How do you know your real account isn't just a sim and your broker isnt just pocketing all your trades??
I think the original poster meant that since most traders lose, the broker simply can just play against the traders and not sending the trade to the exchange. So the loss stays with the broker instead of someone else. That is different than outright stealing the trader's money.
Ah, the old "bucket shop" scenario... would make some sense. Here is a definition: As defined by the U.S. Supreme Court a Bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in." It would certainly save a lot of time, money, paper, etc. LOL. Much like using Intrade, right? And, if things go against the "bucket shop" they just holler to the government to "bail them out" - pretty scary, eh? Don
A former citi BO guy started an FX dealer and did just that... Ran all accounts in sim and made millions. He eventually got greedy and began offering 5% monthly rates to account holders. He got busted a year later when redemptions exceeded his ability to repay. Circa 1993-95 IIRC.
It should be legal. I take the other side plus commissions. No mimimum. Max is how much cash I have on hand. Double your account and we close, you get paid.
Look at the time and sales. In the UK there are bucket shops (called Spread Betting firms) that are allowed to do this legally. Differentiate between winning and losing punters. Not very hard. Pocket all losing punter trades. Hedge winning punter trades. Licence to print money..
Learn to trade first, then worry about where the money is. Money will be there, provided you didn't blow it worrying about what will happen to it.
Here is the thing: As long as you are getting good, realistic fills and you are not overcharged for commission, it doesn't really matter. If you are losing money, you would lose it anyway, (and you are more valuable for your broker) if you are making money, why does it matter where it comes from? The problem arises when/if the broker messes with your fills just to give you a disadvantage against them. But without it, I don't see much of a difference...
Here is another one: If yuo trade through an exchange and get charged exchange fees then the broker commits a serious crime. Especially in the futures industry this is unlikely.