I was just at the web site for Las Vegas casino Luxor. On it there was a stock photo of a woman in a convertable looking somewhat intoxicated with both of her arms raised high. Interestingly this is the exact same photo that GFT Forex had in ads it was running a few months ago in some magazines. Kind of funny when you consider that buckshop FX dealers like GFT Forex are basically legal casinos - for now. And I have nothing against forex - just bucketshops. Here is the link: http://www.luxor.com/contact/contact_directions.aspx
Anyone that has an ECN model. Interactive Brokers would be a good example. If you use GFT, FXCM, or any of the other bucketshops they are on the other side of all of your trades. The more money you lose the more money they make. Your failure is their success. It is an extraordinary conflict of interest.
thanks-- much appreciated can you elaborate on your bucketshop theory?... expalin how they are making money from the situation. This knowledge would be great for me and maybe other users... I ask because I always knew retail prop firms like gft were getting a great deal somehow, but I knew it was where I had to start with small capital available at that time. Even though there is a crappy spread, and a slight data lag; I have made a lot of money from trading with them. Does this make them loose money, in effect?
99% of retail forex traders lose money. Human beings are psychologically programmed to fail at trading. Bucketshops are not brokers they are taking the opposite side of your trade. They know 99% of the undercapitalized wanna be's that trade against them will lose. So the bucketshops are guaranteed to make a lot of money if they can just get enough people to come and trade. A broker just collects commissions. No big conflict of interest. Bucketshops make money by getting traders to fail. Fortunately for them it does not require much effort on their part since most fail anyway. Every penny you make is a penny the bucketshop loses and vice versa.
Forex brokers make money on the spread, they do not need anyone to fail to make a profit. If a trader fails he may stop trading or go to another broker, thus it is in their best interests that a trader succeeds. It is true that sometimes nefarious brokers will run stops etc. But this is not how it has to be. I think I was the first member to refer to forex brokers as bucketshops on ET and trade2win over 3 years ago. I did that because there were so many gullible traders who had no clue about the tricks that can happen. Now we have a new herd of sheep who think they know something if they can spout nonsense from the other extreme.
Roberk, They only make money on the spread for the trades they can match and not all trades can be matched ; to match all trades,there has to be exactly the same amount of size on both sides bid/ask at all times For the trades that can't be matched, they take the other side of the losing traders and the winners are sabotaged because those trades need to be offset in the interbank market otherwise the broker has to pay out of his own pocket. That's why they don't like scalpers because they don't have the time to offset.(How you can offset a mini- contract in the interbank market ? you CAN'T) Matching works on automatic,taking the other side of losing traders also. the hardest clients are the winning scalpers and least amount of profit their spread minus interbank spread (if they offset at all) But why would they match losing traders if they can make more by ta- king the other side ?? The biggest money is made from taking the other side of the 95 % of losers, second place from the matching(the spread) and third from the winning traders (spread minus interbank spread if they offset at least) They have to make sure that the money those 5 % winners make is coming from the interbank market and not out of their own pocket if they cannot offset. So there is indeed a HUGE conflict of interest !
If you owned a casino, and 95% of the people that came to gamble in your casino lost money, would you hedge that? Only if you are a fool.
Traveler: for some reason yesterday in the mail I received the latest 'Trader Monthly'... ...the 2nd funniest part is that I don't remember ever subscribing to this, and it is addressed to me, 'Trader' (which I definately would not have filled in on an address form), at my address, and says I get a free subscription. ...but the funniest part... what is right in the middle? the GFT ad with this exact stock image you posted a few days ago! At least the girl is sexy. ...or maybe she just seemed that way to me after staying up half the night to make a net of over 60% due to my bucket-shop's high margin nice call on that add- thanks for all the help too
If it is not too proprietary what if anything can you tell us about the methodology you are using to beat the odds in the forex game?