I'm asked many questions about froex demo trading so I thought I would take some time to answer a few of them…

Hi Jeff,  Thanks for your video on Forex Brokers.  I have always been concerned about the way in which Forex brokers and in particular MT4 brokers conduct their business.  There are 2 issues that occur to me and if you have time to comment at some stage, your thoughts would be appreciated.

1.    I thought that for each buyer there needed to be a seller and as such, those traders that win are paid from those traders that lose.  If I buy at 1.5000 my profit target is 1.5100, if price gets their and I sell, someone buys from me at 1.5100 and I make my 100 pips profit from them.  The broker profits from the spread in all instances, no different to a stock broker that doesn't care what the stock price is doing, because they profit from the brokers regardless of what price does.  As such, why are Forex brokers so determined to run stops, trade against us and deliberately interfere in an attempt to make our trades fail.  I just don't understand it?  Is it because I don't understand how it works and in fact, if I make a profit, the profit is paid out of the broker's pocket?

Answer 1:  Yes you are right there is always a buyer and a seller but…  Say you are currently a buyer in the market and wznt to exit your position.  Well this means you need a buyer who wants what you are selling.  This thing is you don't know if that person is just getting into a trade or buying from you to cover his/her short position.  In addition each trade who mat get paired up with you will be doing so with different gain/losses.  In other words maybe the person that just bought from you suffere d a 40 pip loss and another person a 100 pips gain.  There is no way to know and it doesn't really matter as the only thing that matters is being able to exit your trade right away.

Now…  If you are using a broker who is directly trading against you then they would lose 100 pips if you made 100 pips.  Odds are this will not make them very happy and if you keep doing this, they may close your account because of  it.

On the other hand if you are using a broker who isn't trading against you, then they simply make their money on the spread you pay.

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2.    I understand that demo MT4 accounts use exactly the same data as live accounts.  As such, the prices on a demo account should be exactly the same as on a live account.  If for example I had a live account with a MT4

broker and also had a demo account with the same MT4 broker, I would expect all prices to be exactly the same.  If GBPUSD was 1.6050 on a live account, then I would expect it to be the same on the demo account.  If price was

1.6010 on the demo account while it was 1.6050 on the live account wouldn't I be able to prove manipulation?  In this sort of example, I would lodge a complaint with the regulator, if the broker I was using was regulated.  I

would expect that if prices were different between their live and demo account, that the regulator would take action against them.  I am totally misinformed here?  Cheers.  No hurry for a response.  Darren

Answer 2:  In a perfect world there would be no difference bewtween a demo and real data charts but the reality is  there is a big difference at times.  It is criminal what some brokers get away with in regards to manipulating the prices the market trades at.  You can complain all you want, but it seams to fall on deaf ears for the moment.

Here's a question from another trader…