Do brokers take the other side of trades?

Technically speaking, a broker can’t take the other side of your trade. By definition, a pure broker is an entity that simply connects buyers and sellers. It’s like match making. Ex) A real estate broker simply matches buyers and sellers of properties.

Can my broker trade against me?

As mentioned, brokers do trade against their clients, which is not exactly a secret — nor is it actual cheating — but it is something that a lot of people may not even be aware of. When trading CFDs and Forex the contract is always between you and the broker. So technically the broker is always trading against you.

How do brokers manipulate trades?

Market manipulation techniques involve spreading false information via online channels that are frequently visited by investors. The barrage of bad information on message boards, when combined with market signals that seem legitimate on the surface, can encourage traders to execute a given trade.

Do brokers take positions?

The simple truth is that most forex and CFD brokers are trading against their clients. B Book brokers will choose what positions of their clients they wish to offset. As such, they are willing to take a directional position in the market, and thus may be trading against their clients in a more material way.

What is a Contra participant?

contra. The other side of a participant transaction. Whenever a security is moved, one side gets a credit and the other a debit.

How long do brokerage transfers take?

Once the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will take approximately three days to move the assets to the new firm.

What happens when you open an FX position with a broker?

This means that when you open an FX position with them they can take the opposite side of your trade and your position will not be traded in the market. If your position makes money, the broker will be out of pocket, if you lose money your broker will make a profit of the same amount as your loss.

Is your broker running a trading book Against You?

Example 1. Your broker is running a trading book against you: You go long of EUR/USD and the firm takes the opposite side of your position rather than hedging it. If on closing the trade you are up £1,000, your broker will have lost the same amount of money.

What are the different types of brokers?

Broadly speaking, we can say there are two types of brokers: A Book brokers and B Book brokers: A Book brokers may technically be trading against their clients in that they are taking the opposite side of the trade, but they generally are taking a risk neutral approach to the market and are looking to immediately offset the trade.

Why is my broker selling EUR/USD in a sell position?

Well, in order to provide market access to you, the broker will have to take a position where they are selling EUR/USD in order for your trade to go through. Since they are in a sell position here, it is in their best interest for the Euro to depreciate in value, or to see you lose on the trade.