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Wise to discuss strategy with my broker?

  • #1
  • First Post: Edited 10:38pm Nov 19, 2012 8:13am | Edited 10:38pm
Hello traders,
I am mainly trading EURUSD on a demo account for about 2 years and my plan is to go real after a year maximum. My question is could someone here at this forum provide me with informations is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily (I know it is very hard) and till now I use various tactics in technical analysis how to enter and exit, combining with a scalping and intraday methods. On a demo account I have success (I don't know if in reality).

Thanks.
  • #2
  • Nov 19, 2012 8:18am Nov 19, 2012 8:18am
Quoting ognen
Hello traders,
I am mainly trading EURUSD on a demo account for about 2 years and my plan is to go real after a year maximum. My question is could someone here at this forum provide me with informations is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily (I know it is very hard) and till now I use various tactics in technical analysis how to enter and exit, combining with a scalping and intraday methods. On a demo account I have success (I don't know if in reality).

Thanks....
the volatility of the Euro for the past year has been .44% daily to make 2% you need to be leveraged, It is possible but remember with Higher leverage comes Higher risk
AVT INVENIAM VIAM AVT FACIAM
  • #3
  • Nov 19, 2012 8:27am Nov 19, 2012 8:27am
Quoting ognen
is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily
Why would You need to discuss your trading strategy with your broker anyway?
  • #4
  • Nov 19, 2012 8:33am Nov 19, 2012 8:33am
Quoting ognen
Hello traders,
I am mainly trading EURUSD on a demo account for about 2 years and my plan is to go real after a year maximum. My question is could someone here at this forum provide me with informations is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily (I know it is very hard) and till now I use various tactics in technical analysis how to enter and exit, combining with a scalping and intraday methods. On a demo account I have success (I don't know if in reality).

Thanks....
I don't know what they would say - do they offer a service to help you devise a strategy? You're having a successful strategy is in direct conflict with their interests, they would probably advise you to just go live now with as much money as you can fund into your account.

I think 2% a day might be a bit aggressive to start with. If you're doing that on demo then great, to replicate it on live start with a very small account and then you can meet and slay your demons without losing a significant chunk of money.
Anything can happen.
  • #5
  • Nov 19, 2012 9:04am Nov 19, 2012 9:04am
Quoting the redlion
the volatility of the Euro for the past year has been .44% daily to make 2% you need to be leveraged, It is possible but remember with Higher leverage comes Higher risk
That'd be 5x leverage, from top to bottom of the move. 5x leverage isn't that much, counting as even JPMC uses 30x leverage.

However, you need to be very systematic, and avoid scalping. 2x isn't but for the most experienced scalpers. And yes, you can talk to your broker. If he's serious, he won't stop hunt and co., thus allowing you to negotiate your spreads(on higher figures, e.g. 100k+).
Please, just slap me around if I'm being silly ...
  • #6
  • Nov 19, 2012 9:05am Nov 19, 2012 9:05am
Quoting ddinnov
I don't know what they would say - do they offer a service to help you devise a strategy? You're having a successful strategy is in direct conflict with their interests, they would probably advise you to just go live now with as much money as you can fund into your account.

I think 2% a day might be a bit aggressive to start with. If you're doing that on demo then great, to replicate it on live start with a very small account and then you can meet and slay your demons without losing a significant chunk of money.
Why would a succesful strategy be in conflict with a broker? Except the broker being a market maker. Else, I don't see why. They have only to gain from prolonged spread paying.
Please, just slap me around if I'm being silly ...
  • #7
  • Nov 19, 2012 9:59am Nov 19, 2012 9:59am
Quoting daemon_delux
Why would a succesful strategy be in conflict with a broker? Except the broker being a market maker. Else, I don't see why. They have only to gain from prolonged spread paying.
the prevailing thought in FF is that a broker takes the other side of your trade and wins when you lose, they are out to get you, is what most people here say.

I disagree with this but, some one needs to be blamed for our failures...it is human nature

the devil is the go to guy in our society
AVT INVENIAM VIAM AVT FACIAM
  • #8
  • Nov 19, 2012 11:05am Nov 19, 2012 11:05am
Quoting the redlion
the prevailing thought in FF is that a broker takes the other side of your trade and wins when you lose, they are out to get you, is what most people here say.

I disagree with this but, some one needs to be blamed for our failures...it is human nature

the devil is the go to guy in our society
Don't they have to pay the money into your account when you make a profit and when you make a loss doesn't the money from your account go into their account? I don't agree with the 'broker taking the other side of your trades' thing but I'm pretty sure that your gain is their loss and vice versa financially. I may be wrong though. :/
Anything can happen.
  • #9
  • Nov 19, 2012 11:21am Nov 19, 2012 11:21am
Quoting ognen
Hello traders,
I am mainly trading EURUSD on a demo account for about 2 years and my plan is to go real after a year maximum. My question is could someone here at this forum provide me with informations is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily (I know it is very hard) and till now I use various tactics in technical analysis how to enter and exit, combining with a scalping and intraday methods. On a demo account I have success (I don't know if in reality).

Thanks....
no
  • #10
  • Nov 19, 2012 12:27pm Nov 19, 2012 12:27pm
Quoting ddinnov
Don't they have to pay the money into your account when you make a profit and when you make a loss doesn't the money from your account go into their account? I don't agree with the 'broker taking the other side of your trades' thing but I'm pretty sure that your gain is their loss and vice versa financially. I may be wrong though. :/
ok show me the evidence where this is so.

investigate how brokers operate, and contact your regulatory body ask them what is legal or illegal for a fx broker to do, contact the Better business beureau of your country of residence and ask what would be grounds for compliance....

if in fact in your country brokers are allowed to operate as bucket shops then you might be correct, but even then shading price will open them to arbitrage
AVT INVENIAM VIAM AVT FACIAM
  • #11
  • Nov 19, 2012 12:34pm Nov 19, 2012 12:34pm
Quoting the redlion
ok show me the evidence where this is so.

investigate how brokers operate, and contact your regulatory body ask them what is legal or illegal for a fx broker to do, contact the Better business beureau of your country of residence and ask what would be grounds for compliance....

if in fact in your country brokers are allowed to operate as bucket shops then you might be correct, but even then shading price will open them to arbitrage
Evidence where what is so?
Anything can happen.
  • #12
  • Nov 19, 2012 12:39pm Nov 19, 2012 12:39pm
Quoting ddinnov
Evidence where what is so?
you say that dealer take the other side of your trade and if you lose they bank your money, if you make a profit they pay out of pocket.....we all know how reasonable guesses stack up to empirical science.

like from nothing nothing comes is very reasonable yet new findings in M theory and astrophysics shows otherwise.


do you have any evidence of what you say is true? that brokers take the other side.
AVT INVENIAM VIAM AVT FACIAM
  • #13
  • Nov 19, 2012 12:48pm Nov 19, 2012 12:48pm
call your broker and ask for a written latter disclosing the risks and their operations including how they offset your orders.


odds are that in such competitive industry like the FX retail market most brokers do their best to stay in business.

unless mine is lying which could be the case

they offset their risk on aggregate, and make money of the spread, and swap rate differentials, if you are inactive they charge you a fee after 60 days i believe.....

there are numerous sources online that show live price feeds, I am sure that an intelligent trader that gets a 50 pip spike that is not there will hit them and make some money on arbitrage.
AVT INVENIAM VIAM AVT FACIAM
  • #14
  • Nov 19, 2012 1:01pm Nov 19, 2012 1:01pm
I always assumed that when when I make a profit the money that get's added to my account came from theirs, and likwise when I make a loss the money removed from my account goes to theirs. Is this not the case? Does the money come from and go to somewhere else? If so where?
Anything can happen.
  • #15
  • Nov 19, 2012 5:00pm Nov 19, 2012 5:00pm
Quoting the redlion
call your broker and ask for a written latter disclosing the risks and their operations including how they offset your orders.


odds are that in such competitive industry like the FX retail market most brokers do their best to stay in business.

unless mine is lying which could be the case

they offset their risk on aggregate, and make money of the spread, and swap rate differentials, if you are inactive they charge you a fee after 60 days i believe.....

there are numerous sources online that show live price feeds, I am sure that an intelligent...
Ask your broker who the liquidity provider and/or counter party is for a live trade. Let us know if you have any success. If everything was above ground, there would be no need to keep this stuff in the dark.

**Let me add that I am currently in profit on all trades to date (for now). I'm not a big player, but I am not a disgruntled trader looking for someone to blame.
  • #16
  • Nov 19, 2012 5:58pm Nov 19, 2012 5:58pm
Quoting the redlion
they offset their risk on aggregate, and make money off the spread, and swap rate differentials
This is correct.

On a small scale, yes your win can come out of their bucket. But they usually have so many traders taking trades all over the place that it is more likely that your win was offset by another traders loss. Not directly of course, because there were probably a thousand other trade executions in the interim. But if "everyone is long" then the broker would automatically offset the difference with their providers.

The best thing brokers have going is matching trades in house.... where one trader buys and another sells. Those trades offset each other and the broker gets the whole spread for doing nothing (except of course, providing the service)

I believe it is not correct to say that one trader's win is the broker's loss.

As far as 'telling' the broker your trading plan..... that doesn't really matter IMO, they can see your plan, see your charts, see everyone's stops..... I think it is no more detrimental than defining your plan on these forums.
  • #17
  • Nov 20, 2012 1:16am Nov 20, 2012 1:16am
In the simplest terms though what's the answer to these 2 questions:

1.- Trader opens an account and makes a $1000 USD profit then closes his account transferring the funds from his trading account to his bank account. He now has $1000 USD he didn't have before - who paid that to him? Where did that $1000 USD he didn't have before come from?

2. Trader opens a $1000 account and get's a margin call losing all of it except say $50. He's now $950 worse off. Who now has that $950? Who's bank account is it sitting in?

I'm not trying to be arguementative, I just genuinely believed that that is how the flow of money worked between trader and broker. I know there is liquidity provided by larger institutions but from a very high level overview I thought that if trader makes a profit - broker pays it to him, and if trader makes a loss broker debits from him into their account. Is that not the case - does the flow of money come from somewhere else?

I also don't believe that they 'trade against their customer' because I don't think they have to. There are enough losing traders for them to be offering 4 figure incentives to people to open accounts...

The only conversation I've ever had with a broker about anything approaching a strategy has been them trying to push me into funding an account with as much as possible and start overtrading as much as possible..
Anything can happen.
  • #18
  • Nov 20, 2012 2:13am Nov 20, 2012 2:13am
If a trader loses $1000, it is most likely that the money is spread out among several other traders, the broker spread +/- whatever the broker's aggregate position is, and possibly some has been transferred to liquidity providers.

Talking about this in rigid and simple terms would be fine if you were the brokers only customer.... but , for an example:

If you opened 10 lots long and 10 other traders opened 1 lot short at the same time.... then the broker facilitated the trade, taking the spread.... and the 10 other traders won or lost whatever you lost or won. That assumes also that all the trades are closed at the same time.

In reality trades are being opened and closed in all different sizes quite regularly. The broker matches offsetting trades and maintains balance overall by offsetting the imbalances through their providers. If the broker fails to offset the aggregate imbalance then, your gain would become their loss.... or vice versa.
  • #19
  • Nov 20, 2012 2:20am Nov 20, 2012 2:20am
Even if a broker was being "hurt" by the winning trades of their various traders, it would seem to me that most traders trade such small lot sizes that it's unlikely to impact the broker's bottom line in any significant way. If there was manipulation going on, most likely there would be a threshold. As in they only worry about gaming the system for traders who are profitable AND trade higher volume. Maybe 10 lots + p/trade. If you're trading less than 2 lots on average, they might hope that you do a little bit better than break-even....that way you can juice enough money out of the market to keep them going and you stay alive as well so that you can do it day after day after day.
  • #20
  • Nov 20, 2012 2:50am Nov 20, 2012 2:50am
Quoting ognen
Hello traders,
I am mainly trading EURUSD on a demo account for about 2 years and my plan is to go real after a year maximum. My question is could someone here at this forum provide me with informations is it wise to discuss my plan and approach with the broker where I am supposed to make a deal? My plan is to make 2% daily (I know it is very hard) and till now I use various tactics in technical analysis how to enter and exit, combining with a scalping and intraday methods. On a demo account I have success (I don't know if in reality).

Thanks....
Why would you want to discuss your strategy or trade plan with your broker in the first place? What do you hope to achieve?
Orderliness of Randomness
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