Brokers bucketing trades

Hi guys,

This is quite an important subject I believe. But it's always hard to tell whether trades are being bucketed.


What's the first signs that a broker is bucketing trades?


Please share your experience!

If you can't tell it, does it make a difference?

It does, because then it'll be the broker's interest for you to lose out on your trades!

Most reputable brokers Dealing Desk brokers take less than 5% of their clients trades as proprietary. And they only do it for small trades, big trades are sent interbank without hesitation. Too much risk for them.

But even if they are taking the other side of your 0.10 lot, do you really think it matters? Do you think them taking the other side of a 0.10 trade will effect anything in the market?


NO. Honestly, those who bitch about brokers that take the other side of your trade.. its a joke. The entire market isn't going to just stop and look at you and your broker and go "Hey, the retail trader is right with his trade, and the broker is wrong, everyone in the market, lets all reverse what we were going to do, so the broker makes profit instead of that one retail client"


It's just a joke. It's never mattered and it never will. Too much liquidity.

20-30 million lots PER DAY in the EURUSD. Your 0.10 lot, 1.00 lot, 10 lots or 100 lots means nothing to the market as a whole.

Now if you had 5,000 lots with only a 5 pip stop loss, then I could see how other big fish in the market might want to try and take out your stop.

Why?

Because 5000 lots in one stop would cause a decent amount of slippage for big players to "soak" with an even larger order after the stop is hit (actually its done exactly as the stop is hit)

That means more lots for them at a better price because they are "soaking" your slippage, instead of creating their own slippage

(which is what happens when markets breakout. there are no orders to "soak" so price spikes 20-40 pips in a matter of minutes.. massive slippage)

hello fellow countryman (vatican state city) .

I wonder.. when brokers are at work, do they bucket their shits or go use the toilet?

just kidding! I'm with Rag2RichesFX on this one

Yup that's been agreed, but I believe certain brokers even the STP ones don't send 100% of the trades to the interbank market, and I speak from experience, I was dealing with a broker, whom I just opened an account with, even with bigger sizes and low liquidity hours of the market, open/close the market doesn't move. Which, I believe is quite a clear sign of trade being bucketed. I agree that 0.1 lot 1.00 lot, 10 etc doesn't mean anything, but there is an underlying impact when you open/close positions on the tick charts/ pip pricing at that moment, and if your size is larger than 50 and nothing is moving when you're closing this when the market isn't really moving, eg, now. Then your broker could well be bucketing your trades.

And yes, broker taking the other side is just massive bullcrap, no one cares, the FX market is so big that anyone who wants to trade it could trade it in whatever way they wish to, it's doesn't matter, banks don't care, and banks are the real market makers. I agree fully with you, but I believe brokers who lie about covering all positions but do not do so entirely should be caught by the regulators.

Also, there was still something pretty bullcrap with a broker I encountered. I had a GBP USD short before FOMC just with a tight stop, then lol, I shorted at 1.5980 with stops just at 1.5990, then the broker just executes all stops at 1.5990 despite the spike on "no taper" to 1.6025 pretty instantly. Another firm sign of trades being bucketed.

very well said. that's why traders need a true ECN broker.
your individual order sent directly inter bank, not grouped up with other clients and sent interbank

ECN brokers are supposed to send 100% of orders to other liquidity providers and not do anything of the liquidity providing themselves.

Well Rag2, I was trading with a STP broker, similar structure with ECN as they say 100% sent to interbank with Direct Market Access, however, everything like this is just pure rubbish. Was trading with a STP, and trades were quite clearly bucketed as I traded large sizes, stops triggered at the exact fractional pip. It's unbelievable how brokers do business now, even when I ask why the heck did the stops get triggered at exactly where I wanted them to do so when the prices shot 50 pips higher, they just say "isn't our liquidity just great?", when in fact the question they should be asking is "don't we warehouse our trades perfectly?"

Oh well, sometimes these brokers just need a boot from the regulators to know what's not ok and what's ok. Brokers who keep ruining the industry by blaming their own faults on "liquidity" and "illiquid markets" should just walk away, this word in fact is going to be defined clearly on MiFID II, and there are certain MiFID articles saying that liquidity doesnt mean anything to prices already as a whole. I just hate it when brokers say they have deep liquidity, I mean honestly, what do you mean by deep liquidity?

Banks aren't even liquidity providers in a strict sense, they are a flow provider, they execute trades for you from their flow of a large client base... The word liquidity is just used to an extent where everyone is fooled by it, if anyone digs up the correct investing definition of liquidity, we will know that "liquidity changes" does not affect the spread, but the change of flow does...

Stop getting fooled people.