A few things you have to understand very clearly when dealing with spot forex market makers.
One:
Given the opportunity, your stops will be “gunned”. When I say gunned, I don’t mean a bazaar 50pip spike, what I mean is if volatility is at “X” and the market trades within “Y” pips of your stop, it’ll be triggered. This is automated. It won't happen every time but it will happen sometime.
Two:
There is a thing called individual pricing. What this means that the price I can buy or sell at on my trading platform will be different from the one you have. You probably were not aware of this and if you were, you may wonder why this is.
In a “real” market the market makers control their risk by the spread. In the case of a spot forex, the broker is the market maker and the only market maker. If they guarantee their spread then the are obligating themselves the buying and selling at a specific price regardless of market volatility which is ridiculous because they cannot effectively control their risk. However by using individual pricing they are in effect manipulating the spread 1 to 5 pips in their favour thus controlling thier risk. In addition to this, in some cases the price on your platform and the price on the chart reveals further manipulation such as price freezing. This happens a lot. Last Friday when the news came out a 2.30pm my time, the price difference between them was 15 pips for a almost a minute. (Yes you read that correctly.)
Another thing to consider:
Many say that Forex is too big to be manipulated and for more than a few minutes, this is true. There are participants, however, who do have the ability to move the market over the short term, either individually or collectively. Be aware of this and place your stops accordingly.
Forex is just like any other market and a lot of games are played andn as a result, in times of low liquidity, you will see price “engineering” taking place.
Now, your wondering, why would they do this? Think about it; if the market is in a bullish trend and you had the ability to move it down so you could then buy more currency “cheaply”, wouldn’t you do just that if the opportunity arose?
All this game playing may seem very unfair but it’s just the way it is. Who ever said trading was a fair game? It took me six months to realize what was going on and I adjusted my trading accordingly. Most don’t last three months so they never learn the “rules of the Jungle”.
steve
One:
Given the opportunity, your stops will be “gunned”. When I say gunned, I don’t mean a bazaar 50pip spike, what I mean is if volatility is at “X” and the market trades within “Y” pips of your stop, it’ll be triggered. This is automated. It won't happen every time but it will happen sometime.
Two:
There is a thing called individual pricing. What this means that the price I can buy or sell at on my trading platform will be different from the one you have. You probably were not aware of this and if you were, you may wonder why this is.
In a “real” market the market makers control their risk by the spread. In the case of a spot forex, the broker is the market maker and the only market maker. If they guarantee their spread then the are obligating themselves the buying and selling at a specific price regardless of market volatility which is ridiculous because they cannot effectively control their risk. However by using individual pricing they are in effect manipulating the spread 1 to 5 pips in their favour thus controlling thier risk. In addition to this, in some cases the price on your platform and the price on the chart reveals further manipulation such as price freezing. This happens a lot. Last Friday when the news came out a 2.30pm my time, the price difference between them was 15 pips for a almost a minute. (Yes you read that correctly.)
Another thing to consider:
Many say that Forex is too big to be manipulated and for more than a few minutes, this is true. There are participants, however, who do have the ability to move the market over the short term, either individually or collectively. Be aware of this and place your stops accordingly.
Forex is just like any other market and a lot of games are played andn as a result, in times of low liquidity, you will see price “engineering” taking place.
Now, your wondering, why would they do this? Think about it; if the market is in a bullish trend and you had the ability to move it down so you could then buy more currency “cheaply”, wouldn’t you do just that if the opportunity arose?
All this game playing may seem very unfair but it’s just the way it is. Who ever said trading was a fair game? It took me six months to realize what was going on and I adjusted my trading accordingly. Most don’t last three months so they never learn the “rules of the Jungle”.
steve
I was here, here I was.
Was I here? Yes I was!