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Shabnam Mansoor

Registered: Oct 2011
Posts: 11

09-11-12 02:42 PM

How much control do they brokers have over the quotes that they give to their customers.

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1245

Registered: May 2012
Posts: 516

09-11-12 04:36 PM

Quote from Shabnam Mansoor:

How much control do they brokers have over the quotes that they give to their customers.

For FX, close to 100%. They can control spreads and size of the liquidity providers on their system.

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trader_phil

Registered: Oct 2011
Posts: 48

09-13-12 01:58 PM

how about prices? can they manipulate that? MM brokers excluded of course..

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1245

Registered: May 2012
Posts: 516

09-13-12 04:18 PM

Quote from trader_phil:

how about prices? can they manipulate that? MM brokers excluded of course..

The FX broker makes a deal with different liquidity providers. They then have two ways to make money. They can show you the BEST BID/OFFER in their system and then charge you a commission normally expressed per $100K. That's typical for institutional accounts called ELIGIBLE CONTRACT PARTICIPANT (ECP). For retail FX, it is more common to pay a wider spread. The broker will take the inside market and show you a higher offer and lower bid. The different between them is their profit.

Your question used the term "manipulate" which implies they are doing something wrong. This is where their Profit comes from. In return they offer you a platform to trade on and are responsible for all counter-party risk after the trade.

1245

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sanfo

Registered: Oct 2011
Posts: 31

09-18-12 02:42 PM

Quote from 1245:

The FX broker makes a deal with different liquidity providers. They then have two ways to make money. They can show you the BEST BID/OFFER in their system and then charge you a commission normally expressed per $100K. That's typical for institutional accounts called ELIGIBLE CONTRACT PARTICIPANT (ECP). For retail FX, it is more common to pay a wider spread. The broker will take the inside market and show you a higher offer and lower bid. The different between them is their profit.

Your question used the term "manipulate" which implies they are doing something wrong. This is where their Profit comes from. In return they offer you a platform to trade on and are responsible for all counter-party risk after the trade.

1245

that's why it's so difficult to find a good broker out there.

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trader_phil

Registered: Oct 2011
Posts: 48

09-18-12 03:34 PM

i see, its like they have the right to do so, but its like up to them if they will abuse it to earn extra from it, I hope i got it right, so it all falls on how honest a broker is.. there is so much i guess i still don't understand about how brokers really work thanks for sharing 1245

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