Newbies Broker Questions

[Alfonzo]

Hi all,

Been trading on a demo account for a couple of weeks with FAP Turbo and getting some good results with the scalper. Have applied for a live account with ODL, but have a few 'newbie' questions,
Are the brokers like a bookmakers, ie if we win they lose and vice-versa, or do they simply gain from the commission on each trade, ie the spread?
I've seen a few posts about some brokers making it difficult to withdraw funds, is this a common problem or isolated incident?
The stealth mode in Turbo is there to prevent some unscrulpulous brokers 'tracking' trades I believe (sorry if the terminology's not correct), but I'm not sure what these traders are actually doing :rolleyes:, and again is it prevalent or just an isolated incident?

Thanks in advance for any help :)

[dcrowley06]

Brokers are not your friend. :) They are more like that guy your dad used to have you call "Uncle Charlie" but you always noticed he was handing Uncle Charlie lots of thick envelopes and talking about some ponies. You always wished he would buy you a pony, but after all the talk about ponies, he never ended up owning one. :)

Brokers hate to give out money. They have to maintain so much money in order to offer the leverage they have. They ultimately are the lenders of last resort. ... look it up on wikipedia ... the term loan shark will be in there. :)

And the stealth mode is in there because some brokers have a dealing desk where if they see you constantly going in with stop loss and take profits of small amounts they know you are scalping and they will raise their spread on you.

But if you win, they don't necessarily lose, they still get paid off the spread, but the higher the leverage they offer, the more risk they are doing on their end.

[Alfonzo]

Thanks DC. Why are the brokers so averse to scalping if lots of small trades will surely gain them more commission than traders who go for the longer term trades?
Could you also clarify that when we win :) it is the actual brokers money we are winning? If a trader becomes a regular winner :rolleyes: do they try to make life more difficult?

[Harre]

Brokers are not losers in case you won. they generate income by the way of spreads they charged that is why when a traders joins ...

I wish this was true... A "real" broker would work this way. In reality, us small time traders buy and sell too little of the currency for the broker to be able to connect us straight to the "market". Instead they need to buy and sell currency themselves and then chunk it up into smaller pieces and sell to us. I.e. they become the market maker and they DO lose when we win.

There are solutions on the way whereby even smaller lots can be bought and sold over ECN type connection, see MB trading for more info, which would avoid these kind of problems. Until then it's still possible to make money if you're with the right broker. Just don't think they'll be your friend...