As a trader, it’s important to realise what type of broker
you are trading with. Many clients find this trivial and don’t realise what
affect different broker types have on their trading.
By identifying your brokers’ model, you can also understand
fully the risk, limitations and underhanded tactics that some of these broker
types employ to generate as much profit from your trading activity.
Market Makers
A market making broker has only one target, that is to
generate a virtual trading environment that often mirrors the real foreign
exchange market, however, the virtual and real market are not connected
whatsoever.
What does that mean for a forex trader? Basically, it means
that you sign the client agreement to approve that you are trading on that broker’s
virtual market and that the market maker has the right to execute your order
however it wishes.
Furthermore, specific restrictions will be on place to limit
the ability for clients to make profit from trading the forex markets. Such
limits can be based on some of the most critical risk controls and profit
securing tools that are a must for a successful trader. Stop Loss and Take Profits often carry restrictions such as minimum distance (in pips) where a SL
or TP can be set away from the open price. Also, the time the order must remain
open for is also a popular strategy used by market makers. These are definitely
strategies to ensure that your order stays open for a specific period of time
in an attempt for the markets to move against you and for your trades to
generate losses for you and profits for the market making broker.
There are many underhanded strategies and tools that remain
private and behind the scenes to ensure that traders never find out what’s really
happening. The market makers use tools and technologies to delay, manipulate
and cheat traders out of their money. Below is an example of one tool targeted
at hurting scalpers that trade on a market making broker.
This plugin
was developed in order to confront scalpers trading within the MT4 platform. The
logic is designed to make Scalpers less profitable by creating delays in
opening and closing orders for a certain amount of time, this is usually in
milliseconds. This allows the broker to reduce the clients profit by slightly
delaying the order open or close. During this time, this tool searches for the
worst market price and delivers this to the client.
This
technology focuses on all order types including buy and sell limits, stop loss
and take profits. At the end of the manipulation the plug-in confirms the order
using the worst price for the trader.
STP Brokers
A true STP broker on the other hand has no reason to place
such restrictions or use such tools to manipulate clients trades as they gain
no profit whether a client generate profitable or losing trades, instead they
gain a commission per lot traded. Because of this, it makes sense for the
broker to hope and target profitable traders. The logic is based on the more
profit a trader makes, the higher the likelihood that the trader will trade
higher volumes and generate more commissions for the broker.
Yadix is a broker that not only specialises in providing
beneficial conditions for forex scalpers, expert advisor traders and for all
forex robots, it also focuses on providing tools and services to help clients
develop their trading strategies and potential profitability.
We are proud to provide a true conflict free forex trading environment
and the ability for our clients to trade any strategy or EA without any restrictions whatsoever.
To learn more about trading on the real interbank forex
markets and its benefits, our support team will be happy to answer all of your
questions.
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