And other brokers directly send your trades to the inter bank market for execution.
Simply stated – you can have the best and the most successful trading strategy in the world, but if you trade with a bad broker, the trading strategy will still not bring profits.
More and more, professional traders are realizing that they need STP / ECN trading accounts to be successful. In response, the vast majority of brokers are offering STP / ECN trading accounts. However do not get confused by the marketing of similar brokers.
OF TRADERS THINK THAT THEY TRADE THROUGH ECN / STP BROKER
IN FACT ONLY
OF TRADERS TRADE DIRECTLY ON REAL INTERBANK MARKET!
This is insider information, and is how Forex brokers currently work to make the utmost profit from their clients, which 98% of retail traders do not know. In the picture below, you can see that our trades are not executed at true interbank market.
Insider information: How 98% of retail brokers make their biggest profits!
Some brokers even offer interbank market platforms for their clients. However, similar solutions are typically usable only to hedge funds and big financial institutions. So only these technologies will ensure that you will not have conflicts of interest with a poor broker or his market maker, and that your trades will be executed at the best prices on the interbank market.
A principle of market makers is really simple – if you make a profit, a market maker loses the same amount of money (that’s why trading is sometimes called a zero sum game). That’s the reason why if your trades are executed with the only one market maker, it will never turn out well for you.
And if a trader makes some profit with a poor broker, the market maker uses dirty practices which are not obvious at first – the market maker will hunt his Stop-Losses, expand spreads in the time of trades execution, freeze his trading platform for a while, and so on.
The main problem is not that trading is a zero-sum game, as a lot of people think, the main reason why traders lose money are conflicts of interest with market makers. If your trades will be executed without any conflicts of interest, it will open a new opportunity for you to earn big profits from trading financial markets.
Extremely important costs that are not well known – slippage
Slippage is the difference between the expected price of a trade, and the price the trade actually executes at. Keep in a mind that this difference highly influences a profit / loss from your trades and that the slippage is usually a subject of both your market entries and exits.
The slippage at solid and fair brokers depends on the current market liquidity and a volume which you would like to execute. Unfair and poor brokers are artificially increasing the slippage. Please do not get confused – we are not saying that brokers with enormous spreads / commission are the best choice, but now you can see the reason why so many low cost brokers can work nowadays.
Enough theoretical talk – real trading tests
1) Low-quality broker (+ 1 685 USD profit):
2) Exactly the same trade with fair broker (+ 1 925 USD profit):
3) Low-quality broker (- 210 USD loss):
4) Exactly the same trade with fair broker (+185 USD profit):
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