What you think? From Where Brokers Earn a Handsome Profit?

What you think? From Where Brokers Earn a Handsome Profit?

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In less than ten years in 1999, there were absolutely no retail or personal foreign exchange purchases and promotions. Trading in the foreign exchange market has become a pile, limited by large banks, hedged budgets, and individuals with absolute high net worth, which is absolute because of the absolute necessity of buying and selling capital. The minimum purchase and promotion duration usually becomes $ 1,000,000.

However, with the fact that the profitability of foreign exchange trading has begun to spread, despite the fact that they do not have enough funds to trade in the traditional interbank market, there are still more people who like this way. Use cash to draw.

For those traders who have about 10,000 to 50,000 US dollars to invest or less, the foreign exchange market has always been in need of development, so the retail foreign exchange market was born. New foreign exchange brokers have begun (but are rapidly rising) to meet this excessive demand, but this element of foreign exchange trading is still highly regulated.

The available foreign exchange brokers are at most in the “market maker” or “barrel shop” mode, these people are obviously not interested in making you a successful dealer. why? Do you ask

Well, their project is important to enabling the foreign exchange market to acquire the rights of smaller investors (hence the time market manufacturers). If you want to do this, they need to fill in every order you place in the buying and selling platform as away, and they can do this by assuming the opposite role of each alternative product you make.

Well, considering that they will open an opposite function for every exchange you make, so as long as you get a successful transaction, they will obviously lose coins. Recall that the reason you have EUR / USD pairs is that you believe that your understanding of the euro is understandable. Well, in order for you to enter the market, the supplier will have to perform a function that they may sell EUR / USD to make your transaction go smoothly.

Because they will be in the selling function here, it is in their interest to depreciate the commission of the euro or cause you to suffer losses in the transaction. Keep in mind that your foreign exchange market maker will never show you this information because they most effectively rely on a small number of shoppers, they really really understand their corporate version, and as a result, most investors will fall. Its victims.

The opposite foreign exchange brokerage enterprise model is called Digital Communication Network (ECN). In fact, dealers are much happier because brokers do not see your established hobbies of failure. In understanding how this setup works, consider that the reason for any broker is to allow market access and liquidity.

Forex market manufacturers do this by taking the opposite function for each transaction you are in, but ECN traders use their communication network to purchase your standby orders and match them with some other exchanges ( For example, if you find an order for a currency pair, ECN may be suitable for you and several other traders selling the currency pair.

ECN agents are definitely your best choice because it is much simpler to make money using brokers to provide brokerage business for such shopping and promotional settings. Due to the fact that they do not see your vested interest at a loss, and as the simplest opportunity to provide a network that enables them to adapt to orders from different buyers, you will not encounter any cash withdrawal issues.

Public Idea # 2

Buying and selling foreign exchange is awesome-you can directly access your account online, so you can trade anywhere in the world, and the very high leverage ratio allows you to earn a lot of money from a completely small account. Commissions are loose, and even foreign exchange spreads are very tight.

Since you (foreign exchange provider) have some advantages, have you ever confused about how your retail foreign exchange dealer makes money? Why are there so many retail foreign exchange traders? In any case, there are foreign exchange brokerage ads everywhere, and the opponents seem very stiff. So, how exactly does your foreign exchange dealer make coins?

This solution may surprise you. Your foreign exchange supplier assumes that you will lose cash for a long time when trading. For motivation, 95% of foreign exchange buyers lose cash, which is a completely comfortable assumption. Each trader must decide whether a brand-new account belongs to the business of the purchaser of the losing cash (95%) or the organization that makes the coins (5%).

This is exactly what your foreign exchange provider does. Each new account is considered to belong to “Group B”, that is, those investors who will lose money. When you consider that 90% of traders belong to this organization, your broker is happy to assume that you belong to this organization.

After a while, if you can always make money, your broker will reassign you to “Group A”-these are the 5% lucky buyers who are constantly making money. After joining the company, your trader will be placed with all the relaxation of institution A to trade your transaction and hedge in your transaction. So, for example, if all consumers in Group A provide EUR / USD, then your trader will create a new area path in the interbank foreign exchange market to offset any gains from this change in Group A.

Basically, your dealer will be placed with the dealer of company A, but there is no doubt that you are interested in getting the bill of institution B. This is because if the trader in Group B loses $ 7,000, that is the fact that he completely blew up the $ 7,000 account, and then the trader gets all the money. Traders will not make coins on the booth now. Dealers profit from the losses owed.

This is why agents continue to market for modern customers. Agents want “easy blood” to maintain their livelihoods, some buyers in organization B will give up shopping and selling, or transfer to other brokers.

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