What does it mean to take the other side of a trade?

Whereas market makers profit from the bid-ask spreads of the securities they hold in inventory, contra brokers are simply the opposing party to a given broker order. In taking the opposite side of a trade, they might be trading on behalf of a client, or they might be trading for their own proprietary accounts.

Why did my broker close my trade?

Some guesses: 1) your stop loss wasn’t where you thought and was simply hit by price, 2) you had a pending order going the other way and your broker doesn’t support hedging, 3) your position size was too large for your small account size, causing your available margin to reach $0, 4) there was increased volatility due …

What is a dark pool trade?

A dark pool is a privately organized financial forum or exchange for trading securities. Dark pools are a type of alternative trading system (ATS) that give certain investors the opportunity to place large orders and make trades without publicly revealing their intentions during the search for a buyer or seller.

What is the difference between an ECN and an exchange?

Exchanges govern themselves, to some degree, with their own regulatory arms; ECNs are regulated both by the SEC and by a national securities association (to which any registered broker-dealer is required to belong). To start an ECN, a broker-dealer needs to devise a set of rules for matching up buyers and sellers.

Do brokers take the other side of trades?

Technically speaking, a broker can’t take the other side of your trade. By definition, a pure broker is an entity that simply connects buyers and sellers. It’s like match making. Ex) A real estate broker simply matches buyers and sellers of properties.

Can brokers take positions?

When it comes to B Book brokers, they will be a bit pickier when it comes to choosing what position of their own clients they want to offset. In other words, they might take a directional position and may actively trade against their clients.

Can a broker close your account?

Yes. The broker can even close your position without calling you. Most brokers would prefer to keep you as a client and work with you, but the brokers have an even greater preference to not lose money due to the margin loan not being repaid.

Can a broker close your trade?

If your Margin Level is at or below the Stop Out Level, the broker will close any or all of your open positions as quickly as possible in order to protect you from possibly incurring further losses. This act of closing your positions is called a Stop Out. Keep in mind that a Stop Out is not discretionary.

How do I access dark pool trades?

These types of prints or trades are the most important types of trades. Once you are on the platform simply click the BLOCKS section to reveal the the Dark Pool Scanner and start seeing trades.

How do you get free dark pool trades?

The Financial Industry Regulatory announced Monday it providing free public access to data on weeklytrades of individual stocks, exchange traded funds and other equities on each of the dark pools and other alternative trading systems at https://ats.finra.org.

Who are ECN brokers?

ECN brokers are non-dealing desk brokers, meaning that they do not pass on order flow to market makers. Instead, they match participants in a trade electronically and pass the orders to liquidity providers. An ECN broker facilitates trades for interested investors across the ECN.

How do ECN brokers make money?

In return for executing buy or sell orders, the forex broker will charge a commission per trade or a spread. That is how forex brokers make their money. The difference between the bid and ask price is the broker’s spread. A broker could also charge both a commission and a spread on a trade.

Why do brokers who trade against their traders have an advantage?

That’s right, most of us retail traders have a pretty rough track record. That means that brokers who trade against their traders have a massive statistical advantage. Here’s another massive advantage: B-Book brokers don’t have to give themselves a margin call.

Is your broker running a trading book Against You?

Example 1. Your broker is running a trading book against you: You go long of EUR/USD and the firm takes the opposite side of your position rather than hedging it. If on closing the trade you are up £1,000, your broker will have lost the same amount of money.

What happens when you open an FX position with a broker?

This means that when you open an FX position with them they can take the opposite side of your trade and your position will not be traded in the market. If your position makes money, the broker will be out of pocket, if you lose money your broker will make a profit of the same amount as your loss.

What happens if you close the same trade too many times?

If on closing the trade you are up £1,000, your broker will have lost the same amount of money. Do this too many times and your broker will start to manually hedge every single order you do which could mean re-quotes, execution delays and wider spreads.