Forex platform brokers trading against you
So the client is short and the market maker long at Don't forex platform brokers trading against you an account? That is why market makers take risk into their books - it is to open a window in which buyers and sellers can match off across time, allowing the market maker to capture spread as compensation for providing their service, and show a better rate than brokers.
The difficulty there is that, if they are acting exclusively as a broker and taking no risk, they need to pass the risk directly on to someone who will i. Client one buys back his short, earning two pips. Different parties can win to a trade, so long as they have different holding periods.
He would like to see another client show up or a passive hedging order fill as soon as possible after client one trades to neutralise his risk. Client forex platform brokers trading against you sells to the market maker, thinking the market goes down. But then he cannot profitably show the market rate - buying from his client at the market rate and then selling at the same rate doesn't create a sustainable business, one that can continue to add value to its clients.
Let's look a little more closely at the period between clients one and two trading. And so we come to the issue of horizon. So the risk generally ends up with a market maker anyway AND with an additional layer of cost. A market maker publishes a continuous two way rate, allowing clients to trade at the time of their choosing.
The purpose being to facilitate client's business and offer the best possible spreads - see our blog on why dealing direct with the market maker is the best option for trading FX - but some of our broker competitors have propagated the idea that market makers 'trade against you'. If the market goes up the market maker wins and the client loses, and vice versa. If there is anything that gives the 'trading against' nostrum its superficial appeal, it is this period where the market maker is forex platform brokers trading against you and the client is short.
It isn't to trade 'against' their clients. Client one buys back his short, earning two pips. Surely this is zero sum?