Electronic Execution That Has Replaced Dealing Desks Have Not Improved The Situation
Los Angeles, CA -- (SBWIRE) -- 10/12/2015 -- For those who are already trading in Forex and those who think that they can make good money by trading on the Forex market, this news story may reveal the right situation in this market.
Earlier, clients were not as knowledgeable about Forex trade as the traders of today. So, brokers slowed down execution and withheld client money. Human dealers were manning dealing desks and these dealers made sure clients did not make money through their trades.
Now, things have changed and 'electronic execution' has replaced dealing desks. This means the new dealers are in electronic form. These "ECN" brokers are no better than those who were manning dealing desks earlier. Though the system is now automated, it does not guarantee to traders on which venues their trades will be executed. This means even in ECN accounts, brokers will continue to remain as middlemen or as counter parties taking the other side of the trades of the clients.
The prices clients see on their trading platform are actually ECN prices transmitted from liquidity providers. Brokers will utilize a liquidity bridge for choosing the trades they send back to the liquidity provider or the prime broker and the trades they execute internally. In short, brokers will continue to delay trades so clients will lose and they will make money.
Clients may think that if they go to bigger brokers or use prime brokers, they may not lose but prime brokers who serve retail brokers are just retail brokers or market makers of a bigger version. The only difference is they may insist on huge minimum account balances and lots.
Clients who are eager to always receive the best spreads and execution may have to open multiple trading accounts at different prime and retail brokerages and trade on all of them. But nothing can be more difficult than this.
Only if a Forex broker aims to give their clients the best prices and terms 100% of the time by being the bridge to the many different execution venues available in the entire market and connecting the individual clients to the Forex web, clients can benefit. In short, brokers should not focus on making the most money but should use the technology for connecting multiple sources of prices and liquidity to the clients' trading platform. Brokers can sell ancillary services to clients or branch out into other areas of finance business for to off-set their notional loss.
About The Truth in Forex
There are many people who want to earn well in Forex. They should realize that earlier, brokers were delaying execution of trades and withholding the money of clients so they can make money. Even after introduction of electronic execution, the situation has not changed. Brokers are still behaving like middle men and ensure that their clients do not make money on this market. Only if they focus on getting good benefits to their clients, traders can benefit.
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