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What is a 'large' position?

  • #41
  • Edited 2:04pm Dec 5, 2010 1:51pm | Edited 2:04pm
"Mid Day" or Noon is just when London and (1/2hr) before Europe stop trading.

What you are likely referring to is a "slow" meaning no Economic reports coming out, no "speakers", no "events", nothing happening where the volume is lighter anyway due to London closing partly and others that just stop trading at 12pm for this reason exit.

When the market is sort of floating like this and trading on techs mainly, it is not really manipulation, what they mean is for instance JPM places a 500 mil order to buy AUD/USD for example not a major, not an exotic, the price will move. So essentially they can push the market around in their favor.

This can happen more so with certain commodities, where if it were legal, one large firm or bank could essentially corner the market and move the price.

Yet, they are not able to hold over a certain amount of contracts depending on the commodity.

Another good example is comparison in price action and smoothness to say EUR/USD to GBP/USD when the two pairs are positively correlated on a "slow"
day. For instance, EUR may move 10 pips while GBP may move 35 due to the thinner volume. Everyone trades the EUR so as someone else had mentioned it is harder to sway it due to the amount of constant open interest.



Quoting Rex Tradewell
When trading mid day (U.S.) during periods of low volume and low volatility I've heard "experts" say not to trade because the market is too easily and commonly manipulated. Does anyone have experience with this?
XAU-XAG/USD_Gold n Silver Trader's Thread = Technicals, Fundamentals & News
  • #42
  • Edited 2:49pm Dec 5, 2010 2:32pm | Edited 2:49pm
Quoting Limstylz
Not necessarily as there could be low volumes as seen in Christmas period 2008 but very high volatility.
I never said "necessarily", I said "more likely". I tend to think only in probabilities when it comes to market activity.

Quoting Limstylz
I think this is more due to high volumes traded in one particular direction
I think you're missing my point.

Quoting Limstylz
I'm not sure that I agree that the buying and selling volume have the same probability of reaching the same point of perfect balance...
Imagine a virtual market with 100 active traders who trade only at market hour X, and another group of 10 active traders who trade only at market hour Y.

At market hour X, the 100 active traders open positions with $100 each (each of them choosing either to go long or short).

At market hour Y, the 10 active traders open positions with $1 each (each of them choosing either to go long or short).

1) - What is the probability that buying volume will come in balance with selling volume at some point during market hour X?

- What is the probability that buying volume will come in balance with selling volume at some point during market hour Y?

- Are these two probabilities equal?

2) - During market hour X, if buying volume is 20% bigger than selling volume, what would the monetary value of the difference between both volumes be?

- During market hour Y, if buying volume is 20% bigger than selling volume, what would the monetary value of the difference between both volumes be?

- Would both instances have the same influence on price? What can you conclude regarding the overall relationship between overall market volume and price volatility?
  • #43
  • Edited 2:52pm Dec 5, 2010 2:40pm | Edited 2:52pm
To bring this more on topic, I'd say that a "large position" is relative to market volume.

A 100 lot position may be "large" under certain market volume, but not so large under higher market volume. And since you can't know the exact volume in Forex, you can't really know for sure how "large" your position is (compared to other open positions in the market).

But like I said, if your trading volume is between 1 and 100 lots per order, you shouldn't be too concerned over this, even during the less active market hours.

No broker is your friend, just a counterparty of sorts, but you can still pick a decent/reputable ECN and do business like a regular trader. I would suggest someone like IB.
  • #44
  • Dec 6, 2010 5:40am Dec 6, 2010 5:40am
Quoting XTrade
the fact that MT4 is a program built for use by market makers with dealing desks.
Does it really matter if it's MT4 or a proprietary program? Any program can be built to disguise deceit. MT4 has great strengths because it is so common place you don't have to learn a new set of software idiosyncracies.

Just because MT4 can be exploited to favor the broker, doesn't mean there aren't decent MT4 brokers out there that operate fairly. You have to know what reputable is, otherwise you will be taken advantage of regardless what platform you use.

As already stated with manipulation... it's common sense. If you smell or see smoke there's usually fire not far behind. The brokers that participate in these kinds of tricks and don't play fairly wouldn't exist if everyone left them in droves. Problem is people just accept it as normal and continue to trade with them.

But to say it's completely a MT4 problem is an illusion IMHO.
  • #45
  • Dec 6, 2010 5:28pm Dec 6, 2010 5:28pm
Alot of good information here that I will attempt to summarize:

10 lots is nothing to worry about in terms of market manipulation even during periods of very low volume between US close and Asia open, EXCEPT in the case of a less than honest broker who has deep enough pockets to move the whole market.

For the best possible execution devoid of any broker reindeer games, an ECN should be used, or even better purchase our own professional trading software (protrader? sounds expensive?). Downside, no ECN's provide 200:1+ leverage?

For the record I have noticed an incredible delay in execution when trading 10 lots vs 1 - 3 lots with my broker, and only once was it in my favor.

Thanks to all who have provided input.

Rex
  • #46
  • Dec 6, 2010 6:35pm Dec 6, 2010 6:35pm
Quoting Rex Tradewell
an ECN should be used, or even better purchase our own professional trading software
Not sure about that "or". An ECN is a type of broker, not a software/platform. Most ECN's (such as IB or MBT) offer different platforms, proprietary or independent, the latter are often paid.

Your execution depends on your broker and its liquidity providers, not the trading platform.

Quoting Rex Tradewell
protrader? sounds expensive?
Protrader does sound expensive.

What I recommend is you first choose your ECN broker. Then see what platforms they have (own), and what other independent platforms they can connect with. Then pick the one that suits your needs best.

Quoting Rex Tradewell
Downside, no ECN's provide 200:1+ leverage?
Yes.

Sticking to reputable ECNs:

American ECNs provide no more than 50:1. Other non-American ones (such as Dukascopy) will provide 100:1.

Quoting Rex Tradewell
For the record I have noticed an incredible delay in execution when trading 10 lots vs 1 - 3 lots with my broker, and only once was it in my favor.
Who is your broker and what liquidity providers do they say they deal with (if you know)?

Larger orders are generally harder to fill, especially if they match orders only internally and hedge their exposure against your trades. With enough liquidity providers though, 10 lots shouldn't take long to fill.
  • #47
  • Dec 6, 2010 8:17pm Dec 6, 2010 8:17pm
Quoting yster
Hi Rex,

$100/pip is just tiny on this market, my trading volume is range from 5m to 10m each trade.

well, for safer. That really depend on where you trade. But 1thing i should warn you that , No mt4 shit , i don't care what the hell broker it is..unless you want to give them yr money.

cheers.
What the heck was that about..
  • #48
  • Dec 6, 2010 10:38pm Dec 6, 2010 10:38pm
Quoting Jhig
Also, during low volatility in the market, the large banks and/or wealthy individuals are not your only threat. You have to keep watch for your broker, especially if you're broker is considered a 'Market Maker'. Most market makers tend to influence their own pool of clients by creating false moves in the market, such as unexplained price spikes or early stop order execution. Just remember, most of the mid-day, low volatility manipulation is done by market makers. If you're with a good broker, you'll not have to worry about this issue.

I’ve been on FF for a while now and have not yet been able to ascertain just who exactly is a good broker.

I think this is one of the most important aspects of trading as I have head brokers not put stops on and thus cause my loss to be much greater, stop hunt, disconnect during NFPayrolls and a massive price spike (anomaly) from 2 brokers or MMs.

What chance do we really have under these circumstances?

There should a place on FF where we can name and shame such brokers and even a poll of their main misdeeds which, in some small way, would keep them honest.
  • #49
  • Dec 6, 2010 11:16pm Dec 6, 2010 11:16pm
Quoting Macdon
There should a place on FF where we can name and shame such brokers and even a poll of their main misdeeds which, in some small way, would keep them honest.
Just don't trade with them, and tell your friends not to trade with them. That'll do.

There are many such brokers out there who simply aren't honest nor safe (Russian bucketshops are an example). No serious trader should even consider those. Period. Yet they continue to exist and operate because not all traders on the internet are "serious" nor do they truly know what the hell they're doing.

There is another category and that is brokers who never (or rarely) cheat, but have bullshit trading conditions (such as over 2 pips spread on EURUSD, and such). Why people leave an honest reputable broker offering much better conditions and choose the other instead is something I don't understand. It's like going to a store to buy a product and ignoring the store next to it offering the exact same product for half the price.

If everybody just thinks for a second and stop trading with brokers who are ripping them off (whether they know it or not) and choose the ones offering the prices, the conditions, and safety you deserve, and are being honest and straightforward with you (e.g. no "as low as" type of bullshit), then all other brokers will be FORCED to either straighten up their act or go out of business.
  • #50
  • Dec 6, 2010 11:37pm Dec 6, 2010 11:37pm
Quoting Marv
Just don't trade with them, and tell your friends not to trade with them. That'll do.
Yes, I change brokers and move my money around, but they have succeeded in making me paranoid to the point where I don't trade much at all.

The last one, CMS, moved all my cash to forex.com who I know almost nothing about.
  • #51
  • Dec 6, 2010 11:58pm Dec 6, 2010 11:58pm
Quoting Macdon
The last one, CMS, moved all my cash to forex.com who I know almost nothing about.
CMS isn't good, nor is Gain Capital (owner of forex.com). My recommendation is:

1) If your capital is small to medium sized, check out Oanda.
2) If your capital allows you to trade with an ECN, check out some of the more reputable ECNs out there such as MBTrading and Dukascopy.
3) If you're heavy weight (so to speak), you might wanna check out Interactive Brókers, or a similar reputable ECN bróker. You need 10k minimum. Many pros and hedge funds already trade there.
4) If you're a truly big player, trade at an institutional level (e.g. with a bank).
  • #52
  • Dec 7, 2010 12:02am Dec 7, 2010 12:02am
Quoting Marv
CMS isn't good, nor is Gain Capital (owner of forex.com). My recommendation is:

1) If your capital is small to medium sized, check out Oanda.
2) If your capital allows you to trade with an ECN, check out some of the more reputable ECNs out there such as MBTrading and Dukascopy.
3) If you're heavy weight (so to speak), you might wanna check out Interactive Brokers, or a similar ECN broker.
4) If you're a truly big player, trade at an institutional level (e.g. with a bank).

Wow, somebody actually sticking their neck out a bit and giving broker advice. I'm sure alot of people will appreciate that. I know I do. I'm with fx sol. for last three years.
  • #53
  • Dec 7, 2010 12:05am Dec 7, 2010 12:05am
Quoting Marv
CMS isn't good, nor is Gain Capital (owner of forex.com). My recommendation is:

1) If your capital is small to medium sized, check out Oanda.
2) If your capital allows you to trade with an ECN, check out some of the more reputable ECNs out there such as MBTrading and Dukascopy.
3) If you're heavy weight (so to speak), you might wanna check out InteractiveBrokers, or a similar reputable ECN broker. You need 10k minimum. Many pros and hedge funds already trade there.
4) If you're a truly big player, trade at an institutional level (e.g. with a bank)....
I've heard a lot about MBTrading on FF and am thinking about them. I can do ECN, if I had more trust in the brokers.

Thanks very much for your advice and I'm hoping it hasn't been off topic, as we are talking about "position size".
  • #54
  • Dec 7, 2010 12:58am Dec 7, 2010 12:58am
Quoting Rex Tradewell
Wow, somebody actually sticking their neck out a bit and giving broker advice. I'm sure alot of people will appreciate that. I know I do. I'm with fx sol. for last three years.
forget the bucket shops & trade futures
"If The Fool persists in his Folly he will become wise." - William Blake
  • #55
  • Dec 7, 2010 2:09am Dec 7, 2010 2:09am
Quoting The Fool
forget the bucket shops & trade futures
That's actually not a bad idea.

If you can do well at Forex, you should definitely consider futures at some point. The E-mini markets are a good place to get started.
  • #56
  • Dec 7, 2010 2:58am Dec 7, 2010 2:58am
Quoting Rex Tradewell
When trading mid day (U.S.) during periods of low volume and low volatility I've heard "experts" say not to trade because the market is too easily and commonly manipulated. Does anyone have experience with this?

I would like to trade up to $100/pip ($100 for each point of market movement) and am wondering if that could possibly create a target in this giant market. If so, would spreading the trade over a few different broker platforms (non-ecn) be a safer way to trade? I've heard this is common for people trading with larger sums. Just not...
Larger is inaccurate, nobody can say what larger is compared to nothing. Am i larger then some humans? Yes larger then kids, but smaller then Bob Zapp, smaller then Arnold Schwarznegger. I could say that large is 1 lot, but id be comparing to say a mini account i use. If i remember correctly 1 lot is 1 tick, 10 ticks is a pip. So a pip is 10 lots, equals 1 million base currency if my memory serves. If you place an order of 1 million it should make a change of 1 pip in the price, perhaps it does but before you can see it, there are EAs/people hwo have a lot better latency then you that will act scalp that, depending on a lot of things, to take most if not all of that change and gobble it up, making it hardly visible in your plattform. Besides, even if you place an order of 1 million base currency, im not sure in what time frame that effects the given market. I dont know how much is lost and altered to pure fraud either. I dont really care to speculate or gather correct data on these issues, i just trade it.

But as another poster said, and to answer your question, 100$ is very little, almost nothing. If anybody is screwing with that, its your broker. I check out Oanda and compare to my other broker, and they are pretty much up to speed with eachoter.

But to go further on this topic, as another poster said, 2% of total account seem quite reasonable. I take it you havent been doing this for 10 years or so if i where you id stick to something like until you see some profit consistently for a couple of months. But lets say you want to allocate two lots on different pairs, or split the lot and scale in. Id probably stick to something like 2% of total account in max stoploss, maybe go to 4%.

Heres how i think about this: I should make it so that i cant loose more money in the forseable future, then i usually gain in twice that forseable future. So in practice if i gain 1% each day, i dont want to have stoplosses riding for more then 2% of account (a forseable future is stipulated as a day for the example).
My signature is: "Classified".
  • #57
  • Dec 7, 2010 3:10am Dec 7, 2010 3:10am
large or not should be dependent on ur account size.

AND most importantly

your own personal threshold for loss.
if you trading a lot size where u will start to get jittery then its best to reduce it.

emotional instability always causes us to lose
  • #58
  • Dec 7, 2010 3:15am Dec 7, 2010 3:15am
Quoting Marv
CMS isn't good, nor is Gain Capital (owner of forex.com). My recommendation is:

1) If your capital is small to medium sized, check out Oanda.
2) If your capital allows you to trade with an ECN, check out some of the more reputable ECNs out there such as MBTrading and Dukascopy.
3) If you're heavy weight (so to speak), you might wanna check out Interactive Brókers, or a similar reputable ECN bróker. You need 10k minimum. Many pros and hedge funds already trade there.
4) If you're a truly big player, trade at an institutional level (e.g. with a...

I would agree with Marv on two points:

  1. No one should consider Gain Capital (or forex.com, or whatever they're calling themselves). They've received plenty of bad press, and been cited by the CFTC for their practices.
  2. While not intending to shill for them, I've been with Interactive Brokers for about 10 years now and have only good things to say about them. Tight spreads, solid platform, easy to deposit/withdraw funds, and from a single account I can (and do) trade forex, futures, and stocks. They are conservative margin-wise, offering only 40:1 on the majors for the past couple years; and relatively high futures margins compared to some.

Platform wise, I suggest you have a look at Ninja Trader. I can trade my IB account directly off their charts. It takes but 2 mouse clicks to enter an order with pre-arranged OCO stop and profit target applied immediately upon execution, and only 2 mouse clicks to drag and drop any order on the chart. I can go all week without touching my keyboard, so no possibility of fat finger errors. All for about $60US / month. NT works with a number of other futures brokers as well.

Just my 2 pips

Regards.

dwt

PS. I'm certain there are other solid brokers / platforms out there as well, and would love to hear about them.

  • #59
  • Dec 7, 2010 3:51am Dec 7, 2010 3:51am
I agree that IB spread is good and execution is pretty ok too. However they have a minimum transaction fee of 2.50 which makes them pretty expensive when you do not trade full lots.

Their API is awfull and the platform technology is outdated. Cobbled together years ago and now affraid to touch it. If you want to use api technology their are better brokers out their when trading forex.
  • #60
  • Dec 7, 2010 4:27am Dec 7, 2010 4:27am
Quoting Marv
1) If your capital is small to medium sized, check out Oanda.
What is considered medium sized? Max 5 lots?
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