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FX market - Taking the other side...

  • #1
  • First Post: Sep 9, 2009 8:30pm Sep 9, 2009 8:30pm
Hi guys,

I havent been able to find a satisfactory answer to this question yet, so Im hoping somebody can help me out.

When trading in the FX market on a propshop, trading floor or small pro level who is actually taking the other side of my trades when trading through an ECN? Would I most likely be being offered liquidity by a dealer or other traders similar to myself?

Leon
Living the adventure in my head.
  • #2
  • Sep 10, 2009 7:52am Sep 10, 2009 7:52am
i use a ecn broker in the us,and in the discloser,they always take the other side of the trade,my brother works for a futures company who also have fx platform,and its the same,they take the other side of your trade,go check online,its the way market makers work in any company hope this helps
student
  • #3
  • Sep 10, 2009 8:45am Sep 10, 2009 8:45am
So it is infact true that, for example, in a pronounced up trending day there are dealers being made very short and they will need to find liquidity to get them out of their possitions?

Anyone higher up in the biz that can confirm?

Thanks to the first poster, afew more opinions should do it.
Living the adventure in my head.
  • #4
  • Sep 10, 2009 9:00am Sep 10, 2009 9:00am
Hi LeonLorenzo,

The question is not that straightforward, can you please be more specific as to what you mean and what you want to understand.
  • #5
  • Sep 10, 2009 9:08am Sep 10, 2009 9:08am
Reading this lot might give you an insight.

Here:


Darkstar

FXOpportunist

Rusty_forexman
Gone to a better place
  • #6
  • Sep 10, 2009 9:19am Sep 10, 2009 9:19am
Quoting lforex7
Hi LeonLorenzo,

The question is not that straightforward, can you please be more specific as to what you mean and what you want to understand.
Basically, im trying to work out If the majoritys trades are offset at the time and price they make them by a counterparty who is also in the business of speculation, or broker/dealers (who offer liquidity for a fee) and end up with large unfavourable possitions that they need to get out of on the interbank.

Hope thats clearer.
Living the adventure in my head.
  • #7
  • Sep 10, 2009 9:28am Sep 10, 2009 9:28am
I read the propaganda from the various 'currency dealers' who handle my trades and I'm never sure exactly with whom I'm dealing. At various times it seems to be clusters of retirement home investment clubs and at others, one of the behorned and cloven hoofed Rothschild clan. Truth be told up til now I didn't care, damn you anyway.

It's always been my understanding that initially the order is held where ever it first stops and a fee is extracted, then depending on the greed/fear level, it is either held or hedged until the actual contract is past on to some other buyer/seller. I assume it's this way in FX, it is in the other markets.

Why are you asking, idle curiosity, looking for an edge, want to send someone a thank you note, trying to figure out how much it's going to cost to subpoena the paper trail of an errant trade. or???


Phil
  • #8
  • Sep 10, 2009 10:34am Sep 10, 2009 10:34am
Quoting Phil4x
I read the propaganda from the various 'currency dealers' who handle my trades and I'm never sure exactly with whom I'm dealing. At various times it seems to be clusters of retirement home investment clubs and at others, one of the behorned and cloven hoofed Rothschild clan. Truth be told up til now I didn't care, damn you anyway.

[size=2]It's always been my understanding that initially the order is held where ever it first stops and a fee is extracted, then depending on the greed/fear level, it is either held or hedged until the...
I want to know, and ofcourse im looking for an edge.

IMO, it makes alot of difference to how one should look at the market depending on whether you are trading with someone who is speculating on direction or another who is collecting fee's.

Leon
Living the adventure in my head.
  • #9
  • Last Post: Sep 10, 2009 11:10am Sep 10, 2009 11:10am
Normally your (prime)broker is the counter party to your trades. They will offset the position amongst their liquidity providers and only make money by charging fees (to avoid conflicts of interest). In theory everybody can act as liquidity providers on an ECN, but must likely it will be the usual suspects, that is large global banks.

This is all officially. Unofficially it can sometimes be difficult to say what exactly is going on behind the curtains. Spot FX is quite an opaque marked.
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