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Market Structure Question

  • #1
  • First Post: Apr 30, 2009 12:46pm Apr 30, 2009 12:46pm
Hey guys,

I have a question regarding market structure that I have asked in this forum before, but have not really received an answer. So I will ask it again in its own thread.

How exactly does the interbank market close for the weekend? Does Reuters and EBS shut down Friday at 5pm EST, just like the Australian Stock Exchange does every afternoon, or are orders matched at any time (including weekends)? If the deal matching systems do shut down, do the banks continue to trade via other mechanisms?

Also, how does the commencement of trading take place between the major banks at the end of the weekend? Is there an exact time that banks start trading with one and other?

Anyone have any ideas?

Cheers
  • #2
  • Apr 30, 2009 1:46pm Apr 30, 2009 1:46pm
there's a senior trader called Jay Norris, his username here is Trout, i believe he's one of those who can provide with you accurate answers for this kind of questions.
I recommend you read something else as this sentence is now concluded.
  • #3
  • May 6, 2009 3:29am May 6, 2009 3:29am
Doesn't anyone out there have the answers to my questions?
  • #4
  • May 6, 2009 3:48am May 6, 2009 3:48am
FX-markets close with the last daylight-zone on Fridays (NYK) and open with the first daylight-zone on Mondays (Asia - which makes it Sunday evening for Europe).

That goes for retail and most ECN's. The order books move with the daylight zones.

There is no order matching inbetween.


regards
daytrading
Enter Signature
  • #5
  • May 6, 2009 3:53am May 6, 2009 3:53am
It never closes, it's just that the banks aren't open anywhere so volatility is dead. You can still go to the bureau de change and make a transaction, although you might not like the spread. The Ozzie stock exchange has a designated open and closing time because it is an exchange upon which the stocks which are listed upon it are bought are sold. The FX market is OTC, all it takes is a buyer and seller with effective demand and supply to meet for business to be done. The vast majority of business is conducted on Electronic Communication Networks which the banks are wired up to, but as the banks aren't trading on the w/e, then these lie dormant until the banks in Asia open on Monday morning.
  • #6
  • May 6, 2009 4:34am May 6, 2009 4:34am
...I wonder what the Thomas Cook Bureau de Change employee would say if you turn up at his counter with 3 million US$ on a Saturday morning and demanded to exchange it for the equivalent amount of Yen - aside from the fact whether you like the given rate or not.

regards
daytrading
Enter Signature
  • #7
  • May 6, 2009 4:36am May 6, 2009 4:36am
Hey guys,

Thanks for the replies. I am just having a bit of a hard time understanding why the banks stop trading at exactly 5pm NYT friday. There is a lot of money at stake and it just seems weird to me that they would stop trading completely just because business hours have ended. It would make more sense if routers and ebs shut down at 5pm and did not let them place trades through their networks, but even then I would have thought that the banks would continue trading directly with each other.

I am also having a hard time understanding how my broker (Oanda) can fill orders over the weekend. They claim to hedge every trade, so who are thay hedging with? The spread is 10 pips for majors, which is not really very much. Not nearly enough to cover the risk they would be undertaking if they don't hedge the orders.

Also, Oanda opens around 4-5am Sydney time, quite a while before sydney starts trading. There is never a weekend gap in the Oanda charts beacause of this. In fact, it seems that Oanda is creating the gaps in other brokers feeds by creating a market before they open. Why would the big banks let one little broker and their clients dictate where the market price will be when they open their trading, without participating in this move?

It just seems that there is something I am missing here.
  • #8
  • May 6, 2009 4:41am May 6, 2009 4:41am
Quoting daytrading
...I wonder what the Thomas Cook Bureau de Change employee would say if you turn up at his counter with 3 million US$ on a Saturday morning and demanded to exchange it for the equivalent amount of Yen - aside from the fact whether you like the given rate or not.

regards
daytrading
Fair point, which is why I included the caveat of effective supply. Mind you, at the profit margins they operate with, I'm sure they'd do their best to give you (and take) what they could.
  • #9
  • May 6, 2009 5:01am May 6, 2009 5:01am
...yep, legal rip-off against every tourist, hahaha

regards
daytrading
Enter Signature
  • #10
  • May 6, 2009 6:03am May 6, 2009 6:03am
If I am not wrong , there are brokers that accept orders over the weekend provided the leverage is switched to 1:1
so when there is an order over the weekend , probably it is the physical currency exchange takes place internally within the broker system (orders dont go outside , with high spread they can physically exchange one form of currency to another with profit)...
that is why spread is high and leverage is 1:1 ,
well thats my guess , im not sure how else trading in the weekend can be done without a counterparty
To Live is the rarest thing in the world , Most people exist , that is all
  • #11
  • May 6, 2009 6:56am May 6, 2009 6:56am
Quoting Agro
Hey guys,

Thanks for the replies. I am just having a bit of a hard time understanding why the banks stop trading at exactly 5pm NYT friday. There is a lot of money at stake and it just seems weird to me that they would stop trading completely just because business hours have ended. It would make more sense if routers and ebs shut down at 5pm and did not let them place trades through their networks, but even then I would have thought that the banks would continue trading directly with each other.

I am also having a hard time understanding how...
Now, armed with what you seem to have found out, what can you do with it?

regards
daytrading
Enter Signature
  • #12
  • May 7, 2009 2:37am May 7, 2009 2:37am
Quoting daytrading
Now, armed with what you seem to have found out, what can you do with it?

regards
daytrading
Well, the main reason for the question, apart from curiosity, is that I want to know the exact values the big dogs use when plotting weekly pivot points. But also, it has been evident to me for a while now that there is a way to exploit Oandas offer to fill trades at a frozen rate over the weekend.
  • #13
  • May 7, 2009 2:41am May 7, 2009 2:41am
Well, if that is doable, it would be a waste not to take advantage of it.

Go for it.

regards
daytrading
Enter Signature
  • #14
  • May 7, 2009 2:48am May 7, 2009 2:48am
Quoting Agro
Well, the main reason for the question, apart from curiosity, is that I want to know the exact values the big dogs use when plotting weekly pivot points.
I very much doubt that 'big dogs' use Pivot points of the mathmatically derived type in their trading. Id like to think that their trading decisions are made on real-world knowledge, Info about orders that are In/coming in to the market and general sentiment.

If they do work by pivots, lunar cycles and Fibs then..... The markets are probably random, lol.
Living the adventure in my head.
  • #15
  • May 7, 2009 2:57am May 7, 2009 2:57am
Quoting Leonlorenzo
I very much doubt that 'big dogs' use Pivot points of the mathmatically derived type in their trading. Id like to think that their trading decisions are made on real-world knowledge, Info about orders that are In/coming in to the market and general sentiment.

If they do work by pivots, lunar cycles and Fibs then..... The markets are probably random, lol.

Trust me, the big dogs are trading long term, short term, mid term and any other term you can think of. Just zoom in to a real short timeframe and have a look at the way price interacts with pivot points, and you will see that there are big, big orders placed at these levels.
  • #16
  • May 7, 2009 3:18am May 7, 2009 3:18am
Quoting Agro
Trust me, the big dogs are trading long term, short term, mid term and any other term you can think of. .
I didnt say they dont...


Quoting Agro
Just zoom in to a real short timeframe and have a look at the way price interacts with pivot points, and you will see that there are big, big orders placed at these levels.
Well, If price does this with any kind of consistancy then what are you doing here? Go make your millions mate.
Living the adventure in my head.
  • #17
  • May 7, 2009 3:32am May 7, 2009 3:32am
Quoting Leonlorenzo
Well, If price does this with any kind of consistancy then what are you doing here? Go make your millions mate.
You would be suprised how consistant they can be. It is absolutely amazing.

ps There are plenty of us on ff that are making money out of forex. Just because you are making money doesn't mean you will stop posting.
  • #18
  • May 7, 2009 4:54am May 7, 2009 4:54am
I would argue against any precision of the regular pivots for the simple reason that specifically banks who are part of the main liquidity providers in the market have information from within that alters their positioning on a constant basis.

The reasons for entering or exiting positions, the size involved etc. is too diverse as for the retail trader to consistently spot these levels. Yes, maybe a an option expiry at significant numbers may accumulate additional interest in buying or selling at some preconceived point but in general, the buy and sell points as well as the amounts behind keep varying extensively from bank to bank, from fund to fund based on their business levels which for the outsider can be classed as random.

The fx market still has a large component which is classed outside of speculative interest - which makes it very hard to predict (or bet in) for no better word (compared to stocks for example).

regards
daytrading
Enter Signature
  • #19
  • May 7, 2009 6:18am May 7, 2009 6:18am
Quoting daytrading
I would argue against any precision of the regular pivots for the simple reason that specifically banks who are part of the main liquidity providers in the market have information from within that alters their positioning on a constant basis.

Hey mate,

I would urge you to do what I suggest and zoom into a very short timeframe (1m or less), and have a look at price action around the pivot points. You will see that there is a reaction there almost every time. I am not talking about 50 pips, or even 20 pips. It may only be 5-10 pips or even just a time retracement. You will also notice that quite often they will produce a major turning point in the market, giving 20-50+ pips. Then look at the pivot points that coincide with s/r, fibs, 00s and trend lines and you will soon notice that some of these areas are about as close to a sure thing as it gets in this market.

See, the way I see it is that short term traders place very large orders due to small stops and take profits, so alot of short term traders together almost always produce some type of reaction, even if it is only a tiny bump in the road to where the market wants to go. Its what I like to call 'the trader effect', and it is the most consistent phenomenon I have come across in the forex market.

I totally agree with you that there are a huge number of other reasons other than speculative ones that drive the forex market, but short term speculators can be a force to reckon with when we are all on the same page.
  • #20
  • May 7, 2009 6:42am May 7, 2009 6:42am
Quoting Agro
Then look at the pivot points that coincide with s/r, fibs, 00s and trend lines and you will soon notice that some of these areas are about as close to a sure thing as it gets in this market.

See, the way I see it is that short term traders place very large orders due to small stops and take profits, so alot of short term traders together almost always produce some type of reaction, even if it is only a tiny bump in the road to where the market wants to go. Its what I like to call 'the trader effect', and it is the most consistent phenomenon I...
Your post screams novice, why act like you know what your talking about when you clearly dont? Are you on the forum for the purpose of improving your self-image or ego? Is it working?

Leon
Living the adventure in my head.
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