can broker spread increase be exploited? | Forex Factory

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can broker spread increase be exploited?

  • #1
  • First Post: May 15, 2007 7:38am May 15, 2007 7:38am
just a thought: broker sees price volatility before we do.. so it increases spread when there is volatility (probably price differences between various feeds). maybe there is some use of knowing it. you can't probably trade it directly but at least its a heads up that something out of the ordinary is happening.
  • #2
  • May 15, 2007 7:56am May 15, 2007 7:56am
Quoting piccolo
just a thought: broker sees price volatility before we do.. so it increases spread when there is volatility (probably price differences between various feeds). maybe there is some use of knowing it. you can't probably trade it directly but at least its a heads up that something out of the ordinary is happening.
i hope you have a main trading system and this is just an after thought.
If I Go Broke Trying Then I Will die happy.
  • #3
  • May 15, 2007 8:00am May 15, 2007 8:00am
Quoting Moe
i hope you have a main trading system and this is just an after thought.
I am not going to trade it. Just thinking about the mechanics behind it.
  • #4
  • May 15, 2007 9:18am May 15, 2007 9:18am
Quoting piccolo
I am not going to trade it. Just thinking about the mechanics behind it.
i heard it can be done, like watching a fixed spread broker qoutes and a various spread broker qoutes who spreads widen during news, but spreads will only widen during news and we all know what can happen around news, so i don't think it can be done.
If I Go Broke Trying Then I Will die happy.
  • #5
  • May 15, 2007 9:19am May 15, 2007 9:19am
Quoting Moe
i heard it can be done, like watching a fixed spread broker qoutes and a various spread broker qoutes who spreads widen during news, but spreads will only widen during news and we all know what can happen around news, so i don't think it can be done.
the trick is that I have seen it widen in the middle of nowhere so I assume its not a "planned" action but rather a reaction to certain events.
  • #6
  • May 15, 2007 9:31am May 15, 2007 9:31am
Quoting piccolo
the trick is that I have seen it widen in the middle of nowhere so I assume its not a "planned" action but rather a reaction to certain events.
It's the reaction of your bucket shop owner trying to buy another Ferrari for the weekend. Trade FX futures if you want a level playing field and don't like being ripped off by suddenly widening spreads.
  • #7
  • May 15, 2007 9:38am May 15, 2007 9:38am
Why not just go with an ECN broker where you get an open book of all the trades on the interbank market? Two of the ECN brokers I know of also trade futures, so you can do what Trader KGB suggested as well.
  • #8
  • May 15, 2007 9:45am May 15, 2007 9:45am
I don't believe an increase spread can be exploited, really, unless either side of the bid/ask is incorrect. Unfortunately, most spread widenings usually straddle the real market price, so you're definitely SOL. remember, when the spread widens, you're buying higher and shorting at a lower price, which no matter how you piece that together is much worse for you.

Spread widening is a protection mechanism for brokers going through periods of low liquidity. Since they take on more risk having to be on one side of the trade, they raise the spreads to increase their profit margins as they try and pass the orders onto the next highest tier.

My suggestion is to try and steer clear of any broker at the time they widen their spreads. You may still be on the right side of the trade, but you'll be in a much worse position than you would have been if you had waited for a typical spread.

ECNs may be your solution...

Quoting piccolo
just a thought: broker sees price volatility before we do.. so it increases spread when there is volatility (probably price differences between various feeds). maybe there is some use of knowing it. you can't probably trade it directly but at least its a heads up that something out of the ordinary is happening.
  • #9
  • Oct 6, 2008 11:47am Oct 6, 2008 11:47am
piccolo,
I have been waiting 3 weeks since you said you would fix the problem on the EA you wrote for me , but still I have not been sent anything by you.
I have tried to email you, skype you and send PM's to you, but I get no response from you.

whats going on? do you not know how to fix the problem on the EA? if not please tell me so I can ask another programmer for help.

Please let me know whats going on.

thanx.
  • #10
  • Oct 8, 2008 3:05pm Oct 8, 2008 3:05pm
thanx Piccolo! the EA works perfect now.
thanx for your help, I really appreciate it.
  • #11
  • Last Post: Oct 9, 2008 4:40am Oct 9, 2008 4:40am
Quoting Trk
piccolo,
I have been waiting 3 weeks since you said you would fix the problem on the EA you wrote for me , but still I have not been sent anything by you.
I have tried to email you, skype you and send PM's to you, but I get no response from you.

whats going on? do you not know how to fix the problem on the EA? if not please tell me so I can ask another programmer for help.

Please let me know whats going on.

thanx.
brr.. please don't post questions for me in random forum threads. thanks.
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