what does a bank see that we don't?

Sometimes I hear talks about volume, market depth and order flows. Well that’s all good and neat but who can see this information? I mean, banks can only see the order flows and market depth only from other banks they deal with in the interbank market. There is no universal centralized tool for it or am I wrong? And retail brokers can’t see sh*t and the depth or volume they provide is within their own client base at best. Or am I wrong again?

Your answer in my opinon lies somwhere in your question.Whoever is making the claim could possibly be talking their own book. Also as with with any news, hear what is said but LISTEN to what is not said http://www.forexfactory.com/forexfor...cons/icon6.gif

banks can see their customer's orders but that's about it. they are also hooked into the gossip circle that we call the "interbank network".

any investment market has inherient risk. It really does not matter if it is bank, retail. Everyone will lose from time to time. so controlling your risk is the only way to win in a long term. So i suggest stop obsessing with "what you dont know", and focus on "making some money. " again, even for banks, there are no "sure money". If there is, there would not be a market.

i second that. don't focus on something you can't control

I was just curious. I thought some maybe have worked in a bank at a dealing desk and can elaborate on the subject.

I am not focused on it, don't worry. The reason I asked is I wanted to know if there is any benefit in choosing a broker that claims to have on top of all the standart features and options also market depth information.

The answer probably is NO.

yes there or but only when you open an account with the big boys like dbfx,jp morgan and so on and they won't big money to open an account with them.

you can start with $10k at dbfx I think but the demo didn't show anything out of the ordinary. maybe with 10k you get only the baby platform.

DBFX sounds great if you like to pay swap but don't want to receive any.

Thats often more of a hinderence rather than a benefit!

But as said previously, apart from their own customer orders Banks see pretty much the same as everyone - Of course, if their customer is a hedge fund placing an order to unwind all their carry trades or the BOJ asking for a price in Usd/Jpy it may(should!) give an indication of price direction

The automated systems (EBS etc) will show best "market price" and the "price available" to that particular Bank - depending on pre-screened credit limits etc between the particular Banks inputting the prices.
Not every Bank can trade with every other Bank on the system.
Eg... Bank A (a Prime Name European Bank) may not be able to deal with Bank B (Crap Bank of Somewhere)
So... EBS may show best market price of 1.8885/87 (actually its never that close on cable! lol).... but if Bank A(Prime Name) is making the bid of 1.8885....."Crap Banks" best/available bid may be 1.8880... It all depends if their are other Banks inputting prices who can deal with "Crap Bank".

To get around this problem of liquidity for small name/obscure/worse credit rating/dodgy country Banks etc, a Bank (who does have limits for aforementioned Crap Bank) may become a "Prime Broker" on the system for that Bank (and take a fee on each trade)- so, Bank B now has access to the same prices and market liquidity of Bank A... which means every deal Bank B does on the system will now be done with Bank A ... Of course, Bank A may also be "Prime Broker" for Bank C.....

So in (overly simplistic) summary....
Bank A = "Prime Broker"
Makes price in EBS of 1.88 85 / 90 (more realistic EBS cable price )
Bank B gives the bid
Bank C takes offer

Bank A - 5 pip profit PLUS fees from Bank B and C ......"cha ching"



The systems also show size/depth of bids/offers in specific amount upto "regular" dependent on ccy pair. On EBS..
Eg Usd / Jpy ... 25mio plus is the "regular"(R) amount (could be 26mio-could be 126mio).. anything less will show as specific size ie $6 mio on the bid etc.
Eur/Usd - 25mio(R)
Gbp / Usd - 8 mio(R)
Usd / Chf - 10 mio(R)

This may give an "advantage" if you think "size matters".. You are offering in 1 mio(minimum size) when you see a Regular Bid appear, this may make you think price is going up - what usually happens in this instance is you get scared by the R bids..... you cancel your offer cos you now think its going up..... the market gets paid once where you were initially offering..... all the R bids disapear....... market drops like a stone with more R offers at every level..... after the 100pip drop you re-input your offer...... a Regular bid appears...........You cancel your offer...... etc ... but dont despair.... at least you werent fooled into joining the Regular Bid at the high.... were you?

If you have a large trade and you dont want to "scare" the market, a system may let you input a price which "hides/works the balance"... eg.. You want to bid for Gbp 20mio.. rather than put in 1 Regular Bid, you can input it so it only shows as 5mio on the bid, if you get filled it will put another 5 mio on the bid etc.


Not all Banks are "bashing it around" in huge size....Yes, some will be trading in amounts of 50mio, 100mio, 500mio.... but a lot will be trading in deal size of less than 10mio - I think the average ticket size on EBS is 3mio.


I think Retail Forex Traders are very lucky - access to information, research, charts , excellent prices/speads, margin etc and ...... great websites like this

Cheers

From what I know, banks make money throug spreads, buying the bid and selling the ask.

There is an excellent post in the "broker" section of FF forums which elaborates a bit on bank trading details. You can look it up if you are interested. The guy actually works for a Aus bank as an intern or something.