Quote:
Originally Posted by SteveBrown
Brokers don't like a trader to make high frequency trades with quick turnaround. That is, a trader who places many trades a day and closes each trade within a few minutes. That does not give the broker time to hedge the trades in the interbank market or to offset the trades against trades by other traders. However, if you are a successful trader who can win consistently on trades lasting hours or days, a good broker will have no problem with that. If you are really good, they will shadow your trades. That is, for every 100k lot you trade, they will take a 1000k position in the same direction, and close their trade when you do. Brokers like losers, but they love ace traders.
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Though I don't know what is involved exactly when it comes to the brokers hedging their postitions, I am pretty confident that for anything liquid, the time taken to effectively complete this can be measured in seconds at the most, more likely it's micro-seconds. So I have always had difficulty with this oft-repeated argument. The other one they use is that their servers are overwhelmed by the enormous number of orders - a rep. form one of these brokers (can't remember which..) cited this recently on TSD, also stating that traders' MT clients were able to load their servers with "questions" (requesting price info etc.) - he obviously was responding from a prepared script, formulated for the not-too-technical, 'cos when I pointed out how and why this was technically impossible with Metatrader, I was greeted with silence...
btw, I'm intrigued by your suggestion that brokers love ace-traders. From all the evidence I have read, the exact opposite is true. There have been a few posters her on TSD that apparently fit this category, and have given a list of the brokers that they were sequencially banned by for being too profitable. Of course, it would be easy to believe that about brokers that make their living from just the commissions (that are not taking the other side of your trade) but this rules out about 95% of MT brokers...