6.2 Market maker brokers pretending to be ECN brokers Video Lecture | Forex: Learn and Master Trading (English) - Business Basics

okay welcome back to Catholics forex
trading calm now in this video we're
going to stay with the subject that we
discussed in a previous video but we're
going to focus more on how market makers
can fool traders who haven't done the
research into thinking that they're in
an ECM broker so realistically we're
going to discuss how some market makers
actually pretend to be ECM brokers and
generally tend to rip their clients off
now if you don't know the difference
between market makers and EC and brokers
and I will strongly advise that you
watch the video previous to this because
we discussed this in those in that video
in a lot more detail but in a nutshell a
market maker broker will receive their
prices from the interbank market just
like any other broker in the world but
what they will do is manipulate market
conditions in their favor through their
dealing desk which will have at the top
here okay so you're the traitor here on
the left hand side and you're trading
and you're being really successful now
in eyes of the market maker broker
you're costing their money so every time
that you trade especially if you trade
successfully you're putting your broker
at risk so the way that they manage that
risk is by having a dealing desk there
can be either manned by traders so so
it's ran manually or it can be ran
automatically through automation through
various complicated algorithms or a
piece of trading software called the
virtual dealer plugin now it's within
their interest that you lose so if
you're putting your broker at risk they
will make sure that you lose by trading
against you through their dealing desk
okay so if you put them at too much risk
the market making process will take
place to make sure that you are going to
lose because they have access to your
account so it's this collaboration with
the dealing desk there's a given market
makers a bad name because traders like
you here on the left hand side cannot
trade successfully and they're not
provided with the fair trading
conditions the ECM broker is slightly
different so they will still receive
their prices from the interbank market
but they won't manipulate the trading
condition
so for example they won't spike the
market they won't provide you with rico
outs they won't not allow you to trade
all they do is provide you with true
market conditions but in order for them
to make a profit they need to mark up
the price so what they will receive for
example is a one pip spread for the euro
USD currency pair from the interbank
market which you will see in your
trading platform as three pips so
basically they will make two pips profit
every time that you trade and they will
make this profit fairly they have no
deal in desk and absolutely no desire to
trade against you now every broker needs
a bridge and all this is is a connection
between the broker and their liquidity
providers or other third parties such as
large banks or large financial
institutions now the reason why would
they need this connection or why they
need this bridge is because it is the
liquidity providers or other third
parties that provide the liquidity to
the broker in order for the broker to be
able to put up the risk in the market so
basically these guys enable the broker
to trade and it is this bridge that's
required in order for the liquidity
providers and other third parties to
pass that liquidity through to the
broker so if you're using an MT for O&M
t5 broker the chances are that your
broker is most likely to use the Boston
Technologies bridge which is a company
based out of the US but obviously this
can vary from broker to broker now the
way in which market makers fool people
into thinking that they are an ECM
broker is by providing the ability to
trade against you to their liquidity
providers or other third parties so for
example they will say that we have no
deal in there so we are an ECM broker
that is not true okay just because they
have no dealing desk does not mean that
they are an ECM broker all they do in
this scenario is provide the ability to
manipulate the market to their liquidity
providers and other third parties so the
more risk that you put your broker under
ie the more successful you are the more
risk or the more trading against you
will be the
by the liquidity providers or other
third parties so all of the brokers risk
is now being managed by these guys so
all the doing is playing with words here
they will still not provide you with
true market conditions all they will do
here is outsource their cheating
strategies to their liquidity providers
and the other third parties in order to
escape from being called a market maker
because nowadays being called a market
maker it's quite bad and you late like
that you are less likely to generate a
large customer base if you are a market
maker because more and more traders are
now realizing that market makers
historically tend to be quite bad
brokers so just be a bit more vigilant
and ask a lot more questions when you're
choosing a broker because the reality is
if you go from one broker to the other
and you end up with a know dealing best
broker that's pretending to be an ECM
broker nothing's changed
you know it's you're the person that has
to trade or use this broker and you will
get no benefit of H of true market
conditions because you will still be
using the same type of broker that will
just have another name now what we've
done to make it easier for you is
provide a list on our website of
approved forex brokers so if you go to
our website capex forex trading comm and
simply click this forex brokers tab here
you will see a list of various forex
brokers that we've approved now each one
of those forex brokers has a link in the
table to open a live account or open a
demo Kowt depending on which stage
you're at so have a look scroll down
we're constantly updating this table and
hopefully you will find a broker that's
more suitable for you so that concludes
this lesson all the links that you need
will be placed underneath this video but
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next video thanks