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Joe Ross / When Not To Trade FX

  • #21
  • Apr 16, 2006 6:51am Apr 16, 2006 6:51am
eagle4x,

Your quote here is interesting for two reasons. One there is no context, (where exactly and from what book) so that we may look up the quote ourselves. And two it is circular logic, because it used the accusation and statement of another person to back up the accusation of the fist acuuser. Even worse, because the testemony here is unrelated to the accusations of the first party. We are again not presented with evidence, only with accusations. however, even if it were true, this is the classic example of drawing a general conclusion from a specific occurrence.

Sorry, even in the broadest sense this is still rumor. Where are the facts the statements the internal memos? Perhaps my level of proof is too high. How ever, I think when a bold accusation is made in public. The accuser at the very least ought to be able to back it up with more than more accusations...
I think if it would not stand up in court, it is not proof. This would not survive an evidentiary hearing.

These kind of bold face rumors and public accusations are just how people's businesses and lives are ruined... If someone says it, prove it. It is just that simple.

I am not saying that wrong doing has not occurred, I am saying lets perform some due diligence before making such claims... Again, Show me real proof and I will concede.
SMJ


Quoting eagle4x
In Kathy Lien's (of FXCM) book, Day Trading the Currency Market, she wrote: ... the initial movement at the London open may not always be the real one. Since U.K. and European dealers are the primary market makers for the GBP/USD, they have tremendous insight into the extent of actual supply and demand for the pair. The trading strategy of waiting for the real deal first sets up when interbank dealing desks survey their books at the onset of trading and use their client data to trigger close stops on both sides of the markets to gain the pip differential.

So here is part of the proof of shady practices by dealers, straight from the horses' mouth.
  • #22
  • Apr 16, 2006 7:09am Apr 16, 2006 7:09am
Eagle4x

My last post sounded a bit harsh and I did not mean any disrespect against you.
I have read your posts and have the utmost respect for your opinion. I am addressing the broader issue and was only using your quote of Kathy Lein as an example. I hope you did not take offense, because I meant none.

sincerely SMJ
  • #23
  • Apr 16, 2006 9:05am Apr 16, 2006 9:05am
Quoting eagle4x
There was another time I remember (regarding Refco):
"i think this whole thing is overblown. one little secret loan isnt going to bring the whole company down i just bought some butterflies on the stock, the volatility is crazy overblown right now.
__________________
Merlin"
yeah i remember that too because i lost money on that trade! didnt realize there would be a run on the bank! i made that mistake with enron too
Relax and be happy.
  • #24
  • Apr 16, 2006 9:08am Apr 16, 2006 9:08am
Quoting eagle4x
interbank dealing desks survey their books at the onset of trading and use their client data to trigger close stops on both sides of the markets to gain the pip differential.

So here is part of the proof of shady practices by dealers, straight from the horses' mouth.
some dealers are shady, no question about it. but couldnt the above be a senario for the futures market too?
Relax and be happy.
  • #25
  • Apr 16, 2006 11:22am Apr 16, 2006 11:22am
I'm sorry, but I didn't think we were testifyng on the People's Court here. I was just putting my two cents worth in as to the claims by hagadol. Sure,
what I posted is relevant, since one of the claims of hagadol was "You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications." The quote I refereneced is from pg. 109 of
Day Trading the Currency Market. Kathy Lien is Cheif Strategist of FXCM, who I believe is in a position to know about such practices. I have read about other posters on this forum that complained about stop running, which leads me to believe there must be some truth to this. Regarding other questionable practices, I found this link on the web, titled Forex Scams: http://en.wikipedia.org/wiki/Forex_s...op_loss_orders,
Also, EVEN on the CFTC's web-site, there is a section titled "Beware of Foreign Currency Trading Frauds": http://www.cftc.gov/opa/enf98/opaforexa15.htm




Quoting smjones
eagle4x,

Your quote here is interesting for two reasons. One there is no context, (where exactly and from what book) so that we may look up the quote ourselves. And two it is circular logic, because it used the accusation and statement of another person to back up the accusation of the fist acuuser. Even worse, because the testemony here is unrelated to the accusations of the first party. We are again not presented with evidence, only with accusations. however, even if it were true, this is the classic example of drawing a general conclusion from a specific occurrence.

Sorry, even in the broadest sense this is still rumor. Where are the facts the statements the internal memos? Perhaps my level of proof is too high. How ever, I think when a bold accusation is made in public. The accuser at the very least ought to be able to back it up with more than more accusations...
I think if it would not stand up in court, it is not proof. This would not survive an evidentiary hearing.

These kind of bold face rumors and public accusations are just how people's businesses and lives are ruined... If someone says it, prove it. It is just that simple.

I am not saying that wrong doing has not occurred, I am saying lets perform some due diligence before making such claims... Again, Show me real proof and I will concede.
SMJ
  • #26
  • Apr 16, 2006 11:43am Apr 16, 2006 11:43am
Kathy Lien's book is fantastic, by-the-way. I did look this quote up, and I can back up Eagle on the location of the quote, as well as Kathy Lien's occupation and position of power.
  • #27
  • Apr 16, 2006 2:12pm Apr 16, 2006 2:12pm
Hey Eagle4x,

I did not mean any offense, that is why I typed the second post.

To everyone,

Now, I just think that a bold and strong statement like the one that Joe Ross made reqires solid proof. Joe did not say some brokers are scammers in his statement he said "brokers", meaning all brokers fall in to the category he is laying out.

In the Wikapedia site, this is referring to Forex scams. So is the CFTC site.
They in no part of their statements said that all forex is a scam.
Joe Ross did. That is a very strong accusation.

It really is important that if Joe Ross is only talking about some Forex scammers he make that clear. In these two articles the authors made this point clear.
They said there is a growing fraud. They did not say that all are fraud.

It just goes back to performing due diligence when deciding to do business with anyone or believe an accusation made by someone.

Do you believe all brokers run this type of operation? if so, what should we as Forex traders do to protect ourselves? How can we even continue trading the Forex? That seems like a very big deal.


Eagle4x,
Ps, Nice touch on The Peoples Court. I was going to say W.W.J.J.D.
"What would Judge Judy do?". But, I thought it might be over the top. I like yours better.

SMJ


Quoting eagle4x
I'm sorry, but I didn't think we were testifyng on the People's Court here. I was just putting my two cents worth in as to the claims by hagadol. Sure,
what I posted is relevant, since one of the claims of hagadol was "You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications." The quote I refereneced is from pg. 109 of
Day Trading the Currency Market. Kathy Lien is Cheif Strategist of FXCM, who I believe is in a position to know about such practices. I have read about other posters on this forum that complained about stop running, which leads me to believe there must be some truth to this. Regarding other questionable practices, I found this link on the web, titled Forex Scams: http://en.wikipedia.org/wiki/Forex_s...op_loss_orders,
Also, EVEN on the CFTC's web-site, there is a section titled "Beware of Foreign Currency Trading Frauds": http://www.cftc.gov/opa/enf98/opaforexa15.htm
  • #28
  • Edited 5:32pm Apr 16, 2006 5:22pm | Edited 5:32pm
Hi All,

There is no doubt that the Forex market seems very promising at the moment.
But lets face reality.

Nowdays, the brokers are working as "buckets" - they don't (and can't) really afford trading the currencies (since they give the traders very high leverage). they count on the the statistics to be on their side - (most of the traders are loosing money in Forex trading).

My guess is that in less than a year we will be able to find very successful EA's with very high winning precentage. This will definitely going to change the rules of the game..

The big question is how the brokers would deal with it. Maybe by lowering the leverage? or by real execution of the orders? (It's a bit like guessing the EUR/USD one year from now?...).

Many pips and good luck,

Simon
  • #29
  • Apr 17, 2006 1:37am Apr 17, 2006 1:37am
Quoting smjones

In the Wikapedia site, this is referring to Forex scams. So is the CFTC site.
They in no part of their statements said that all forex is a scam.
Joe Ross did. That is a very strong accusation.
The CFTC is a goverment organisation. They can't say openly, what they mean,
'cause they gotta be realy carefull not to destroy a good workin' company.

For me the CFTC articles reads like, nearly all fx-brokers are scam. 'cause
most of the forex brokers do at least one promise from the list of the CFTC.


Quoting smjones

Eagle4x,
Ps, Nice touch on The Peoples Court. I was going to say W.W.J.J.D.
"What would Judge Judy do?". But, I thought it might be over the top. I like yours better.
If you're talkin' about american courts, i think we shouldn't fall to that
level either.

regards,
tojoko
  • #30
  • Apr 17, 2006 7:56am Apr 17, 2006 7:56am
Quoting simonfx
Hi All,

There is no doubt that the Forex market seems very promising at the moment.
But lets face reality.

Nowdays, the brokers are working as "buckets" - they don't (and can't) really afford trading the currencies (since they give the traders very high leverage). they count on the the statistics to be on their side - (most of the traders are loosing money in Forex trading).

My guess is that in less than a year we will be able to find very successful EA's with very high winning precentage. This will definitely going to change the rules of the game..

The big question is how the brokers would deal with it. Maybe by lowering the leverage? or by real execution of the orders? (It's a bit like guessing the EUR/USD one year from now?...).

Many pips and good luck,

Simon
I don't know about your timeframe for change...I've been hearing these things for a few years now about retail-forex and let me tell you...things are as much the same as they ever were. There are just more players. Hell, some brokers still haven't upgraded their platforms since inception, and really we're talking a few years (at least 3).

As far as the future holds, as long as companies don't continually go under and take investor money with it, I think things will remain the same.
  • #31
  • Apr 17, 2006 4:37pm Apr 17, 2006 4:37pm
Quoting hagadol
• Leaning. Brokers say they are charging you a 3 pip spread to trade the popular currency pairs. But in reality a broker may be making as much or more than 10 pips on your trades. He does this by skewing prices. Since you are not trading at an exchange, the broker can feed you any price he wants to feed you. He can buy at the bank for perhaps 7 pips less than he sells to you. He then charges you 3 pips for the privilege of being ripped off for a total of 10 pips.
The Broker has to know first whether I am going to buy or sell. Otherwise skewing prices may turn against him.
time is money! Z
  • #32
  • Apr 20, 2006 12:31am Apr 20, 2006 12:31am
smj: no disrespect taken, this is just friendly debate. I like your posts as well - esp. the one about your channel breakout strategy for trading news. I have made alot of pips so far trading with it!
-eagle



Quoting smjones
Eagle4x

My last post sounded a bit harsh and I did not mean any disrespect against you.
I have read your posts and have the utmost respect for your opinion. I am addressing the broader issue and was only using your quote of Kathy Lein as an example. I hope you did not take offense, because I meant none.

sincerely SMJ
  • #33
  • Apr 20, 2006 4:47am Apr 20, 2006 4:47am
Quoting hagadol
• Leaning. Brokers say they are charging you a 3 pip spread to trade the popular currency pairs. But in reality a broker may be making as much or more than 10 pips on your trades. He does this by skewing prices. Since you are not trading at an exchange, the broker can feed you any price he wants to feed you. He can buy at the bank for perhaps 7 pips less than he sells to you. He then charges you 3 pips for the privilege of being ripped off for a total of 10 pips.
Call me paranoid or something, but I have noticed this happening over and over with many brokers: you enter a trade and within a minute price dips a fistful of pips against you (on top of the spread), so it's like if you virtually kick off your trade at -8'ish pips.

Oanda is the only broker where I have yet to see this happening.
  • #34
  • Edited 5:50am Apr 20, 2006 5:45am | Edited 5:50am
Oh, I cannot take credit for that trade... I use it, but learned it years ago.. Even Steve Nison talks about some thing similar in his continuation patterns. He just does not relate it directly to the news.

Bemac was talking about something similar yesterday in his discussion on DORbreak. It does work well, though. It is almost like clock work...

Thanks SMJ


Quoting eagle4x
smj: no disrespect taken, this is just friendly debate. I like your posts as well - esp. the one about your channel breakout strategy for trading news. I have made alot of pips so far trading with it!
-eagle
  • #35
  • Apr 20, 2006 5:48am Apr 20, 2006 5:48am
Quoting WTB
Call me paranoid or something, but I have noticed this happening over and over with many brokers: you enter a trade and within a minute price dips a fistful of pips against you (on top of the spread), so it's like if you virtually kick off your trade at -8'ish pips.

Oanda is the only broker where I have yet to see this happening.
You're paranoid (you asked for it)!

So what you mean to tell me is a broker (say FXCM) who has thousands of clients all with differing opinions on what a currency is going to do at any given point in time is going to wait for you to place a trade and then move the market against your position? By doing this, all their clients who have the same view as you will be able to get in at a better price which is of course to the detriment of FXCM.

I am not sure why people find it so far fetched to believe that something like this happens:

I place a buy order for $1million at 75 and at the same time someone else places a sell order for $1million at 72. What is the result for the broker? No exposure to the currency (1 client long and 1 short the same amount) and has just picked up 3 pips x $100.

What about this - they offer a spread of 72/75 and they can get 73/74 in the interbank market. I place an order to but $10 million at 75. That puts their book out of balance so they then sell $10 million at 74 and pick up 1 pip for their trouble. In this case they make $1,000.

In neither case have they had to rip their clients off to make any money. Now, the above is pretty simplistic but you can certainly imagine a pretty fancy computer algorithm that combines both of the above strategies and minimises the brokers exposure to movements in a currency and doesn't rely on their clients losing all of their money for them to make money. Their clients are good enough at losing their own money without the brokers help. It is not in the brokers interest for their clients to lose money because they have to go out and find some more. Much easier to keep their clients trading and making money from the spread.

I'm sure this can't be right though because then we couldn't blame our brokers for losing our money - we would then have to admit that we made the decision when to buy/sell and that we are solely responsible for losing the money - that couldn't be right now could it?

Simon
  • #36
  • Apr 20, 2006 6:17am Apr 20, 2006 6:17am
Simon, do the following experiment: open a trade at the same time and in the same direction both at Oanda and at any other "duboius" broker with a dealing desk and monitor the trade evolution during the first few minutes. I have done this a number of times and many many many times the gap widens between the two (Oanda being the better one) for a fistful of pips within a very short time span.
  • #37
  • Apr 20, 2006 6:32am Apr 20, 2006 6:32am
Quoting WTB
Simon, do the following experiment: open a trade at the same time and in the same direction both at Oanda and at any other "duboius" broker with a dealing desk and monitor the trade evolution during the first few minutes. I have done this a number of times and many many many times the gap widens between the two (Oanda being the better one) for a fistful of pips within a very short time span.
Has this kind of thing happened to you on demo before?

Simon
  • #38
  • Apr 20, 2006 6:39am Apr 20, 2006 6:39am
I saw this phenomenum yesterday afternoon in a EURUSD trade.
  • #39
  • Apr 20, 2006 7:29am Apr 20, 2006 7:29am
So you are suggesting that when you get into a trade your broker deliberately runs their bid/ask in the opposite direction of your trade causing a difference between their quotes and the quotes of other brokers. Do you close the position as a result of this? I can't see what possible benefit this could have for the broker.

Why don't you take advantage of it?

Open a small position and let the broker run the quote in the opposite direction to your position and then load up some more but at the same time go flat in Oanda. This would mean that you have picked up the spread between your broker and Oanda. When your broker and Oanda line up, close out both sides of your position.

Simon
  • #40
  • Apr 20, 2006 7:35am Apr 20, 2006 7:35am
A very nice arbitrage.. I somehow doubt it will work in real life though. I am just not buying this the broker is out to get me theory... SMJ



Quoting DrRock
So you are suggesting that when you get into a trade your broker deliberately runs their bid/ask in the opposite direction of your trade causing a difference between their quotes and the quotes of other brokers. Do you close the position as a result of this? I can't see what possible benefit this could have for the broker.

Why don't you take advantage of it?

Open a small position and let the broker run the quote in the opposite direction to your position and then load up some more but at the same time go flat in Oanda. This would mean that you have picked up the spread between your broker and Oanda. When your broker and Oanda line up, close out both sides of your position.

Simon
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