How your Forex Broker can Scam you || ECN or Dealing Desk ? || Anish Singh Thakur || BooomingBulls
Hello guys. My name is Anish Singh Thakur, and welcome to this very important video related to the Forex series. You want to trade in stock market, so you open an account in Zerodha. You think we'll trade in NSE. SEBI will regulize it.
There's no problem. It's very safe. But before trading in stock market, do you know that how many types of brokers are there, who manages them, the trade that you've selected where does it go and execute that trade? We hear very often that that dude, my stop loss did not even hit on the tradingview chart. But in Forex my stop loss did hit. So whose fault is this? My target was hit, but market gave pull back again. But here it's showing target wasn't hit it's showing loss. Mnay such types of smaller, and actually not small, I'll say big rather, people get to face such problems.
And does your money... if you are already trading, is your money safe? Because a millionnaire trader will think I have a 5 million dollar trading account, is that in cash? No, Your entire money is always will always remain with a broker. When you become successful in future, you get to know that dude, by giving some story, putting some blame my money is lost. So, what's the point. So before you start Forex trading, or even if you are doing Forex trading, I want you to watch this video, full video. You'll get a lot of insight as to how many types of brokers are there, and with what kind of broker should we work.
So I'll see you in the outro video. Hello guys, my name is Anish Singh Thakur, and welcome to this video. Well you already know the topic and everything, that this is regarding Forex.
And before we start doing Forex, which we are about to start, it's necessary for us to know some things about Forex firstly. Like exactly the most important part of Forex trading is our broker. Now, you already know what's our relation with the broker. We put our money in the broker's account, and then we trade. We win money, we lose money, whatever it is, their concern only should be their commission.
Nothing else, right? That's how it should be. That's what happens in the stock market because there is a central exchange there. Now to see the central exchange also, NSE, BSE, there is SEBI. So, it's a simple funda.
So there isn't a greater chance of fraud in that. Stock market is a very good place. I mean, we are already fed up with our own trading dude, it takes so much hard work for us to make our profit.
Why should we bear other tensions. But Forex market isn't like that. And moreover, in India especially Forex is already legally banned, you can't do that. No company sets up it's office it can't set it up there legally at a high level.
But there are many things happening. In order to understand all those things, today we guys are coming on this video. And I'll properly explain you here that, first of all, who are brokers, how many types are they.
The ones in India right now, both the types are operational in India. Now in what way and with whom can we invest our bigger fund. Small amount of fund like 10-15-20 thousand, 1 lakh, 2 lakhs is fine, but for 5 lakhs, 10 lakhs, 50 lakhs, 1 crore if we need to invest that much, can we do that. What kind of a company should it be where we can invest this fund, we'll have a discussion on all these topics. So let's start. Now we'll start the video.
I'll explain you about Forex brokers, okay? So let's start the video now. Just one minute. Okay. So we'll go ahead now from this iPad. Clear the page. Okay. So, let's start the video.
First of all let us understand how does the stock market work in India. Here is NSE. NSE connects Zerodha, UpStox, okay? And connected to this we have trader no.1
and trader no. 2. If I have to... If I want to buy something, then this will sell it to me It will coordinate in this manner and we will complete our transaction. This will charge me some amount of fees. And this will charge them some fees, and this connection keeps continuing.
There is an authority named SEBI which focuses on all these things, that no fraud or mistake occurs, and that no customer incurs loss by mistake, for example for this. But now what happens in Forex, something similar happens in Forex, but there is no central exchange. So how does this work. How does this work. So, basically, here big banks, big commercial companies, high net worth investors, and all the people, they trade currency, gold, or if I talk about commodities. We can even trade index in other countries.
We can trade a lot of instruments in Forex, through a good Forex broker. So let's talk now. What happens here basically is that, let me tell you now what happens here basically, the biggest... in place of exchange...
the num... for you... look, if you analyze me technically then maybe you may feel that no, you missed this here, you added this extra there. Yes. I... so that you are able to understand
I'm trying to explain you this way. Because you don't have to go and write any exam, we don't have to give CFA level 3 exams. We are concerned with our trading. We are not concerned with any bookish knowledge. I want to explain you exactly what you want to understand.
So let's start. In place of exchange here we will use liquidity provider. This is the biggest...
biggest thing here. What is a liquidity provider? This is a very big company who don't have that much time that they approach and open small accounts for traders. Their connection is with the brokers. Okay? And the broker's connection is with traders. As I told you up till now.
Their connection is with very big banks, with very big banks, with very big commercial companies, with very big traders, with very big dealing desks, Their connection is with many things. And this is how they provide buying-selling, buying-selling. This is what happens and should happen, a genuine funda basically, a story ahead of broker also. Now what happens, there are two types of brokers.
First type, the ones who used to prevail in old times, and basically even today you cannot tell, even in new trend, that is it a dealing desk broker, or is it an ECN plus STP broker. ECN stands for Electronic Communication Network, and STP stands for Straight Through Processing. If you don't understand some things in this video Google them, you'll find it easily. But I'll definitely explain. So, first of all let us understand who is an ECN broker.
ECN broker, or Straight Through Processing is such a broker who straight away processes your orders through electronic communication network. What do I mean by this? What I mean to say is, if you are a trader, okay, this is your broker. Let's say your broker is an ECN, STP broker. And this broker gives you EUROUSD, 1 pair EUROUSD, you want to go long, as in you want to buy, you want to short this. You buy. Okay? So the order reaches them.
They directly process your order. They didn't even see how big is your order, what's the volume, what you do, they have no interest in that. They aren't concerned. They directly forward your
positions to liquidity provider, and then they instantly match with some other trader no.2 Now, if you make money, he'll lose money. He will lose money. But if you... but if he makes money, you lose money. But whatever phenomena is occcuring in between, they are not concerned with that.
neither is liquidity provider concerned nor is your broker. There is no interest. They only are interested in their money. That is their commission which... I'll make the next video immediately in which I'll explain commission, kind of costs, swaps, spreads and commissions.
And there are some more fundas. I'll explain on Wednesday or weekend in the next video which will come very soon. Maybe it comes today or tomorrow or day after tomorrow. So this is the funda. This is called ECN.
They aren't concerned. Whether you earn or you lose, they have no interest. This is called ECN-STP. Okay. Now, what is dealing desk. Now, what is dealing desk guys.
Now, dealing desk is such a broker when, who takes a counter trade in your place. Which means, you are a trader, okay, you are a trader, you bought EUROUSD, you went long on EUROUSD. So he sold. This means if you earn money... if you earn money, then loss would be incurred by broker. And if you lose, and if you lose, then this is a profit for the broker.
So, I'm not saying here that he'll do wrong, he won't... you are the one taking the trade but there is a conflict of interest. Conflict of interest means my customer is earning money for me. So I am incurring a loss.
If my customer is losing money, I am earning profit. So there is a conflict of interest here. Now what happens is, mostly companies say that we are ECN.
They say that we are ECN. All of us.. Nowadays Maximum companies will say that we are ECN. We are ECN, we'll process your order directly, and this will happen, that will happen. Now.. now
and the most important topic.. listen carefully now. Maybe your trader or your broker, where you're trading, he may say that he is ECN. But maybe he's not. How's that possible? Electronically every company can become ECN. But is it genuinely that or not, how we get to know that? We'll talk about that in a while Now you guys must be knowing, you're watching Forex video, if you don't know I'll tell. The charts of Forex, if I open tradingview here, and if I after going on tradingview, open my Forex watchlist, this page that's open guys, like I opened EUROUSD over here, Reliance opened. Just a minute.
Like when I open this... We need to open EUROUSD, just one minute. If I open.. look, can you see FXCM written here? FXCM.
This is the chart of FXCM of that broker. If we will search EUROUSD here now, we will get ten types of charts. I wrote EUROUSD.
We'll get ten types of charts, an you see, FXCM, OANDA, Forex.com, ICE, Saxo Bank, Capital.com, Global Prime, Currency.com, can you guys see? So many types opened. So overall, these charts on which you put stop loss, or you put target, it's possible that on tradingview you see OANDA or see Forex.com, but your broker will not consider that.
Your broker will show different chart in your MT4, MT5. What does this mean? Try to understand carefully. Many times you guys..
not you guys, you haven't done it yet, if you have, then maybe you might have faced or heard that my stop loss has hit. Dude it didn't hit on this chart but stop loss has hit on that chart. How's that possible. Broker's has hit here. How's that possible. Now I don't say they maniipulate the market, but this is appropriate to some extent which can happen. Now let's talk
how. So overall your stop loss that you put, your target that you put, this chart, genuine chart that you are seeing on tradingview.com, your stop loss didn't hit in that, a long rejection formed, but here they're saying that this has happened.
Now how's this possible? It's surely possible. That is their account, those are their charts. That is also possible. So due to a conflict of interest that exists people blame Forex brokers a lot, many brokers have a negative image.
Due to this reason that some people, it doesn't happen with everyone but some people though, especially with profitable traders. Sometimes they even let losing traders go. Because they know they've earn money at the end. So now what we'll do guys, let me tell you the other thing now It's not that he's doing fraud totally. ECN bro.. and this is all open, you can find it out.
Nowadays what they do, all dealing desks say that we are ECN brokers. And I'll tell you two things. First thing.
What they do, whenever you trade with them, they classify yourself as a losing trader or a winning trader. Now how do you get to know this. There are so many QSR, quant guys, quant, there are so many methods right now through which, by seeing your history or by seeing your trading style or by looking at your capital, by seeing your trades they can tell that you will lose overall at the end. So you take a winning trade.
All winning traders who sell their trade to this broker they forward that directly to liquidity provider. And they accept trades of losing traders. That's how they do business, which is not illegal and genuine You can do it. But now I don't know if if your broker is doing this work that it's taking all trades upon itself. Okay. ECN as in
they can't take it upon them but let me try to explain you electronically. This is you, the trader, this is your broker, who says that I am an ECN, because I am sending you directly to LP. Now LP is not a single company but thousands of companies.
What happens, many.. these same people form another company of theirs and say that's a liquidity provider. I mean company and name are different but it's their part only.
At the end they're showing to the public that no bro, we send here. This is also their company. They are taking it on them after all.
What happens in such a situation guys, company earns a lot of money, lot of money, it may do something wrong sometimes, unethical-ethical depending on which company you're dealing with And sometimes a trader becomes winning trader suddenly. Let's say a very big movement came in gold, a very big movement came, you earned a very big profit. Here again we start talking that no, you broke some rule, it's illegal in India, you can't do this, no you.. by arguing at any point whatsover will.. there are thousands of customers, let's cut it. Just one negative review would be visible.
And that's how many negative reviews start coming. So I hope I was able to explain you that your ECN broker, despite of being ECN it's possible he might be a dealing desk who might be just rerouting. So what's the solution to all this. What's the solution to all this.
According to me, solution to this is that we should work with a genuine broker which I have already found. And I'll definitely... now the next video can be about that possibly, and it's important to make one more before you start trading. You should know, like you learn commission in Zerodha, 20 rupees per lot, in UpStox you know 20 rupees per lot is being put, X amount is put in Kotak. You should also know about Forex. So I'll launch that
and after that I'll give you broker. so that you guys don't incur loss and you understand what you're doing. So firstly I expalined you all about brokers.
Now let's talk about what we should do. Obviously we need a broker that is in the market since some time, who has stayed in market for good amount of time, who has good reviews, that are good companies. Like I will tell you why I trust this company which I'm going to promote now, what's the reason of me promoting it.
I will share all that with you. I'll tell you that. Now let's talk about India. Guys, maximum brokers in India as of now who are sitting with opening small shops and they are earning in crores even by such shops because they are always taking your trades. Those guys will instantly say to you that sir we'll give you more money, we'll put money in your account, we'll pay through IMPR or cash, we'll give Bitcoin, but we will. All those people are local people.
I dont know, if something happens how much safe is your money. If the money.. If it's a matter of 25-30-50 thousand or 1 lakh rupees then there's no problem. Even if it's 5 lakhs, no problem. If you want to become a serious trader gradually by mistake if you make huge money or by trading smaller amounts by developing your skill, you earn 50 lakhs after two years, if you don't earn 50 lakhs then what'll you do think for yourself, you are intelligent. Secondly
there are a lot of companies in India that are advertising a lot on YouTube, that are advertising on YouTube, Instagram, famous companies, I don't want to point out any specific company I don't want to name any Forex or FX company, but there are companies advertising openly. What do you think, won't the Indian government or people be watching them.. They aren't creating problem so nobody is interested but what's their working style, even they're giving you IMPS it's taking money from GPay, so convenient. They're taking on GPay, giving on GPay.
They're entirely working on P2P model, getting person-to- person transaction done I need payout, you want to withdraw, you transfer it in Anish's account by such a game famous companies are working in India. If governent needs to close in future anytime everything will come to an end in one go because you're already famous. And whatever, whatever working visions you have are in India itself.
That's obviousl. Definitely they can anytime shut it. So do you think you can.. yeah, if you just want to have fun do it, but learn. Invest 2000.. 5000 rupees. Yeah, can you seriously trade big money with them. Can you seriously
try to make a career with them. Because when you make capital... Capital is always.. Biggest thing is, a millionnaire feels that.. let me explain you about a millionnaire trader.
A millionnaire trader feels that bro, I'm a millionnaire trader, I have five million dollars with me. Tell me something. Bro, these 5 million dollars that you have, where are they.
They are in broker's account. Imagine, you consider yourself as rich, or you never plan to withdraw that money permanently. You'll never withdraw entire 5, you won't withdraw entire 5 millions and spend you'll withdraw only some of it, like half a million or few lakh dollars, you won't withdraw all of it.
You'll always try to make this account bigger. Imagine, where you're going to make your account bigger, or grow it, can you grow it there? Just a simple question. So I don't know where you have opened your account or where you want to open it. I've explained you the ground reality in a very open and simple way how all these things work.
I hope you must have understood. I'll make the next video very soon. This is my habit to keep my videos short and simple. That is why I will take your leave now. I'll stop this video.
And I'll meet you in the outro video, okay? Thank you. Alright. So you saw how we have ECN, STP brokers and that we have dealing desks. Now, you are smart enough to understand that which step should you take.
If you want my recommendation, then just within two to three days, or four days, I will launch a new video where, the broker with which I'm depositing my fund, you can also do it there and you can trade there also. So please wait for that, and if you're satisfied with your broker then work with them, no problem at all. But whatever I told that your money, even if you become a millionnaire, you'll only be a millionnaire because your money is in brokerage account.
Or maybe it's lying in Zerodha. So that's why it's very important guys that you keep your money safe before you become... make it as a career or even for learning purpose. Why should we waste money unnecessarily.
And I hope you guys.. let me finish next part of this video. I've made a bonus part also for you guys, market analysis. I've done post market analysis which I had made and shared. So please enjoy that as well, and thank you. And let me know in the comments box what you think about this video. Thank you.
B'bye! Alright. Since I was already making a video.. I had made market analysis video also yesterday. So I thought why don't I put this as well as a bonus. What I might have not traded today.. but by seeing the analysis, you'll learn or understand at least something that how do we analyze the market.
So I gave you a bonus part in this video in which we will quickly see the analysis that I had done how have my levels worked. Analysis work is simple that involves observing levels. So the price action which occured on the levels achieving that is what you've got to do. That is your job.
So coming back to the orange list. Okay. Let's checkout Nifty first, the levels I gave in Nifty, did they prove to be useful. Guys this is the buying position that I had given you. You have to buy on this. When the first candle comes right here, it's a go-buy.
If you buy right here.. I've already told you your target should be this much. 75 point target of yours stays intact. Now to trade after this, if you trade after this yourself, this is an evening star pattern which you can see at these 3 candles.
An evening star pattern is formed, this target could have been achieved again by immediately doing short. What did I trade personally, let me show it to you, today I have taken one and only trade, basically, one on Nifty, another on Bank Nifty. I have two account, small and big. So I've taken on both of them. This is my morning star pattern which... this is my... yes, a morning star pattern, but I had entered before this.
I.. because I've seen that in market when such lower big rejections happen, again the market.. when the market forms wick the third time, and the moment Doji is confirmed, Look, a red candle and a Doji confirmation.
Doji is an early sign of reversal. I've entered on closing of this Doji. I entered over here. I entered a long position.
The moment Doji closes, I entered. And I put my stop loss at the bottom of Doji. I put my stop loss somewhere here. And guys this I.. Can you see this level? This.. This level.
Which is the resistance level. Exactly, yes, exactly, I have exit the moment my target touched little bit. So it was a 1:2 kind of a trade. 1:2.. exactly, I've exit slightly below here. Yes, 1:2. Even now.. yes,
I may have exit somewhere here. I exit by seeing these levels. I have taken one trade of 1:2 in Nifty today itself. Okay? I've taken in Bank Nifty also.
Let's check Bank Nifty levels first. These are the levels that I gave you. Market touched the level and it came back.
It's working at all levels. Even here it was the same scenario. When I saw this Doji here, I took the same trade here too. Talking about Bajaj Finance, let's see the levels here also. I had told you clearly, you have to trade outside this box. Market opens, trend line rejection.
Market gave closing. You have to short here. Your target gets completed here. Let's talk about SBI.
It stayed between the two lines which I made for you. You can see. Market is between those two lines exactly that I had made I had made a triangle and given to you in Reliance Triangle gave breakout. It's doing retest and sustaining here again. So this was a big move in the morning, and then it's touching top most part of the trend line throughout.
I had given you Axis Bank. That bro, the moment Axis Bank comes above this level you have to buy. And you can see, it's in front of you.
Exactly the level of 751 that I gave you we could have taken trade two times from there. But I don't say.. nobody is a super trader. At least a long trade could have been taken. This is short trade. Any one out of the two could have been taken.
HDFC bank I have told you there was a very important level of the market. Market Gap Up opened, has fallen down, has broken out at this level and tested here. Here also in HDFC, I had taken a trade.
What trade did I take in HDFC, the moment it gave closing outside, I put my stop loss somewhere here and took my trade. And I took a smaller target in HDFC Bank. Because the moment I...
approximately.. I wasn't able to take a lot, target was very small. I would have taken it around closing of this. And basically I've quit this trade.
Why have I quit this HDFC trade? Because at the same time I took long position at Bank Nifty. So, I'm not stupid, short on HDFC Bank and long on Bank Nifty. Obviously they will go.
That's why I quit my trade in some place. And in this also I gained some profit. I had given you Coal India. Well, this was a positional trade. Coal India, it again went Gap Up and consolidated. Adani Enterprises I had told you just generally. It was last week's trade.
Blue Star was also last week's trade. It is still on. So that's it.
I even explained you a bit that how does market behave and how can we trade. Okay so, I hope you would have liked this too. And yes, if you're trading in India, stock market, I suggest you open account in Zerodha thie link of which you'll find in every video. If you are regular subscriber of this channel, go ahead and open your account in Zerodha, and Forex.. this is a bonus part of the Forex video.
Definitely now I have to explain you about charges. I'll make that video now. After that I will directly give you link of Forex video. Thank you so much guys.
I'll see you soon in the next video. Please hit the like button if you like this video and if you're waiting for more series like this.