My answer to your last question is because I have a person who is an ex employee of a brokerage firm saying this was a "normall practice"
What more can I say ?
What more can I say ?
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Quoting boycieDislikedMy answer to your last question is because I have a person who is an ex employee of a brokerage firm saying this was a "normall practice"
What more can I say ?Ignored
Quoting JohnFXDislikedIf they can "stall" the market during low volume I'm sure they do to prevent a limit from being hit, if the trade is going against them. But, once outside volume comes in and the market gets really moving there's not much they can do except let the market go where it's going.
JohnFXIgnored
Quoting fdiskDislikedI agree that visual stops or mental stops are best, But what about putting a limit in. Would they try to avoid getting to your limit ???????????Ignored
Quoting narafaDislikedIf you would accept my opinion, it's still a zero sum market. The 2 traders lost money and the broker won this same amount of money. The broker or the market maker was actually acting as a trader in this example, so the broker cashed in the losses of the 2 traders, zero sum, isn't it??
Thanks,
NaderIgnored
Quoting PipstaDislikedI'm a little naive on this subject. Are people suggesting brokers are actually engaging in trades to move the market to hit stops? Or are people suggesting they manipulate the price feed so that it appears to have moved just on that one trader's platform?...or both.Ignored
QuoteDislikedI have to wonder even during thin maket times how much they would have to trade with to be able to make a move of 20 pips. I would think they would have to dump quite a bit into it to get the desired results and then they got to figure out how to layer their trades so they could actually cover the money they've put out to hit a measly stop on a little trader. Plus they already have gotten their spread. Why would they do that just to make someone else lose their money if it doesn't actually help them make even more.
QuoteDislikedIt just doesn't make sense to me why they would do it. If they can make money while moving the market, not becuase they make you hit a stop, why would they even care where your stop is? If they are making money by moving the market, I don't see the reason why they would be stop hunting.
QuoteDislikedI guess I don't see it as much because I use strategies and margin that allow me to have huge cushions.
Quoting fijitraderDislikedThey only make money when they move the market quickly in small ways that causes a bunch of orders to get executed with a loss in a short period of time. This is low risk and high rewared.
FTIgnored
Quoting fijitraderDislikedAre you saying that the broker does not have to pay a spread for his money? Sure he may not have to pay it on that trade if he buckets it but has he not been paying a spread on the IB all along? Ultimately everyone in the game has costs that siphon off profits. Fees are being payed all the way along by all participants. The fees siphon money out of the game. If a bunch of people are sitting round a poker table and the collective stake is 20k and nobody has any fees to pay out of that 20k then it is a zero sum game. If the game goes on for several days and 20k is the aggregate total funds for all players and it is decided that with each bet placed that 1 percent will be set aside to pay the hotel room fees then it is a negative sum game because with each bet a little more of the pot is removed and each player loses something as the game progresses. The true test of a zero sum game is that if you take a finite amount of money and declare that no more can enter the game. Now play that game forever. Does the pot eventually get smaller due to fees or other means of attrition? Then it is negative sum.
Take the same set of players with the same 20k aggregate stake. Now imagine that all accommodation and meals etc. are paid from an outside source. Is that zero sum or negative sum? If the economy has inflation you could call it a negative sum game because the collective stake will be worth less inversely less than the inflation eating away at the value of the currency. It is all a matter of perspective because the example you proposed does look like a zero sum situation. However the key to that issue is that the broker does not keep returning to the table with the same amount of money. They always come back to the other players with 3 pips less. Each player starts with a loss except the broker. Therefore the game for the broker is always positive sum and the game for the players is always negative sum. Another way to position it is to see what happens if the players were to enter and leave the market before price moved. Each bet they made had no price movement. They put 10k on the table and take 997 off. That is negative sum. Look at the broker. In each case he puts 10k on the table and if there is no price movement and he exits he takes 10,003 off. That is positive sum.
FTIgnored
Quoting narafaDislikedIn the case of poker, the one on the sidelines is always winning, and this makes the poker game being played a negative sum game. But in the case of the forex broker or market maker, he is into the game sometimes. He is the market maker, he buys from people who want to sell, and he sell to people who want to buy, so he is into the game, he is always having positions.
Thanks,
NaderIgnored