Do we actually trade against brokers in forex?

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trade against brokers
It is extremely important for each trader to understand how forex brokerages operate. Do we trade against brokers?
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Overview

Many traders believe that we all trade against brokers. Firstly, we would like to to dispel the myth that brokers take out money to the International Forex market. The truth is that the biggest part of the deposited money circulates within the company.

Only because of the spreads and the lost money of most traders, brokerage companies are able to give these huge deposit and no-deposit bonuses.

It is only the ECN type of brokerage house that is not yet well explored. Perhaps, in this brokerage type, brokers do in fact send money to the international foreign market.

Why is it important to understand whether brokers work against the trader?

This is important to understand not because we make mistakes and we need someone to blame, but because brokerage companies sometimes use deceitful techniques through their trading platforms MetaTrader 4 or Metatrader 5.

This program not only allows tracking down the presence of customer stop losses but also allows artificial price increase in order to hit these stops. In addition, it can also perform a certain slippage of prices for customer transactions.

For you, this is a violation of your trader’s rights and not in your favor. For the broker, these are additional earnings. You can all confirm the truth of this article through checking the official website of MetaQuotes (the provider of the MetaTrader platfrom).

Related: Steps on Creating a Profitable Forex Hedging Strategy

What we can do in such situation?

It is difficult to profitably trade in the market while brokers also interfere with making money and are trying to do everything possible to keep our money inside their company.

First, you need to understand one thing – there is an extremely high competition among forex brokers. In case a forex broker loses its brand reputation, the company can very quickly lose its customers as well.

For the sake of creating a reputable brand name, many large brokerage companies have spent hundreds of millions of dollars trying to be precepted a honest as possible.

Do we all trade against brokers?

Your deposit must be large enough so that the company takes some drastic measures. They would differ visually from the actions of other companies. Do we trade against brokers? Forex companies are not so stupid to risk all their hardly-built reputation and cheat on their clients. They are aware that such action may cause a massive internet wave of negativism towards the brand.

Having understood that forex companies keep existing because of your lost deposits, it is worthwhile understanding how a broker can influence your trading results. Such influences could be the slippage, the disappearance of communication during strong market movements, the spread widening, or perhaps the change in the size of the leverage without your knowledge.

As such carry out small attacks that will built profitable results over a longer period of time. You will begin to develop systems in which small bites do not play a significant role in changing the profit probability against you.

Related: How much money is needed to make a living as a forex trader?

Scalping and short timeframes

The most vulnerable system for broker frauds are scalping on short timeframes. The smaller the value of profit and stop loss in your systems, the less likely to be in profit.

So, think about serious trade only in medium term or long term, and small trading volumes. It is worth to try to gain as many pips as possible. This is done through smaller size trades or through working with pending orders. In this case you will not experience slippage (requotes).

We wish you a profitable trading!

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