Forex broker maker market

We are going to stick to the same subject as in our previous Forex training video but we are going to focus more on how market makers can fool traders who have not done research, into thinking that they are an ECN Forex broker. In essence, we will discuss how some market makers pretend to be ECN brokers and generally rip their clients off.

In a nutshell, a market maker will receive prices for currency pairs from the Interbank market; this is the same for all Forex brokers. However, they will manipulate those prices via their dealing desk resulting in a financial advantage to them but a disadvantage to their customers.

In other words, they will trade against their customers via the dealing desk.

One thing you must remember is that every time that you trade, you are putting your Forex broker at risk. The more successful you are the more risk is pushed towards the broker. So, it is within their interest for you to lose because this is how they can make the most profit. They will not simply allow profits to be made by widening the spread or attaching a commission cost to your trades because the profit margin is very small. However, if you lose they can take all the money that is sitting within your stop loss and eventually, you will be stopped out.

Money A2Z

Whatever the management style however, the end result will always be to trade against you thus making sure you lose, as they have access to your trading account.

The ECN broker Electronic communications network works slightly differently. They will still receive their currency pair prices from the Interbank market but they will not manipulate market conditions. All they will do is provide true market conditions. To make their profit they will either attach a commission charge onto your trades or simply widen the spread. So, they will make 2 pips every time you trade.

This is a fair and honest way of making a profit from their customers.

Every Forex broker needs a bridge. These partners and contributors provide liquidity to the broker so that the broker can put up a certain amount of risk in the market that enables us to use them.

Market Makers Brokers | Types of Brokers | Forex Brokers

If your Forex broker uses MT4 or MT5, the chances are that they are using a bridge supplied by Boston Technologies but this will vary. The way in which they can fool people into thinking they are an ECN broker is by providing the ability to trade against you to their liquidity providers and third party contributors such as counter-trading banks or large financial institutions.

For some reason most people think that if the broker claims they have no dealing desk that they are an ECN broker. That is not true. Just because they have no dealing desk does not mean that they are an ECN broker.

All they do is switch the responsibility to someone else, away from their office block. So, in the end their risk is being managed externally. They are right about not having a dealing desk but they will certainly not admit to being an ECN company. To conclude, be a bit more vigilant and ask a lot more questions when choosing a Forex broker.

The reality is that you may be stuck with a broker that is pretending to be an ECN after switching from an old one to a new one and your situation would have not changed. You will still trade with a market maker and you will not benefit from true market environments. The type of broker will be the same — they will just operate under a different company name.

Market maker brokers pretending to be ECN Forex brokers - Capex Forex Trading

To find the right broker visit our Forex brokers list. Here you will find a list of approved companies where you can open a live or a demo trading account.

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