Retail Forex market: nuances and details.

Retail Forex market: nuances and details.

Retail Forex market: nuances and details.
John Dou - 21/02/2020



Retail Forex business can be as opaque as the market itself. Only a small part of private traders have an idea of how the transaction process goes, whether orders are placed on the market and many other subtleties for which there is not enough General knowledge. Today, Sharefounders will discuss common, non-Scam, models of functioning of retail Forex brokers, the basic terminology, as well as many things that brokers hide and do not want you to know about them.

Retail brokers are usually divided into several categories (models). In some cases, combinations of models are used to work with more whimsical clients. For example, there may be 70% of the B-model, 20% of the A-model, and 10% of the C-model within a single firm. Such terms and designations are used in the Forex industry, I did not invent anything new. Just focus your attention on these items, many do not know this.

Aggregation Of Liquidity.

Retail brokers will collect liquidity from a huge number of main areas and channels. Long ago, the only way out for a retail Forex broker was to establish a connection with a Bank or several banks and concentrate this liquidity on their platforms. The broker could choose delivery channels, essentially doing what market makers do today.

Liquidity aggregation is becoming more and more accessible today due to the expansion from among those who participate in the market (brokers, traders, funds). This allows brokers to be more flexible and expand their horizons, thereby providing even more favorable conditions for traders of all categories. Ultimately, the market is improving, becoming more transparent, and retail traders have more opportunities and freedom than ever.

Sharefounders will tell you how to understand that this is a Market Maker, not a Scam artist.

— Availability of requotes. In this ECN, you get the market price and either accept it or not.

— Many types of trading are prohibited, such as scalping, etc.

— Asymmetric slippage. This practice is illegal when the broker does not allow you to enter at the best price or the price inside the spread, so the slippage can only be for the worse.

— Lack of market depth. Trading volumes and the number of bids for a certain price must be available to the trader.

— Setting freeze levels. Freeze levels are the minimum distances for stop loss or take profit. For example, the freezing level is 10 points, which means that if the price approaches you take profit or stop loss by a distance of 10 points, you will not be able to delete or change the stop and profit levels, in other words, your orders are doomed to execution.

Sharefounders provided a list that is mainly focused around the «features» of market makers who have repeatedly discredited themselves with such things, which is why they received the stigma of a Scam.

Recommendations from Sharefounders on how not to get hooked on a Scam by a retail broker.

The first thing we pay attention to is the cost of the transaction. Take care of your money. Each small, seemingly insignificant amount accumulates over time into a rather impressive one.

Most people do the wrong thing when they ask brokers if they are trading against their client's positions. Usually, brokers avoid a direct response, starting to praise the NDD function, and then you become a victim due to lack of knowledge or as a result of an inflated transaction price. So be extremely careful.

If a regulatory agency is monitoring your broker, this does not mean that it has any problems.

What else should you learn from this article?

Beware of spreads such as fixed. They are simply useless. The broker will work against you as a Market maker or use the STP model, which will also only bring trouble.

There is no ideal platform, no matter who your broker is or what model they use — a market maker, STP, or ECN. You need to analyze it yourself and draw the appropriate conclusions.

Sharefounders cautions, be smart not to get caught in a Scam. Choosing a broker should not be a spontaneous decision or based on additional tools, signals, bonuses, or other such minor things, it all looks like a free dining room in a casino, you know what it is created for. It's your hard-earned money. Try to save them.


  • Chek: Sharefounders broker
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