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Vegas: "the house cares"

  • #1
  • First Post: Jan 28, 2006 5:46am Jan 28, 2006 5:46am
Vegas, you wrote:

You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares.

What happens then if I make an account for my wife, child and 97 other friend? We all play the same way 10$/pip. Together we play in fact 1000$/pip. Does the house care in this case? In fact nobody is playing high....

What happens if I play 10$/pip on 100 pairs? It makes together more or less the same 1000$/pips. Does the house care in this case?

Of course, anybody else is welcome to answer the questions as well

Thanks in advance!
time is money! Z
  • #2
  • Jan 28, 2006 8:36am Jan 28, 2006 8:36am
Quoting Zazzy
What happens then if I make an account for my wife, child and 97 other friend? We all play the same way 10$/pip. Together we play in fact 1000$/pip. Does the house care in this case? In fact nobody is playing high....
That's right, with 1000$/pips they care what YOU do.
100 persons aren't YOU, so if you are trading with less than 1000$/pips they don't care what YOU do.

Simple and logical!
  • #3
  • Jan 28, 2006 10:32am Jan 28, 2006 10:32am
Quoting Zazzy
Vegas, you wrote:

You start out trading $10/pip and nobody in the world cares what you do. At $1,000/ pip, believe me, the house cares.

What happens then if I make an account for my wife, child and 97 other friend? We all play the same way 10$/pip. Together we play in fact 1000$/pip. Does the house care in this case? In fact nobody is playing high....

What happens if I play 10$/pip on 100 pairs? It makes together more or less the same 1000$/pips. Does the house care in this case?

Of course, anybody else is welcome to answer the questions as well

Thanks in advance!
Zazzy,

2 points to make.

1) I'm willing to bet that nobody will put together a group of 97 other people to escape house scrutiny. I'd go so far as to say that one would have trouble putting a group of 5 together.

2) All the banks and brokerage houses employ very sophisticated software that allows them to know, in real-time, what their customers are doing as a collective unit. They know if everybody, at their brokerage house, is collectively long or short. They know where the stops are situated.

So even if you put together a group to act as one it won't do you much good.
vegas
  • #4
  • Jan 28, 2006 10:59am Jan 28, 2006 10:59am
Quoting Croesus
That's right, with 1000$/pips they care what YOU do.
100 persons aren't YOU, so if you are trading with less than 1000$/pips they don't care what YOU do.

Simple and logical!
well the question was rather whether in this case the house cares what WE all do. In other words: are they smart enough to group the orders of a 100 peoples and see that everyone play the same way ?
time is money! Z
  • #5
  • Jan 28, 2006 11:04am Jan 28, 2006 11:04am
Quoting vegas
Zazzy,

2 points to make.

1) I'm willing to bet that nobody will put together a group of 97 other people to escape house scrutiny. I'd go so far as to say that one would have trouble putting a group of 5 together.
well I just simplified. Obviosly it is not possible - I was just trying to guess how far can the house go in monitoring of different orders.

Quoting vegas
2) All the banks and brokerage houses employ very sophisticated software that allows them to know, in real-time, what their customers are doing as a collective unit. They know if everybody, at their brokerage house, is collectively long or short. They know where the stops are situated.

So even if you put together a group to act as one it won't do you much good.
All right, I get your point! Thanks!

And what about different currencies? Let us say my strategy works more or less on 10 pairs. If I play 100$/pip on 10 pairs then I hope the house will not care so much (comparing to 1x1000$/pip), am I right?
time is money! Z
  • #6
  • Jan 30, 2006 1:41pm Jan 30, 2006 1:41pm
Given the discussion of this thread, it occurs to me that if all other things are equal (i.e. spreads, slippages, execution, etc), then one would be better off with a larger broker than a smaller one.

If the house is monitoring our trading activity that closely, are we not more concerned about the liquidity of the broker and not the forex market as a whole?

I understand how my broker could analyze my trading style, but there would be no way for any other broker to know that same information. Correct? And if that is true, the larger the assests my broker controls, the "less the house should care" about my individual account. Yes/No?

Or does any of this matter that much at all?


Jonathan
  • #7
  • Jan 30, 2006 7:47pm Jan 30, 2006 7:47pm
I think that they do care for whatever happens, it's their business, and that's how they really make their profits...As Vegas said, they use sophisticated software which monitors everything real-time, and that's really a big big edge for them, if not the main edge they are using to make their profits...


Thanks,

Nader
  • #8
  • Jan 31, 2006 12:22am Jan 31, 2006 12:22am
Quoting vegas
1) I'm willing to bet that nobody will put together a group of 97 other people to escape house scrutiny. I'd go so far as to say that one would have trouble putting a group of 5 together.
LOL!

its so easy to forget about the practicalities. this is especially true in mechanical system trading. a trader will build a system that requires him to be on-call at 10 seconds notice for 24/5 and actually think they can follow the system !!!! only reason i know this is because i did it too

these days "easy to trade" is number two on my list of system features i look for, second only to "profitable". synchronizing 97 people is about as hard as it gets!
Relax and be happy.
  • #9
  • Jan 31, 2006 1:54am Jan 31, 2006 1:54am
Quoting narafa
I think that they do care for whatever happens, it's their business, and that's how they really make their profits...As Vegas said, they use sophisticated software which monitors everything real-time, and that's really a big big edge for them, if not the main edge they are using to make their profits...
Hello Narafa, thanks for the answer!
Actually it is clear they monitor everything, I am not afraid of it, I know they actually see all my orders.

What matters for me is how they are going to use the information that some people are playing this way and other playing another way.

1.
In other discussions I understood the broker can artificially move the chart for some time to trigger the stops. But I dont use them. I am not afraid of it.

2.
Then the broker (I dont know of it is true, it is my own conclusion) can calculate how far can my margin go with the loss and move the chart and close my position by margin call. But I can calculate the same and I can place my opposite order on the same level - the broker triggers an artificiall loss AND at the same time triggers my order which makes huge profits when the chart goes back.

If you say the number 2 can happen and the idea with opposite order is good I do so!

Is there number 3,4 and so on? What else should one expect. Can the broker just cut me off and simulate a broken connection or so? Sounds childish, but now I start to play seriously and I need to consider everything.
time is money! Z
  • #10
  • Jan 31, 2006 7:28am Jan 31, 2006 7:28am
Quoting Zazzy


Is there number 3,4 and so on? What else should one expect. Can the broker just cut me off and simulate a broken connection or so? Sounds childish, but now I start to play seriously and I need to consider everything.
i thought some of the brokers already did this now. plus whats to stop them, they already shade the price in their favour, "broken connection" is just another method.
another INTP
  • #11
  • Jan 31, 2006 8:14am Jan 31, 2006 8:14am
Quoting anthonybaker
i thought some of the brokers already did this now. plus whats to stop them, they already shade the price in their favour, "broken connection" is just another method.
so the only way to survive is just trade with several brokers
time is money! Z
  • #12
  • Jan 31, 2006 8:34am Jan 31, 2006 8:34am
Quoting Zazzy
so the only way to survive is just trade with several brokers
You could go with a broker such as Interactive Brokers who use an ECN model and have four global banks making the markets for them.
I was here, here I was. Was I here? Yes I was!
  • #13
  • Jan 31, 2006 12:48pm Jan 31, 2006 12:48pm
Quoting SterlingTDR
You could go with a broker such as Interactive Brokers who use an ECN model and have four global banks making the markets for them.
That's one of the decent solutions..Interactive Brokers forex trading cost you commissions, typically $2.5 at minimum, they are not after your money, they don't care, they are not on the other side of the trade...

To Zazzy, the fact that your broker or market maker already knows your margin call limit doesn't mean that he will push the prices to there, even brokers and market makers have limits they can't go through...If you are using a high leverage, and a 50 pips loss will put you on a margin call, most probably this will happen...If you are using lower leverage, and your margin call is 1,000 pips away, this is out of their dreams...

However, I believe that as the brokers and market makers have a real edge, everyone else can create a real edge for themselves to trade with and create profits...In chess, there is something called double checks, usually made using knights, and sometimes bishops or rooks...Your real edge is to create yourself a double check strategy in which your broker or market maker can't play games with you, he will lose either way, so he will just leave you alone and not profit from you...


Thanks,

Nader
  • #14
  • Jan 31, 2006 6:46pm Jan 31, 2006 6:46pm
Another idea is to completely ignore all of this conspiracy theory stuff and focus on what you can control - your own actions. Simply design a trading strategy that works and trade it. I am not the slightest bit concerned about what my broker may or may not do because it is completely out of my control. I also don't believe that a broker would hunt down a stop for a few pips. I recall recently on the Oanda forum someone complaining that they were having their stops hunted and they were trading a DEMO account! I think that says it all.

Simon
  • #15
  • Jan 31, 2006 7:09pm Jan 31, 2006 7:09pm
Quoting DrRock
Another idea is to completely ignore all of this conspiracy theory stuff and focus on what you can control - your own actions. Simply design a trading strategy that works and trade it. I am not the slightest bit concerned about what my broker may or may not do because it is completely out of my control. I also don't believe that a broker would hunt down a stop for a few pips. I recall recently on the Oanda forum someone complaining that they were having their stops hunted and they were trading a DEMO account! I think that says it all.

Simon
They will hunt the stop(s) if it is worth their while. If the positon is big enough or if enough of the herd have their stops all placed in the same area, which so often happens. Hence the term "Bucket Shops".


JohnFX
  • #16
  • Jan 31, 2006 7:34pm Jan 31, 2006 7:34pm
Quoting JohnFX
They will hunt the stop(s) if it is worth their while. If the positon is big enough or if enough of the herd have their stops all placed in the same area, which so often happens. Hence the term "Bucket Shops".


JohnFX
Hi John,
I've traded for a long time now {decades} and for most of it felt the same as you. {Why would I tell anyone how much I am willing to risk. ie. post a Stop.}
I was never worried by the fact that when I posted my Stop it was >50 pips away from current price. I was, however very worried when the price grew to being 3-5 pips away from my stop. And I believe I was correct in being worried. I never had the joy of thinking to myself that I placed my Stop at the perfect position ie 1-5 pips beyond the Hunter/Gatherers,always feeling that I had 'Dropped my shorts so to speak'.

Here's my point on this particular thread,
If I know where the bulk of the stops are, I should be able to take advantage of that price and play toward it.

So My Question is;
Do you know of any URL site that posts current stops or limits
  • #17
  • Jan 31, 2006 7:46pm Jan 31, 2006 7:46pm
Quoting Bemac
Hi John,
I've traded for a long time now {decades} and for most of it felt the same as you. {Why would I tell anyone how much I am willing to risk. ie. post a Stop.}
I was never worried by the fact that when I posted my Stop it was >50 pips away from current price. I was, however very worried when the price grew to being 3-5 pips away from my stop. And I believe I was correct in being worried. I never had the joy of thinking to myself that I placed my Stop at the perfect position ie 1-5 pips beyond the Hunter/Gatherers,always feeling that I had 'Dropped my shorts so to speak'.

Here's my point on this particular thread,
If I know where the bulk of the stops are, I should be able to take advantage of that price and play toward it.

So My Question is;
Do you know of any URL site that posts current stops or limits
Hey Scot;

No, I don't know of a particular website that has such info. The only way I hear about stops is from IFR. I get IFR free because I have an account with FXCM (with no money in it). At least FXCM is good for something...LOL. I use IBFX for my trading. Many times IFR will state where a lot of stops are clustered.

Thanks

JohnFX
  • #18
  • Jan 31, 2006 7:52pm Jan 31, 2006 7:52pm
You know what really makes me laugh is some of these Brokers/MM's who have signal calling services telling you where to enter and where to place your stop. TALK ABOUT A CONFLICT OF INTEREST. Now would you want to place your stop at a price where the one who most likely is on the other end of your trade, tells you to?


JohnFX
  • #19
  • Jan 31, 2006 8:38pm Jan 31, 2006 8:38pm
Quoting JohnFX
Hey Scot;

Many times IFR will state where a lot of stops are clustered.

Thanks

JohnFX
Exactly my point. How would you feel if you were amongst the "Cluster"?
  • #20
  • Feb 1, 2006 8:13pm Feb 1, 2006 8:13pm
Quoting Bemac
Exactly my point. How would you feel if you were amongst the "Cluster"?
You would exactly feel as if your head is just right in the intersection of the 2 perpendicular lines of the rifle of the sniper...


Thanks,

Nader
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