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Price movement as a function of Supply and Demand

  • #21
  • Edited 3:34am Jan 24, 2007 3:21am | Edited 3:34am
A message sent by Felix:
Quote
On a positive note to conclude this review, a trader from JP Morgan lost $218 million today on a speculative trade on the GBP/USD. Bank of China dumped the pounds earlier today during the UK session, then JP Morgan followed the lead. Then a big Middle Eastern bank bought a bunch of pounds, and reversed the direction, and caused a very big loss to JP Morgan. I hope that trader that lost so much didn't lose his job... I am sure you won't hear about this on the news, but the loss could be seen by one of my friends on the interbank feed in the order flows. Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy

Order flows, Order Flaws!
  • #22
  • Jan 24, 2007 3:51am Jan 24, 2007 3:51am
Maybe ask Felix. I will too. He says that Rob has over a million dollars in his account and because of that and his connections that's how he gets it. It sounds legit. I read Felix's emails and try to read in between the lines when he is bring up Rob. Sounds like the info he has will show that there are orders not way out in the future but ready to be placed say right at the opening of the NY session.
Quoting BurgerKing
Felix of KingForexSignal claims that his partner ROB has access on these info and the reason why he is making good pips day by day - claiming to have more than 600 pips for January already.

600 pips with 1 lot is a good $6000. That is stupenduously good if you ask me.

Either the claim is a myth or fact remains the mystery. Thus why I am curious about all these. The FXCM Orderflow is vague. Yesterday, they claim that there are heavy USDJPY sellers (exporters and profit takers) at 121.50 which takes to mean to limit any USDJPY rally. Guess what? USDJPY still manage to shoot past 121.70. So the FXCM orderflow is crap data board. IF I remember it right, I used their orderflow info months ago as confirmation to my TA trades - crap lost most of the time.

I had long since thought that FXCM's orderflow is mis-information meant to screw traders to loose money (like I did). Hmm.. perhaps I should take that orderflow and "think the other way".
  • #23
  • Jan 24, 2007 4:16am Jan 24, 2007 4:16am
Quoting BurgerKing
Felix of KingForexSignal claims that his partner ROB has access on these info and the reason why he is making good pips day by day - claiming to have more than 600 pips for January already.
well he doesnt calculate his pips like that.
if he made 3 pips, but traded 10 units, he count it as 30 pips
from wat i know, he normally trades 2 units
so its more like 300
and you never get in at his price, he has 1 pip spread so when he claims he's making $$$ on a 5 pip profit trade,50% of the peeps in the room might actually be losing.
I tried out his service and got my refund.
For the price he's charging, i'll rather go with the james16 group education.
  • #24
  • Jan 24, 2007 4:24am Jan 24, 2007 4:24am
Quoting goodthings
Sounds like the info he has will show that there are orders not way out in the future but ready to be placed say right at the opening of the NY session.
even if we have access to the "platinum data" called order flow, we would still need to have a skillful understanding of price action. IMO, ultimately the best money in forex is on observing the zone of price exhaustion. That "pause point" is many times where the order flow is crossing the matrix of supply and demand. Having a good source of up to the minute bank news will give needed confirmation of what your eyes see is happening on the chart.
  • #25
  • Jan 24, 2007 4:33am Jan 24, 2007 4:33am
Hi Folks !

I give you a little hint....

Draw horizontal lines on your chart at levels ending with 00 or 50
and go back in the past.....

Stop hunting rules

Greetings

Bernhard

P.S. A very good book on market microstructure is from Larry Harris
The title is "Trading and exchanges, market microstructure for
practitioners"

It's available at amazon
  • #26
  • Jan 27, 2007 5:40pm Jan 27, 2007 5:40pm
Quoting behof
...Draw horizontal lines on your chart at levels ending with 00 or 50
and go back in the past.....

Stop hunting rules

...
I am interested in stop hunting and how these brokers do so...
Anyone knowledgebale on this?
  • #27
  • Edited Jan 28, 2007 3:18am Jan 27, 2007 7:19pm | Edited Jan 28, 2007 3:18am
Making Sense of FX Broker Stop Loss Policy

Why do on-line FX brokers guarantee stops at all? The answer is simple; they make a lot of money from it. Only the on-line FX brokers handle stop loss orders such that a customer?s stop loss order is executed when the level is reached and not breached. In fact, in FX banking the etiquette is to not fill a stop until 3 points or so breaches the level.
For example, if you leave a stop loss at 1.2150 with a bank, your stop loss order is unlikely to be filled unless the market trades 1.2147 (meaning deals are actually done at that rate); and then the Bank will likely fill your order at 1.2148 or 1.2149. In the on-line brokers if the market trades at 1.2155 and the broker makes the rate 1.2150-53 you?re stopped out at 1.2150.
What?s particularly disturbing is the low trade may actually be 1.2155, even; it is not at all unusual for the on-line broker to "jack in" a low ball rate and "run" the stops; meaning execute the stop loss orders at 1.2150 (buying from customers at 1.2150) and selling to Banks at current market price 1.2155.
This ability to arbitrarily "jack in" off market rates is the cornerstone of broker profitability and clearly explains why brokers that guarantee stops choose to do so. The fact is if the broker didn?t guarantee stops then nobody would leave stops and the lucrative stop running strategy would not exist.
Another benefit of having an order book of stops is the potential to use the stops to offset a wrong market position or to get a right one. Case in point; on August 6th, 2004, as seconds ticked on toward 8:30am and the release of non-farm payroll EURUSD was marching into the mid 1.2060s; one broker jacked in a 1.2032-1.2035 rate.
This clearly off-market rate caused hundreds of customer long EURUSD positions to be stopped out; in effect all the customer long positions became broker long positions. It is unclear whether the broker knew the non-farm payroll number when the off market rate was jacked in but it was a no lose situation for the broker.
As it turned out the EURUSD price was 200 points higher right after the number; so instead of the customers making 200 points the broker made between 210 and 230 points, depending where they bought the customers EURUSD position (where they stopped out the customer).
The bottom line here is that FOREX brokers that routinely do not simultaneously offset their customer transactions with Banks are in effect strictly market makers and as such have a fiduciary responsibility to treat their customers orders fairly and honestly. Just because a customer signed a client agreement that says the broker rate can be different than the market rate does not mean a broker can make a "flash" price for a nano-second and clean house ? take all the customers positions for themselves, regardless of where the market really is.
When a broker that acts primarily as a market maker jacks in an obviously off market price by 30 points and makes millions of dollars by doing so the regulators ? CFTC ? should at least acknowledge that a situation exists. In this case despite hundreds of complaints I have not heard a single word from the CFTC concerning this matter.
I have called many times and have yet to get a response myself. If the public is indeed protected by these brokers being registered CFMs; well where is the protection when we need it. Where is the CFTC on this matter? The question to be raised if this situation is "swept under the rug" is this; Can anyone with adequate capital become a CFM and do what they want ? provided they have the capital? If so, what kind of "business people" is FOREX inviting?
I personally would like a call from the CFTC so I know that the matter is at least being looked into. There is not a single knowledgeable trader, broker, or informed individual that does not realize that a grave injustice has been done here. If the buck does not stop here, I am afraid on-line FOREX trading is doomed.
Jimmy Young - {Link removed, see rule 3}
  • #28
  • Jan 27, 2007 7:53pm Jan 27, 2007 7:53pm
Please God, just let him tell me the name of 1 broker that quotes off market pricing. Single-handedly bankrupting a broker sounds like so much fun.
  • #29
  • Jan 28, 2007 4:57pm Jan 28, 2007 4:57pm
A message sent by Felix:
Quote:


On a positive note to conclude this review, a trader from JP Morgan lost $218 million today on a speculative trade on the GBP/USD. Bank of China dumped the pounds earlier today during the UK session, then JP Morgan followed the lead. Then a big Middle Eastern bank bought a bunch of pounds, and reversed the direction, and caused a very big loss to JP Morgan. I hope that trader that lost so much didn't lose his job... I am sure you won't hear about this on the news, but the loss could be seen by one of my friends on the interbank feed in the order flows. Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy



I read the above comments from Felix in the email last week and fell off my chair laughing. Unless my knowledge of fx is totally flawed, this has got to be the biggest BS I have read for a while. Could someone who actually trades on true interbank market (and I know there are a few ppl here), clarify, is it remotely possible for someone to "see the loss someone else is making". My understanding is, you can see the bids and offers all the time, but no way you can see which one person/entity is buying and selling at anytime.

I am very happy to be corrected.

Cheers,
K.
  • #30
  • Jan 28, 2007 5:07pm Jan 28, 2007 5:07pm
Quoting kermut
A message sent by Felix:
Quote:


On a positive note to conclude this review, a trader from JP Morgan lost $218 million today on a speculative trade on the GBP/USD. Bank of China dumped the pounds earlier today during the UK session, then JP Morgan followed the lead. Then a big Middle Eastern bank bought a bunch of pounds, and reversed the direction, and caused a very big loss to JP Morgan. I hope that trader that lost so much didn't lose his job... I am sure you won't hear about this on the news, but the loss could be seen by one of my friends on the interbank feed in the order flows. Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy



I read the above comments from Felix in the email last week and fell off my chair laughing. Unless my knowledge of fx is totally flawed, this has got to be the biggest BS I have read for a while. Could someone who actually trades on true interbank market (and I know there are a few ppl here), clarify, is it remotely possible for someone to "see the loss someone else is making". My understanding is, you can see the bids and offers all the time, but no way you can see which one person/entity is buying and selling at anytime.

I am very happy to be corrected.

Cheers,
K.
I'm not on EBS, but if it's like all the other institutional platforms, then no you can't see another parties losses. You have absolutly no way of knowing the couterparties positions. A sell limit order could represent either a liquidiation of a long position or the initiation of a short position. Without knowing the counterparties current exposure, all you can do is guess.

The trader at JP Morgan could have just a seasily PROFITED $218m and neither Felix or his mythical friends would be the wiser.
  • #31
  • Jan 28, 2007 8:17pm Jan 28, 2007 8:17pm
Quoting Darkstar
I'm not on EBS, but if it's like all the other institutional platforms, then no you can't see another parties losses. You have absolutly no way of knowing the couterparties positions. A sell limit order could represent either a liquidiation of a long position or the initiation of a short position. Without knowing the counterparties current exposure, all you can do is guess.

The trader at JP Morgan could have just a seasily PROFITED $218m and neither Felix or his mythical friends would be the wiser.

Nowhere in Felix's message does he say that he's noticed that trader's losses on a particular platform. If the story is true, it's obviously come from soemone who works for JP Morgan or someone else who has some inside information.
  • #32
  • Jan 28, 2007 9:31pm Jan 28, 2007 9:31pm
Quoting PipStar
Nowhere in Felix's message does he say that he's noticed that trader's losses on a particular platform. If the story is true, it's obviously come from soemone who works for JP Morgan or someone else who has some inside information.

I would have to disagree Pip. Below I have underlined his comment about this particular transaction. It clearly states his friend could see the the loss on the feed in the order flows.

Either way, this thread is not about what he said or did not say, so don't want to take it down that path. I commented on it from BK's posts because it either sounds like BS, or there is a bit of a gap in my understanding of fx.



message sent by Felix:

Quote:
On a positive note to conclude this review, a trader from JP Morgan lost $218 million today on a speculative trade on the GBP/USD. Bank of China dumped the pounds earlier today during the UK session, then JP Morgan followed the lead. Then a big Middle Eastern bank bought a bunch of pounds, and reversed the direction, and caused a very big loss to JP Morgan. I hope that trader that lost so much didn't lose his job... I am sure you won't hear about this on the news, but the loss could be seen by one of my friends on the interbank feed in the order flows. Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy


Cheers,
K.
  • #33
  • Jan 28, 2007 9:32pm Jan 28, 2007 9:32pm
Quoting kermut
... I am sure you won't hear about this on the news, but the loss could be seen by one of my friends on the interbank feed in the order flows.
It's plainly evident Felix has never seen an institutional platform.

I'm not sure why people even bother to listen to this guy anymore. He found one arbitrage opportunity (which was glaringly evident to anyone bothering to look at the platform) and was too stupid to keep his mouth shut about it. I guess there are suckers still born every minute...
  • #34
  • Jan 28, 2007 9:33pm Jan 28, 2007 9:33pm
Quoting kermut
I would have to disagree Pip. Below I have underlined his comment about this particular transaction. It clearly states his friend could see the the loss on the feed in the order flows.

Either way, this thread is not about what he said or did not say, so don't want to take it down that path. I commented on it from BK's posts because it either sounds like BS, or there is a bit of a gap in my understanding of fx.
DOH! Beat me to it.
  • #35
  • Jan 30, 2007 10:16pm Jan 30, 2007 10:16pm
The key to supply and demand is on the chart, not in some news release.
  • #36
  • Edited Jan 31, 2007 3:46am Jan 30, 2007 11:18pm | Edited Jan 31, 2007 3:46am
I was pondering deeper into what Felix posted about the $218M loss by JP Morgan.

At the time that info was emailed, GBPUSD just retreated from the 1.9900s record. Let us assume that JP Morgan lost 50 pips, how much volume is required to loose $218M? Assuming they lost 50 pips (Sold at 1.9850 and bought it back at 1.9900).

$218M / 50 pips = $4.36M per PIP.
IF a Standard Lot amounts to $10 per pip, then
$4.36M / $10 = 436,000 LOTS or equivalently GBP43.6 Billion or USD86.5 Billion

Is it possible for a Private Bank to unload this much in one go?

This supposedly happened last Jan 23, several days after the US Retail Sales on Jan 19. US Retail Sales was very USD Positive but whipsawed. According to Felix's SNW performance website, THEY LOST on this day!

Read the email once again: "Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy".

I believe that Felix wanted to give his members some confidence in the SNW service (as the signals were strong but the currency movements were not) by telling us that "bank traders lost a lot more than we did".

Gathering all the information, personally, I think this story is BS.
  • #37
  • Mar 29, 2007 9:26am Mar 29, 2007 9:26am
Quoting BurgerKing
I was pondering deeper into what Felix posted about the $218M loss by JP Morgan.

At the time that info was emailed, GBPUSD just retreated from the 1.9900s record. Let us assume that JP Morgan lost 50 pips, how much volume is required to loose $218M? Assuming they lost 50 pips (Sold at 1.9850 and bought it back at 1.9900).

$218M / 50 pips = $4.36M per PIP.
IF a Standard Lot amounts to $10 per pip, then
$4.36M / $10 = 436,000 LOTS or equivalently GBP43.6 Billion or USD86.5 Billion

Is it possible for a Private Bank to unload this much in one go?

This supposedly happened last Jan 23, several days after the US Retail Sales on Jan 19. US Retail Sales was very USD Positive but whipsawed. According to Felix's SNW performance website, THEY LOST on this day!

Read the email once again: "Why is it a positive note? Well...apparently bank traders lose money too once in a while. And if you broke even today, or had a small loss, I hope it wasn't as much as $218 million, and you should be happy".

I believe that Felix wanted to give his members some confidence in the SNW service (as the signals were strong but the currency movements were not) by telling us that "bank traders lost a lot more than we did".

Gathering all the information, personally, I think this story is BS.
Banks must be trading on 1:1 leverage. It doesn't make any sense otherwise...
  • #38
  • Mar 29, 2007 10:56am Mar 29, 2007 10:56am
I use candlesticks in tring to determin suply/demand. It's not very relevant,but it was the best thing I could ever find
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #39
  • Apr 11, 2007 12:52pm Apr 11, 2007 12:52pm
I must agree with Darkstar. I don't think that F. guy has ever seen an Institutional Platform.

First of all. Sometimes I keep reading this "the big guys this, the big guys that" - I might remind you that the "big guys" loose, too. And not to shabby.

I collect EVERYTHING Forex/Trading related from Newspapers, Magazines, etc. I have one Newspaper clipping that explained in detail W. Buffets loss.

Warren Buffet >> lost in one year 1 Billion Dollars.....sorry, wrong side of the market.

Banks loose all the time, but they offset it with other trades and gain on commissions, interest rates from us - all the suckers that have to borrow money. Expensive money.

Right now I'm reading "The Vandals Crown - How Rebel Currency Traders Overthrew the Worlds Central Banks" by Gregory J. Millman.
I'm not through the book, but this book is an eye opener. It starts at the roots of trading - supply and demand and inflation. He explains inflation from an historical point, but thats another story. The point is, the book mentions Traders stories "from the trenches" and some of these guys have lost BIG time. Just like us! Only with bigger sums! (ONE trader lost 700 Million, also remember Nick Leeson??? Don't know him? Read it up here http://www.answers.com/topic/nick-leeson-1 - the guy used twice the amount of Barings Banks capital to trade and lost 1,4 Billion Dollars, which led to the Banks collapse! Imagine ONE GUY, like YOU and ME, doing the VERY SAME THING we're talking about and did mistakes. Isn't life sweet? This means they are humans like YOU and ME. Humans make mistakes. Don't be mistaken by the big flashy trading rooms. They don't make my stupid mistakes, but other stupid mistakes TIMES hundreds of millions dollars/yens/euros....)

Second. What bothers me with this discussion is that it goes a bit against what you read in most books or learn from REAL Bank Pro's. Here again:

FOREX is NOT centralized as a market. Banks try to "trick" each other....they would NEVER give away they're Order Flow! Are you crazy??? The REAL Orderflow is UNKNOWN - please correct me if I'm wrong, I like to learn, but I could show you example after example that shows evidence for an UN-centralized market.

Yes. You could be hooked up to a big financial Institution and "see" the Orderflow for a couple of Thousand Traders, maybe that gives you a good hint. And YES, the COT Report does help to get a sense for the next big trend, BUT...

....you CANNOT foresee when some country does some speed train deal and has to exchange a couple of billions to clear the contract (or it is payed over several months/years and they will offset the exchange at certain moments, once the market shows a favorable price level). Also companies have to exchange currencies and give orders to they're accounting departments at a certain point in time - THAT THE OTHER PLAYERS DON'T KNOW!

This makes this game so difficult, I would stop looking for some "nice kick ass database" up-to-the-date with all the BUY/SELL Orders in order to take a position.

Should you find that "mysterious database", please come back here and share it as a good FF member that you are .

Peter.
  • #40
  • Apr 11, 2007 1:54pm Apr 11, 2007 1:54pm
Profiting With Forex is a good book regarding how supply and demand affect the price of currency. No info on where to get order flow, but powerful and easy to understand fundamentals for sure...
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