Is it a fair business ?

[activefxtrader]

My question is about forex mini accounts and possible scam business held by forex brokers. I need to know how the forex trading held on Gain Capital or Refcofx for mini accounts ? Do they lost when we win ? In other words do they apply offshore for our mini-accounts ? Or all forex mini accounts are fair enough and they also win while we are winning ? Please forgive my pessimistic or paranoid question but I feel that many new traders or professionals have also this kind of fear while we already experiencing "stop hunting cases" in the industry.

[MrRaidier]

Broker's always win, period. The spread is their 100% locked in profit, so no, in general no scam.

[PittsburghFX]

Having worked for FXCM and RefcoFX I have lived on the inside. There is no scam invloved. The fact of the matter is that in this country you have the freedom of stupidity. You have the freedom to buy and sell at your choice. The brokers only make the spread. Most if not all offset positions.

Just because most people think they can afford a mini account, most can't. Which means they are trading with already committed funds.

1 888 50 FOREX, double check me if you like. I have lived on the inside. I have seen Interbanks trade, move prices, move markets, I have had bad days as the guy on the other end of the phone calls. 99% of all the clients that yelled at me, called a few hours later to apologize. I don't care what you thought you bought or sold, the only thing that matters is what you actually did. IF you trade too much money you will get margin called. If you really don't know what your doing you will blow up in a matter of months.

You have the freedom to manage your own account, most people don't know how and they will not invest in resources that will teach you how to trade. IF you don't know what to do, and you will not invest in resources to help or teach you, then you have no business trading.

Kindest Regards,
Brian Summy
Former FXCM and RefcoFX employee
www.pittsburghFX.com

[activefxtrader]

Actually my question was about real mini account less than $500 funds. I need to know that do they open ticket at interbank when we open 0.1 lot (10,000) at their trading platform ? I was told one of the FXCM chat person that they apply collecting small lots procedure which means they collect small positions until they have larger lots and then they open a real position on interbank. In this matter, can we call this situtation as an offshore forex business like GCI applies ? Also in this scenario they will be happy when we lost all of our funds (because the all mini-account funds will be stay at their original place --- brokers bank --- and actually there will be no open tickets on interbank). Now two crital questions arise after this little analysis:

a- How are more profitable for their business for mini-forex accounts : Chronic losers or disciplined winners ?

b-If they like chronic losers, they will also hate scalp traders. Won't they ? In this scenario what is the best suggestion for forex mini-account holders ?

[autofx]

I don't see why they'd hate scalp traders. I don't think there's a higher percentage of profitable scalp traders versus other style traders -- probably scalpers do much worse, actually, since so many newbies are trying to scalp. Could be the brokers love the scalpers to death -- PittsburghFX could maybe answer that.

I think scalp traders provide important liquidity. I think we need them in the markets.

For me, expending that much effort for such small reward makes zero sense, but to each his own.

[PittsburghFX]

Okay, scalpers here it is, the truth. Your broker hates you, period. All brokers no matter who you trade with, hate you. All brokers hate scalpers and quick pickers. If you don't believe me, ask anyone on the forum about Dealer intervention.

The fact of the matter is that when trading mini lots, everything aggregates together. This may take anywhere from 20 seconds, to 5 minutes depending upon what clients are trading. If 80% of clients are Net Long Euros, then realistically there is not enough internal volume for any company no matter how big, which means the broker will have to go to the Interbanks to offset. Realistically, all brokers do not really want to use the Interbank, internal is the best. So when brokers go to the Interbank to offset their clients 80% net position, they then get what is called in the industry a "FU" price. I think you understand what I mean.

So lets say 2 minutes before NFP, clients are 80% long Euros, everything comes to whisper quiet before numbers, there is the broker with the hand in the cookie jar with a Huge Net position opposite to the clients. Most if not all offset that because the brokers job is to make the spread, holding that net position is way too risky for any broker to take on, unless they are themselves agreeing with their position from their own analysis.

Eur is trading at 1.2400 lets say, and the clients net average position is around 1.2395, the Interbank will let the broker offset at lets say a 30 pip range from that, so thats quoting 1.2425/1.2365 This is what is called a "FU" price. Which means it is not realistically offsettable unless you simply want to get rid of everything.

For pickers and scalpers you are not providing liquidity. Thats the market makers job, if anything you are using up liquidity because odds are 95% of everybody else is doing the same thing you are. Doesn't meant you or anyone else makes money at it, but "Crowds" tend to form for directions. Most times clients are wrong. If anyone had access, I would ask what is your clients net long or short and do the opposite.

Also, if for example the clients are right and 80% are correct then the brokers get killed holding the cookie jar, of course unless they offset at an "FU" price.

So when the market is gapping 20 pips at a time, scalpers and pickers get in and get out before the broker has time to either match you up or offset your position at the market price just making the spread. Do not scalp and do not pick. All brokers watch for that because they do lose. They simply do not have enough time to aggregate everything together, no one does.

I have had to talk to pickers for many days at a time. Automatic execution is a privlige, do not abuse it. If you think you found a really quick EASY way of making trades, then your broker will shut you down. I saw a guy made six figures in 15 seconds, the true market prices never ever traded there. Trade was revoked because what is too good to be true, always is. There is no secret of getting around this, unless you have been in my shoes, but that is something I would never tell. I won't slice my own throat!

[MickMason]

Getting taken off auto execution is no picnic, and it soon puts a stop to scalping and sniping at spikes! Dip your fingers in the marketmakers till and you'll lose 'em, they don't like it!

PittsburghFX, if it's not giving too much away, in what capacity were you working at FXCM?

Mick

[autofx]

Would be so curious to somehow find out how many successful
fx scalpers there are.

Guess not many if they get shut down as PittsburghFX claims.