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Joe Ross / When Not To Trade FX

  • #41
  • Apr 20, 2006 7:42am Apr 20, 2006 7:42am
WTB,

does this happen with regularity? What a great opportunity. What brokers have you done this test with? Thanks SMJ


Quoting WTB
I saw this phenomenum yesterday afternoon in a EURUSD trade.
  • #42
  • Apr 20, 2006 9:58am Apr 20, 2006 9:58am
Im not saying they manually do this, but after having seen it repeated a number of times I must come to the conclusion that their software is somehow programmed to build in an extra hidden "spread" on top of the regular one. I am telling you that I have taken the same trade on some brokers (I dont want to state their name) and on Oanda at the same time, and few minutes later there was a few pips gap between the two of them, being Oanda ALWAYS the most favourable for me of the two.

At the end of the day, Forex is not a centralized market and thus the quotes you're been fed at 100% at your broker's discretion.
  • #43
  • Apr 20, 2006 10:04am Apr 20, 2006 10:04am
Hey WTB, I am not doubting you, I am interested in this. One could in theory stick it back to them using a method of arbitrage and an auto trader..

Who do you think are the biggest offenders?

SMJ


Quoting WTB
Im not saying they manually do this, but after having seen it repeated a number of times I must come to the conclusion that their software is somehow programmed to build in an extra hidden "spread" on top of the regular one. I am telling you that I have taken the same trade on some brokers (I dont want to state their name) and on Oanda at the same time, and few minutes later there was a few pips gap between the two of them, being Oanda ALWAYS the most favourable for me of the two.

At the end of the day, Forex is not a centralized market and thus the quotes you're been fed at 100% at your broker's discretion.
  • #44
  • Apr 20, 2006 10:36am Apr 20, 2006 10:36am
Sorry SMJ, I wont say the name of the brokers, I dont want to risk getting myself into troubles in case my statements are not correct. My advice is: create demo accounts on the most commonly known forex retail brokers and another one in Oanda. Whenever you find a trade oportunity, enter both trades at the same time on both platforms and see if you experience the same phenomenum I have witnessed. After that, please report back in this thread one way or the other.
  • #45
  • Apr 20, 2006 10:47am Apr 20, 2006 10:47am
I will, do you think the feeds for these suspect brokers is the same as the live ones? Using them against Onanda could in theory be very profitable...
especially if the market does not really move much, but even if it did...

I guess I have me some demo accounts to open... SMJ


Quoting WTB
Sorry SMJ, I wont say the name of the brokers, I dont want to risk getting myself into troubles in case my statements are not correct. My advice is: create demo accounts on the most commonly known forex retail brokers and another one in Oanda. Whenever you find a trade oportunity, enter both trades at the same time on both platforms and see if you experience the same phenomenum I have witnessed. After that, please report back in this thread one way or the other.
  • #46
  • Apr 20, 2006 10:48am Apr 20, 2006 10:48am
Quoting WTB
At the end of the day, Forex is not a centralized market and thus the quotes you're been fed at 100% at your broker's discretion.
Absolutely. I work for a brokerage...and I am currently working on the systems which will take feeds from banks and add on client-leve spreads on top of them....all decided by the dealers themselves...

There is no regulation...Brokerages can quote you any price they want at any time they want.
  • #47
  • Apr 20, 2006 11:54am Apr 20, 2006 11:54am
Quoting DrRock

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.
There is no proofe of any kind, that when you place an order for 200000 Dollars
at your brokers software that broker is goin' to buy any dollar at all at the
interbank market.

He is, on the other hand, most probably not doin' it. You know what's leverage?
Let's take we have a leverage of 1:400. - How should a broker be able
to buy so many dollars?

In practise

Market... is always tellin' me, it can't process my order - just when it's goin'
to get interstin' and it's possible to make a few pips the fast way.

Second. Watch the price on two brokers at a time when a important news
is published, i often see that

a) There is a difference between one or two pips on a halt
(And, year, size does matter, even if it's just a pip more)

b) The peaks up and down are different - how can that be,
on a global market?

ciao
  • #48
  • Apr 20, 2006 12:09pm Apr 20, 2006 12:09pm
Quoting accrete
my 2 pips worth,
Dr Elders in his book "Trading for a living" talks about slippage in the Futures market being at times quite significant. Just stating what is in the book. I have yet to have a problem with my spot FX broker on slipage or steelage ; - )
This is soooo true! I still trade futures using Genesis Trade navigator. I can recall one trade that I place in Live Cattle. This market is listed on the CME exchange and trades from 9:05amCST - 1:00pmCST. And then its closed!

Image my shock an awe when my long positon that I placed on one day, gapped limit down upon open the very next day!! What the blazes happened overnight while we slept!! Another "mad cow" scare maybe?? Well you can bet that all of us traders were scampering real hard to get out of that trade. But to no avail. Limit up/limit down trades are nightmares. I like forex because of the liquidity of the market, and be cause there are no major gaps like in the futures. I still trade my futures, but less...and I trade forex more.

My 2cents.
  • #49
  • Apr 20, 2006 12:27pm Apr 20, 2006 12:27pm
Quoting hagadol
WHEN TO NOT TRADE FOREX


• Brokers deceive you about there being no commissions. $30 minimum/round turn (called the spread) is in reality a commission that eats up your capital at an astonishing rate. Even winning traders lose money and end up with negative results because of this outlandish overhead. Trading futures, you should never have to pay a broker more than $10/round turn, and usually quite a bit less than that.
Atleast some brokers try to keep the spread minimum, in futures market I have seen my spread rising as my floating profit rises.

Quoting hagadol
WHEN TO NOT TRADE FOREX

• You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications. The truth is there is far more stop running in forex than in futures, and possibly as much stop running as in the stock market. I have friends who work in forex as well as many traders who of necessity have to trade forex. One of my students is a market maker in forex. These are people who should know, but in case you don’t want to believe me or them, simple observation of forex trading will reveal the vast amount of stop running that takes place there. Who is it that runs the stop? Why it is your friendly forex broker. The broker has a vested interest in seeing to it that your orders are filled. Stop running is nothing more than order filling. The broker sees to it that everybody’s order gets filled.
Arent stop running done by futures brokers too?
  • #50
  • Apr 20, 2006 6:32pm Apr 20, 2006 6:32pm
Quoting WTB
Sorry SMJ, I wont say the name of the brokers, I dont want to risk getting myself into troubles in case my statements are not correct. My advice is: create demo accounts on the most commonly known forex retail brokers and another one in Oanda. Whenever you find a trade oportunity, enter both trades at the same time on both platforms and see if you experience the same phenomenum I have witnessed. After that, please report back in this thread one way or the other.
So now you are suggesting that they will do this even on your demo account when there isn't actually any money on the line???

Perhaps what we are looking at here is a sampling bias? Have you watched the price difference in the feeds for a long time during the day? If you have, have you noticed this occurring during the day even when you are not getting into a trade?

Some guys that I work with have live feed from Oanda and one from FXCM and have historical data on both for around the last 16 months or so and their comment is that the prices line up very well.

Simon
  • #51
  • Apr 20, 2006 6:38pm Apr 20, 2006 6:38pm
DrRock, That is too bad that the feeds line up. Think of the potential there. It would be like the Holy Grail of trading... Oh well, It is one thing to complain. Quite another to prove it. I only wish that the spread manipulation were ture.... What a great opportunity

I have been testing today against onanda and I cannot find anything. But then why would any broker in manipulate a demo acct.?


SMJ


Quoting DrRock
So now you are suggesting that they will do this even on your demo account when there isn't actually any money on the line???

Perhaps what we are looking at here is a sampling bias? Have you watched the price difference in the feeds for a long time during the day? If you have, have you noticed this occurring during the day even when you are not getting into a trade?

Some guys that I work with have live feed from Oanda and one from FXCM and have historical data on both for around the last 16 months or so and their comment is that the prices line up very well.

Simon
  • #52
  • Apr 24, 2006 4:42am Apr 24, 2006 4:42am
Haven't any of you guys ever been in business in any other industry?? In many businesses, there is a phase in a project where you bid to supply material or services and will be awarded a contract if you are the low bidder. During this time, some of your clients will be feeding your bid to YOUR competitors (perhaps their friends) to initiate a bid war (typical). You can get screwed any given day. On top of this, when you invoice, and they're tight on cashflow or don't feel like paying, they'll make up any excuse regarding deficiencies and other problems and you might not get paid til a year later, or worse, never! To describe the amount of risk involved in any business is to ramble on and on for pages, to no end. In my experience, FX is the least riskiest business you can get into (provided you train and stay on top of things).

If you're right, you get paid NOW. If you're wrong, you incur a minor loss NOW or break even. There's NO game playing and even if there were, the minor pips we are talking about is nothing.

What other business is as efficient as FX? What other business allows you to track market conditions 20 years back? In my opinion, anyone who blames a br$ker for their loss needs to read some good business books on attitude and mentality. When you lose, it's your br$ker's fault, and when you win it's all skill? Just my opinion, but if you believe your br$ker is scamming you, you are psychologically setting yourself up to lose. It's mostly a mental game...Think happy thoughts!!

Good luck!
  • #53
  • Apr 24, 2006 4:49am Apr 24, 2006 4:49am
that last post was not directed at anyone in this thread in particular...it's just that i've seen the Wikipedia stuff on forex scams. I think it's mainly referring to managed accounts where you throw your cash at someone you've never met and hope you make 3000%. for individuals who actually follow the market and trade forex, i don't think there are too many who believe the br$ker is scamming them. otherwise why is this forum packed with successful traders??
  • #54
  • May 6, 2006 11:45am May 6, 2006 11:45am
Quoting bernadette
This is soooo true! I still trade futures using Genesis Trade navigator. I can recall one trade that I place in Live Cattle. This market is listed on the CME exchange and trades from 9:05amCST - 1:00pmCST. And then its closed!

Image my shock an awe when my long positon that I placed on one day, gapped limit down upon open the very next day!! What the blazes happened overnight while we slept!! Another "mad cow" scare maybe?? Well you can bet that all of us traders were scampering real hard to get out of that trade. But to no avail. Limit up/limit down trades are nightmares. I like forex because of the liquidity of the market, and be cause there are no major gaps like in the futures. I still trade my futures, but less...and I trade forex more.

My 2cents.
You obviously have yet to experience gaps in forex, but they do occur, and they can be major. Just last weekend GBP/JPYdropped 130 pips between when it closed on friday and when it reopened on sunday. Luckily I was on the right side of that trade and I was jumping for joy at what had happened. I was only wishing that good money management would have allowed me to have more than 1 mini lot. However, I can imagine how upset I would have been if I had had an open long position instead of my open short position.

It is possible that it occurs less often in spot forex but when it does it can be a disaster or a gift from heaven.
  • #55
  • May 6, 2006 11:49am May 6, 2006 11:49am
Yes I know what you mean, but My nerves cannot take that ride, so I generally close my trades on Friday and reopen them, (if I can) on Sunday... I suppose I could go with someone who is always open, but I like to play on the weekends... Oh well, Scott



Quoting moonchild
You obviously have yet to experience gaps in forex, but they do occur, and they can be major. Just last weekend GBP/JPYdropped 130 pips between when it closed on friday and when it reopened on sunday. Luckily I was on the right side of that trade and I was jumping for joy at what had happened. I was only wishing that good money management would have allowed me to have more than 1 mini lot. However, I can imagine how upset I would have been if I had had an open long position instead of my open short position.

It is possible that it occurs less often in spot forex but when it does it can be a disaster or a gift from heaven.
  • #56
  • May 6, 2006 12:43pm May 6, 2006 12:43pm
The following comments are just my own feelings, nothing to put stock in. I started studying Forex about a year ago. Several times early on I saw huge spikes that closed out trades in my demo account that did not show up on other brokers feeds. It happened regularly (about once or twice a week) until I called the broker and started asking why these spikes were only on their feed. I got many excuses but the spikes subsided after that. I still see spikes occasionally but they are now much smaller. So, I personally DO think that brokers try to run stops. A friend said he met someone who had worked for an fxbroker and part of his job was to run stops but I cannot personally verify that. Why do it on a demo account? Well since their feed is used live also I assume they don't use 2 different feeds.

I still like Forex and think it can be a decent way to make money but trying to make money using EA's might be some time off. MT4 and brokers feeds are still way too unreliable with too many bugs. Sometimes I'm not sure if these bugs are intentional or not since I've rarely have trouble opening a trade but regularly have difficulty closing trades. I also find it interesting that the very same EA will react very differently at different brokers.
  • #57
  • May 6, 2006 1:31pm May 6, 2006 1:31pm
It is essential to have 2 or 3 seperate price feeds when trading FX.
  • #58
  • May 6, 2006 2:11pm May 6, 2006 2:11pm
Quoting hagadol
It is essential to have 2 or 3 seperate price feeds when trading FX.

what exactly for?
  • #59
  • May 6, 2006 3:17pm May 6, 2006 3:17pm
So that you can see that the price your broker is giving you is reasonable and that the do not fcuk you around.
  • #60
  • Jan 18, 2007 4:29am Jan 18, 2007 4:29am
i dont know why you would open a can of worms. this has been kicked over so many times, in so many markets, over such a long period of time, for so many years, in so many cultures, for as long as man has existed. saying that brokers cheat retail buyers is like saying the sun will rise tomorrow morning.

we are always going to have to play by someones rules, you want us to play by yours, the bank wants us to play by theirs, god wants us to obey his and i want my kids to obey mine.

and when my kids find a clever way to break my rules i send them to their room for a little bit. when traders find a way to beat the house they get punished too. when blackjack players count a deck they get profiled and when criminals break the law they get sent to jail.

over time rules change, careers blossom and businesses die. politicians retire and babies are born. families buy houses and kids rent apartments. markets mature and areas saturate.

forex buckets have changed significantly over the last 5 years. i believe it will develop into a more reputable, accessible and more widely traded market.
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