the link between CFD's brokers and bank spot liquidity? - futures io
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the link between CFD's brokers and bank spot liquidity?


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the link between CFD's brokers and bank spot liquidity?

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  #1 (permalink)
arman77
amsterdam
 
 
Posts: 5 since Dec 2020
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hi
the institutional banks trade spot forex although they trade online
for retailers, they just trade CFD or futures and in CFD they buy or sell to the market makers right? so if I am right to this point then how this liquidity providing from banks happen for retail traders through brokers(stp or ndd)
because of brokers orders are CFD but the bank's orders are spot forex?I can't find the link between these two? how this change of type of thing are going to happen CFD is just a derivative but banks trade the spot I can't understand?
I will be very happy to hear from you
thank you in advanced

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Nineeleven
Germany,Göttingen
 
 
Posts: 13 since Jan 2021
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Hello Arman
For me this is more a PR-Gag Brokers spell out.
Fact is Brokers ( i mean really retail Brokers also known as Bucket Shops have their own Books) I dont think at all they route your Order trough the Markets.
More making their own Bet on it.

In the End Price is Price whatever Contract ure using.

Only my two Cents!
Cheers

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 Tymbeline 
Leeds UK
 
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Liquidity (of the sort you're asking about) isn't really relevant to retail CFD traders (in the way you're asking about it).

CFD "traders" are not really dealing with brokers: they're "trading" (actually betting) against counterparties who are pretending to be brokers while dealing in their own products (also while making up their own prices, holding your deposited funds, and making up and interpreting most of the transaction-rules as well).

Those counterparties, the CFD "brokers", may offset their own net liabilities in an underlying market (and some of them certainly do), but that's an entirely different matter from what I think you're asking about.

That's not to say that CFD-trading can't be done profitably, of course, but "liquidity" per se is probably relevant only in so far as it might indirectly impact the spreads they charge their customers. There aren't really any currencies changing hands (between the customer and the "broker", anyway) when CFD's are traded - as mentioned above, it's more or less a "PR gag": they're only pretending to be brokers.

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