are thousands of traders who lose those hundreds of dollars on a daily basis.

The reality that lies behind those problems with Market Maker Brokers is in its aggressive form of getting new customers.

These customers usually have little or no knowledge at all. Which leads them to lose their money in a consistent manner, and instead of try to find what they are doing wrong. They blame it to his/her poor performance, the strategy, the platform or on the market.

To these kind of traders I advise them to use systems that do not uses stops losses. Such as the Trifecta or hedging, or why not a Grid Trading. Here they will no longer be able to complain about the Broker. But will continue to lose money in the same way. And blaming someone else for their problems, and not seeking which really is the origin of the problem.

With this, I repeat, I do not say that there are brokers who make bad practices. But it does not have to be exclusively Market Maker. Bad Brokers There are all kinds… FXCM is just one example of a broker which is not Market Maker, and have defrauded their customers.

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