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What happens to my orders

  • Post #1
  • Quote
  • First Post: Nov 12, 2010 1:33am Nov 12, 2010 1:33am
I was wondering what happens when i place an order with my broker.My live account is a micro account with alpari uk.The maximum risk per trade is only 10 pounds.So i know somebody has to take the other side of this trade but who?Does the broker just let these small orders pile up and just try to ofload them in bigger chunks?Thanks in advance.
Quoting DemoForever
I was wondering what happens when i place an order with my broker.My live account is a micro account with alpari uk.The maximum risk per trade is only 10 pounds.So i know somebody has to take the other side of this trade but who?Does the broker just let these small orders pile up and just try to ofload them in bigger chunks?Thanks in advance.
Your broker most likely takes the other side of your trade. Here is a post on market microstructure that is worth a look.

http://www.forexfactory.com/showthread.php?t=7484
Don't wish it were easier, wish you were better. ~ Jim Rohn
Quoting LasVahGoose
Your broker most likely takes the other side of your trade. Here is a post on market microstructure that is worth a look.

http://www.forexfactory.com/showthread.php?t=7484
I wonder why that post isn't stickied anymore. Definitely one of the best posts here.
Quoting billflet
I wonder why that post isn't stickied anymore. Definitely one of the best posts here.
I noticed that too and spent a few minutes searching for it. Maybe a glitch after they made and renamed the some of the new forums?
Don't wish it were easier, wish you were better. ~ Jim Rohn
considering most people are opening orders that are nothing more than a coin flip they will generally win as much as they lose, but the spread is what eats them alive.

if this is the case, then the broker simply needs to do nothing but milk their spread-baked fees.

for profitable traders, well i don't know. possibly depends on how profitable and how many profitable traders they have as customers.
Quoting LasVahGoose
Your broker most likely takes the other side of your trade. Here is a post on market microstructure that is worth a look.

http://www.forexfactory.com/showthread.php?t=7484
Thanks for the article LasVahGoose and thanks for your input nubcake.This is what i am looking at regarding the eur/usd at moment.Lets just say that i want to buy at the market price,my brokeris showing 1.36500 to buy and 1.36485 to sell.What if there is twice as much money to buy at this price than to sell does this mean the broker will probably widen the spread from say 1.5 to 3 pips.-So in effect it will now cost me 1.36515 to buy?
extremely doubtful.

this has been hashed over before. you can get access to different brokers with different price feeds. it would show-up that there is such a thing as different broker price feeds would all be somewhat different. it has been resolved that they are all virtually identical... hence the answer to your question is no.

going back to my previous response. if all customers of broker abc went long, and all customers then exited 10 minutes later for profit, i'm sure the broker would look at this and go "meh, so what".

given enough time all the customers will no doubt have taken further trades that then give all the money back plus more.

edit : to clarify the answer, although spread is not represented on charts customers all know what to expect the spread to be and when it will widen and return to 'normal'. given that unexpected widening has people on forums shouting "wtf was that? did i miss a news event" it would be revealed quickly if broker abc was deciding to widen stops based purely on their customers balance of orders. there are a lot of paranoid people out there in regards to their brokers... just go with someone that does not have a bad reputation and put it out of your mind. this, as they say, would be risk management.
Quoting nubcake
extremely doubtful.

this has been hashed over before....
So are you saying that because im trading a small account my broker will always take my order at the quoted price?
Quoting DemoForever
So are you saying that because im trading a small account my broker will always take my order at the quoted price?
that's a loaded question.

on instant execution, yes, providing the market doesn't move further than your slippage setting by the time your mt4 gets it's message to your brokers server (assuming they aren't being sly dogs).

on market execution, maybe, providing the market doesn't move before your order reaches the server (assuming the broker isn't a sly dog).

if you go looking for 'broker tricks' as you trade you will find them, whether they exist or not. you will see your stops getting hit to the pip and then markets reversing, and see limit orders opened exactly at the top or bottom of a move and put your profit in the red. seeing this you will blame the broker. you will (likely) be wrong.

i can, time after time, backtest and place orders which exhibit exactly the same behaviour as above. the broker obviously can't be playing tricks on a historical chart that i'm rehashing through... so the conclusion is that i'm just that awesome at being on the wrong side of the market. it's my own fault, and i'm either selectively remembering the times i get precisely placed on the wrong side of a position or i really am just that freaking good at being precisely wrong.
Very funny.Thats exactly whats happened to me this week,three times trying to sell the usd/yen and twice trying to buy the eur/usd,no big deal though.The one time that we really know we can get slipped is during news and something that made me think while reading darkstars posts,l dont trade during news,but i have been without realising it.Sometimes i have stop orders from previous trades from days or weeks earlier at or near the price at the time of the news.The price then shoots straight through the stop.These trades were in a demo account so the trade was closed at the exact price.Would this happen in a live account or would i get slipped?
you provide no volume for the true market. you are basically playing a game that your broker facilitates. as such, you get filled on the price you set. limit and stop orders get executed at your set price. until you start moving a few mil or bil through the actual banks then you have no worries about things like partial fills etc.
Say you have every man and his dog buying the euro all day long.The price is shooting for the stars,the broker has no sellers on the book how is he going to balance the book.Will he hedge these bets and how will he do it?
Quoting DemoForever
Say you have every man and his dog buying the euro all day long.The price is shooting for the stars,the broker has no sellers on the book how is he going to balance the book.Will he hedge these bets and how will he do it?
"Trading and Exchanges Market MIcrostructure" by Larry Harris is a really good book and comes highly recommended around these parts if you want to understand what is going behind the scenes. It's a heavy duty read, but interesting if you really have to know the nuts and bolts.

With that said, some will tell you you don't need to know that stuff to trade. This is true, but if you HAVE to know how it works, that book is a great place to start.
Don't wish it were easier, wish you were better. ~ Jim Rohn
Quoting LasVahGoose
"Trading and Exchanges Market MIcrostructure" by Larry Harris is a really good book and comes highly recommended around these parts if you want to understand what is going behind the scenes. It's a heavy duty read, but interesting if you really have to know the nuts and bolts.

With that said, some will tell you you don't need to know that stuff to trade. This is true, but if you HAVE to know how it works, that book is a great place to start.
My wife keeps asking me what i want for christmas?Trading and Exchanges:Market Microstructure for Practitioners by Larry Harris please.She asked me if ive lost the plot.Trouble is now i have to wait for christmas to read the bloody book.Seriously thank you for the recommendation.I have realised that i know very little about how the market works.I think i need to stick to the micro account for a bit longer!
  • Post #15
  • Quote
  • Last Post: Nov 13, 2010 5:22am Nov 13, 2010 5:22am
"Dealers lose to well-informed speculators because they end up being on the wrong side of the trade.Prices tend to move against their positions before they can trade out of them.Dealers recover their losses to informed speculaters by widening the spread between the bid and the ask prices at which they will buy and sell.Uninformed traders therefore pay more for their trades when dealers lose a lot to informed traders.In effect,uninformed traders lose to well-informed traders through the intermediation of dealers."
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