The Truth About Trading: How Institutions, Brokers & Prop Firms Profit Off Retail Traders
📍 Two Types of Brokers: Market Makers vs. ECN/STP Brokers
🔹 Market Makers (A-Book/B-Book Brokers)
These brokers don’t actually send your trades to the real market.
They take the other side of your trades, meaning when you lose, they win.
Many use dealing desks to manipulate price feeds and trigger stop losses.
Example: You buy EUR/USD at 1.1000, price spikes to 1.0990, stops you out—then reverses. That’s your broker playing games.
🔹 ECN/STP Brokers (True Market Access)
These brokers route your trades directly to the market.
They make money from spreads & commissions, not your losses.
They don’t manipulate prices because they aren’t taking the opposite side of your trade.
These are the brokers you want to use.
🚨 How Market Makers Manipulate Retail Traders
🚩 1. Stop Hunting (Forcing You Out of Trades Prematurely)
Brokers see where traders place stop losses.
They push price just enough to stop you out, then reverse the move.
Solution: Use wider stop losses or place stops in “hidden” areas (e.g., structure-based stops instead of round numbers).
🚩 2. Spread Manipulation (Making You Pay More Per Trade)
Brokers can increase spreads during volatile times to hit stop losses.
News events? Spreads can widen 10x.
Solution: Use brokers with low, stable spreads and avoid trading right before news events.
🚩 3. Slippage (Getting You in at a Worse Price)
You click buy at 1.1000, but the broker fills you at 1.1005.
That extra 5 pips? Pure profit for them.
Solution: Use limit orders instead of market orders when possible.
🚩 4. Slow Executions (Making Sure You Enter at the Worst Time)
You see a perfect setup, click buy, and get filled 1-2 seconds later at a worse price.
In fast-moving markets, this delay costs you money.
Solution: Choose brokers with fast execution speeds.
📍 How to Choose the Right Broker & Protect Yourself
✅ Look for Regulated Brokers
Regulated brokers must follow stricter rules and are less likely to scam traders.
Avoid offshore brokers with no oversight.
✅ Check If They Offer ECN/STP Accounts
True ECN/STP brokers don’t profit from your losses.
They provide better spreads and execution.
✅ Use a Broker With Low Spreads & Fair Commissions
Low spreads = cheaper trades.
Some brokers charge high commissions but have low spreads—that’s fine.
✅ Avoid Brokers That Offer Crazy Leverage
1:1000 leverage? That’s a red flag. They want you to over-leverage and blow your account.
Stick to 1:50 or 1:100 max.
📍 Common Scams & Red Flags to Watch For
🚩 “No Commission” Brokers
If they don’t charge commissions, they’re making money off you somewhere else (wider spreads, stop hunts, etc.).
🚩 Brokers That Offer Deposit Bonuses
If they give you “free money” to trade, they’ll find a way to take it back.
🚩 Unregulated Brokers in Sketchy Jurisdictions
If the broker is based in Cyprus, St. Vincent & Grenadines, or Seychelles, be careful—many scams operate there.
🔑 Key Takeaway:
Not all brokers are out to get you, but many are. If you’re using a market maker broker, you’re playing against the house. Choose an ECN/STP broker, avoid manipulation traps, and trade smart.