Does BTF Prime aim to profit from client losses?
No. Our business model is based on providing individuals with the opportunity to trade the world’s financial markets, in exchange for fair and proportionate transaction fees. It is a well-known fact that trading successfully is difficult, and most speculative traders tend to lose. However, we do not typically benefit from trading losses that an unsuccessful client may experience.
Mostly, our clients offset each other’s positions. For example if client A buys one lot of the DAX and client B sells one lot of the DAX, both sides of the trade are covered. This means BTF Prime is not exposed to the profit or loss of either client. Instead, we make our money via the spread (i.e. the transaction fee) that each client pays to trade.
Sometimes, a large majority of clients will trade in one direction. When this happens, we will protect our exposure to risk by hedging in the underlying market. For example, if client A and client B buy the DAX, we may buy actual DAX futures. This then covers the amount we will pay out if both clients are successful.