Clarification on being banned from retail brokerage for being consistently profitable

I saw another post that mentioned a trader being restricted by Etrade for being a source of toxic flow, linked above. Toxic flow is defined as trading activity that costs a market marker unusual losses in profit.

When a trader submits an order, their counterparty is most often a market maker, but can also be a fund, or another retail trader. But, as I understand it, market makers are the bulk of the counterparties that retail interacts with. The profits from one trader are offset by the losses other traders incurred. If a market maker identifies etrade as a source of consistently winning trades that in aggregate cost the market maker profit, then the market maker can decide to let the retail brokerage know, and the retail brokerage can then identify the trader by account and restrict or ban their account.

Is the above all correct? Can a retail trader really be penalized for winning too much too consistently? Does anyone have experience with this situation? Does this apply to retail traders who trade single leg option orders?

" Toxic flow is trader behaviour that consistently profits at the broker’s expense, and most brokers discover it too late.

The most common patterns include scalping, latency arbitrage, **news trading**, and swap abuse."

Quote from the first link below-

"Toxic flow refers to order flow from traders who consistently profit at the broker’s expense—typically by exploiting information advantages, pricing inefficiencies, or execution weaknesses. Unlike normal trading activity, toxic flow is structurally damaging to a broker’s B-book profitability and, if unmanaged, compounds over time.

The term covers a range of trading strategies and behaviours, not all of which are intentionally exploitative. Some traders are simply very good at what they do."

Edit- some links for additional reading written for the benefit of brokers

* **Tools for Brokers: "Risk management for brokers, episode 5: Toxic flows"** [https://t4b.com/knowledge-base/risk-management-for-brokers-episode-5-toxic-flows/](https://t4b.com/knowledge-base/risk-management-for-brokers-episode-5-toxic-flows/)
* **Insightful Trade: "Toxic Flow Trading — What It Is & How to Manage the Risk"** [https://insightfultrade.com/toxic-flow-trading/](https://insightfultrade.com/toxic-flow-trading/)
* **Leverate: "Managing Toxic Flow: Protecting Broker Margins"** [https://leverate.com/blog/managing-toxic-flow-protecting-broker-margins/](https://leverate.com/blog/managing-toxic-flow-protecting-broker-margins/)
* **Multicoin Capital: "Adverse Selection Rules Everything Around Me"** [https://multicoin.capital/2026/02/17/adverse-selection-rules-everything-around-me/](https://multicoin.capital/2026/02/17/adverse-selection-rules-everything-around-me/)
* **LiquidityFinder: "What is Toxic Flow in Forex? Broker Risk & Hedging Guide"** [https://liquidityfinder.com/insight/other/what-do-brokers-consider-toxic-flow](https://liquidityfinder.com/insight/other/what-do-brokers-consider-toxic-flow)