How do you know if your broker is trading against you?

[parthaab]

Spread betting firms may act as a market maker and run a trading book against their clients. This means that when you open an FX position with them they can take the opposite side of your trade and your position will not be traded in the market.

Alternatively, if you are a successful trader and make money on a regular basis the broker may manually hedge all of your orders in the market which means you must wait for a dealer to process and accept your order before your trade is confirmed. If the market moves in between the time it has taken the dealer to receive and process your order you may also receive a re-quote.

No Dealing Desk is a new type of execution technology that has removed the need for any manual interaction which means quicker execution and importantly no conflict of interest between the broker and client.

So far, it seems to be used only in FX trading. Is there any broker who uses NDD?

http://www.cityam.com/article/your-broker-trading-against-you


There are two types of No Dealing Desk brokers:
- Straight Through Processors (STP) - brokers who connect traders with the interbank market. They collect quotes from multiple sources and present the trader with the best bid and ask prices adding some pips as their commission.
- Electronic Communications Networks (ECN) – brokers that allow direct trading between all participants of their network. They do not alter the spreads and charge small commissions for each trade. The true ECN model eliminates conflict of interest that exists when brokers take the opposite side of the trade.

 

[buradithat]

I do not know if my broker is trading with me.

 

[parthaab]

I do not know if my broker is trading with me.

Brokers are unlikely to trade with you ( place similar orders as you did ), since they know that statistically MOST traders lose money.

Most traders do not know that their orders never reach the market place. Instead, the brokers trade against your trades ( 'market makers' ). And since most traders end up losing money, the brokers make that money.

IF you are one of the 5% who makes money, the brokers know they will lose money, and therefore will either manually hedge your trades ( which will take time to execute ), or discourage you from trading with them.

So for ALL scalping / intraday / swing traders, its a lose-lose situation , and no one seems to be aware of this.

In Fx, according to the link above, the NDD is a new software that are only used by a few brokers. I am trying to find out if anyone knows more about NDD and its use in CFD and spread betting in the UK.

 

[parthaab]

"the brokers trade against your trades", that is something new to me. So how to know about this???

Ask if they are 'market makers'. Most of them are, though they may not advertise it.

 

[Robbe]

The tricky part is that you yourself can't understand if your deals are being withdrawn on the market or if they stay "in the kitchen". All you have left to do is believe the broker and its honesty.

 

[wisefoolx]

What is the product ? Is it exchange traded ? If it is then you should be ok, if it isn't then it is some form of MM / SB jive despite all the new fandango terminology, NDD and STP and so on, a MM/ SB / bookie will always bet against you.

 

[foroom lluzers]

If you place a stop order , see how price moves to your stop level , after closing out your position price will move away fast.Other signs are re quotes , no fills and partial fills.