Why does forex have a bad rep? | Currency Futures


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Why does forex have a bad rep?

  #27 (permalink)

Leeds UK
 
Trading Experience: Intermediate
Platform: FXTrade
Broker/Data: Interactive Brokers, CapitalSpreads, Oanda
Favorite Futures: GBP/USD
 
Tymbeline's Avatar
 
Posts: 429 since Apr 2015
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How many ForEx brokers do not take the other side of your trades?

Brokers (particularly of the counterparty market-maker type) come and go all the time. I don't know "how many" there are. I doubt whether this information is even definitively collated anywhere.

Here's the point, though: there are genuine brokers (who execute trades in the interbank market on behalf of customers who can't themselves deal there, just like stockbrokers buy shares for their clients) and they have no incentive for their clients to lose, because they're not involved in the transaction other than carrying it out in exchange for a fee.

On the contrary, if anything, they prefer their clients to win, because that way they remain clients and generate future commission income for the broker.

Interactive Brokers ("I.B.") is an example of a genuine broker, of this kind.

And then there are the majority of firms advertising themselves online as "forex brokers" who are actually counterparty market-makers, hold the other sides of their own clients' positions and are effectively trading against them - while holding their funds, and to a large degree also making up both the rules and the prices.

We all decide for ourselves which type of broker to use.

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