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Call for Regulations regarding Liquidity Providers

  • #61
  • Jan 18, 2015 12:03pm Jan 18, 2015 12:03pm
Quoting albchr
{quote} If we want a free market we have let it be free.
Absolutely agree al.
If you float it, then let the market decide.
Rgds
  • #62
  • Jan 18, 2015 12:52pm Jan 18, 2015 12:52pm
i think if a currency is Peged or exotic currencies (or not traded 24H monday to friday currency, and chf should be traded 24H monday to friday) it should not be traded with margin greater then 1:5 (Law should be made like that and followed by brokers), thats the only thing that helps, but then what about CFDS and futures (not allowing overnight or overweekend trades) and the list goes on & on,... greater margins then 1:100 should be forbidden as well...crazy brokers offering 1:400, now crying for help,..
its just money
  • #63
  • Jan 18, 2015 1:53pm Jan 18, 2015 1:53pm
Quoting Forexia
{quote} Yes but the government CAN force that grocery store to stay open even during crisis times...
Forexia, you do not understand how the market works, and if you can't get your head around "black swan' events, you should not be trading. On top of the fact that your account was probably with a bucket shop, one of the sketchiest businesses out there This is said not to besmirch your personal character, but you must understand "risk", and counter-party risk before you can focus on reward. One problem with the OTC market-complex is the focus on reward when in fact, that is the absolute backward way to look at it, hence, one of the myriad reasons traders lose. Did you understand the markets were risky when you started this endeavor? Did you maybe look at historical CB interventions and the aftermath? This one is hardly the first. Furthermore, were you railing against CBs when you were making "free money" on a "sure thing" trade based on currency pegging, which is CB manipulation?
Let's take your grocery store example. Can the government force a grocery store to stay open? For the sake of argument, let's say yes.
So, an asteroid hits your town, total devastation, it lands right on your refrigerator. But you survive and head to the grocery for a can of peas.
So the grocery is more or less destroyed, but some employees are still there bravely trying to comply with the regulation.
But there are no peas. And you want peas. The government says the store must remain open so there MUST be peas.
What to do? Go on a message board and rail against the lack of peas. But, you see, there were...no...peas to be sold.
Bringing it back to reality, what if the LP took all the trades against it? So it uses up its reserves and becomes insolvent. What is it going to back up its side with if it has no more money left? A similar thing happened with Silver futures a few years ago - Comex crashed the silver market when it added additional margin requirements that clients could not meet. So, a regulation that reduced counter-party risk (good), killed you if you were long Silver (bad). Would you have agreed with the Comex rule in that case?
Or let's take your example of only intervening 100 pips a day. Seriously? Imagine how crowded that trade would be. Would your broker short to sell you the long?Or if you were in a regulated market, who would you find to sell a long to you? Do you know what lock-limit is in the futures market? If you have no idea what any of that even means, i suggest you go back to the drawing board, and get some education about it. I'm not saying any of this to show I'm so smart or a great trader - I'm not. Lost my shirt trying to catch moves in gold during the 2008 crash because, coming from a Forex background, I didn't understand the bid/ ask spread, I thought it was just a vig for the house. But it is way more than that- in fact that- it is the market - two parties coming together at auction to agree on a price is the market. At one point I thought it was a buy/sell button on my screen. The difference is way larger tan you may think.
Being a successful trader means you have to take responsibility for everything that happens to your account, and regulations won't even necessarily save you (MF Global meltdown, anyone?) I understand you need to vent, and that is part of the healing process, but no one can save you, my man.
  • #64
  • Jan 18, 2015 2:01pm Jan 18, 2015 2:01pm
Attached Image


You want regulations because you're pissed you lost money. How come these survived "with flying colours" and the others didnt?..its simply, the other brokers werent doing things right..if they were they would have been on this list too. Move on.
YOUR MOTHERS ASS
  • #65
  • Jan 18, 2015 4:23pm Jan 18, 2015 4:23pm
Quoting Taters
Being a successful trader means you have to take responsibility for everything that happens to your account.

Not Forexia though, he will never own up to his own mistake, he had a dreadful trade and got burned. He has been avoiding the mirror for days and would rather blame someone else, hence his tirade here since last week. On every thread he posts he keeps going on about LP's and how his loss is their fault, it was their responsibility to create an artificial market and quote him prices close to his stops.

He isn't getting very far so he comes here trying to get other uninformed traders behind his useless mission.


He will probably find some others who can't own up to their responsibilities and would rather have a go at the big faceless institution instead of some healthy self reflection.
A contrarian; I always disagree.
  • #66
  • Edited Jan 19, 2015 1:29pm Jan 18, 2015 11:17pm | Edited Jan 19, 2015 1:29pm
OK I want to make something really clear for those of you who are reading my thread seriously before the trolls starts yapping again.

I am NOT saying the liquidity "providers" necessarily caused this turmoil but What I AM saying is that they made a bad situation worse. They made an already extreme market condition more volatile than it should be which is NOT right. If you want to read my analysis of what happened, you can read Post#55 in this thread. And yes, I have traded during those other CB interventions, the most recent one before the SNB event this Thrusday was the BoJ with the collaborations of all the CB's around the world depreciating the Yen to help the Japanese Yen in 2011 after the tsunami and they used mainly the AUD and NZD and within 1 min, both AUD and NZD rose in value by 200+ pips but what was different was that trading continued, price quotes continued to stream across the board, there was never any disruption of market; there was NEVER any point any affected currencies became untradable like this time. WHY? Because the liquidity providers at that time continued to make market. Hence no large negative balances, no brokerage insolvencies or scrambling to find white suitors. All those brokers who are saying they are Ok now; we don't really know whether they are truely OK depending on they are going to recoup their losses which is going to take long time to sort out so you never know, we might be hearing more grim news down the line, IG is one example, that just announced its insolvency decision now.

So the question remains WHY did the liquidity providers continued to make market that time and this time, with the same CB interventions, they decided to throw in the towel and just take off leaving us traders and brokers fending for ourselves? What all of us traders back then somehow knew about the BoJ interventions and just all stayed on the right side of the market and all had short positions on Yen ready, in those trolls' words had all the "good" trades and plus we were all using no leverage? So stop being ridiculous!

You want to have a free market that's fine but you must have a market first! Shutting down quote feed is NOT having a market. Without market, then there is no way to determine fair market value. If my stop-loss was at 1.12, WHY should I accept a price of 0.90, 2K+ pips away just because the liquidity "providers" refused to trade? That's the liquidity "providers"' problem. My trade should've been closed 1.12, it's not my problem that the system was shut down with no quotes and my trade couldn't be closed. To me that was just a system glitch, now that the system is back online, I expect my trade to be closed at 1.12 and not 0.90 and thus I only owe the broker the difference from my entry price to my stop-loss times my trade size. That should be the only loss amount that I am responsible for. It's their refusal to deal that made my loss bigger, then they deal with the s***.
Make your losses in demo. Earn your profits live.
  • #67
  • Edited 11:50pm Jan 18, 2015 11:20pm | Edited 11:50pm
Quoting goldfinch
{quote} Not Forexia though, he will never own up to his own mistake, he had a dreadful trade and got burned. He has been avoiding the mirror for days and would rather blame someone else, hence his tirade here since last week. On every thread he posts he keeps going on about LP's and how his loss is their fault, it was their responsibility to create an artificial market and quote him prices close to his stops. He isn't getting very far so he comes here trying to get other uninformed traders behind his useless mission. He will probably find some others...
What "healthy self reflection" would you be referring to? LOL You mean I didn't get a crystal ball and saw that SNB would remove the peg to Euro? LOL Stop defending for your s*** of an a$$ banks! You know I am right if you read and understood my analysis. Your bank employer f***ed up trying to be greedy and now it's backfired on them. Good luck collecting all the negative balances and enjoy paying up for our winnings!!
Make your losses in demo. Earn your profits live.
  • #68
  • Jan 19, 2015 12:16am Jan 19, 2015 12:16am
Somebody mentioned if FX is moved to Regulated true exchange it will be BAD
BAD why? and for who?

Why?
If Stock market is alive on a 1:1 leverage and Futures market works on 1:6 leverage then why would FX exchange work? already you have FX futures
( No wonder there are no CFDs allowed in USA)

Bad for who: it will be bad for all those who only wish to speculate and the brokers/ LPs who make money on it
For peopel who exchaneg hard cash for business or personal purposes there is on diff!

It is fashionable to blame regulations and regulators as if it is some sort of communist theory!
but a true free market won;t be free unless it is played with some rules which prevents people from running away
Would the people who say NO more regulations in financial markets be happy if the same is applied to medical filed or the civil engineer who builds your house/ buildings!
Would you not want these professions to be properly trained/ regulated etc.

Having said all this I wonder if a future or a stock plummets and has a huge gap there are no counter party interested in trading would the same happen? only diff would be impact be smaller
On the positive side there is SIPC or FSA insurance
With OTC Fx it is the wild west!

Any way the vested interest of having leveraged markets prevents thsi going to a regulated low leverage exchange
The culprit is greed enhanced by leverage! IMHO
  • #69
  • Jan 19, 2015 2:06pm Jan 19, 2015 2:06pm
Quoting Moka
Somebody mentioned if FX is moved to Regulated true exchange it will be BAD BAD why? and for who? Why? If Stock market is alive on a 1:1 leverage and Futures market works on 1:6 leverage then why would FX exchange work? already you have FX futures ( No wonder there are no CFDs allowed in USA) Bad for who: it will be bad for all those who only wish to speculate and the brokers/ LPs who make money on it For peopel who exchaneg hard cash for business or personal purposes there is on diff! It is fashionable to blame regulations and regulators as if...
EXACTLY my point! I am glad somebody finally caught on. And looks like I am NOT the only one who has noticed the unscrupulous dealing with us during this SNB situation:

http://forexmagnates.com/banks-bucke...nc-volatility/

Truth comes out! And this makes sense because whether you realize it or not, the liquidity "providers" or "prime banks" is really the BIGGEST bucket shops for the ENTIRE forex industry or I should say the ULTIMATE bucket shops for the forex industry, not just retail one but the entire forex industry. They are IT!! All of your orders, no matter what kind of brokers you trade with whether it's ECN or Market Maker or a hybrid like FXCM and Oanda, Market Maker but hedge your positions, ULTIMATELY your orders end up with them, the liquidity "providers" like Deutsche, Citi, Barclays, UBS and etc., all those flashy logos that you see at the bottom of the webpage of your brokers that boast the deep liquidity that it has. Yes they are certainly deep but when s*** hit the fan, they all disappear.

And during the time when they are providing "deep liquidity" to us; they are all trading against us since they always take the opposite side of all of our transactions. Basically our losses are their gain and vice versa. So if we see all of those unscrupulous dishonest trading practices done against us by small bucket shop market makers like stop hunting, front-running, honouring negative slippages but not positive slippages, not filling your orders due to "system glitch", what makes you think those BIGGEST market makers who have nobody to hedge your trades against (because they are IT) wouldn't do the same thing to us? And they did just that last Thursday during the SNB decision, they created one HUGE "system glitch" not filling our orders for ONE HOUR+ and then coming back scooping all of our orders with 2K+ negative slippages and at the same time, trying to weasle out their way into honouring the positive slippages that winning traders had against them.

FXCM got fined by FCA, and subsequently CFTC/NFA for unfair slippages. Why shouldn't the same regulatory bodies investigate these liquidity "providers" for the same shady slippage practices and persecute them? Just because they are bigger than FXCM, so they think they should get away with what they did??!! No they need to be investigated, persecuted, and regulations passed to stop these unscrupulous behaviour. I am not surprised that they haven't been because when you are big enough, you are beyond touch and above the law.
Make your losses in demo. Earn your profits live.
  • #70
  • Jan 19, 2015 2:29pm Jan 19, 2015 2:29pm
the definition of a market: the place where demand and supply is regulated by the price (every 1st semester student learns that when studying economics).

if there is no one willing to provide liquidity as a buyer for certain reasons, price will fall to extreme levels. all the dumb people who believed in a secure speculation (eurchf) now payed the price for this believe. also, a very typical retail-thinking (like "this was a well designed plan of THEM in order to burn US, the innocent retail victims" is very common on ff but for the same reason pure nonsense: the biggest fx-dealers like deutsche bank, barclays, citi) lost approx. 150. mio each, even goldman had a loss (they are supposed as the muppet master = evil by the most hobby traders), not to talk about the snb which had a loss of 60-80 billions due to that "well designed plan".

losers pay the winners, and the winner takes it all. easy like that.

accept your losses, learn from your failures, and make it better the next time.
fortis fortuna adiuvat
  • #71
  • Jan 19, 2015 2:50pm Jan 19, 2015 2:50pm
Quoting Forexia
{quote} EXACTLY my point! I am glad somebody finally caught on. And looks like I am NOT the only one who has noticed the unscrupulous dealing with us during this SNB situation: http://forexmagnates.com/banks-bucke...nc-volatility/ Truth comes out! And this makes sense because whether you realize it or not, the liquidity "providers" or "prime banks" is really the BIGGEST bucket shops for the ENTIRE forex industry or I should say the ULTIMATE bucket shops for the forex industry, not just retail...
I like your view about LP as BucketShops, you are relatively right about that!
However, they do make money profiting from the spread (the ultimate spread! lol), so basically when you or an institutional trader or a bank or a broker buy at ask, you are buying from the LP that sell you at Ask.
Then, another trader (or whatever) sell at bid, and they buy from him, at bid.
Making money on each and every trade that is executed in the whole currency interbank. A pretty big business!

They are also big losers however, take the eurusd for example (image attached to this post), the COT data show how the commercials (LP) are net long (buy side) on the eur from MAY of 2014, basically they are on the wrong side of the market for the whole eurusd downmove of the 2014, and they do are almost always on the wrong side of each and every trending market.

So you see, making the market (market makers / liquidity providers) is not all roses and flowers, on the swiss franc the LP however was actually on the very right side of the market, and basically all the money lost from all the brokers/traders/banks last week went straight to their pockets!
But apart from these rare cases, they are always on the losing side (again, they can survive and even make profit thanks to the spread).
Attached Image (click to enlarge)
Click to Enlarge Name: eu.png Size: 33 KB
  • #72
  • Jan 19, 2015 2:55pm Jan 19, 2015 2:55pm
Quoting Forexia
{quote} Yes but that's not the issue. I am ALWAYS wrong on my trade and I am ALWAYS highly leveraged and I am ALWAYS facing to me unreasonable slippages and spread but that has NEVER been a problem before. The question is WHY now? Like I said before because there has ALWAYS been a MARKET, not like yesterday where a pair is completely untradable for an hour. If you look at the charts for any CHF-paris from 4:45 am to 5:45 am there was NO bars, NO candles, NO nothing, just the background of the chart. THAT is unacceptable and NOT right!!! So don't...
the only problem with LP's is not about them stopping the liquidity for 1 hour...the real issue is that first LP in a row did not inform the previous counterparty that there is a huge risk of EURCHF floor being removed and that either margins should have been increased, leverages lowered and advices on going out of the trade to the prime position taker's given...there are traders who have laced SL orders months ago prior 15/1/15 just below 1,20...why did this so called LP's did not inform retail clients about the risks for both retailers and brokers and tell them months ahead of 15th january to CLOSE THE RISKY POSITIONS..I believe there will be many complaints that retailers will present to regulators, comissions and ombundsman's and that those can do the right thing by rulling that SL's placed days ahead of 15/1/2015 should be respected, clients compensated and only in such case will this so called LP's no what to do in the future to properly risk-manage us all in the process of trading...otherwise FOREX trading is gone and you can expect this kinds s... to happen on a regular basis
  • #73
  • Jan 19, 2015 3:33pm Jan 19, 2015 3:33pm
Quoting stoplossmatt
{quote} the only problem with LP's is not about them stopping the liquidity for 1 hour...the real issue is that first LP in a row did not inform the previous counterparty that there is a huge risk of EURCHF floor being removed and that either margins should have been increased, leverages lowered and advices on going out of the trade to the prime position taker's given...there are traders who have laced SL orders months ago prior 15/1/15 just below 1,20...why did this so called LP's did not inform retail clients about the risks for both retailers...
Forex trading won't be gone, not because of this or any other event. Retail forex is just a small piece of whole markets and it really doesn't make any difference if some people keep calling justice here. Especially because nothing wrong has happened. Somebody was on a wrong side of trade and somebody else was on a right side. It is not LP's or CB's or government or Banks who put you on the wrong side of deal. It was, well you know who it was.

This kind of s... will happen in future, there you are right. Maybe in different form but these kind of extreme situations will happen and nobody can protect you or me if we are on a wrong side at that moment.
  • #74
  • Jan 19, 2015 4:02pm Jan 19, 2015 4:02pm
Quoting kalastaja
{quote} Forex trading won't be gone, not because of this or any other event. Retail forex is just a small piece of whole markets and it really doesn't make any difference if some people keep calling justice here. Especially because nothing wrong has happened. Somebody was on a wrong side of trade and somebody else was on a right side. It is not LP's or CB's or government or Banks who put you on the wrong side of deal. It was, well you know who it was. This kind of s... will happen in future, there you are right. Maybe in different form but these...
you probably also believe God doesn't exist and that it is irrelevant whether you are on good side or evil side...only that you are on the right side??..regulations exist for improwing Black Swan situations..better stay away this forum cause next time your account might be at stake
  • #75
  • Jan 19, 2015 4:37pm Jan 19, 2015 4:37pm
Quoting stoplossmatt
{quote} the only problem with LP's is not about them stopping the liquidity for 1 hour...the real issue is that first LP in a row did not inform the previous counterparty that there is a huge risk of EURCHF floor being removed and that either margins should have been increased, leverages lowered and advices on going out of the trade to the prime position taker's given...there are traders who have laced SL orders months ago prior 15/1/15 just below 1,20...why did this so called LP's did not inform retail clients about the risks for both retailers...
I heard on CNBC foreign exchange trading will be gone by end OF THIS YEAR!!! Only big companies (those who can prove they are selling real products, like Apple) and governments are allowed to participate in the forex (RIP) market. I really don't know what to do, as the only thing I'm capable of is trading. I hope the dollar and all currencies will fall, so we can trade goods and cows and shit, so I can start speculating again.
  • #76
  • Jan 19, 2015 4:54pm Jan 19, 2015 4:54pm
Quoting stoplossmatt
{quote} you probably also believe God doesn't exist and that it is irrelevant whether you are on good side or evil side...only that you are on the right side??..regulations exist for improwing Black Swan situations..better stay away this forum cause next time your account might be at stake

Are you serious? What God or good or evil have to do with this?

How it looks to me is that you just don't understand how markets work. LP's or Banks or whatever you call them took huge losses at Thursday. City and Deutche bank both took 150 million loss. They also have limits how much they can lose and therefore are forced to act according that. More importantly they are doing business meaning they try to make profit. Do you really say that they should lose 500 million or a billion just because retail forex traders don't understand what they are doing and therefore it is not fair that they lose?

And I was on a "wrong side" of this trade 2 days before. I was lucky and closed it but even if I wouldn't, my account would have survived because I don't over leverage my trades and I would have survived because I don't blame other people of my mistakes.
  • #77
  • Jan 19, 2015 5:04pm Jan 19, 2015 5:04pm
Quoting spaceduck
{quote} I like your view about LP as BucketShops, you are relatively right about that! However, they do make money profiting from the spread (the ultimate spread! lol), so basically when you or an institutional trader or a bank or a broker buy at ask, you are buying from the LP that sell you at Ask. Then, another trader (or whatever) sell at bid, and they buy from him, at bid. Making money on each and every trade that is executed in the whole currency interbank. A pretty big business! They are also big losers however, take the eurusd for example...
I am actually not "relatively" right, I AM right LOL but I thank you for your acknowledgement. Nothing is all roses and flowers in trading but that does NOT give them the excuse for what they did. They basically did EXACTLY what we complained about the MM brokers did to us only ten times worse. And just like what I said, since they trade against us so our gains is their loss and their gain is our loss because it's a zero-sum game and everybody loses whenever they are on the wrong side of a trending market except when the Euro was tanking against USD, all of us retail traders did not just collude and get up and stop trading and come back and set the price for EUR/USD at par and say "here we will fill you at 0.96". Would that be the "efficient and professional" thing to do?

Of course we are not able to do that because we are small, with just thousands of dollars of account balance LOL. But again as I said before, so just because they are big and they can, is it right for them to do that? This time with SNB they didn't end up on the right side of the market it's because majority of the retail traders were on the WRONG side of the market so now they want to make a killing to scoop us all up at the very bottom when when they were on the wrong side of the market for EU, they could still offset their losses by earning the spread (which we retail traders cannot do) and executing their stop-loss against us when retail traders TP'ed early?

This is my premise for regulations against the liquidity "providers". There have been ample regulations against us retail traders and brokers like FXCM have been disciplined when they were found to have engaged in unfair trading practices. It's time that there are regulations and disciplining done against the liquidity "providers" to deter these kind of dishonest trading practices. Obviously they haven't learned their lesson when they were disciplined for their price fixing of LIBOR rate.
Make your losses in demo. Earn your profits live.
  • #78
  • Jan 19, 2015 5:10pm Jan 19, 2015 5:10pm
Quoting stoplossmatt
{quote} the only problem with LP's is not about them stopping the liquidity for 1 hour...the real issue is that first LP in a row did not inform the previous counterparty that there is a huge risk of EURCHF floor being removed and that either margins should have been increased, leverages lowered and advices on going out of the trade to the prime position taker's given...there are traders who have laced SL orders months ago prior 15/1/15 just below 1,20...why did this so called LP's did not inform retail clients about the risks for both retailers...
Actually I don't expect liquidity "providers" to do that. They are our competitors NOT our brokers so they are really under no obligation to inform us of any positions that are taken (although they do have an unfair advantage over us retail traders in that they see all of our positions and our Stop-Loss and TP orders). Doing this is like showing your hand to your opponent in a poker game. I don't mind competing against them with what I know so when I beat them, I beat them fair and square but what I do expect however is them to follow the rules of the game, and not hiding cards under their sleeves.
Make your losses in demo. Earn your profits live.
  • #79
  • Jan 19, 2015 5:14pm Jan 19, 2015 5:14pm
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fortis fortuna adiuvat
  • #80
  • Jan 19, 2015 5:25pm Jan 19, 2015 5:25pm
Quoting Forexia
{quote} Actually I don't expect liquidity "providers" to do that. They are our competitors NOT our brokers so they are really under no obligation to inform us of any positions that are taken (although they do have an unfair advantage over us retail traders in that they see all of our positions and our Stop-Loss and TP orders). Doing this is like showing your hand to your opponent in a poker game. I don't mind competing against them with what I know so when I beat them, I beat them fair and square but what I do expect however is them to follow...

Inserted Video
fortis fortuna adiuvat
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