What will my broker do if I earn stable money?

Many people who are potentially interested in trading and investing in financial markets are captivated by delusions that it is impossible to receive a stable income on Forex, that brokers simply do not let their traders make money and profit from trusting clients. This stereotype is constantly reinforced by the yelling of “deceived financial tycoons” who, when they came to the market, started trading right on the real account, without any system, and lost all the money. Naturally, 99% of such “traders” blame the broker about everything, and Forex seems like a huge scam.

However, in practice, everything is not so simple.

Is the broker interested in the financial success of his traders?

In fact, everything depends on the broker. If you look at the market in a simplified way, then all brokers can be divided into two categories: ECN (STP) brokers, which deduce transactions of clients to interbank, and “kitchens”, where the trade is conducted inside the company, and the trader at the best deals with other customers , and at worst – it trades against the company itself.

With ECN brokers everything is clear – it is beneficial for them to make as many trades as possible to earn on commissions, while a trader who loses all money will not be able to conclude deals. Therefore, it is advantageous for them if the client trades at least not at a loss.

With “kitchens”, in fact, everything is also not so bad: there are many such brokers who work in the market for 10 years, and were not seen in the apparent deception and didn‘t make the customers lose money. When a novice trader constantly makes mistakes, he will just lose money on his own, he doesn‘t need help in that. And, on Forex, most people make mistakes.

The ratio of “kitchens” to traders who trade profitably is somewhat more complicated. Large companies may close their eyes to the stable but small earnings of a client and allow him to withdraw his money, after all, reputation is more important. Moreover – this can make a good PR and attract hundreds of newcomers, who eventually lose much more money.

But if the company understands that one of its clients is not only stable trading in plus but also constantly increases volumes, taking more and more out of the brokerage pocket – the broker starts to apply some measures. And in most cases, the broker deprives the client of all of his funds and blocks access to the platform, without breaking the law. To the question of how the broker does it, we will return a bit later, but for now, it is worth paying attention to the most popular ways of obtaining stable earnings on Forex.

How get a stable income on Forex?

Traders who earn on forex can be divided into two categories. The first is experienced traders who, of course, have a strategy (or, more precisely, a set of certain rules), but decisions are made based on their own experience, and sometimes even on intuition. Such professionals do not close every month with profit, and they can fail for a long time, but experience and professionalism allow them to get out of the hole, again and again, compensate for all losses and again go into profit.

Such traders tend to trade in large volumes, so they immediately go to ECN-brokers, without risking to mess with the “kitchens”. As a result, the broker stably receives his commission, and the trader is confident that he will not be deprived of honestly earned profits.

The second category of earning traders are algo-traders, EA users and all those who have a profitable trading system and are able to follow its rules clearly. In this case, the trader does not need to be failed by the stockbroker – it is enough to understand the fundamentals of the market and be able to control his emotions. The people who earned by forex robots do not have exchange experience but are versed in programming and calculating probabilities. Such specialists can write a robot based on the analysis of the market, which will bring a stable profit in certain conditions until the market evolves and the former initial data loses relevance.

But even before the market changes, most automatic trading systems have one problem: they require instant execution of orders. ECN-broker cannot provide such conditions – it allows a trader to conclude a deal only when he finds a counterparty for him. And in force majeure situations (for example, when trading on news, which counts for most of such systems), there are serious delays in performance, as well as slippage, when the transaction opens at a price for a couple of dozen pips above/below the expected.

For more information about this, see How Forex orders are executed.

That is why most algo-traders have to apply for the services of “kitchens”, since only they can provide instant execution of orders. And the broker, having noticed such an uncomfortable client, begins to look for ways to make him lose money with minimal risk for his reputation.

How “kitchen”-brokers legally take away the money of successful customers

It should be understood that the “kitchen” broker, especially working in the market not for the first year, in advance calculates the probability of the appearance of traders who in one way or another will be able to reach a permanent income and take measures against them.

The easiest way to protect yourself from excessively successful customers is to insert a few small and seemingly innocuous points in the client agreement. This can be a time-limited transaction (which is critical for scalpers), a maximum profit limit in the transaction, or a maximum withdrawal amount. If the trader even accidentally fixes a larger profit than stipulated in the agreement, he can be formally recognized as an infringer and refuse further service by freezing accounts (that is, taking out the remaining money on the deposit).

There are solutions even easier – to put a point providing the right of the broker to refuse the client in the provision of further services at any time without explaining the reasons. It’s ridiculous, but a trader accepting such conditions fixes the right for the broker to simply take his deposit, without having made a single transaction.

Of course, there is also a reputation factor, and in most cases, it is even more serious than the legality of the broker’s actions (most of them still have an offshore registration). A large company will not steal money from clients in an impudent way, because it threatens much more losses because newcomers will prefer competitors with a better reputation.

That is why before choosing a broker you need not only carefully (point by point) read the client agreement with all the additions, but also to study the reviews about this company on the Internet. Sometimes, it can be hard to see the real situation because of a big number of paid reviews of the same company and black PR of rivals or just offended losers who easily blacken even an honest company’s reputation, just not to recognize their own errors.

One of the independent resources where you can read feedback about brokers is this: http://www.forexpeacearmy.com/

Some nuances of cooperation with forex brokers

In addition to “kitchens” and ECN-companies, there are brokers working on a hybrid basis. This means that they issue large transactions to the interbank, and the orders made by a fractional lot are traded within the company. Brokers do this in order not to refuse to provide services to small customers, who can subsequently become serious investors. However, it is not advisable to sent transactions to the interbank of 0.01 lot, so the broker performs them independently.

In practice, this is fraught with the following situations: the client’s transactions are executed instantly and at the declared price, while he trades in a small lot. If a trader is system trading and his deposit grows – he begins to increase volumes. As soon as the volume of transactions reaches 1 lot, orders are going to the interbank market, there are delays in performance and slippage. The trader starts to think that the broker intentionally interferes him, while he only brings him to the real interbank market.

More details about this we wrote in the article How the Forex market is arranged.

However, regardless of the motivation of the company, for a system trader, such a scenario is unacceptable. Therefore, before starting cooperation with the broker, it is necessary to clarify all the nuances of execution. If the trader decides to cooperate with such a company, you need to limit the volume of transactions.

How not to become a victim of scammers

Now that the Forex market is gaining popularity every year, various organizations that are directly or indirectly fraudulent towards customers come to the market. It may be the persuasion to open an account for a large amount, take a loan to replenish the deposit, or simply refuse to withdraw profit.

In order not to fall into such a trap, you need to exercise the utmost care and not cooperate with unverified companies. Your choice of a broker should be done on the basis of his own research and conclusions. If a representative of an unknown company calls you and suggests opening an account, promising huge profits, it is better to refrain from such cooperation – solid brokers do not attract customers with banal cold calls.

If it so happens that you have already become a client of a dubious organization (from the category of “offering a job” and then persuading you to take a loan to open an account), and you have problems with withdrawing funds, you need to immediately begin to take decisive action. The simplest option is to write an application to the police. In 99% of cases, the money will be returned within a few hours. The application can then be withdrawn.


In order to avoid such problems in principle with your broker, it is recommended that you simply cooperate with trusted ECN-companies, with whom the client is not guaranteed a conflict of interest.

If the entire success of a trader depends on the instant execution of orders to within an item, you will have to do research to find the most loyal “kitchen”, and then constantly protect the profit from your broker with regular withdrawings. And just in case, it’s better to have a couple of spare options.

Regards, Michael