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Can Brokers Really See Us???

  • #1
  • First Post: Oct 29, 2007 9:55pm Oct 29, 2007 9:55pm
I have a serious concern, although it may sound rediculous; can brokers see our orders? too often i have been in a trade where it is doing absolutely nothing and i will close after minimal gain/loss, then suddenly it goes many pips in my direction once i've pulled out. I used to laugh and said it was just bad luck, but last week i began wondering - can brokers see what i am doing?

I spoke with a rep. tonight and he was good at circling around giving straight answers; all he said was that they have to comply with NFA regulations; i finally asked him (twice) what is the success rate percentage-wise of the clients with this firm. he tells me that he could not give out that information, which didn't make sense to me because i'm not asking for names or personal information; i simply wanted to know the success rate of the customers who actually do this for a living. He never answered the question - which only rises my suspicions. Can they see what i'm doing, and manipulate the movement of the live feeds?

If anyone can clear this up for me i'd appreciate it.

Thanks much.
  • #2
  • Oct 29, 2007 10:01pm Oct 29, 2007 10:01pm
Quoting awcmon
I have a serious concern, although it may sound rediculous; can brokers see our orders? too often i have been in a trade where it is doing absolutely nothing and i will close after minimal gain/loss, then suddenly it goes many pips in my direction once i've pulled out. I used to laugh and said it was just bad luck, but last week i began wondering - can brokers see what i am doing?

I spoke with a rep. tonight and he was good at circling around giving straight answers; all he said was that they have to comply with NFA regulations; i finally asked him (twice) what is the success rate percentage-wise of the clients with this firm. he tells me that he could not give out that information, which didn't make sense to me because i'm not asking for names or personal information; i simply wanted to know the success rate of the customers who actually do this for a living. He never answered the question - which only rises my suspicions. Can they see what i'm doing, and manipulate the movement of the live feeds?

If anyone can clear this up for me i'd appreciate it.

Thanks much.
The best thing to do is to have other charts of the same pair open and see for yourself.... usually it is bad luck, but I believe brokers can see your orders... I doubt they can change the price much though other than the occasional spike (which BTW should be refunded whether in loss or profit by your broker)
  • #3
  • Oct 29, 2007 10:16pm Oct 29, 2007 10:16pm
I gotta tell ya that is a very common occurance.....it starts to make ya parinoid....but give it some real thought , do you relly think a broker is sitting and waiting for your (also read OUR) piss ant little trade so they can take your 20 bucks?
Come on there are people that when they open a position it is thousands of bucks, some even in the hundreds of thousands, and a few even bigger.....so do you REALLY think your 20 or a 100 is anything anybody is losing any sleep over, and waiting to steal or run your stop?

jmho
Same Whore .... Different Dress
  • #4
  • Oct 30, 2007 12:57am Oct 30, 2007 12:57am
Quoting johnedoe
I gotta tell ya that is a very common occurance.....it starts to make ya parinoid....but give it some real thought , do you relly think a broker is sitting and waiting for your (also read OUR) piss ant little trade so they can take your 20 bucks?
Come on there are people that when they open a position it is thousands of bucks, some even in the hundreds of thousands, and a few even bigger.....so do you REALLY think your 20 or a 100 is anything anybody is losing any sleep over, and waiting to steal or run your stop?

jmho
Excellent point
  • #5
  • Oct 30, 2007 2:34am Oct 30, 2007 2:34am
Quoting johnedoe
I gotta tell ya that is a very common occurance.....it starts to make ya parinoid....but give it some real thought , do you relly think a broker is sitting and waiting for your (also read OUR) piss ant little trade so they can take your 20 bucks?
Come on there are people that when they open a position it is thousands of bucks, some even in the hundreds of thousands, and a few even bigger.....so do you REALLY think your 20 or a 100 is anything anybody is losing any sleep over, and waiting to steal or run your stop?

jmho
Yes. And risk a regulatory investigation, loss of reputation . . . etc.
For $20-100
  • #6
  • Oct 30, 2007 2:56am Oct 30, 2007 2:56am
IMHO, they don't sit and count up individual orders, but orders pile up at certain levels. Many of us put our stops around the same price points. If price heads toward a support, for example, big traders are able to spike it with a few big orders, and take out the stops, then allow price to revert so that the profit is theirs instead of ours.

I''m pretty sure something like this happens.

Traders like Darkstar claim to know how to exploit this phenomenon with, I'm guessing, limit orders just beyond support or resistance, so they can tag along for the ride.
  • #7
  • Oct 30, 2007 5:50am Oct 30, 2007 5:50am
wake up guys.

Yes they see all your orders, yes they take out your stops (some worse than others) yes they do this to make money.

Let me explain what you are dealing with whe you trade with a broker.

Most brokers are whats called market makers - in other words you arent actually in the real interbank market you are in your brokers market. You and everyone else using that broker see the same prices but those prices are what your broker decides is their market price. Normally this does not differ much from the interbank market but for them to make a killing it doesn't have to.

Most of the time your trade never even sees the interbank market. you are a part of 'the book' - the book is the aggregate of all positions that the broker has - you are long one contract, someone else is short one contract so you cancel each other out - the balance between all the punters at a broker is 'the book' - brokers make a lot of money from the book without ever going into the market and without ever paying a cent in spread. a well balanced book is a cash cow in spreads. 80% of transactions never leave the book.

If the book becomes unbalanced then they offset the imbalance by going into the interbank market. they also do this for clients who trade large to offset the risk and for those who they know win and make money. they pay in most cases less than a pip in spread but they do have minimum lot sizes of a Mio

At any time the broker can see where your stops are. they do not target individual stops but they can see where the stops are building so it feels that way. If there is a point say 2 pips away where there are more stops than limit entries then they will move the market to those stops to take them out and make some money - it is in their intrests to take out stops as it means you will look for more trades to open - the more trades you open and close the more money they make.

someone said that they dont have enough money to move the market - refer to the first part of my answer - they make the market so they can say what the price is - they don't have to pay anything to move the market they just say move it and it moves and takes out the stops.

Now you will say that this is theft or whatever. The broker has to make money one way or another - this is why they provide the service and like you they want to make big money. They make on the book because they dont pay any spread whilst you do and they make by taking stops out when the balance is in their favor to do so and increasing the frequency of your trades.

They also make money by price shading. price shading is the moving of the spread - so if the quote is say 25/28 and more buy at 28 than sell at 25 they will move the spread to bias the shorts in the hope it will encourage those looking short to enter and thus balance the book again - this is why sometimes price moves against you immediately when you enter, it's not personal against you but it sometimes means that a lot more took your position too.

Someone will say 'but if they spike a stop there will be others taking that price for a profit' - well that's what requotes are for

Brokers are crafty bleeders looking to take money from your pocket. that's what they do. they know that the vast majority of the retail traders are scared to close their own positions and use a stop to do it for them. the fact they know where those stops are is one of their biggest edges - how much could you make if you knew where all the stops and limits were?

what you have to do to beat those edges is make sure that price shading does not change your view, dont leave stops in the market close to price dont overtrade and play into their hands and take responsibility for closing your trades yourself.

Brokers love short term traders - they pay the bills and make loads of money from them. they can't move price enough on swing traders but then they don't need to, there are enough short term traders trading each other on the book without having to bother the longer term ones.

The brokers can only screw you if you let them.
https://linktr.ee/Soultrader
  • #8
  • Oct 30, 2007 6:07am Oct 30, 2007 6:07am
Quoting soultrader
it is in their intrests to take out stops as it means you will look for more trades to open - the more trades you open and close the more money they make.
Just a question on this as I still don't understand why this is... then why do brokers care when you are scalping? Several seem to have a "anti-scalping" policy or send e-mails/letters/calls when you start exceeding a certain amount of trades.

Can you shed any light on this?

Thanks!
To be one with the market, you must first be one with yourself.
  • #9
  • Oct 30, 2007 7:25am Oct 30, 2007 7:25am
Quoting awcmon
Can Brokers Really See Us??
They can't see me.
I trade in the dark with my curtains drawn.
  • #10
  • Oct 30, 2007 7:35am Oct 30, 2007 7:35am
scalpers are non-directional and as such are unpredictable.

if the broker uses price shading to try and balance the book and scalpers are in the mix then the book may never balance because of them closing just as the book balances. therefore they are more trouble than they are worth given that they arent around long enough for the brokers to make a profit out of them in long term

brokers dont really care about scalpers as generally they trade small amounts - however there are a few scalpers (and i mean very few) who make money and play big (and i mean big) - the broker certainly does not want these as they cannot offset the risk fast enough in the market. trouble is if you admit one scalper youve got to admit em all, including the big player who wins. best just to ban em outright for the trouble they cause.

this is all conjecture - the earlier post i know for a fact however i will ask next time i talk to my insider.
https://linktr.ee/Soultrader
  • #11
  • Oct 30, 2007 8:00am Oct 30, 2007 8:00am
Quoting soultrader
scalpers are non-directional and as such are unpredictable.

if the broker uses price shading to try and balance the book and scalpers are in the mix then the book may never balance because of them closing just as the book balances. therefore they are more trouble than they are worth given that they arent around long enough for the brokers to make a profit out of them in long term

brokers dont really care about scalpers as generally they trade small amounts - however there are a few scalpers (and i mean very few) who make money and play big (and i mean big) - the broker certainly does not want these as they cannot offset the risk fast enough in the market. trouble is if you admit one scalper youve got to admit em all, including the big player who wins. best just to ban em outright for the trouble they cause.

this is all conjecture - the earlier post i know for a fact however i will ask next time i talk to my insider.

So what you are saying is that ECN is the way to go?

I am switching from forex.com to EFX Group (MB Trading). It takes awhile to setup the account with EFX, but I think it will be worth it...

Forex.com seems to have a lot of liquidity as they are really big, so I haven't really seen major "gaps" other than the fact that I probably lost more than 30% of my winnings to the "spread". They do make it very easy to create an account and even allow credit cards. But I feel once I go to efx I will never look back to the bucket shops...

The only concern I have is that if something drastic was to happen Forex.com guarantees that you will NEVER owe more than what's in your acct, while with ECN you may be responsible for more than you deposited.
  • #12
  • Oct 30, 2007 9:05am Oct 30, 2007 9:05am
Im not saying that at all.

An ECN is about the only way to scalp properley.

but you get much more from a broker than just a price. if or when you get big a broker will work an order for you, if you have a problem a broker can help - you can argue slippage with a broker and often win - with an ECN you have nothing but price and those tight spreads you see dissappear during volatility - ive seen 80 pip spreads before on an ecn when no-one wants to take the other side of your trade.

EFX would be my LAST choice as an ecn having traded with their software last year. I could say a lot more about EFX but would get myself in trouble.
https://linktr.ee/Soultrader
  • #13
  • Oct 30, 2007 9:06am Oct 30, 2007 9:06am
Here is what Oanda lets us see, this graph shows all open orders they include limit buy and sell , stops and TPs, this graph is a culmination of all open orders..... now Oanda see's all these on an indidividual basis, the TPs are all visable alone as well as each of the other groups of orders.
http://img85.imageshack.us/img85/364...enshot1tp3.png

The above graphs show statistics on open orders, including limit orders, S/L and T/P orders. Depending on the graph type, the cumulative or non-cumulative distribution of orders is shown in each of 4 quadrants:

Top-right quadrant: Buy orders at a price above the current price
Bottom-right quadrant: Sell orders at a price above the current price
Bottom-left quadrant: Sell orders at a price below the current price
Top-left quadrant: Buy orders at a price below the current price
All orders for a given currency pair add up to 100%

here is the link to this chart page for your future referacene.
http://fxtrade.oanda.com/resources/t...rsummary.shtml

now ... does Oanda run your stops? I would hope not, especiealy since I use them as my broker...LOL...but there have been spikes in the past that have taken out alot of orders, BUT when this has happened Oanda has come in and corrected the spike for all there clients and set things back to coerrect for the errant spike...that shows a bit of integrety in my book.

as to your stops being taken out....well humans are herding animals and as such when we place orders we tend to place our protective orders in predictable clusters, so as the market breathes (read IS MANIPULATED) bu the big players or your broker it is very likly your stop is gonna get hit. I know this is a rather simplistic answer to you original question but I hope it helps clar things up for you.

bottom line ...is there manipulation in the markets....YES...it doesen't matter wheather it is FX, stocks, futures, or whatever you care to try and trade, some body is gonna try to wrigle the market a bit to their advantage and not yours. sooooo forwarned is forarmed...
Same Whore .... Different Dress
  • #14
  • Oct 30, 2007 4:42pm Oct 30, 2007 4:42pm
Thanks to ALL for your responses and knowledge. I think i understood most of the information - which in sum translatesto manipulation of our orders. I guess that's why the representative that i spoke to absolutely refused to give me an answer when i wanted to know the success rate of their customers.

So i will ask folks on this board: are you successful full-time traders? I left stocks because it's so manipulated by brokers. Forex is a better option for me, but i feel i can do better if i follow your advice and begin closing trades on my own and staying away from STOPs.

Questions: someone made reference to SWING traders and SHORT TERM traders; what is the difference? Also, which category does a "scalper" fall under?

While I continue to learn what it means to utilize META trading (i'm not getting it yet), is it more or less beneficial to use with a 15-min chart or 1-hr chart?

Thanks
  • #15
  • Oct 30, 2007 5:30pm Oct 30, 2007 5:30pm
Quoting awcmon
I have a serious concern, although it may sound rediculous; can brokers see our orders? too often i have been in a trade where it is doing absolutely nothing and i will close after minimal gain/loss, then suddenly it goes many pips in my direction once i've pulled out. I used to laugh and said it was just bad luck, but last week i began wondering - can brokers see what i am doing?

I spoke with a rep. tonight and he was good at circling around giving straight answers; all he said was that they have to comply with NFA regulations; i finally asked him (twice) what is the success rate percentage-wise of the clients with this firm. he tells me that he could not give out that information, which didn't make sense to me because i'm not asking for names or personal information; i simply wanted to know the success rate of the customers who actually do this for a living. He never answered the question - which only rises my suspicions. Can they see what i'm doing, and manipulate the movement of the live feeds?

If anyone can clear this up for me i'd appreciate it.

Thanks much.


In a word: Yes. Brokers with a dealing desk can see your orders and, in fact, have monetary incentive to stop you out. It is very easy for a broker to simply sit back and collect their pip spread every time you get into the market, but there is much higher profit for a broker to understand what direction the market is trending and actually trade against the client. By trading against the client I mean instead of passing your trade through or finding a sell order to match your buy order the brokerage will actually take on the risk in house and clear the trade with house money. This makes up a majority of a brokerages profit sometimes. I have worked for a brokerage and have seen my dealing desk run as much as 16 pips off the market price to clear out a bunch of stops. The broker will do this no matter the size of your stop, especially if other people have their stops near yours or in a cluster.

As far as manipulating the price, the best example I can give is a brokerage is like a convenience store. You walk in and a candy bar (currency pair) is on the shelf at a given price. The store can offer you that candy bar (Currency Pair) at any price they choose, you as the customer decide if you want to accept that price and take the candy bar (Currency pair) to the register.

ECN brokers and other STP brokers simply pass your trade through to the interbank and collect their commission. They are the only brokerages without incentive for their clients to lose. Any broker with "Fixed Spreads" or "No Commission" has a dealing desk behind it that allows them to manipulate the price and fix those spread and build their commission into the spread itself.
The basis of a democratic state is liberty. ~ Aristotle
  • #16
  • Oct 30, 2007 5:34pm Oct 30, 2007 5:34pm
What is the difference between $100 and $100K?

The small boys play with small money; the big boys play with big money.

IF I want to screw someone, I'd rather screw the smaller boys than to screw a big one who will surely give a big fight. Besides, the big boys dont trade with retail brokers.

To say that brokers have more important matters to attend to than screwing small fry is inaccurate. Big or small $10 is still $10 and multiply that with hundreds of small fry - you end up with a big cash. Ever wonder why they have Dealers? These dealers are there to do their job. What Job? to overlook at our trades.

If you are referring to Stop Hunt Spikes, two can play that game. When I realized my broker was doing that, I took advantage of them. I placed Limit BUY/Sell to capture the 10 pip spikes (both ways) and pockets 16 pips everytime - easy money. They cleaned their acts though and I run with the money before they do something else.

As far as I am concern, Dealing Desk are there to screw us. However, two can play the screw-me game though.
  • #17
  • Oct 30, 2007 5:40pm Oct 30, 2007 5:40pm
Quoting awcmon
Thanks to ALL for your responses and knowledge. I think i understood most of the information - which in sum translatesto manipulation of our orders. I guess that's why the representative that i spoke to absolutely refused to give me an answer when i wanted to know the success rate of their customers.

So i will ask folks on this board: are you successful full-time traders? I left stocks because it's so manipulated by brokers. Forex is a better option for me, but i feel i can do better if i follow your advice and begin closing trades on my own and staying away from STOPs.

Questions: someone made reference to SWING traders and SHORT TERM traders; what is the difference? Also, which category does a "scalper" fall under?

While I continue to learn what it means to utilize META trading (i'm not getting it yet), is it more or less beneficial to use with a 15-min chart or 1-hr chart?

Thanks
Most of these questions should be asked in the Forex Beginner forum so that others can find the answers when they need to ask the same questions.
The basis of a democratic state is liberty. ~ Aristotle
  • #18
  • Oct 30, 2007 5:45pm Oct 30, 2007 5:45pm
Quoting BurgerKing
IF I want to screw someone, I'd rather screw the smaller boys than to screw a big one who will surely give a big fight. Besides, the big boys dont trade with retail brokers.

To say that brokers have more important matters to attend to than screwing small fry is inaccurate. Big or small $10 is still $10 and multiply that with hundreds of small fry - you end up with a big cash. Ever wonder why they have Dealers? These dealers are there to do their job. What Job? to overlook at our trades.

If you are referring to Stop Hunt Spikes, two can play that game. When I realized my broker was doing that, I took advantage of them. I placed Limit BUY/Sell to capture the 10 pip spikes (both ways) and pockets 16 pips everytime - easy money. They cleaned their acts though and I run with the money before they do something else.

As far as I am concern, Dealing Desk are there to screw us. However, two can play the screw-me game though.

You are spot on. If a broker see's 10 stops at a certain price they will spike to it no matter the amount and hope that no one complains. 8/10 won't, generally they will refund the 2 that do no problem.

You've got the small fry comment correct as well. This is why alot of brokers are allowing micro accounts nowadays. Money is money, 95% of traders fail. If the brokers are trading against those losing money they will win 95% of the time. Keep in mind that Vegas operates on a 4% margin, and I think you know how successful they are.

As far as spiking is concerned, yes you can screw them back just as easily. The first broker I realized was stop hunting my account I scalped on a non-farm day and took my 10k account to 64k in 45 minutes, then closed the account on Monday.
The basis of a democratic state is liberty. ~ Aristotle
  • #19
  • Oct 30, 2007 5:53pm Oct 30, 2007 5:53pm
Thanks Soultrader for posting so clearly all this information. One of the most honest and informed posts I have seen on the forum, I would have made it stickie if I could.

One clarification, from your last post in this thread I get the impression you think ECNs are not as good in case you want to dispute a trade. Given your experience (I have read other posts by you in the past) do you have to recommend some broker, ideally UK based, that you think plays fair or at least better than others? I find it hard to choose a broker, but at least I realised that being UK based would be an advantage to have a UK based broker, at least regarding money transfers fees and speed, exchange rate commissions (several US brokers don't accept GBP payments), and FSA regulation.
However I don't want to end up in a bucket shop...

Thanks again for taking the time to post here and open our eyes to the vultures of the business.
  • #20
  • Oct 30, 2007 6:31pm Oct 30, 2007 6:31pm
Quoting awcmon

So i will ask folks on this board: are you successful full-time traders? I left stocks because it's so manipulated by brokers. Forex is a better option for me, but i feel i can do better if i follow your advice and begin closing trades on my own and staying away from STOPs.


Thanks
You have to remember: You are NOT trading in the "real market". If you think stocks are manipulated, you are going to be sorely upset by Forex.

Forex doesn't really have a market. I mean, not one that most of us ever get into. Your little order isn't floating out there in the Interbank Market.

You might be "Trading the Euro" in theory, but in reality, you aren't trading anything. You never bought Euros, or sold them for that matter.

If you are looking for leveraged markets, perhaps Futures? (I have little experience with these.) But at least the brokers don't make money off your losses, it's off your commission. You make money, you trade more, you keep trading for years - they have a constant stream of income.

Clockwork
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