brokers against customers

Discussions about brokerage firms for futures, stocks and other tradeable instruments.
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BARLI
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brokers against customers

Post by BARLI » Tue Jul 04, 2006 9:27 pm

I was wondering if brokers firms do take the opposite trades of their customers. In the beginning of June I had an unfilled limit order ( a market traded above for 3 minutes) but it wasn't confirmed on my platform. I called my broker and through the back office he found out that I am actually entitled for a fill. it took 'em a day to "work this out" for me.

RedRock
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Post by RedRock » Wed Jul 05, 2006 2:04 am

If the floor broker had the order and market conditions were not fast it is his her trouble. If the broker did not deliver the order to the pit broker, its their responsibility. The firm would enter a position at the market adjust the price for your account and place the difference into the firms error account.

BARLI
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Post by BARLI » Wed Jul 05, 2006 3:14 pm

now its clear how they work in a back office, but do they really trade against the customers? I am biased its like in the days of Livermore that those bucket shops trades against their customers. Forex is at least 90%.

RedRock
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Post by RedRock » Wed Jul 05, 2006 8:36 pm

Fraud: CFTC

Pursuant to Section 4b(a)(iv), 7 U.S.C. § 6b(a)(iv) it is unlawful to bucket customer orders.

Here are the true life stories of some "distinguished gentlemen" who thought they might try...

http://www.cftc.gov:8765/query.html?col ... iso-8859-1





walker wrote:The book Mastering The Trade has this to say on page 27:
What happens is that traders are taking a four-point profit, a three-point profit, a six-point profit, and then on the last trade of the day it goes 30 points against them. So the traders have three winners out of four but they are down on the day. And it's kind of a typical thing that'll happen for traders who are in this frame of mind of not wanting to have to go through the pain of watching a profitable position go all the way back into the red.

Many brokers actually analyze their client's accounts in order to predict when they are going to blow up. This way they can hedge the traders before the losses actually occur, essentially trading against them. The number one indicator that a trading account is going to blow up is an increase in the frequency of trading combined with the increased use of market orders instead of limit orders. Firms that hedge see this situation develop, begin to lick their chops, and fade their customer's account, taking the opposite side of every trade.
There it is, written in a book, reviewed and edited by professionals at McGraw Hill publishing company. Does that guarantee it's 100% true? Ask Oprah Winfrey and James Frey.

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