Monday, December 21, 2009

Do forex market makers and clients have a conflict of interest?

Market makers are not intermediaries, portfolio managers, or advisors, who
represent customers (while earning commission). Instead, they buy and sell
currencies to the customer, in this case the trader. By definition, the market
maker always provides a two-sided quote (the sell and the buy price), and
thus is indifferent in regards to the intention of the trader. Banks do that, as
do merchants in the markets, who both buy from, and sell to, their
customers. The relationship between the trader (the customer) and the
market maker (the bank; the trading platform; Easy-Forexw; etc.) is simply
based on the fundamental market forces of supply and demand.

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