News trading discussion - continuation

Great weekend to everyone.

26/06

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I got the below reply from my broker when I questioned them about different liquidty streams and how they effect news trading.
If anyone has experience with juggling things for sensitive algos it would be nice to hear from you.

News trading (and news EAs) are always tricky. What makes them tricky is that they may work fro a while on one feed, then go out of style on it, then in style on another. It seems to be fairly dynamic and changing, and of course it is a very volatile time in the markets naturally.

I would start on the feed that you are on, and if you notice poor performance, move SOME of your capital to one of the other two feeds (or all of them) and test/compare performance between them for a while.

This is exactly what some of the "sensitive algo" guys are doing. They will run their algo on multiple feeds, for a length of time. Then record the variances in performance between them, to see if they can find anything meaningful that shows one may be better suited than the other.

Thoughts on "smart traders"

Liquidity - Where does it come from?

The original question:
"What happens when crown forex has soo many spike traders sending Thousands of orders at the very same moment?
Will the liquidity be available to fill them?"

A little over a week ago, I answered "yes" and asked if anyone could say why I answered "yes". The answers were close, but no one said what I was looking for.

Many of you appear to be so jaded by a previous unpleasant experience with a broker, that you have lumped all brokers into one category: suspicious, dishonest, sneaky, and not to be trusted. If your experience is anything like Maxey posted a couple of weeks ago, that is understandable.

Forex brokers are a business. Any business can choose to be honest or dishonest. Those on the internet are more suspect than others. From all that I have observed, there are two types of forex brokers: Those that clear their trade through a financial institution and those that don't.

By definition, a broker is a middleman between two parties wishing to consumate a deal.

Those forex brokers that hold all their orders "in house" and don't clear through a financial institution do not fit the definition of broker. They are not in the "middle" they are the final stop on the other end of the deal. They appear to the trader to perform all the same functions of a forex broker with the exception of clearing your trades through a third party financial institution.

This business model does not make them dishonest because, most likely, they have disclosed their practices deep within their terms and conditions. These pseudo brokers are the ones you read about that win when you lose, and lose when you win. If they are well capitalized, they can play the odds that 95% of all forex traders will lose. They are frequently patronized by novice traders. They offer 500:1 leverage, and rediculously low minimum deposts. They accept electronic currencies, offer instant execution, and many other attractive benefits. When their success is threatened by a successful tech trader or even worse, a spike news trader, they will quietly ask them to leave. Sometimes they let you keep your profits when you go, but sometimes they will back them out. When they do, they know you will go to a review site to complain to anyone who will listen. Yet their business model continues.

The other type of broker is a real "intermediary". They fit the definition of broker by acting as a true middleman between the trader and the financial institutions. They maintain the records of your margin account while providing customer service and streaming live executable price quotes to the trader in exchange for a fair cut of the transaction in the form of the "spread". This may surprise you, but this type of broker is also the counterparty to your trade, but only temporarily. If you lose, they remove the money from your account. If you win, they display the money in your account. They settle up with their banking partners at the end of the business day. Depending on the success of their traders, this could be a net debit or credit for the broker.

We use the terms banks and liquidity providers rather loosely without actually naming them. Do you know who they are? Below is a list of financial institutions that provide that illusive liquidity to the forex market:

Bank of America
Citibank
UBS Deutsche Bank
Societe General
Morgan Stanley
RBS
CME
Lehman Brothers
Goldman Sacs
S/E/B
Dresdner Kleinwort
EBS
Santander
ABN-AMRO
JP Morgan Chase

These banks won't even talk to us as retail traders. They deal in mega $$ millions. They represent the true interbank market. Our broker, ( lets say Crown, for arguments sake) maintains a margin account with them, just like we do with our broker. As they stream their executable prices to Crown and we get filled on them, Crown is committed to them to settle the outcome of that trade, just like we commit to Crown to settle the outcome for us.

So how does a broker get a composite feed of all the available prices from all the potential providers? While there is no central exchange, there IS a forex grid or network that connects these financial institutions to their broker/clients. Here is an example of a company that facilitates this type of interbank connectivity:

http://www.integral.com/products/overview.htm

In short, they provide the technology to hook everyone up.

I often refer to Crown's 10 banks of liquidity providers. To my knowledge this is not listed on their site. Our Introducing Broker, Scott Kuehne, has spent years researching forex brokers. Here is an excerpt from his site:
"We have tested or are knowledgable about most FX firms. If a firm lies, cheats, or makes empty promises we move on. We always find out how a firm offsets its client's trades. We refer you to the firms which have earned our trust and who provide the trading conditions you seek."
I encourage you to read Scott's accounting of his relationship with Crown forex on his site at:

http://www.forextradersinc.com/company_crown_forex.htm

It was here, and through Scotts' contact with the management of Crown Forex, in his capacity as an IB that I learned of the 10 bank relationship for liquidity.

Remember that these liquidity providers don't just quote prices to one broker any more than Crown quotes their prices to "just you". No matter where you trade, it is likely that some "mix" of these providers are quoting prices to you. Maybe your "other" broker uses 5 feeds, or 3 feeds or 15 feeds. You may never know, as they may deem their providers, proprietary information in the same way you may be reluctant to tell others what broker you trade with.
Now let me summarize and explain my answer to the original question.... ugh... What was that question? ......Oh yes, Can Crown provide an increasing number of traders with the necessary liquidity?

We would be foolish to think that our little group of spike traders could even shade a candle on the interbank market. Believe it or not, spike trading is not new, and we are by no means, the only ones doing it. If I'm trading the spike at Crown, and there are 10 banks ( and I mean BIG banks) behind that composite feed, and I don't get filled, then I calmly and resonably accept that there was NO liquidity, or very little, available to fill my order. I don't yell "scam" or "cheat". I have educated myself to understand that this is business. and no one is just going to hand over the money. We have to work for it. Don't blame Crown. They don't fill your orders, they just provide a price feed of executable prices, nothing more!! We set our slippage controls to hopefully grab a piece of the prices that may reasonably be quoted. Both sides protect themselves with the tools they have. Getting a fill at another broker may not be as much a function of liquidity as it is a function of technology and efficiency of the trading platform.

Lack of fills causes some traders to give up. For me, it causes me to work harder. So far, its working.
2006

Well I got slipped 20 pips on eu and still made money so monitoring for profit is still the bottom line

Thoughts on "smart traders"

Requotes within Slippage
Many of us have been getting requoted at prices that fall within our slippage control, or max deviation. I believe I have figured out why this is happening. Since most of us use the multiterminal, we don't see the requote until after the trade when we reference the journal. On a regular MT4 dealing station, the requote pops up in the order box. Here is the reason:
Again, it boils down to available liquidity at certain levels. If you were trading 90000, and get requoted within your slippage control, it is because there is still available liquidity at that price, but not for the lot size you requested. Since our dealing stations are minimized, we don't see the complete text of the requote, and it may not even be there, but if anyone wants to take the effort to verify the text box at the time of the requote, it may also contain a revised volume amount for you to accept or reject.
2006

metatrader has "fill or kill" for orders. so all amount is filled or nothing , no partially filling. because market prices in metatrader are only for small trading amounts you dont see whats the real prices in the market at the moment for bigger trading amounts. thats the problem with fill or kill orders, that its rejected until the price is ok for whole order amount.

thatswhy many beginners think by mistake (they dont know they have often all same LP behind) its better to have more metatrader brokers, and get so more orders done, but they would have same with one broker and same splitted orders or one broker with no t only fill or kill orders.

sounds interesting but when I search you on telegram it is not finding you?

Reminder

TY