Does the broker trade against you?

[ForexDude]

I know that some forex brokers take the other side of the trade. Is this also true for CFD providers?

Thanks

 

[rog1111]

Most of them will say that they don't do it because they hedge their positions, but in effect they are making a market against their clients collectively. If it suits their financial objectives to "adjust" their quotes a little from time to time, then they will. There's nothing in the rules that says they can't do it, so why assume that they won't ?

Safe trading

rog1111

 

[khi]

Most of them will say that they don't do it because they hedge their positions, but in effect they are making a market against their clients collectively. If it suits their financial objectives to "adjust" their quotes a little from time to time, then they will. There's nothing in the rules that says they can't do it, so why assume that they won't ?

Safe trading

rog1111

rog 111, you are right that some brokers do take on the positions and trade against their clients, but not if its a direct market access cfd, ie u trade at the best price of the underlying stocks and also u can work bids and offers on the sets orderbook. so in this case, prices are transparent and no hidden spreads

khi

 

[pboyles]

Yes, it can be. Brokers known as 'Market Makers' initially take the other side of their clients trades and can, if they want to hold on to the position and effectively bet against their clients.

However there are actually some advantages of trading with Market Makers too, but in my opinion not enough to out-weight the benefits of trading with a true level 2 DMA broker.

I have a short article on the two different CFD broker models here: CFD Providers

Thanks, we've been waiting 6 years for that. At least we have an answer now.