Market Maker & ECN Broker

In stock trading, brokers act as intermediaries that connect with a market trader. Stock exchange regulations that require traders can only sell or buy shares through a broker's hand where it is done so easily exchange authority in conducting surveillance.

Stock broker will make a purchase or sale on the stock exchange in accordance with the prices that occurred at that time. Never had a stock broker, so the purchase or sale is made between the client in a different broker or brokers. It never occurred a client to buy shares from a broker, because the broker is acting as an intermediary only and not a stock trader.

Unlike in the forex, broker divided into 2 types, namely:
- Dealing Desk broker or also known as Market Maker Broker
- ECN (Electronic Communications Network) brokers

Brokers

Market Maker broker is a broker that is currently the most widely encountered. They are not intermediaries like stock brokers, but act as a seller or buyer.

A simple example of such an easily understood or Bank Money Changer. You can exchange foreign currency amount to anything as you wish at the Money Changer or Bank but with the rate they've set yourself. You can not not determine its own exchange rate?

Try occasionally traveled to several Money Changer or the Bank to exchange Euro to U.S. Dollar exchange rate they charge of course vary. Though every day the official reference rate set by Bank Indonesia, but still there is a difference between the Money Changers or Banks. That difference is called spread, namely the difference between the selling and buying value.

For example, the official reference rate set for sale is a 9200 and bought the 9000. This means that if you want to sell your own property then the dollar appreciated only 9000, whereas if you do not have dollars and want to redeem the rupiah has become then have to pay 9200 dollars.

Although he has established an official reference exchange rate, but in practice or Bank Money Changer may apply its own spread, for example, selling for 9225 and bought by 8950. Therefore, applying the Bank Money Changer or spread of each there arose a difference, so if you try to get around to some or Bank Money Changer will then find that the exchange rate they charge is different. When in fact its just the same exchange rate because it has no official benchmark rate, to be different because the application of different spreads.

Such was the picture of simplicity Market Maker broker.

When used Market Maker broker then you actually buy or sell to the broker, not to the stock exchange. That is, if a profit then the actual profit is part of the money broker that you take. Conversely when experiencing loss, then the money belongs to you will go into the pockets of brokers.

When confused with the above explanation, just imagine Money Changer and not the forex broker. Because basically, Market Maker broker is really just another form of the Money Changer.

Suppose you come to the Money Changer to buy dollars at a price of 9200, of course, after you buy it you lose money dikantong 9200 and replaced with a sheet of one dollar. An hour later you come back to the Money Changer, it appeared that an increase in the exchange rate, for example to sell 9500 and buy 9300. Surely, if you belong to redeem a dollar, then it has obtained profits of 100, having previously purchased for 9200 but can now be sold at a price of 9300.

Whose money is used to pay for 100 benefit them? Of course, money Money Changer because you are trading and the place is paid.

Simply put, when used in Market Maker broker, then you actually do the trading against the broker. Because, you get the same benefits with the losses suffered by the broker.

Therefore, the broker will make efforts so that you do not get lucky, the "cripple" your account it will be more profitable for the broker:)

Here are various ways brokers can instantly create an account to "stump":)

1. Leverage
Many brokers who provide great leverage, there is a 1:500 even reached 1:1000. The beginners are generally very happy with this because quite a little capital, it will be able to buy lots in bulk. Of course, in the shadow of the head, how very efficient, with just a small capital but can generate huge profits. Whereas in the forex, profit is not easy to come by, which is easily available is the loss:)

If able to buy at once 20 lots with a capital of only $ 10,000, then the loss of 50 pips alone will be able to wipe out capital. Let's count together, 50 pips on the standard account is equal to USD 500 per 1 lot. Multiply $ 500 by 20 lots, now equal to $ 10,000 instead? Just one transaction only with the loss of 50 pips, then the entire capital money will move into the pockets of brokers:)

2. Minimum Deposit
Have you ever wondered why the brokers vying to minimize deposit to open account and not raise it?

Because the brokers understand, if necessary to open an account must deposit a minimum of USD 10,000, of course, not many can afford. Deposit is therefore minimized so that many are interested.

Not to mention the added lure, if you make a deposit of U.S. $ 100 it will be the added bonus of U.S. $ 30. Well, who is not interested in the bonus?

Once the deposit is received by a broker, then opened a live account with leverage 1:500. Imagine how good his broker's, it's been given a bonus of U.S. $ 30 is still coupled with a very high leverage is given. Well, it's someone you really trust a very bona fide broker.

Though well aware that the broker failed percentage is 95%, only 5% are able to qualify. Easy to guess what happens next is not it?

Small capital with high leverage is a deadly poison instantly. It does not matter to give a bonus of U.S. $ 30 or even U.S. $ 3,000 in advance, yet the broker a matter of time for U.S. $ 30 is returned to the pocket. Not to mention later still added U.S. $ 100 from your capital money that disappeared because of a loss:)

Brokers actually only lend to you U.S. $ 30 is. It initially seemed like a given free to you, but the percentage of failures in forex which is 95%, surely only a matter of time that money back into the pockets of brokers.

3. Slippage
Slippage is the difference in price that can be tolerated. Suppose you want to buy entry, of course, after the mouse-click order entry and then finally get to the broker server takes time. Due to the lag time, the price has changed, no longer the same as when you click the mouse.

Suppose you set at 3 pips slippage, if the price difference is not more than 3 pips, then the entry buy will be executed. However, when the difference in price is more than 3 pips, then there is requotes and you must click the mouse again to repeat the entry.

Slippage used brokers not to obstruct the entry, but to deter exit. By blocking the exit, then the loss position will experience a greater loss or profit position to have less income, due to delayed exit that position because it is difficult to be closed.

But this slippage problem arises only when not in use stop losses, take profits, or a trailing stop. However, it does not mean the use of stop losses and take profit is not problem free, this also can be utilized by the broker.

4. No Connection
This will happen many times when you can profit in large numbers so that brokers felt the need to monitor trading that you do. Ways in which the broker, at the time of obtaining profit the Metatrader trading loss made the connection alias when the connection is lost internet connection is fine, just missing the connection in Metatrader.

Due to no connection, then you can not close the position being profit. This will give time to the broker. Keep in mind, the market is always changing direction so that the profit that you earn is no longer much as before or worse, profits turned into losses. Now, if this is already happening then the connection will be activated again by Metatrader brokers. After all, if you complain the broker will stay with lightly replied "we have to check and everything is fine, maybe your computer is problematic". It is difficult to prove, is not it?

No connection is most common at high impact news. Do not expect to stop losses that have been installed will work, because it never experienced themselves.

Stop losses just did not work so the loss originally been limited to only 30 pips only, eventually to 100 pip stop losses while the line remains at its original position. At high-impact news, the price will move fast and by the accidental broker can not perform entry or exit. If not sure, please just try it for yourself, but try on a live account because brokers subterfuge is most prevalent in live and not in the demo.

5. Stop Loss Hunting
Spread is a very powerful weapon for the broker. Seldom pay attention to changes in spreads become very high in just 1 or 2 seconds, completely undetectable.

Spread is a deduction from profit and loss enhancer vice versa. For example in a loss position with a 17 pip stop loss 20 pips, the broker simply add just 3 pips on the spread for 1 second. Consequently, and triggered stop losses you suffer direct loss.

Or currently in position 27 pips profit, just wait a little longer to reach the target take profit 30 pips. Broker living increases 3 pip spreads, then the original 27 pip profit will automatically drop to 24 pip spread is due to a sudden increase. In this way, then take profit line untouched and give time to market changes so the profit decline.

Therefore, never assume that the broker is your best friend. They are actually wolves in sheep's clothing, especially the Market Maker broker. They have the interests of money capital, the more value then the loss will be more profitable for them.

Brokerage firm is built on the fact that 95% will fail in forex trading. Therefore, if you have a firm Market Maker broker and want to be successful it must be arranged so that the client experienced loss, provided that any legal way. Above methods are legal means in the forex world. Everything went very fast so it is difficult to prove.

This paper once answered my question all along, why there is a very aggressive broker to seduce the people who do not understand to trade forex with the promise of heaven as if it could be rich easily. Apparently the answer to the above, namely how to transfer money as rapidly as possible into the pockets of employers to deposit brokers. Legal way is to make the client as if losing forex making it difficult to prosecute because of course the initial contract has been mentioned 'losses will be fully borne by the client ".

In fact, without any diakal-outsmart, forex trading has been very difficult, especially if there is a trick plus in it, the sooner it disappears deposit:)

The lessons can be drawn from this paper, never entered into the world of forex with real money when capital is still not understood. The money you've earned with difficulty will soon disappear in an instant the eyes. Learn and practice first on a demo, then new to the forex world when it's actually really confident and ready.

The second type is a forex broker ECN brokers, who now began to emerge to replace Market Maker broker. ECN broker like stock brokers, they are only acting as an intermediary that connects traders with dozens of major banks. ECN broker has no interest to deposit your capital, because they fully earn money from the spreads obtained.

ECN brokers are slowly becoming popular as more and more traders who finally got it bad practice to do Market Maker broker. In addition, ECN brokers also provide a spread is much smaller, so increasingly cost-efficient trading and profits increased. Unfortunately, ECN brokers are still not many. Plus, it is still rare that supports Metatrader and required a large initial deposit to open an account. Understand it, because the main income comes only from the spread, then the deposit is required to keep trading with large lots.

Keep in mind too, the broker who claimed himself as the ECN broker is based on a written explanation on their website. Well, how do I prove that they are truly ECN brokers that will be profitable trading that we do. Um, I also do not know .... :)

Therefore, the test was made comparing the brokers: Comparing Brokers

Hopefully with these benchmarking trials, it is known that a good broker.