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Who pays you when you are trading currency with traderush,forex.etc?

Who pays you when you are trading currency with traderush,forex.etc?

Postby osmond » Mon Apr 15, 2013 11:21 am

I want to know who pays a rader when he is trading binary options.If the company he has his account with ,then I can assume that he will never make any benifits .They will not let things in his favour.But if a third part does .perhaps things will be different.
osmond
 
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Who pays you when you are trading currency with traderush,forex.etc?

Postby engelbert » Mon Apr 15, 2013 11:22 am

I have been trading binary options for a year now and you are right. I have lost money on my bets, because you cannot take a profit when you are ahead, but rather you have to be right when the option expires.
engelbert
 
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Who pays you when you are trading currency with traderush,forex.etc?

Postby cormack31 » Mon Apr 15, 2013 11:33 am

There are two main types of brokers: Dealing Desks (DD) and No Dealing Desks (NDD). Dealing Desk brokers are also called Market Makers, while No Dealing Desks can be further subdivided into Straight Through Processing (STP) and Electronic Communication Network + Straight Through Processing (ECN+STP).

Market Maker
Forex brokers that operate through Dealing Desk (DD) brokers make money through spreads and by trading against their clients. Also called market makers, Dealing Desk brokers literally create a market and artificial forex exchange rates for their clients. While you may think that there is a conflict of interest, there really isn't. Market makers provide both a sell and buy quote, which implies that they are indifferent to the decision of the trader.
Since market makers control prices, it also follows that there is very little risk for them to set FIXED spreads (you will understand why this is so better later). Also, clients of dealing desk brokers do not see the real interbank market rates. Don't be scared though, the competition among brokers is so stiff that the rates offered by Dealing Desks brokers are close, if not the same, to the interbank rate.

STP broker
Some brokers claim that they are true ECN brokers, but in reality, they merely have a Straight Through Processing system.
Forex brokers that have an STP system route the orders of their clients directly to their liquidity providers who have access to the interbank market. NDD STP brokers usually have many liquidity providers, with each provider quoting its own bid and ask price.
So when you decide to buy 100,000 units of EUR/USD at 1.3002, your order is sent through your broker and then routed to either Liquidity Provider A or B.
If your order is acknowledged, Liquidity Provider A or B will have a short position of 100,000 units of EUR/USD 1.3001, and you will have a long position of 100,000 units of EUR/USD at 1.3002. Your broker will earn 1 pip in revenue.
This changing bid/ask quote is also the reason why most STP type brokers have variable spreads. If the spreads of their liquidity providers widen, they have no choice but to widen their spreads too. While some STP brokers do offer fixed spreads, most have VARIABLE spreads.

ECN Broker
True ECN brokers, on the other hand, allow the orders of their clients to interact with the orders of other participants in the ECN.
Participants could be banks, retail traders, hedge funds, and even other brokers. In essence, participants trade against each other by offering their best bid and ask prices.
ECNs also allow their clients to see the "Depth of Market." Depth of Market displays where the buy and sell orders of other market participants are. Because of the nature ECN, it is very difficult to slap on a fixed mark-up so ECN brokers usually get compensated through a small COMMISSION.

But Binary Options is different with forex trading, it's a gambling method between host and player.
cormack31
 
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Re: Who pays you when you are trading currency with traderus

Postby setkewi » Fri Apr 19, 2013 12:26 pm

Forex trading is business not gambling. Most of the people invest money in forex because they think that forex is gambling and they lose their money at the end. Forex trading beneficial for those who have good knowledge and experience. Traders should follow market trend and analysis the technical position of forex market.
setkewi
 
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