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Technical Analysis Fallacy

  • #30,361
  • Jan 26, 2012 1:49am Jan 26, 2012 1:49am
Chief, interestingly, as you were teaching, I came across this post of yours

http://www.forexfactory.com/showthre...92#post3807892

That answers most of my questions regarding retail brokers, I guess

I wish some pros here would be able to ask more in depth questions... really keen to learn.

regards
  • #30,362
  • Edited 2:10am Jan 26, 2012 1:49am | Edited 2:10am
Quoting tricello
Hi fti,

many retail brokers claim they get price feeds from 10+ different tier 1 banks.

Assuming this is true (even if the trades are executed in their secondary market) and based on what you are explaining and the sizes traded at retail, Would it be safe to assume than in reality, even if the feeds are direct, we, at retail are trading at a 10 pip real spread? (meaning that the broker can move price wherever he wants inside the interbank spread)

thanks for your great insights
ask them name their source of liquidity. If banks dare list the names beside their "ASAP" sources of info that they are making markets at a certain price. Whats the big deal of brokers highlighting their source of liquidity?


I suspect you are probably on more than 10 pips slippage of prices. probably double. But this may differ from broker to broker.
It may depend on their book que liquidity and their robot.

A new secondary market, they call ECNs are begining emerge,that may be new avenues of robust liquidity for markets. But seems they not easy to get to, i still not understand why?


regards
  • #30,363
  • Jan 26, 2012 2:13am Jan 26, 2012 2:13am
I trade with MB trading and they were forced to change the name of their ECN service because as you point out, is not accurate. They now call it EXN, meaning that the trades are mostly (totally?) filled inside their own market.

I believe (or want to believe) that they get feeds from real banks, because in moments of very low liquidity (news) i've seen as much as a 10 pip NEGATIVE spread. This makes me think that the prices are so wide (and thin) in the real market, that the best bid and offers overlap themselves.

Of course you wouldn't usually get filled at a -10 pip spread, but a few times i've had fills reflecting the prices quoted, even at negative spread.

Do you believe that this "secondary" range could be used strategically to the benefit of the retail trader?
  • #30,364
  • Edited 2:56am Jan 26, 2012 2:26am | Edited 2:56am
Still no one has asked about honour, the back bone of free enterprises.

Any way the whole interbanks system of forex trading and money market activities are center on this Honour.

Honour is the back bone of the free markets.
fostering willing buyer and willing sellers, willing borrowing and lending.

Default aka non-performance of contract on interest or principal is unthinkable.
In a free market system, there is no need of rating.
Ratings are a gauge, determine if higher interest be imposed due to possible higher risk of default(dishonour) ,
to defray risk.
Once default is sighted , felt or, envisualised. Then the party has no standing.
In technical terms has no credit wortiness.
Undersuch circumstance. there is no need to arm twist the party concerned.
All credit wortiness is lost and such should be left to their own devices.
Because no one should assume take the risk lend or borrow from them any more.
Unfortunately seems there are forces on markets these days that are above the System of Honour. I sit back wonder at times, whats become the system of honour that governs free enterprises esp banking.

regards
  • #30,365
  • Jan 26, 2012 2:32am Jan 26, 2012 2:32am
Quoting fti
Still no one has asked about honour, the back bone of free enterprises.

Any way the whole interbanks system of forex trading and money market activities are center on this Honour.

Honour is the back bone of the free markets.
fostering willing buyer and willing sellers, willing borrowing and lending.

Default aka non-performance of contract on interest or principal is unthinkable.
In a free market system, there is no need of rating.
Once default is sighted , felt or, envisualised. Then the party has no standing.
In technical terms has...
Chief, than the case is crystal clear for euro... Greece has defaulted and probably italy/spain/portugal in time to come... Honour is lost for sure. So free market has failed.. and what's next?

During my army days, my unit slogan is "For Honor and Glory". So in some sense I understand you, Chief.

regards
  • #30,366
  • Edited 3:31am Jan 26, 2012 3:02am | Edited 3:31am
Quoting N_Trader
Chief, than the case is crystal clear for euro... Greece has defaulted and probably italy/spain/portugal in time to come... Honour is lost for sure. So free market has failed.. and what's next?

During my army days, my unit slogan is "For Honor and Glory". So in some sense I understand you, Chief.

regards
Well not yet.
They still working so that they may find way for greece not need be dishonoured. Only thing is i not seen they found they way yet, except by whipping the honourable banking system and gyrating market with uncertainties creating fear and instability in robust time tested institutions. But thats that, govt and institutional stuff.
What on my mind is more how the honoured banking strutcure of trading free markets is evolving.
Will honour, the back bone of it all together be removed and allowed to florish a cut throat variant that some could abuse to their own ends. In my mind, the allowing the conflicts of interest between broking and market making, is a point of contention.

But i am only a small voice in the wilderness, sounding that the honourable may hear. Hoping that the honourable practises may transmigate to a new infant industry who's trying to emulate the robust interbanks OTC that exists.



regards
  • #30,367
  • Jan 26, 2012 3:12am Jan 26, 2012 3:12am
Quoting fti
The secrets of the OTC interbank system.
----------------------------------------------
The Interbank system is an HONOUR system.
Is made up of honourable banks quoting to each other prices of money.
they can call each other by myrid ways like over the reuters dealing console or via telex, or by phone or if necessary walking over to the other's bank dealing room to deal if necessary , if all else communication methods fails.
Dealers will make to each other prices of money and there is a standard and practise, where this is quoted.
Prices are...
Chief, I know this may sound really amateurish... But could you explain more about money markets and how they differ from forex market? I know that Philips Capital have this thing called the money market where your can "park" your cash with them to generate better interest than a bank savings account.

But I never understood the art and science behind it.

Hope it's not too lame a question

regards
  • #30,368
  • Jan 26, 2012 3:14am Jan 26, 2012 3:14am
Quoting fti
Well not yet.
They still working so that they may find way for greece not need be dishonoured. Only thing is i not seen they found they way yet, except by whipping the honourable banking system and gyrating market with uncertainties creating fear and instability in robust time tested institutions.


regards
Thanks, Chief.

I hope they are able to dig out of this mess... but seems no one ready to bite the bullet for the debts.. so it's simple solution but not easy solution... that's my 2 pips.
  • #30,369
  • Jan 26, 2012 3:44am Jan 26, 2012 3:44am
Quoting N_Trader
Wow... This is top secret stuff... thanks, Chief. I had no idea how retail can manage contracts as small as $1. Like Oanda for example... and they give really small spread.. 1.2 for EU most of the time.

So there is good reason to believe that the market that retailers are trading is not real? But it has to somehow be close to interbank rates right?

At the very minimum, most retail brokers are in sync... surely there is a reference that all are following to make the market?

Sorry for my delayed response as i'm still on my day job

regards
They can give really small spread because they know that 95% of their customers will loose and if we are all looking at the chart and trading long, who are we trading against? As you stated above MOST RETAIL TRADERS are in sync, that was the reason I ask the original question as to how they stay in sync because once we figure that out we will know more than 50% of the time when they are going to make their move and we will be moving with them
  • #30,370
  • Edited 4:09am Jan 26, 2012 3:50am | Edited 4:09am
Quoting N_Trader
Chief, I know this may sound really amateurish... But could you explain more about money markets and how they differ from forex market? I know that Philips Capital have this thing called the money market where your can "park" your cash with them to generate better interest than a bank savings account.

But I never understood the art and science behind it.

Hope it's not too lame a question

regards
the money markets is just a market place where local money is lent and borrowed according to its needs.

Ist you havethe customers books where banks resources are lent to their customers. A base lending and borrowing rate is set by the central banks and then banks add "haircuts " to those rates for lending and boorrowing according to the credit rates of each customer.

Banks also have requirements to park a certain amount of moneys with the central banks , to facilitate the functions of the central banks as lenders of last resort, in case where is needed.
This basic banking.

As the money structure goes up the ladder , is corp lending and borrowing requirements. Which have similar structure of credit ratings. These are know as corp papers.

Further up is the longer tenures of lending and borrowings to economies, facilitate projects and govts. these known as bills and bonds. Bills are lendings is tenure of generally below 5 years, Bonds are those loan papers thate are normally exceeding 5 years.

As different level, rates differ due to the percieved and calculated risk. So returns from such activity differs at different levels.

The grecce example is one where the lending had hit a snare at highest levels due to govt losing control of its efficiency. The complication of other govts and bodies stepping into the pic is creating a minefield thats no easy to navigate.
Other govts are trying hold up the greeks but the greeks not standing up on their own isn't helping much, but they still trying.

What phillips is doing is opening other avenues of lending and borrowing apart from that which are covered by the banks.
so may afford you better rates of returns for the higher risk profile it creates.

Forex is about foreign exchange which is the exchange of one currency for another. And if unsued , can be parked with banks whose currency you had bought can be parked for prevailing interest. eg, is if you bought usd with sgd then you in efects sold the sgd to the bank and have held for you usd which they will park with a us bank for your safekeeping. You can alternatively want higher rates of returns and could invest your usd in the us wall street, accordingly.

This is as layman as i can explain the struxture to you without dragging you through an economic course of study.



regards
  • #30,371
  • Jan 26, 2012 3:55am Jan 26, 2012 3:55am
Quoting fti

But i am only a small voice in the wilderness, sounding that the honourable may hear. Hoping that the honourable practises may transmigate to a new infant industry who's trying to emulate the robust interbanks OTC that exists.

regards
My view is that the retail industry started wrong, profiting from misinformation of the average client. That, in itself in dishonorable. If we add the tricks and games that some brokers play, it becomes plain robbery.

As in any bussiness, both parts should understand the risks and obbligations that are undertaking in the relationship. Hopefully, as the industry matures, better and more honorable relationships should grow. Brokers must be compensated for their risk and service but under clear terms. A possible solution from my perspective could be some kind of minimum certification required for trading, at least to ensure that every trader has been clearly explained the mecanics of the market they are trading in.... and of course, clear regulation for the brokers.

It would be a lot easier if everyone lived by their honour code like you Fti, but unfortunately that is not always the case
  • #30,372
  • Jan 26, 2012 3:58am Jan 26, 2012 3:58am
Quoting diy_
They can give really small spread because they know that 95% of their customers will loose and if we are all looking at the chart and trading long, who are we trading against? As you stated above MOST RETAIL TRADERS are in sync, that was the reason I ask the original question as to how they stay in sync because once we figure that out we will know more than 50% of the time when they are going to make their move and we will be moving with them
An earlier post from Chief:
"There is no such thing called an interbank feed. For spot inter-bank banks call counterparty banks by many channels. The prices differ from bank to bank and country to country at any given instance. if all yoru brokers are showing you same prices, then it doesn't matter if you have 100 brokers, they live on the same feed line.
There is however a Broker feed. What they do is take many interbank indicative prices and feed that into a broking network. And some sharks will use that same feed prices to scam the ignorant, while looking at their blotter."

regards
  • #30,373
  • Edited 4:41am Jan 26, 2012 4:18am | Edited 4:41am
Quoting tricello
My view is that the retail industry started wrong, profiting from misinformation of the average client. That, in itself in dishonorable. If we add the tricks and games that some brokers play, it becomes plain robbery.

As in any bussiness, both parts should understand the risks and obbligations that are undertaking in the relationship. Hopefully, as the industry matures, better and more honorable relationships should grow. Brokers must be compensated for their risk and service but under clear terms. A possible solution from my perspective could...
Well is already in the works.
Already the CFTC and regulatory bodies, had imposed 50X leverage.
This is to control risk that the uninitialted expose themselves to due in their greed. You wold be shocked at how many traders are killed because of their overexposures to market.

There's lots more work, on the teething problems in the retail forex arena.
You must realise that the new kid is on steroids backed by a shattering back breaking speed of technology. Is not easy task audit where there is cheating. Is even harder proof thats it exists.

segregating brokers and customers funds, thats another thingy they had imposed to weed out the erranous.

Look for and give your business to honourable and knowledgeable brokers. thats half the problems solved.
Be like prudence of banks, any broker violates you or their honour, Then "lines off " and report them.



regards
  • #30,374
  • Jan 26, 2012 5:26am Jan 26, 2012 5:26am
Ok so much about the big picture.
Now back to reality.
Those who trade retail, you are really only little ants.
And i tell you, be little ants and trade for your bread.
you want carry mindset of giants then you must have resources like the gaints.
Otherwise you are disillusioned.
Last thing you want to do is have resource like ants and behave like giants.
Thats easy way get killed. because you not know yourself.
Your super systems and predictions?
Question is , do you have the resources last the battle?


regards
  • #30,375
  • Jan 26, 2012 5:31am Jan 26, 2012 5:31am
Quoting fti
the money markets is just a market place where local money is lent and borrowed according to its needs.


This is as layman as i can explain the struxture to you without dragging you through an economic course of study.



regards
thanks Chief.

For allowing me to drag you thru the layman streets

Really appreciate your efforts and kindness. I understand now.. I will read up more on my own to further my learning. Have gotten very good foundational lessons here on TAF thread.

Finally back to my battlestation. Gonna watch the charts abit.

How's your energies today? Seems you have been up for a pretty long time and could sense the positive energy building up in you.

regards
  • #30,376
  • Jan 26, 2012 5:42am Jan 26, 2012 5:42am
Quoting N_Trader
thanks Chief.

For allowing me to drag you thru the layman streets

Really appreciate your efforts and kindness. I understand now.. I will read up more on my own to further my learning. Have gotten very good foundational lessons here on TAF thread.

Finally back to my battlestation. Gonna watch the charts abit.

How's your energies today? Seems you have been up for a pretty long time and could sense the positive energy building up in you.

regards
No problem N.
I am just as naughty as all of you.
I like this second wind in an emerging secondary forex market much.
Have avenue extend my career swasbuckling daily and cutting them pieces, taking the loots pips i can squezze out of the swings.
But unfortunately my body not give me this privalage.
So i sit here and watch in awe, and tell you stories of the by gones.
Maybe help someone along his learning curve.

Lets see if i can find it again, to go with some of you in a pirates adventure again

regards

my song.

Inserted Video
  • #30,377
  • Jan 26, 2012 5:49am Jan 26, 2012 5:49am
Quoting fti
Ok so much about the big picture.
Now back to reality.
Those who trade retail, you are really only little ants.
And i tell you, be little ants and trade for your bread.
you want carry mindset of giants then you must have resources like the gaints.
Otherwise you are disillusioned.
Last thing you want to do is have resource like ants and behave like giants.
Thats easy way get killed. because you not know yourself.
Your super systems and predictions?
Question is , do you have the resources last the battle?


regards
It wasnt so much a case of behaving like giants but having the knowledge that when giants move we want to move with them, not against them, I wont even fight this battle unless I can determine my escape route first
  • #30,378
  • Jan 26, 2012 5:49am Jan 26, 2012 5:49am
Quoting fti
Ok so much about the big picture.
Now back to reality.
Those who trade retail, you are really only little ants.
And i tell you, be little ants and trade for your bread.
you want carry mindset of giants then you must have resources like the gaints.
Otherwise you are disillusioned.
Last thing you want to do is have resource like ants and behave like giants.
Thats easy way get killed. because you not know yourself.
Your super systems and predictions?
Question is , do you have the resources last the battle?
regards
Big picture is very scary. That makes me sometime think, despite what little skill and mindset which i've acquired here at TAF, that i'm a gambler. 10 pips slippage and brokers quoting prices according to their exposure is horrible. one of my friends advised me to use Metastock datafeed to lessen the possibility of getting victimized. Chief...! being ant will bring bread home?

regards
  • #30,379
  • Edited 6:09am Jan 26, 2012 5:53am | Edited 6:09am
Quoting fti
No problem N.
I am just as naughty as all of you.
I like this second wind in an emerging secondary forex market much.
Have avenue extend my career swasbucking daily and cutting them pieces, taking the loots pips i can squezze out of the swings.
But unfortunately my body not give me this privalage.
So i sit here and watch in awe, and tell you stories of the by gones.
Maybe help someone along his learning curve.

Lets see if i can find it again, to go with some of you in a pirates adventure again

regards
It's amazing how peeps life crosses... I would never have imagined that it was possible for me to learn from a super trader. I only hope that I will bring honour and not shame to what you have generously laid before us

You are and will always be an inspiration to me and many others here
Take it easy, Chief. I know it's very taxing to engage in live battles... if the time do come that such will happen, I will be honoured to be part of it.

Till then, I think we are contented to have a nice chat once in awhile. And to have the shepherd guiding our course.

If you do visit sg again I would really hope to meet you in person... my friend Veritos is a great fan of yours too

regards

this is for you, Chief.

Inserted Video
  • #30,380
  • Jan 26, 2012 6:27am Jan 26, 2012 6:27am
Quoting cuthbert
Big picture is very scary. That makes me sometime think, despite what little skill and mindset which i've acquired here at TAF, that i'm a gambler. 10 pips slippage and brokers quoting prices according to their exposure is horrible. one of my friends advised me to use Metastock datafeed to lessen the possibility of getting victimized. Chief...! being ant will bring bread home?

regards
well, we are what we are.
Whether you succeed or you fail. Its in your hands.
The markets is what it is, a battlefield.
Find ways survive.
You will hardly be able change it.
so you wait for the masses make it change for the better.
Meanwhile you fight keep self alive and relevent.

Do whatever it takes , do no evils to self or others.
Love your creator, for the duration you have choice do so.

regards
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