I can see opportunities in USDJPY and EURUSD of 7 pips sometimes. However my cost of execution for round trip is around 1pip. This makes me reluctant to trade these opportunities as the risk reward isn't that favorable after costs. How can I lower my cost of execution to less than 1 pip if that is possible at all? I do not have direct access to interbank quotes or EBS or Reuters. Are their costs lower than 1 pip for round trip?
On ECN network, the spread for EURUSD is typically .2 pips and USDJPY .3 pips. When I use limit orders I find that I experience more adverse selection since my broker only crosses it internally. Does it make sense to just use market orders all the time?
By the way, my methods don't depend on pin-point execution. I just need to be on the right side of the S/R zones I'm looking at. Perhaps your system/methodology is a little rigid?
Another lazy rookie added to my Ignore list.
Do you think that it's worth the effort to trade for 7 to 10 pips or focus more on those 30 to 100 pips opportunities?
For instance, I don't have time to look at markets more than once in a day. So my focus is on making 100-200 pips.
I can scalp and still make money (and institutionals have to know this because their workstations at the Banks are expensive to justify).
Nowadays I just choose not to.
Does that count...?
Hi skenobi, I would like to hear your insights on a few questions
1)who make market during off exchange hours, for stock indices? If someone has vested interest in a particular asset, can he push the market during less liquid hours like gbp, eur pair on asian session? or S&P 500 after american session? If the answer is yes, this mean the move can be manipulated and have a chance to be corrected once the most active market for the particular asset open?
2)since most asset are interrelated, do you think our edge is the greatest when we jump into the trend that can be explained by fundamental flow? this means we avoid any trend that doesn't make sense just in case the trend is not backed by real flow and can be short life? ex: all stock market down, but JPY go down without any reason, we avoid the trend in jpy even though thrust is strong? (as jpy is major borrowing currency as should shoot up during risk aversion)
3)likewise, what do you think of ranging market， I find it really challenging as ranging market is very irregular and the central point keep shifting, even with dollar cost averaging it is diificult as our tp might not get hit when we need to stop attend our position, do you avoid ranging market? (movement that are out of sync with historical correlated asset class)
4)Does MM monitor cross chart also when market making in major, the reason being I often observe that when majors chart are zig zaging and historical positive/ negative correlated asset move in opposite direction, I suspect that this is because MM know many trader will monitor cross chart and they use cross chart to hunt stops? ex: MM know today non trending day in majors, they sell eur buy gbp (which are positvely correlated) to trip eur/gbp sell stops and then buy eur sell gbp to trip buy stops? likewise, by observing cross chart we can determine the likely price movement when majors are not trending, ex: EUR/GBP are trending up, and we determine today is non trending day on major, we can guesstimate that eur might go up and gbp will go down which are still contain in a range in majors, and EURGBP will trend up?
Size doesn't matter.
Whether the initial move appeared manipulated (or even whether it corrects) or not, doesn't matter. The same principle applies.
Let me put it in another way: If price moves as a result of only ONE player in low volume conditions in a no-capital-control currency pair, would you still consider it "manipulated"?
If the answer to the above matters to you (it doesn't bother me and many others at all), you're going to be disappointed many, many times in the markets, and just wasting time besides.
There is no "our edge". Just "my edge" or "your edge". It doesn't have to work for other people. You don't have to make people agree with you; you just continue making money.
For me? Looking for explanations is a waste of time.
Looking for flow information is a waste of time, because flow information is fluid and orderbooks can change on a dime. *snaps fingers*
Depending on inter-relations and then complaining when the inter-relationships don't "work" is a waste of time.
But that's just me. You don't have to agree.
If there's opportunity, I just trade it.
Maybe ranging conditions aren't your cup of tea?
Why? If charts are zig-zagging as you say, I would just dial up or down the chart TF and find a usable trend and gauge from there. So for instance, if I can SEE with my eyeballs that EURUSD and GBPUSD is trending up, while EURGBP is trending lower, it just means that the USD is weaker in general and should be traded against stronger of the EURGBP cross i.e. I look for levels to buy cable.
That's enough "correlation" for me.
Knowing what I know about how price behaves when we hunt stops, we already pretty much know where the weak order clusters are. Weak or not, these clusters USUALLY gather around historical S/R lines.
Refer back to my answer here for a flavor of what I meant.
If you decide today is a non-trending day and if you don't trade trends, then feel free to stay out of markets. The rest of us are just fine. There is no "we".
With regards to the rest it is typical of the institutions to manipulate price in the low vol Asian sessions because its cheaper to do it then. They will pass on instructions to their Asian desk to achieve a certain price which will then be reversed in the European session.
For the S&P its a bit different. Institutions will typically use the volumes at the close to accumulate a position and then the volumes at the opens to get off.
Overall everyone should forget about institutional traders, 90% are not that good and if you look at the average P&L statement for their own punting (house money) it's not pretty. Yes, of course they tend to make money but that's what the bid-offer spread, fees, commissions, fees on fees, commissions on fees and outright cheating/fraud/theft are for.
The institutions are all running similar models though, built using the same maths, using the same correlations and inputs, so most of the time they are going to be going in the same direction.
Here is 30m EUR chart. See how they take it the wrong way in the low volume Asian session and then reverse it at Frankie/LDN opens when the volume kicks in.
" In fact, I'm violently allergic"
And for everyone who complains about the institutions why not try to use them instead of them using you (perceived or not). A simple strategy would be to observe when they're going for the stops, one of their standard plays, and then concentrate on the recovery if there is one. That would align your interests with theirs.
Sometimes, manipulation can also turn into real move as market is irrational. Besides who really know whether it is manipulation or not, sometimes it could be real move originated from unknown causes, as shown in some days where market move in one direction from asian to ny session.
the best we could do is to expect volatility/ change of direction when such times are approaching.
All in all, I think having a good grasp of immediate fundamental development, some technical chart reading skill (confluence in TA) and a prudent money management will help us to tame the market.
Personally, I find day trading hard enough, not to mention scalping (taking into account the cost and no real edge for small movement). It is also unjustified for me to trade long term with small capital (too little setup), currently day trading trend move is the best option.
All isolated scenario from my above questions are only meant for ease of discussion, in real trading, all elements should be combined to form an overall view of the market.
Traders with a reasonable edge should just get it out of their heads that they "failed" to somehow read the markets "correctly" occasionally. Unexplainable anomalies are simply out of anyone's hands, and should just be hedged against as best as you can in all your trade plans.
I have question about Arbitrage trading. Is this type of trading applied between brokers which quote differently or it can done by trading different currency pairs?
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