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Quoting mfoste1
In fact, nearly 65% of all volume on major exchanges is done through algos. The market has evolved very much in the past 5 years, and in order to survive in this business, you need to adapt, otherwise you won't survive. I see discretionary traders trying to trade on short tfs like 5m and 1m and I cringe. The algos control those tfs, and as a discretionary trader you don't stand a chance in the long term trading against people who have very large capital resources, unlimited talent pools, and data mining and flow much faster than you ever would be...
This reminds me of people who think that the market is out to get them and hunt all their stop losses. If you think like this youll never succeed at smaller timeframes. How can it be impossible if others have done it before?
A consistent formula gives you consistent results :)
Quoting Starry
This reminds me of people who think that the market is out to get them and hunt all their stop losses. If you think like this youll never succeed at smaller timeframes. How can it be impossible if others have done it before?
You're stacking the odds against you with the smaller timeframes. For one thing, the influence of spread is going to be much more significant, and you'll need a killer edge just to overcome it. I've developed maybe half a dozen profitable systems on the daily and weekly timeframes in the last year, but haven't found anything that wins on 30M or below. The spread eats you alive. If the algos can spot entry signals before you, where's your edge?
Quoting KingKaivar
I've developed maybe half a dozen profitable systems on the daily and weekly timeframes in the last year, but haven't found anything that wins on 30M or below. The spread eats you alive. If the algos can spot entry signals before you, where's your edge?
This is a fallacy, it doesn't work for you, means it can't work for others?

What signals are algos spotting? Is there some universal signal every short term trader uses? Every bank, hedge fund has an edge over you period.
Quoting mfoste1
I'm not even going to entertain your ignorance.
.. and I yours (:
Quoting Starry
This reminds me of people who think that the market is out to get them and hunt all their stop losses. If you think like this youll never succeed at smaller timeframes. How can it be impossible if others have done it before?

The market has changed my friend. The odds of you succeeding on a short timeframe are slim to none and they are getting smaller every day. As I said in my post, its not really about attitude or anything like that, the simple fact is that you are outmatched. The people driving the market on the short timeframes have unlimited resources. The have more capital than you will ever have. They don't have to worry about a 2-3 pip spread. They have highly sophisticated data gathering techniques at speeds much, much faster than the average retail trader. They literally see orders and prices faster than you, albeit at nanoseconds, however they turn this into their edge. I've been around this business long enough to know that I(and retail traders) are outmatched in a certain area. Like I said, if you think you can beat the market on a high frequency (holding period< 1 day), then you are lying to yourself. I'm not trying to be cynical or anything like that, I'm just being realistic.
Quoting Kosomolate
share it just like that? you must be joking.

Yes 98% of the ones flying around online are not good

kos
I mean share your experience like it worked or not
PRICE IS EVERYTHING
Quoting mfoste1
The market has changed my friend. The odds of you succeeding on a short timeframe are slim to none and they are getting smaller every day. As I said in my post, its not really about attitude or anything like that, the simple fact is that you are outmatched. The people driving the market on the short timeframes have unlimited resources. The have more capital than you will ever have. They don't have to worry about a 2-3 pip spread. They have highly sophisticated data gathering techniques at speeds much, much faster than the average retail trader....
Hmm, well ive seen people claim to be profitable on the 15 minute timeframe (for example, the Dance strategy) and they use the 5 minute timeframe to make more exact entry points. I mean, I havent been succesfull, but i used to think it wasn't possible to be profitable in forex, i know just because i haven't done it (in fact haven't tried much) doesnt mean its impossible.

The thing is, speed doesn't matter, unless youre scalping for 2 pips or so. On the 15 minute timeframe, you're aiming for 15 + pips. spreads also do not matter much in terms of eating into your profits, if you have enough of an edge.

Im just really against the mysterious boogey man argument 00. Patterns repeat on all timeframes, as long as the patterns can net you more than 10 pips than youre fine (no 1 minute timeframes probly).
A consistent formula gives you consistent results :)
Quoting Starry
Hmm, well ive seen people claim to be profitable on the 15 minute timeframe (for example, the Dance strategy) and they use the 5 minute timeframe to make more exact entry points. I mean, I havent been succesfull, but i used to think it wasn't possible to be profitable in forex, i know just because i haven't done it (in fact haven't tried much) doesnt mean its impossible.

The thing is, speed doesn't matter, unless youre scalping for 2 pips or so. On the 15 minute timeframe, you're aiming for 15 + pips. spreads also do not matter much in terms of...
There are thousands of people out there that will claim they are successful in FX trading.

Speed means everything in a business driven by information. Faster you get the info, bigger the edge. Spread is the biggest enemy of the retail FX trader. You are always buying on the ask and selling on the bid, whereas market makers are always buying on bid and selling on the ask. I know it is a hard concept for most retail traders to recognize, but it is a huge factor. I really don't know how else to put it.

The only way, in the long run, to avoid the common inherent bias against you as a retail trader is to trade on larger timeframes such as 4H, 8H and daily. Yes patterns do repeat on all timeframes, but I really don't know what you're saying when you say "as long as you can net 10 pips". How much are you risking to make those ten pips? If you are using 1:2 r/r then with the spread, you can only risk 3 pips which is for all purposes here, impossible to trade with a stop of 3 pips lol. You are just trading noise, remember? The market maker, which I explained earlier, have this game in their favor and you WILL NOT beat them at this game, its as simple as that. So by the time most traders realize this, they are 1, 2 or 3 years down the road, 10-20k in the hole and now calling the fx market a hoax because they consistently lost money. These traders leave never to return. The turnover rate is very high with traders who trade short timeframes. So why even bother trading exclusively on short timeframes? Its a losing game, the faster you realize this the better.
Quoting mfoste1
There are thousands of people out there that will claim they are successful in FX trading.

Speed means everything in a business driven by information. Faster you get the info, bigger the edge. Spread is the biggest enemy of the retail FX trader. You are always buying on the ask and selling on the bid, whereas market makers are always buying on bid and selling on the ask. I know it is a hard concept for most retail traders to recognize, but it is a huge factor. I really don't know how else to put it.

The only way, in the long run, to avoid the...
Speed means nothing, computers are fast enough now a days. How is a nanosecond going to make much difference to the patterns that are formed? The patterns formed are taken over multiple bars which means 5+ minutes, plenty of time. And you're supposed to take some profits early (say at 10 pips) and then let the other half run. Sometimes you can get 50+ pips. Patterns != noise. Sure, the market makers always win, cause they got the spread, but thats because they're playing a different game than you are playing, making money on spread. There is no beating them, you're not playing their game.

I do believe trading on the larger timeframe is easier, but im betting 15 minute timeframes are plenty fine. But i have no experience , so oh well im done
A consistent formula gives you consistent results :)
Quoting Starry
Speed means nothing, computers are fast enough now a days. How is a nanosecond going to make much difference to the patterns that are formed? The patterns formed are taken over multiple bars which means 5+ minutes, plenty of time. And you're supposed to take some profits early (say at 10 pips) and then let the other half run. Sometimes you can get 50+ pips. Patterns != noise. Sure, the market makers always win, cause they got the spread, but thats because they're playing a different game than you are playing, making money on spread. There is no...
I don't mean to be rude, so don't take this the wrong way. It seems you aren't very familiar with what is going on in the markets and how they are changing. What you see as a retail trader and what the market making HFTs see are two completely different things okay. They know exactly what you are going to do, and where your orders are. HFTs control this market, at least in the short term. High frequency trading drives the market intraday. To you as a trader, a nanosecond won't mean a difference. However, to the firms making your market, it does make a difference, thus affecting you.

This might help you understand it a bit better. This is a really good documentary on HTF and I encourage you to watch it.
https://www.youtube.com/watch?v=aq1Ln1UCoEU
Quoting mfoste1
I don't mean to be rude, so don't take this the wrong way. It seems you aren't very familiar with what is going on in the markets and how they are changing. What you see as a retail trader and what the market making HFTs see are two completely different things okay. They know exactly what you are going to do, and where your orders are. HFTs control this market, at least in the short term. High frequency trading drives the market intraday. To you as a trader, a nanosecond won't mean a difference. However, to the firms making your market,...
I think you are lumping in the fx market with American equity markets. HFT in fx market is around 25% compare to 60%. Also fx markets(max orders per sec 100) is slower compared to equities(thousands of orders per sec). EBS has been cracking down on hft monitoring through the use of a top of book quote interrupt measure, which tracks the length of time for which a quote that stays undealt remains at top of book. Also platforms have the option of reducing or removing the trading privilege of predatory HFT counterparty.

They feed off large liquidity pools, I have never herd of any gunning for the tinny orders of retail traders. The strategies i know of are latency arbitrage to picking off the slower market makers which create risk removing quoted liquidity making it harder for banks to off load their risk.
Quoting mfoste1
I don't mean to be rude, so don't take this the wrong way. It seems you aren't very familiar with what is going on in the markets and how they are changing. What you see as a retail trader and what the market making HFTs see are two completely different things okay. They know exactly what you are going to do, and where your orders are. HFTs control this market, at least in the short term. High frequency trading drives the market intraday. To you as a trader, a nanosecond won't mean a difference. However, to the firms making your market,...
Thx for the link.
A consistent formula gives you consistent results :)
Quoting Starry
I do believe trading on the larger timeframe is easier, but im betting 15 minute timeframes are plenty fine. But i have no experience , so oh well im done
Take a look at this thread. No guesswork, just an analysis of the different time frames as far as tradeability from a retail standpoint. Set yourself on solid ground by selecting a time frame that has the highest information content. Kudos to Old_Dog for his excellent contribution.

The Optimum Time Frame For Trading
.

I agree with M-H Trader... I go even further.. my believe is HFT in forex is not even 3%.
HFT systems are based in algorithms that involve multiple symbols in stocks, index,
commoditites, etc.. and takes advantage of market inefficiencies... forex is almost 100% efficient.

Anyone thinking about HFT for forex does not understand what HFT is, and/or what and how
is use to make money in wall street.

Now, granted that some of these HFT systems developed over the recent years "may" include
buying some specific currency if the algorithm call for it in the chain of action... but I am not aware
of any HFT system that uses "only" currencies by anybody.... small trader or big trader.

Now, granted also that the forex market it is sorof a HFT market itself in the sense that multiple banks
compete between each other to fills orders by keeping their quotes quite tight, and that they must
have some kind of algorithmic form attempting to fill the most possible to obtain more revenue... but this
type is not for speculative purposes.. rather to provide a service and get pay for it. Trust the fact
that Banks do not hold any currency (different then their books currency) for more then a few milliseconds.
As institutions they do not speculate... they just in the business of exchanging for a fee.
If they do speculate.. they hire traders like you and me.. assign some working capital to them and pay them a salary
and bonuses... if thet are good they stay.. if the are bad they get booted-


In the other hand, it is possible to make algorithms with currency symbols only, that is what I do for automation,
but far from being HFT systems.

J.
Quoting jeuro
.

I agree with M-H Trader... I go even further.. my believe is HFT in forex is not even 3%.
HFT systems are based in algorithms that involve multiple symbols in stocks, index,
commoditites, etc.. and takes advantage of market inefficiencies... forex is almost 100% efficient.

Anyone thinking about HFT for forex does not understand what HFT is, and/or what and how
is use to make money in wall street.
Sourced from a BIS report, article 1 year old:
Quote
Globally, HFT is responsible for thirty percent of the activity in foreign exchange markets and are high performers in trading with euro and dollar currency pairs.
High Frequency Trading in the Foreign Exchange Markets

Quote
Now, granted that some of these HFT systems developed over the recent years "may" include
buying some specific currency if the algorithm call for it in the chain of action... but I am not aware
of any HFT system that uses "only" currencies by anybody.... small trader or big trader.
Lots of things are changing quickly right now from a market structure standpoint, including the makeup of the liquidity providers, and new inefficiencies are being found every day. IMO it's sort of a mini gold rush in FX right now for those who can position themselves to take advantage of the inefficiencies before new, larger entrants join the party after the stock HF trading saturation. It's not all high frequency either, medium frequency has a lot of potential in FX and is accessible to quantitative minded fx developers.
..

I guess I disagree with the BIS report.
And also disagree with the comment of the link.. I mean
if someone calls trading currency, as trading derivatives not much
to read after that.

I guess also that all comes down as we understand what High Frequency Trading (HFT) is.
In one hand we could say that 100% of the forex market is High Frequency trade... after all, that is
what all Banks and liquidity providers do... trade in a high frequency every millisecond filling orders
by buying and selling to whosoever get in the market by placing one. But is that really the HFT we have in mind?


Also most of the arbitration done by Banks or lower level entities... are these HFT system or just plain
old arbitrage?

If a system (done by any big or small player) has algorithm that finds a strong mini trend and gets in and out... is that a HFT system or just a plain scalping system?


It is a matter of concept and understating... but at the end , and going back to the thread topic.. forget about
HFT in forex ... under the old classical understanding of HFT use by wall street of using multi-symbols, or being arbitrage or scalping. Just not worth the time for automatic trading. I mean.. I probably own the best commercial arbitrage software in the market... does it find some 200-300 arbitrage per day in between a few brokers?? of course it does.
It is a HFT system? It could be call that for sure, has made some 500 entries in some specific days. But can I take advantage of it the in a continuous base?.. of course not... happy to come up with 10 per day with it. That is in retail
with market makers... but as the spread get thinner up the ladder, the big boy on the top have same difficulties I have...
after all, bottlenecks are found all the way up because in forex NO one sell us nothing nor buy nothing if they dont make a buck, specially on the top.

J.
  • rayzeel
    Joined Nov 2008
I've seen so many times thread like this on other forums. There is endless war between concepts of discretionary trading and systematic trading. I think I can prove that systematic trading is likely to produce steady income over long period of time. You can watch my stats at http://autotradingsys.blogspot.com. At my blog Im describing much more.

Fact is that automated systems not able to think. They reacting only in specific way but they can work on numerous number of market with many different strategies in same time. This is like one big trading room compressed into few lines of code working for me for free ! For me this is the power. I dont need precision and deep analysis, cos they not guarantee a profit either. My portfolio are able to generate steady income over time (not single lucky strike) and I want to show that it is possible. Just watch my site from time to time.

Greets !
Quoting FXEZ
Sourced from a BIS report, article 1 year old:

High Frequency Trading in the Foreign Exchange Markets



Lots of things are changing quickly right now from a market structure standpoint, including the makeup of the liquidity providers, and new inefficiencies are being found every day. IMO it's sort of a mini gold rush in FX right now for those who can position themselves to take advantage of the inefficiencies before new, larger entrants...
I agree, more HFT are coming to FX market because speed is becoming less of an edge in equity's. So it is a race to exploit the inefficiencies as much as possible.
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