Why The F@#k is this legal!?

The flash crash? The was pretty material impact caused by HFT.

How does price rigging matter relate to HFT?

It is not forex, but crashes happen, HFT or not. Trade the event. What would be the material impact to you as a trader?

If you read carefully the article, is not only rigging but also front running...

"Some also appear to have passed on information to traders at other companies about big upcoming trades. All of this could have artificially raised the value of one currency against another."

Ah, and I forgot, The UK Central Bank...

A material impact can be that you don't get a fair price when trading news for example because HFT algos eat each other and they outrun the remaining retailers.

Try to place a stop order before a news event and you just get killed by the slipage.

The slipage is just that your broker cannot execute your order as fast as the HFT algos can.

It's even better explained here :

http://www.forextraders.com/forex-br...ex-orders.html

Wonder if they cut a special deal with the LPs. Maybe they trade directly on the LP's server lol.

No matter how you cut it, HFT is insider trading. To be able to jump in front of the order queue with perfect knowledge based on an algorithms speed in execution and use of extremely low latency is no different to a Director of a company making a trade based on insider info prior to market release. The only difference is time of execution which an algorithm and exchange location and latency speed is designed to overcome.

It is a scam and needs to be shut down as it is by any legal definition, exploitative and leads to material losses to the trading community.

There're no laws against 'insider' trading in FX unless you work for a central bank I believe. And even then it's internal policy not state law.

Over here in Aus, they would be nailed by insider trading provisions of the Corporations Act which is federally implemented. I am not sure whether there are any HFT traders domiciled over here in Aus. Most would use VPN's linked to servers in close proximity to Wall Street which prevents such legislation actually working. The VPN I use is a high latency VPN for HFT and I am here in Aus.

To tackle HFT, you need a global response to take these buggers down.

If You Think the Markets Can be Cleaned Up, Take a Closer Look at Who Controls Them!

We will all be dead of old age before these things change. Why? The regulatory agencies (SEC for securities, CFTC for commodities, futures, currencies) are in the pocket of the Robber Banks/MMs. They always have been. And the "Big Money" boardrooms are where many of the "regulators" go after they retire from pretending to to their job, sort of a "reward" for not doing their job.

It might interest you all to know that actually there is no law on the books anywhere that forbids insider trading. This is a myth. Oh, there might be some "regulations" at the regulators about it, but regulations are not criminal laws. Really important shit like this is never put to law, and the reason is so "Big Money" can do whatever they want. On the other hand, when "Big Money" is victimized by others that also do these no-no things, then the "false" regulators go after them to try an get the taken money back to "Big Money".

The markets are corrupt. They are corrupt because they are controlled (self-regulated) by the "Thieves of Wall Street", the Robber Banks/Investment houses/MMs. What about the regulatory agencies. Well, they are set up as "commissions" with "regulations", and all at the behest of the thieves themselves. It is the foxes running the hen house, with the foxes having also set up the "commissions" with their "regulations" to see to it that,......What?

......To see to it that the foxes have complete control of how folks are allowed to participate in their ruthlessly controlled and manipulated markets and to assure there IS NOT a level playing field, and that "Big Money" can ignore some "regulations" from time to time, but nobody else can without some disciplinary action (fines). Remember, the courts fined Martha Stewart and put her on house arrest for a period of time, and for what? For violating a law that actually does not exist except in the form of a SEC regulation. The false regulators look the other way most of the time because most of the violations are by "Big Money". She was not "Big Money". She got what "Big Money" lost. The regulators and "Big Money" did not like that so they went after her as an example. What example? The example is that "Big Money" is saying to market participants, "Do as my regulators say, not as I do!".

The markets are corrupt because the super-rich are behind the market relevant institutions: banks, investment houses, regulators. These are very rich, very powerful folks. These are the folks that crashed the global economy and "persuaded" the US government to bail them out at the expense of everyone else in the nation! That is real power. Do you think these people that bend governments to their will are ever going to give up their control and power over the corrupt markets they operate for their own profits by fleecing the participants?

-tah

Another myth - Martha Steward went to prison for lying to a federal agent

How can it be scam? You can go and buy that faster feed too.

Someone like you with real-time feed would be HFT to someone on 15 min delayed but free feed. Are you breaking law?

You either change/adapt or go back to your day job
If you expect things to be fair, time for you to wake up

And you have still not understood that when some have an unfair/illegal or call it what you want, advantage or edge, you just cannot adapt but only lose against them.

You are a sheep like me, and we are eaten at the same time, the difference is that while you say that's normal and that we have to adapt, I'm saying that not and I'm wondering who's the one that should really wake up.

You are dead right. The last paragraph is most significant....., SEC go after the HFT manipulator in parents basement because the big boys have too much lawyer money and SEC wouldnt dare touch them But their business model is founded on exactly what that guy is being prosecuted for. Its wrong.

is it done on purpose in order to minimize the population of retail traders? I heard that in some areas there is lack of workers, because more and more people are becoming profitable from the FX or other trading?

Anyway, fair or not, DO NOT GIVE UP! Having a normal job is often not fair as well

Corruption exists all over the world and in all business sectors without any doubt , BUT it does not make the markets untradeable.

Find your edge and do your thing. There is money to made whether you are a hedge fund , Bank or retail trader. The markets are generous enough and there is money in it for all.

If you think you cannot make money because of corruption or market manipulation, stop loss hunting or any other unfair practices then pls stop trading for your own sake.

G.

Here's my first impression of Wall Street (took few years to figure it out, I'm a slow learner - yeah you probably heard this all 100 times already but how to know who are speaking the truth is hard for a novice)

Simplest answer to why those firms have few to no losing days is that they are in some way or form in either a riskless spread making or insurance dealing business or both. (or if they are "taking risk" and not losing at all then they probably have some control over where prices end up)

While the buy sider on the other hand is thinking about investing, getting the insurance award (big trend you can hang on to with size - rare) or just for fun and games (entertainment).

Investing in fx is pretty much the carry trade, when available.

Trying to win the fx lottery against the insurance companies is pretty much buying a lot of lottery tickets and losing a whole lot of time. The better "edge" and trade/risk management the less you'll lose while waiting for the winning ticket to land in your hand.

As lot of the retail brokers/market makers/internalizers etc are on the spread making/insurance side of this, they have self-interest to not provide traders with similar tools they use. (eg. if you want level playground, set up a company and connect to the exchange, otherwise it's not level) So while you can think of "I can buy AND sell", the reality is more "I can buy insurance for price going up or down" without a simple tool to "buying insurance" that the price is going to stay in a range. They don't want to offer that tool because they are taking that trade and do everything they can to make it expensive to make a trade that "eur usd is going to stay between 1.0 and 1.2". There's no technical reason why they couldn't make it super simple to make such trade. Instead you have to buy and sell all sort of options and the spreads you pay end up eating all the profits if you were to try that. Binary options are even bigger scam because not only you are taking the wrong side (buying insurance) but also defining a loss-exit. Read up on "mass quote"'s to figure out how prices will always move in ways to make sure you lose. The way they work is that couple companies who got those get your money the instant you open a trade whether long or short (they get your margin - market maker does not need any money - people give it to them) and then by having everyones money, they can put up bids and asks across all markets to get even more money. And of course with all the money they have from people (the margins) they can now hold tight on bid / offers market wide, globally, such that those who bought the insurance end up losing until the insurance (option) expires worthless. (pinning, max pain etc) Pretty much anything you can think of doing is buying insurance.

So how would markets look without market makers? Well then you'd see LARGE spreads with big trends that you can bet directionally on without the problem where the market reverses when you buy the highs with simple market orders.

Now you may think "market makers are good for me, small spread and I can average into the trade at better price". That's essentially true - the issue is that the presence of market makers and all these internalizers etc is both making it more expensive to hold on to trade (encourages more trading) due to the parity between the naked positions and the pinning to expire related insurance/options worthless *and* obfuscating the spread that would be there without market makers (yeah you can use ATR or weekly candles to get an idea). The net effect is that of retail traders ~90% lose - quite similar as the "90% of options expire worthless" - completely unrelated I am sure.

And of course not only 90% of the insurance (for fear of price going up or down or missing out) retail is buying is worthless, also by giving their money away they are losing interest and the other side is receiving collective interest from all the positions they took using the "mass quote", whether the positions are long or short. Clever scam promoted with $$$ millions of marketing. Old rule of thumb : Anything promoted is probably a "sh1tty deal" and scamming the scammer is hard or impossible.

serious? Then the HFT is doing good to make sure there are people doing the real work which is need to make sure we have food, water, transportations and all that daily live need.

we can't have everyone just trading forex, I didnt know trading is so easy these days

If that's even true, what is more likely happening is that a lot of people are trying it out, maybe even finding they are profitable but eventually one of 2 things happen:
1) either they get too large or use excess size
2) a lot of people piling up on a particular system - if the system is very robust but market cannot handle the cumulative size of people trading it then there will be some sort of slow change as those on the losing side find their systems are becoming less profitable/erratic and adapt/stop trading - this will drain the liquidity and all those people who piled up on a system without understanding the markets completely will have their positions end up in hands of one of the big market makers that control prices across all markets (they don't have to even collude with other market makers, they simply use special agreements with exchanges along with special order types and low latency to adjust their prices such that the entire market globally adjusts prices seemingly "in concert" such that those who piled up on the winning system all lose big all of sudden - they may have stops in place to protect them but what happens is the spreads go super wide and those who have stops will get 10%+ loss (more if leveraged) and those who don't have stops and get in with size when others are forced out with increased margins, margin calls, risk limits etc, are the ones "buying the dip" and making a quick bank (of course if they get greedy they'll get creamed too - for same reason - more size than market can support))

If nothing above was new and your strategy takes into account how much size the market allows you to put on a trade, then you're well ahead most of the folks if long term positive expectancy is what you're after. The obvious implication here is that after you put on a trade, you can't just leave it, you need to know if other people have piled up on it in so much size that the market can't support it. (ok - you could just use a trailing stop but that has slippage risk that is related to how many people are using similar parameters - trailing stop + partial exit can help - if the market goes up HARD after you sell, that indicates that market didn't support your size and it's just the market makers doing their bs - not something you could have banked)