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Yeah Ive been live trading and demo trading and thats the thing, its impossible to tell if my orders ever reach the exchange or get diverted somewhere else. It moves so quickly that during periods of high liquidity, unscrupulous brokers could easily divert some of the consistently losing retail traders to a lovely little money making exchange on the side.
Did you guys ever bother for a brief second to go to the home page of his "institute"?
Right on the home page, there are four brokers he is referring to while three are FX and CFD brokers.
In the U.K there is a concept of I.A which is Introcing Agent, namely, you introduce customers to a brokerage, get paid on in but you can not guide or be an intermediary with the clearing house. You do not need to be licensed to be an I.A and as the name suggests, you only introduce. In my personal opinion, he gets paid for the referral of customers. So brokers are bad UNLESS you get paid on the flow?
I find extremely unprofessional (putting it mildly) that he uses such tactics to draw in beginners.
After you throw away all the useless indicators you bought, courses, lifetime licenses for software, etc. The only person you would stay with is your broker. He/she will be your longest term partner.
Matt Z
Optimus Futures
There is a substantial risk of loss in futures trading. Past performance is not indicative of future results.
Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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The brokerage most likely to do these types of things are your non-ECN forex brokers.
The typical non-ECN forex brokerage always trades against its customers - it is just the only way to do this when there is no exchange. However, doing this carries a risk in that the customers can suddenly be right and the brokerage will suffer losses and go out of business. Therefore, once their exposure reaches certain thresholds, the brokerage will just go to another participant and hedge the exposure that is out of line. Even though they are technically trading against you, their business model relies on lots of traders executing lots of trades that net each other off and allows the broker to earn commissions (spreads).
The honest non-ECN fx brokers do not make money betting against you. If a fx broker wanted to screw you over, they could either provide you with false prices that stop you out or widen spreads that stop you out. I only traded with OANDA, but I had a Bloomberg on my desk and could compare fx prices. OANDA's prices were legit. Regarding the widening of spreads, OANDA did widen them to discourage trading around news events, but it was mostly done to reduce their risk. It was extremely annoying to be stopped out of positions merely cause the spread widened, and not trading around those times was the only option. Their model was not aimed at fleecing me, but rather at earning commissions while keep their risk low.
So, how does this relate to futures? Quite simply in that a brokerage that trades against you carries risk. Apart from the obvious market risk, it carries regulatory risk (can I be fined / disbarred) and reputational risk (will I lose all of my clients if this becomes public). Even if the broker decides to take these risks, there are still easier and much less riskier ways to make money. If you have have a large client base, the interest you earned (before 2009) would have been pretty significant. Not sure how brokerage adapted to this low-interest rate environment, but I am pretty sure there are other ways to make decent money (managing funds for instance).
Of course a broker who is struggling financially, may resort to these type of shenanigans, but he would most likely be put out of business sooner or later. A bigger risk would be that your broker goes bust (MF Global - https://en.wikipedia.org/wiki/MF_Global) and you can't get your funds back due to some legal loophole no one noticed at the time. Or just plain fraud that the auditors never picked up (https://en.wikipedia.org/wiki/Peregrine_Financial_Group)
@mattz is most likely correct - this guy is just trying to earn referral fees.
