Broker's Feed Manipulation???

I am finding more and more the longer I trade or attempt to trade forex that my platform signals get unduly delayed/shut down and or corrupted so I have no control to exercise a trade. This has happened a lot in the past few days and is frustrating to say the least. I watch charts from Refco FX and netdania. These prices quoted are generally 2 pips different than my broker data feed, FX Solutions. HOW HONEST ARE THESE BROKERS? I have lost all faith in them. I am looking for an honest broker. Any suggestions would be very welcome.
I have been a police officer most of my life and find that too many coincidences become the truth of the matter. That is why coincidence evidence is allowed in courts.
Searching for a broker situate in Canada (Please tell me if you know of one) on the net I came across the url that I am going to post from AFXI. You may already be familiar with it but perhaps not. Please check out this schematic and you be the judge.
http://afxi.com/manipulation.htm
I am bloody perturbed to say the least. It is hard enough to call the trade in the right direction let alone having to deal with pip manipulating brokers.

slick 60

Being new to FX, I realised that it is extremely difficult to find one decent, honest broker in FX trading arena.

Searching for one that really provide tight spread, good interface, guarantee stop loss order is similar to finding the holy grail of trading success.....

OANDA for instance, claims to provide tight spread - but in reality, spread get wider during news announcements. Spread is never static as advertised.

Others like Gain Capital/Forex.com claims guarantee fills on stop order but further checks will reveal that this guarantee does not include weekend & holiday.

FXCM provides guarantee stop loss order but its spread is about 5 pips & their interface is bad.

Could some kind souls please help?

slick 60

I totally agree with your observation.I now work for a currency trading firm in California, We execute our trades through a firm in London.

Before institutional trading I found the only way to get around this problem was to open several small accounts (4). This allowed me to execute at the best price available. With some of these accounts you can have 200-1 margin so $600 in each account would allow me to buy 2 contracts in each account.I understand this is not very efficient but every point counts!!
To many people are lazy and that opening 4 accounts would be to much hassle, we must remember this is business.

Barry c

I had noticed the same thing, comparing CMC, CMS and Gain Capital. At any one time their prices might be 1-2 pips different. But, does it really matter? For instance, say FX Solutions is quoting 1.2500/03, and Refco is quoting 1.2502/05 at the same time. So long as you enter and exit with the same broker, your profit or loss will be exactly the same. I.e, if you buy from Refco at 2505, you are paying 2 pips more than you would if you bought from FX Solutions; but when you sell, you are receiving 2 pips more as well. So, does it matter?

velduca: this is a common misconception. not only do brokers quote different prices, but they shift their spread in the direction the currency pair is moving as well!!! they use some kind of momentum algorithm, and it helps their bottom line considerably.

everyone: you may think "brokers are slimeballs". but not really...they are just in the business of making money just like you and me. its a game and you have to play to win. but you first need to realize that these "dishonest brokers" are part of the game we play. you will never find a broker who sets up an infrastructure that benefits the trader over the firm, that would not be good business for them!

another note...you have to realize what what the forex arena looks like from a high level. there is no central exchange we are trading on...no central body...no SEC. the Spot market is made up of hundreds of little market makers, companies like FXCM, GAIN, CMS, Reco etc etc. The banks are market makers as well. all of these little market makers create what we call Forex. this widespread and unregulated participation is why forex is called the wild west of trading. you either love it or hate it. if you play hard you can win, but if you are looking to trade in a market that is more "fair", i suggest going to something like Currency Futures where there is an actual regulating body (CME).

btw, an excellent book that covers the big picture forex market is Luca's "Trading in the Global Currency Market".

One of the biggest concerns for new traders their broker and preceived pip differences from another broker.

Take a guess here....euro is trading near the low of the day. 10mio passes through the bank at 1.2020 and 1 mio passes through at 1.2012. What is the low of the day? If you said 1.2020, you are correct. Highs and lows are based on significant volume.

As for your broker, why different than another? Several answers, but you need to understand they are clearing their trades through different avenues.

What about spreads you ask? On the interbank market, spreads change. They do not stay the same for each "customer." They are dynamic not static.

Guaranteed stops? Lets be real, if price gaps over your entered stop you will be filled at the best availible price.

Find a broker you feel comfortable with and understand that none are perfect, but it is a cost of doing business. Face it, without these middle men, you wouldn't be trading currencies at all.

VD
I agree with you on that point. I am finding my platform being manipulated when I go to make a trade. If I click on the BUY or SELL or to hedge a position or to close a position and leave them open for any length of time waiting for my entry the price often time will freeze for 20 seconds plus while the other charts are ticking away. Pull the plug on the trade and an immediate 3 - 5 pip move against my trade plus the 3 pip spread. Has happened all too many times. Also I am trading from a brand new computer and couple times a day I will encounter lock-up of system. One time they told me it was my computer fault. Bullshit because I executed the exact wame trade in my demo account with them. I was told this had not happened ion at lwast two years and it had been repaired. Crap!!! Netdania charts will not respond and I cannot close or do anything with my positions. I close FX platform and netdania becomes alive. Today, June 10/04 I got an error message that I did not have the right and most current platform loaded. Could not load. Re-boot computer and no problem with entering platform. Meantime down the tubes a number of pips and may I say never in my direction. Leads me to believe one thing!
slick 60

XTsunami and Merlin
Thank you for your input to this thread. I am trying to generate enough noise for the NEWBIES to read so that they are not disallusioned as I was. I am still waiting for someone to assist me though in finding a broker in CANADA that may be a little closer to me.
Merlin I have posted the title before and it really is true because I believe they are all alike. I have also said that perhaps since this is the wild west of currency trading that perhaps we should bring back the hanging tree. (just for the brokers)
Have either of you gentlemen had the priviledge of visiting a brokers site from whence these trading platforms eminate? Know of any willing to give a tour?
What are your comments on AFXI?
slick 60

So, if FX Solutions is quoting 1.2500/03 and REFCO is quoting 1.2503/06, does this mean REFCO thinks the trend is going up, while FX Solutions thinks the trend is going down, or vice versa? I still do not understand how this slight difference matters to any one trader who has an account with one or the other broker. It seems that what you might lose on the long end you gain on the short end, so it appears to be a wash.
Cheers,
Vince

Bill,

The easy way to avoid the frustrations you have been experiencing is to use only limit and stop orders for entries, and avoid using market orders.

Yes indeed, Brokers DO manipulate the FX Price Feed Data for retail trade viewing. As noted in a prior post by Merlin, that is the part of the nature of FX business.

Most retail FX brokers (most of them IBs, introducing brokers), generally are not market makers, but receive their incoming data feed from some other broker, who in turn are often but not always a market maker. Upon receipt of the incoming data stream, your retail non-market maker broker runs the data through his computers for among other purposes, to add their spread. Ethical retail brokers make their living from the spread whenever their clients buy and sell.

Some retail brokers also add commission, whether it is directly as USD per round trip per lot, or pips per trade, or management fee, etc. Most U.S.-based brokers advertise "Zero commissions." However, when evaluating a retail FX broker, be careful not to overlook hidden charges, which in effect serve as a commission or management fee. [We have worked with the Manila office of a Singapore FX broker. The Manila office blatantly charges 7% to 10% per entry full lot. Has anyone seen any other broker with commissions this high?]

Everything discussed above are legitimate business practices, and it is up to the retail customer to determine if the benefits of associating with a broker counterbalance the commissions plus spreads.

For example, many of the Manila broker customers appreciate the local broker’s instant withdrawal facility. They do not have to pay for wire transfer fees and usually get their money within 24 hours in USD. They have some high level of anxiety regarding USA brokers because they feel that their money is too far away. For these benefits, clients have been willing to pay 7% to 10% commissions and spreads of 7 to 15 pips. [Many of these clients did or do not yet know that these are unusually high charges; caveat emptor!] However, these costs make it very difficult for clients to profit; they must overcome (commissions + spread + slippage), which total 20 to 30 pips, which they must earn just to break even! [After serving my apprenticeship, I switched to CMC, London for zero commissions, 3-5 pip spreads. I spent nearly 2 months researching and corresponding with them via email and telephone before opening an account.]

Back to a subtopic, UNETHICAL AND/OR ILLEGAL MANIPULATING FX PRICE FEED DATA. There are many retail FX brokers around the world, including good old USA, that practice unethical and/or illegal manipulation of the price feed. It is a widely practiced art, called "Stop Loss Hunting or Harvesting." Brokers could use the power of database technology to generate tables of "what if" scenarios: What if the price drops 10 pips, how many US$ would be lost from client accounts through stops? What if the price drops 20 pips, 40 pips, 80 pips, etc? Ok, let's send a transitory 40 pip negative spike to all retail client screens. That should harvest US$???

That's a nonsense scenario, isn't it? You may ask, "Why would a broker manipulate the quote data feed? I thought a broker earns from spread and commissions? Why would a broker care whether his customers win or lose? Isn't FX trading a zero-sum game? For every dollar of profit, isn't there is another dollar of loss in the whole market overall?"

Yes, forex is a zero-sum game, however, who profits from a retail customer's losses? Is it a faceless counter position trader halfway around the world staring into his PC screen? Yes, if the loser's broker put the entry money into the Interbank FX Spot Market.

NO, if the broker did not put the entry money into the Interbank FX Spot Market! Oh, how could that be possible; that's what I naively asked 5 months ago. The dishonest broker practice of not putting the client's money into the actual market, but putting the money into his own pocket is known locally as a "Bucket Shop" or "Bucketing." I have spoken to several local traders who have known first hand of bucketing for many years. I have read accounts from India warning of similar practices. I have very often seen chart evidence of phantom spikes that we could not verify from other broker charts. So although I have no direct proof of such practices, here is the circumstantial evidence.

Phantom spikes often appear on the live charts (they usually disappear a few days or weeks later upon historical updating). Traders lose their stops. Client accounts suffer losses. Repeat this often; amplify client losses with high commissions and high spreads, which in turn make net profits very small, few, and far between. Do not teach or warn clients regarding money management but instead, extol the profitability of FX trading, even if the client only has $10,000 for a full lot account. Do not train or pre-qualify in-house traders how to preserve client equity and give them only the most rudimentary hints on trading. Eventually, if not sooner, the account is depleted, after the brokerage has collected commissions (win or lose positions), spreads, and possibly bucketed profits. Regardless of the loss mechanisms, the majority of the brokerage client accounts die from a combination of overtrading to generate commissions (churning), inexperienced trading, and possibly bucketing. The clients go home with lighter wallets, a little wiser, but still in the dark what actually happened and what was truly intended. Long-time local traders have told me, "Once the client brings his money in the door, he will never see it again."

So where did the clients losses go? Much of it went into the traders and brokerage's pockets, as spread and commissions (we can all see that part and most of us want to shop for a good deal). Some of it probably went into the Interbank FX Spot Market (that's sad, but legitimate). Some may have gone into the pockets of the brokerage as bucketed profits (the client's account was loosing anyway, why shouldn't we profit from his losses?).

Well, that sort of nonsense only happens in developing countries because they don't have the regulations and enforcement we have in _____. Certainly, it wouldn't happen in USA...

WASHINGTON, D.C.—The U.S. Commodity Futures Trading Commission (CFTC) announced today that it filed a complaint in a Florida federal district court against Gibraltar Monetary Corporation (Gibraltar), a Florida corporation, and Florida residents Jayson Kline of Boca Raton, Florida, Charles Fremer of Coral Springs, Thomas Clancy of Sunrise, and Ed Johnson of Wellington, for allegedly defrauding customers they solicited to trade foreign currency options. The complaint, filed on February 10, 2004, also charges foreign currency firm Forex Capital Markets, LLC (FXCM), a New York-based foreign currency dealer, with liability as a principal for the acts of Gibraltar. (http://www.nfa.futures.org/basicnet/...2&contrib=CFTC)

The above is only a recent example of what is happening worldwide. US Federal Agencies have been putting on what appears to be a full-court press against unlicensed and/or illegal FX operations. Retail Internet FX trading is only 8 years old, and as with anything new and appearing profitable, greed often supersedes caution and skepticism. Shysters will always be there to fill the gap and their pockets.

If you are seeking legitimate FX brokers, consult the NFA web site as noted above. Although you cannot know what has not yet happened, you should at least know if the prospective company is registered, if any cases have been filed, and are there are many arbitration awards. In the USA, also check the local Better Business Bureau, and the State Attorney's Office. In most developing countries, we can only go by SEC registrations and word-of-mouth. For those who speak English in any country, if you have no other solid broker data, use a major USA- or UK- or Australia-based broker mainly because they have high liquidity. Then you should check whether they are registered with central regulatory agencies (such as U.S. National Futures Association (NFA), U.S. Commodity Futures Trading Commission (CFTC), U.K. Financial Services Authority etc.), and hopefully have a long history of ethical business. I have a May 24,2004 Futures Magazine article that lists major brokers, capital, years in business, etc. For those seeking to research FX brokerage firms: http://www.futuresmag.com/forextrade.../forexfcm.html

Another thought. Check whether all quote prices are consistent for a particular broker. For example, wouldn’t you expect the quotes on the brokerage web site to agree with the brokerage trading station as well the spot quotes for trade executions? We have observed that is not always true and have found no rational explanation for the discrepancy, certainly none that are explained in contract documents. Any of you have any thoughts on this? Also check how your broker's quotes compare with Bloomberg TV or CNBC--you may be surprised.

May the Trend be with you,
Paul Y. Shimada

Paul
Thank you very much for your input into this subject. You seem very knowledgeable in these matters and have put forth considerable effort explaining to the masses. It is nice to find someone who writes longer stories than myself in these forums! I guess the truth be known there will be little done with the unscrupulous brokers until regulations come into being stronger than they are today. Really too bad. Too many regulations already.
My opinion - VERY GOOD POST!

slick 60

Paul thanks for taking the time to share information with us. With your extensive knowledge, could you comment on/check something out for me? I placed an order to go long USD/CAD at 1.3695 stop at 1.3665 on June 11,2004. The order was triggered at exactly 8:06 est and stopped out at 1.3665 at 8:30 est. What is curious is the fact that my dealing station shows that the price hit exactly 1.3695 no higher and then retreated to 1.3665. I have seen this happen several times before. Just seems a little strange.
Steven

How well I know this, much to my loss. Seen it enough times that I call it the Anti Stop Guided Missle.

LOU

Hi Lou, thanks for the comments. I have had this same thing happen several times with the GBP/USD. The entry order price is hit exactly. Then the stop is picked off.
Steven

Looks like this happens very often...my experience is the same...that is why I am setting much wider stops now and closing rather manually (mental stop)

Regarding your specific USD/CAD spots for 6/11, my charts show the same as you noted with no unusual patterns associated.

REGARDING STOP LOSS SETTING:

A. What was time period of the chart you were trading, M1, M15, M30, H1, H4? 30 pips may or may not be appropriate. Consider using setting your stops based on some measure of volatility. If you use standard unchanging stops, you may stop out excessively in volatile markets, and not often enough in slow markets. I use N=2*ATR(20) as did the Turtles.

B. If you are not using a trend following system for entry/exit, your risk/reward should be very close >=0.5. Remember, your stop reflects your potential risk. What are your expected rewards in pips—are you a scalper, short-term pattern trader, trend follower? So your stop (a.k.a. risk) which may necessitate either increase/decrease of stop level, and/or changing chart period.

If you are using a trend follower system or any other “always in the market,” which continuously alternates from long to short to long …, you may not be using stops if you can tolerate the floating losses.

C. Consider that your stop represents your “equity at risk.” As such, equity at risk should generally not exceed 1% to 2% per trade. This is a very important money management concept.

D. Summary: your stop should be a balance among volatility, risk/reward, and 1% equity at risk. Stop setting is not as trivial as it may seem at first glance.

E. Finally, please see item #2 below regarding how precisely the market “picked off: your targets.


REGARDING STOPS BEING "PICKED OFF." Here are several ideas.

1. If you are worried about your feed/broker playing with the quotes/charts, try the following.

1a. First, look for internal consistency among the prices quoted by your broker at the smallest period, such a M1.

1a1. Check for agreement between the live chart (make a print out immediately), and check several days to one month later. Are all the bars the same or have some spikes disappeared? We have recorded phantom spikes.

1a2. Check for consistency among other quotes supplied by the same broker: live chart, tabulated quotes for several/all pairs, spot quotes for order entry/exit. Also check for the quotes from Bloomberg &/or CNBC. Are the quotes equivalent? Remember to consider the effect of differing spreads if necessary; otherwise, average spot should be the same. We have found average spot quotes inconsistent and still have no reasonable explanation.

1b. Check for consistency of M1 bars and/or spikes between your broker's charts and charts from some other broker, such as those from the various free demo account brokers with M1 charts. We have found significant spikes for one broker's charts but not another. Remember to adjust bars for differing time zones--some use GMT, some European Time, some USA EST or DST, etc.

2. The fact that your entry and stop were hit exactly is not surprising. Most players use round or "nice" number targets, ending in ...0, or ...5, such as 1.8765 or 1.7890. So if you are using support and resistance lines for setting entry, exit, stop, consider setting them above/below where the herd would set theirs; set yours above/below the herd and avoid commonly used nice numbers. When questioning stopped positions, remember to consider the spread--if your entry was on bid, then your exit will be on ask and vice-versa; the average quote is only a guide. Note the spread can dynamically change, so if you entered on a 5 pip spread, you may be exiting on a 6++ pip spread. The average quote does not count on entry and exit!

3. Market Makers can and do practice stop loss hunting. For example, GBP had been trending steadily upward for several days and momentum has finally dropped with the order of the day now being trading mode and whipsaws. The chart is now in a trading channel with a resistance level just above. Market makers trade in very large volumes compared to mortal retail traders (80% of the FX market). How can they liquidate their voluminous long positions to profit from the exhausted uptrend without immediately driving the market down (they have very high volume to unload)? Everyone is waiting for a breakout from the channel, and half expect a downward correction. Knowing that there are many positions with stops set at varying levels below the resistance, market makers may initiate an upward breakout with several closely spaced new long positions to lure the market into an uptrend bandwagon. Of course, bandwagoners would have believed this to be a true breakout and entered with stops. A few bars later with an impending strong breakout in the wings, the market makers true intentions become known to all, as they liquidate, slowly at first, recouping their sacrificial longs and continuing with heavy selling, which of course was their original intention. By initiating an engineered long breakout, market makers (and others in the know) were able to liquidate large volumes of long positions without immediately driving the price downward. As the price drops, a series of deeper and deeper stops are triggered, joined by others liquidators desperate to preserve some profitability in a chart that has quickly reversed into a panic-driven downtrend.

[Several Web training services use chart patterns to recognize such engineered situations of market maker influence and intentions.] Market maker manipulation differs from that described in item #1 above. These may be legal and would be somewhat ethical as long as the market maker does not infiltrate brokerage databases of positions and stops--traders [market makers] should be allowed to use the power of their equity, but should not trade with private information that is not available to the general trading public.

May the Trend be with you,
Paul Y. Shimada

When you have a doubt about an execution of an order, please do not hesitate to contact me or another market maker to check if the price really reached the price of the order.

Nico.

Regarding Forex “Spikes, Stop Loss Hunting,” etc., I have extracted an exchange from the following Web forum: http://groups.yahoo.com/group/Tradingstrategy/ Messages 8 and 24 have the clearest understanding of Spikes. I've included the other messages in the thread so you can appreciate how widespread the phenomena is. If you haven't been on the receiving end of a Spike, congratulations on your broker selection. But don't pat yourself on the back too quickly; keep your eyes and mind open, share your observations, warn the unwary.

Trade wisely, trade safely,
Paul Y. Shimada
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Message: 8
Date: Mon, 14 Jun 2004 09:41:45 -0500
From: "Kenneth Zambo" <[email protected]>
Subject: Trouble with CMS-VT spikes

Several times over the past two months, CMS-VT brokerage has shown a large spike on the AUD/USD for no apparent reason. The most recent occurred at 18-1900 hours Sunday night. Pair spiked up to 6943. However no other broker that I can find (FXCM, FXSOL, or Advanced GET) reports that same level. The highest report I can find is 6917. A couple of pips difference I can understand, but this is too large to ignore.

Plus, about a month ago, an even more disturbing spike occurred where the pair spiked up 80 and then down 100 and then back to the original level all within 5 minutes. I am beginning to think CMS may be playing some expensive games with their quotes.

Have any other CMS customers experienced these mystery spikes that are Not confirmed by other brokers?

DrZ
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Message: 9
Date: Mon, 14 Jun 2004 08:27:18 -0700 (PDT)
From: PogoDyn <[email protected]>
Subject: Re: Trouble with CMS-VT spikes

Hi Ken,

Here's what might me going on...

As you know, there are to sides to every transaction: If you're buying a pair, there must be a seller; if you're selling a pair, there must a buyer. And to facilitate the transaction, there has to be a broker. In a walnut shell, there are two types. One gets paid a commission for finding a party to take the opposite side their client's trades. The other automatically takes the other side of their client's trades; this is commonly what happens in the Forex (and doesn't charge a "commission" as we know it).

No big deal, right?

Hmmm. Well, not with the first. But if when you think about it, the second type of broker, by taking the opposite side of their client's trade, is actually trading against they're client. Some brokerages have trading desks for this express purpose and, because they have the advantage of controlling the data you see and when you see it on their chart free charting software, and because they know exactly where their clients are entering and setting stops, they have a distinct advantage over the unintiated trader and can make "things" happen in their favor.

Now, I'm not saying this is going on with CMS; I don't know. And what you're seeing may only be happening with their demo accounts because of server problems; I don't know this, either. It's just something to be aware of.

To combat this and to keep your broker "honest," one might run two or three data feeds (charting packages) occasionally to see if they're playing fair.. If they're not, you can call them on it and let them know you suspect something isn't quite right. Or, the better solution may be simply to switch brokers.

I hope this is in some way usesful.

Cheers,
CW
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Message: 11
Date: Mon, 14 Jun 2004 12:25:53 EDT
From: [email protected]
Subject: Re: Trouble with CMS-VT spikes

This is a very good explanation as to what is happening with CMS and they also do it on their real accounts, I have one, but I also do most of my trading on FXCM because they do not do this. FXCM is like the first type of broker. But the charts and their trading off the charts at CMS is great when they are not playing games for profit and when they are stable, which is occasionally.
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Message: 12
Date: Mon, 14 Jun 2004 11:16:04 -0500
From: "Kenneth Zambo" <[email protected]>
Subject: RE: Trouble with CMS-VT spikes

I suspect the latter. Have you found any brokers that you would consider to be above average? I had a demo account with FXCM and thought their platform very stable, but their charts are not very good ( IMHO). I like the VT charts but have some concerns about the brokerage. Any and all input is appreciated.

DrZ
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Message: 13
Date: Mon, 14 Jun 2004 09:44:11 -0700
From: "Rob and Natalia" <[email protected]>
Subject: RE: Trouble with CMS-VT spikes

Hey guys,

My real account did also spike but it only went up to the 50 period moving average line. I can't believe that the NFA would allow any broker to "make up" market moves just so they can fake losses and basically steal their customer's money. I did compare the time period to GFT's DealBook 2 and they didn't show it either.

Rob
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Message: 17
Date: Mon, 14 Jun 2004 13:08:42 -0400
From: Bodaire <[email protected]m>
Subject: Re: Trouble with CMS-VT spikes

Are you having trouble with the CMS charts and service being stable on a live account? I thought only the demo accounts were unstable and the live accounts had fantastic, stable feeds.

Bodaire
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Message: 19
Date: Mon, 14 Jun 2004 10:22:00 -0700
From: "Rob and Natalia" <[email protected]>
Subject: RE: Trouble with CMS-VT spikes

I have no complaints about their stability. There is no comparison to the demo accounts. This spike thing does have me a bit concerned though. I'm not sure if they knocked you out with one of them, you could do anything it. I'm really starting to wonder about the professionalism/stability of this company. Why would any company want to take a chance like that with their reputation with fake spikes? Or with one of the worst demo accounts in the industry that I'm aware of.

Rob
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Message: 21
Date: Mon, 14 Jun 2004 13:17:08 -0400
From: Bodaire <[email protected]>
Subject: Re: Trouble with CMS-VT spikes

There is no one Exchange for all forex trading like the NYSE does all stock trading. So different brokers use different banks (or different banks-that-have-grouped-together). This can make for a significant difference in prices. Particularly if the broker is associated with (funded by or a subsidiary of) the bank(s) they use.

Bodaire
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Message: 22
Date: Mon, 14 Jun 2004 10:33:45 -0700
From: "Rob and Natalia" <[email protected]>
Subject: RE: Trouble with CMS-VT spikes

So this should cause small differences between feeds. Not huge spikes like were talking about. Somebody is pulling something with that.
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Message: 23
Date: Mon, 14 Jun 2004 13:39:22 EDT
From: [email protected]
Subject: Re: Trouble with CMS-VT spikes

The real accounts are also NOT STABLE, but maybe better than the demo. I have not had a demo for over a year. They hit their worst around the first if the year and are doing a little better now. I find that they destabilize most of the time then the market starts to move. I have not kept track to be exact, but my guess would about 60-75% of the time. When the market is flat, the are stable. Games? Or just not willing to fix their problems? Your guess is as good as anyone's.
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Message: 24
Date: Mon, 14 Jun 2004 17:55:13 -0000
From: "fbsinvestments" <[email protected]>
Subject: Re: Trouble with CMS-VT spikes

Hi Rob, The spike usually occurs with the commodity pairs and JPY. JPY with its independent movement plus frequent BOJ intervention.

The defintion of an spike from our seminar material is:

Definition

The price moves beyond the intended intra-day trend reversal level and return to the existing trading level. Price move beyond the intra-day trend reversal level is more extensive than that of an Extended Rise / Correction.

During a Spike the rise / correction will happen as an Extended Rise / Correction and will return to the existing trading zone after some hours. A Spike is exactly the same as an Extended Rise / Correction but with greater extent.

Spikes are planned actions of the market makers to create panic and confusion. [My emphasis, Paul Y. Shimada]

Spikes will require quick and accurate reaction from the trader and is used to create panic and distressed buying / selling (“stop hunt” and “pump and dump” moves). In majority of cases the Spike will be in the direction of the Session Sentiment / Trend.

The recommended trading during a Spike:
- Strategic Level Trade with 50 pips intervals between Stop Levels and the next Position Level.
- Multiple Stop Trade
- Hedge Trade with Stop

Do not do two-way trading against the Session’s Trend.

The brokerages in FX market are defined as Inventory Type, where they carry the stock of positions that they got in a cheaper price and when you place an order they sell it to you. Also, in order to clear their transaction through the clearing house they need to balance their longd/shorts....

Therefore, all brokerages do cheat against their clients, it is matter of how often and how noticibly done. It is worse with the off- shore brokerages. [My emphasis, Paul Y. Shimada]

We can't do anything about it becasuse NFA has no firm regulatory body to govern this, so we have to always be prepared for such a false move done by the market makers. So far, with my real CMS account, I had not much of a problem, usually it is with the demo since they don't limit the period of demo subscription, there must be a huge traffic...

I am sorry if I discouraged you but this is the fact that FX trader should have know before going into actual trading.

Hope this helps you out.

Steve (FBS)
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I haven't seen any wild spikes on my broker's charts yet (apart from data release).
What do you mean by 'all brokerages do cheat against their clients' ? Does it mean there are no decent brokerages at all?
btw: who is your broker?