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When small account becomes LARGE...

  • #1
  • First Post: Sep 23, 2008 10:32am Sep 23, 2008 10:32am
Greetings to everyone,

I was messing around between various brokers, ECN and Retail.
After reading the sticky post here about differences between the two, i've come to a question i was not able to answer, not without the help of a more experienced trader.

If you squeeze out a nice strategy that applied can grow your capital, you gain by percentage, depending on account balance.
If you reach the very top, let's say a reference number, 30M $, how can you keep trading such amount? keeping leverage of 50:1 or if possible 100:1?
Ofcourse i am talking of a safe strategy and assuming the risk is the classic widespread percentage of 3% each trade... so the broker would be exposed not to 100% capital risk multiplied per the leverage, but just the 3% of it * leverage.

I had a chat with HotspotFX and they said there is no account top limit, and i know that oanda limits orders to 10M units, but in demo, you can have multiple 10 Mil. orders at a time with one currency, so the limit is to consider... limitless?

but if retail really take positions against you, if you were right, didn't they just go broke? (if you still use Retail at that level)

OR when you reach such heights you just do your trading with different instruments that US mortals are used to?

If any of you has insights or wants a clarifications, here to answer!

thanks
jj
  • #2
  • Sep 23, 2008 11:14am Sep 23, 2008 11:14am
Just a simple things.
If retail broker does takes position again you and you're experienced trader with very high trading size and they won't be stupid to take position again you because they will lose large amount of money.Then someday, they will go out of bussiness.
But ECN broker doesn't trade again you so nothing called maximum with them. You trade big, their profits big.
Sorry if my english grammar sometimes being crazy.
Rich is just a definition !
  • #3
  • Sep 23, 2008 11:23am Sep 23, 2008 11:23am
If you trade long term, strategic positions you are only limited by your margin. If you trade shortterm 1 click per trade you are also limited by liquidity. For example right now on HotspotFXi 1 mio eur/usd is 1-2 pips wide, 50 mio. is 5-8 pips wide, fluctuating. It also depends on the time of the day, on european noon there was 80-100 mio. available, during asian session usually not more than 20 recently. I doubt very much you will get 1:100 for a large account, but margin haircuts are negotiable with the primebroker (its his credit you are going to trade on).

Why do you think Oanda would take huge directional risk in their books, they are brokers not traders. Makes no sense.
  • #4
  • Sep 23, 2008 11:36am Sep 23, 2008 11:36am
i was just pointing out that the (oanda) platform limits to 10 Mil and you can open various 10Mil orders. i don't know if you can do it live though...

I already know that ECN gains are made by commissions, and thanks to the second user now i know that you can negotiate leverage when you reach such high level trading.

I was just asking myself IF and just IF, one successful FOREX trader should then change his trading environment just because he can't obtain the same performance as he had previously...

ofcourse one can subdivide money between brokers, but that's not the point of the topic, or is it?
  • #5
  • Sep 24, 2008 11:32am Sep 24, 2008 11:32am
A few answers:

1) Leverage tends to tighten up as you grow, but it is negotiable. 50:1 is certainly achievable at the amounts you inquire about.
2) You will change venues, and no longer use retail brokers.
3) The amount of money you can make is limited by liquidity. Liquidity varies by pair, by broker, and by time of day.
4) Ultimately you will need to use multiple venues.
5) Managing larger trade size requires more staff and/or good automation.
6) If you make too much money at one place, even an ECN, you will tend to find your trading environment "degraded".
  • #6
  • Sep 24, 2008 1:03pm Sep 24, 2008 1:03pm
Quoting jennajameson
but if retail really take positions against you, if you were right, didn't they just go broke? (if you still use Retail at that level)
retailers don't ALWAYS take positions against you. If they would trade against you always, they would go broke as u mentioned it.

Retailes take the other side of the trade only based on certain conditions (i.E. has the trader a winning or losing track record, how much money is involved etc.etc.)
Forex is a losers game.
  • #7
  • Sep 24, 2008 1:14pm Sep 24, 2008 1:14pm
Please don't make the mistake to use a calculator to compute how rich you will be in 5 years. I did it, and it doesn't work that way.

Just trade your way. And if you reach the limit of 100 standard lot (= 10,000,000 units) please ask again. I doubt you will (and want to) ever exceed this limit...
  • #8
  • Sep 24, 2008 2:08pm Sep 24, 2008 2:08pm
Quoting Xaron
Please don't make the mistake to use a calculator to compute how rich you will be in 5 years. I did it, and it doesn't work that way.

Just trade your way. And if you reach the limit of 100 standard lot (= 10,000,000 units) please ask again. I doubt you will (and want to) ever exceed this limit...
LOL ...
  • #9
  • Sep 24, 2008 2:59pm Sep 24, 2008 2:59pm
Quoting trader121
retailers don't ALWAYS take positions against you. If they would trade against you always, they would go broke as u mentioned it.

Retailes take the other side of the trade only based on certain conditions (i.E. has the trader a winning or losing track record, how much money is involved etc.etc.)

wrong, wrong, wrong. Depending how much capital a company has they will open their entire book. Second, they might run two books. Third, unless they suck at managing risk they would rarely look at a client on an individual basis unless you are picking their latent feed. Finally, companies that manage risk well would manage overall risk and not single traders. They manage flow not joe shmo fx trader.
  • #10
  • Sep 24, 2008 4:53pm Sep 24, 2008 4:53pm
Quoting Xaron
Please don't make the mistake to use a calculator to compute how rich you will be in 5 years. I did it, and it doesn't work that way.

Just trade your way. And if you reach the limit of 100 standard lot (= 10,000,000 units) please ask again. I doubt you will (and want to) ever exceed this limit...
I already read of that commonplaces, and digested them pretty quick.
This is a thread moved by curiosity, what happens to next level trading and to discover why calculations aren't always what one might think, because the problems at that heights are just WAY beyond the ones one might encounter at the start.
  • #11
  • Sep 24, 2008 6:35pm Sep 24, 2008 6:35pm
Quoting jennajameson
Greetings to everyone,

I was messing around between various brokers, ECN and Retail.
After reading the sticky post here about differences between the two, i've come to a question i was not able to answer, not without the help of a more experienced trader.

If you squeeze out a nice strategy that applied can grow your capital, you gain by percentage, depending on account balance.
If you reach the very top, let's say a reference number, 30M $, how can you keep trading such amount? keeping leverage of 50:1 or if possible 100:1?
Ofcourse i am talking of a safe strategy and assuming the risk is the classic widespread percentage of 3% each trade... so the broker would be exposed not to 100% capital risk multiplied per the leverage, but just the 3% of it * leverage.

I had a chat with HotspotFX and they said there is no account top limit, and i know that oanda limits orders to 10M units, but in demo, you can have multiple 10 Mil. orders at a time with one currency, so the limit is to consider... limitless?

but if retail really take positions against you, if you were right, didn't they just go broke? (if you still use Retail at that level)

OR when you reach such heights you just do your trading with different instruments that US mortals are used to?

If any of you has insights or wants a clarifications, here to answer!

thanks
jj

Hotspot have two platforms Ones for Institutional and the other retail.
Once your trading amounts to start to grow, it may worth a chat to the insto guys to see if you can switch.
You will need a prime broker so your financials have to stack up.
For large size trading stay with the ECN's.
Market makers can be pedantic about you making them lose cash.
Sometimes its worth giving them a smack just to see them squirm
  • #12
  • Sep 24, 2008 7:58pm Sep 24, 2008 7:58pm
Thanks for the replies, all well accepted, i thought a flaming topic would develop from this post

i also seen some comments on EBS (icap), and read something about ebs software inside the bloomberg terminal and bloomberg professional service... anyone that can clarify on this EBS part? other that they are just for hedge fund managers (and i am telling just the "ordinary man" without counting corporations), big big... big players out there...
  • #13
  • Sep 24, 2008 8:29pm Sep 24, 2008 8:29pm
Quoting jennajameson
but if retail really take positions against you, if you were right, didn't they just go broke? (if you still use Retail at that level)
Plain an simple, if you win, you take money out from the broker's pocket. If you lose, you give them money.

But do remember that 90% traders lose money so brokers dont go broke.
However, I was told by a friend working in a broker that, successful traders are screened and placed in manual execution. while the more successful traders' orders are re-directed to other brokers.
  • #14
  • Sep 25, 2008 8:11am Sep 25, 2008 8:11am
Quoting BurgerKing
Plain an simple, if you win, you take money out from the broker's pocket. If you lose, you give them money.

But do remember that 90% traders lose money so brokers dont go broke.
However, I was told by a friend working in a broker that, successful traders are screened and placed in manual execution. while the more successful traders' orders are re-directed to other brokers.
but this is only to MM, no? What about Interactive Brokers, Dukascopy, etc?
  • #15
  • Sep 27, 2008 8:25am Sep 27, 2008 8:25am
Quoting Xaron
Please don't make the mistake to use a calculator to compute how rich you will be in 5 years. I did it, and it doesn't work that way.

Just trade your way. And if you reach the limit of 100 standard lot (= 10,000,000 units) please ask again. I doubt you will (and want to) ever exceed this limit...

Let him be greedy and have some sweet dreams as we all did
  • #16
  • Sep 27, 2008 8:35am Sep 27, 2008 8:35am
Quoting BurgerKing
Plain an simple, if you win, you take money out from the broker's pocket. If you lose, you give them money.

But do remember that 90% traders lose money so brokers dont go broke.
However, I was told by a friend working in a broker that, successful traders are screened and placed in manual execution. while the more successful traders' orders are re-directed to other brokers.

Are you sure of this?
What I know that brokers make money only on spreads. All the loss or profits on trades are going to or coming from their liquidity provider.
Unless they want to play as liquidity provider and take the money of these 90% traders. is this what you call Market makers?

thanx
  • #17
  • Sep 27, 2008 12:23pm Sep 27, 2008 12:23pm
I don't understand this talk of brokers trading either. Trading is one thing and it's not related and even if some brokers trade it's not with your money probably (I hope for your sake). Second thing is hedging your trade by providing liqiudity by themselves. Oanda does that and so do other brokers. When you buy you buy from them and they're then on the sell side of the trade, but their net exposure can be and is small as they hedge all their other customer orders against each other and any large net exposure they close by taking the opposite side of the exposure through their liquidity providers - the big banks and such. Their profit is from the spread difference of the spread you get and the lower spread they get from the banks.

In regard to large orders such brokers might have a problem to hedge the order internally and may have to limmit their exposure through the banks which could cause some problems with such orders, I imagine, don't know really. But if the size is still acceptable for them then there should be no reason for them to care if you win or lose while they're hedged - they make their spread difference either way.

Anyway, I'm defenitely planning to find out what goes down with really large accounts sometime in the not so far future...
On the path to Enrichment.
  • #18
  • Sep 27, 2008 1:16pm Sep 27, 2008 1:16pm
Quoting lasty
Hotspot have two platforms Ones for Institutional and the other retail.
Once your trading amounts to start to grow, it may worth a chat to the insto guys to see if you can switch.
Interestingly enough, you can get on FXi with as little as $25k these days (was 10x that amount a year or two ago). The liquidity is surprisingly somewhat sparse too. Perhaps the two are correlated. I'd recommend other venues these days with deeper liquidity pools.
  • #19
  • Sep 28, 2008 11:46am Sep 28, 2008 11:46am
I've been on FXi for a couple of months, and I find the liquidity to be roughly comparable to the 3 other ECN's where I have experience. Their liquidity during Asian session sucks, but is pretty good during New York.
  • #20
  • Last Post: Sep 29, 2008 10:48am Sep 29, 2008 10:48am
Quoting shooting15
I've been on FXi for a couple of months, and I find the liquidity to be roughly comparable to the 3 other ECN's where I have experience. Their liquidity during Asian session sucks, but is pretty good during New York.

I've bee on it for almost two years now and their liquidity sucks all around compared to what it was and compared to another ECN that I am currently using. However, liquidity in general is not there these days due to current market conditions. Lehman being gone has really really sucked and it has caused issues with Goldmans spreads which again sucks.,
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