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Newbie tip: don't rely on anything

  • #1
  • First Post: Nov 3, 2015 5:44am Nov 3, 2015 5:44am
See attached chart. Two major brokers: IC Markets and IG. Both Demo account. Daily charts.

MAJOR differences.

Small trend line breakout on one vs not-even-hit on the other (think about how different a message this gives: potential upcoming breakout vs nowhere-near-breakout!), pinbar vs not, many small candles on IG vs the many large candles on IC Markets...

Rationale 1: don't overly rely on chart events like Trend line crosses, double top accuracy etc.'s - even when it comes to a timeframe as high as Daily. I would instead use an "approximately double top", "approximately TL hit" etc. MAYBE. Give me your thoughts.
Rationale 2: if you're going to be coding an EA or anyting else, you'd better make sure that you use data from your broker (or better yet, back scan data live)
Attached Image (click to enlarge)
Click to Enlarge Name: Broker Data Differences.png Size: 126 KB
Not financial advice. For testing purposes only. Do not use on live account
  • #2
  • Nov 3, 2015 5:53am Nov 3, 2015 5:53am
Are the server times of the brokers the same?
  • #3
  • Nov 3, 2015 5:54am Nov 3, 2015 5:54am
Hi roel13,

Yep, those discrepancies used to puzzle me too. Bearing in mind I only took a quick look at your chart - do any of those daily candles close/open at a weekend? Broker server sync times vary, which will effect how the daily candles print and evidently how one's chart look. It's a vexing issue that occurs on H4 as well and can make cross-broker comparisons difficult. One way round it is to always double check the H1 charts as a back up to any H4/D1 analysis. In theory the H1 candles "should" line up, as should the M30 and lower.
  • #4
  • Nov 3, 2015 6:02am Nov 3, 2015 6:02am
If you notice the small candles on IG occur after every 5 days, meaning IG print the sunday candle.
practising coitus interruptus
  • #5
  • Nov 3, 2015 6:19am Nov 3, 2015 6:19am
Great points guys. Yes, server times are different, and the IG Sunday candle is very interesting too. Yes, H4 is very broker specific too. Did not realize D1 could be broker specific, but it makes sense.

But... as expected... even on M5 there's differences (see below) - even differences that start to look like they could be interpreted as different chart events. Likely more pronounced on M30/H1 etc.
Attached Image (click to enlarge)
Click to Enlarge Name: Broker Data Differences2.png Size: 77 KB
Not financial advice. For testing purposes only. Do not use on live account
  • #6
  • Nov 3, 2015 8:56am Nov 3, 2015 8:56am
Liquidity providers quoting different prices perhaps...
  • #7
  • Nov 3, 2015 2:22pm Nov 3, 2015 2:22pm
That + per-broker trades (de-centralized market) + spread manipulation ?
Not financial advice. For testing purposes only. Do not use on live account
  • #8
  • Nov 3, 2015 3:15pm Nov 3, 2015 3:15pm
Why would they be exactly the same, though?

You're comparing charts from one genuine broker and one counterparty market-maker, here, I think?

IG are trading their own product, essentially. They set their own prices. There's no reason for them exactly to mirror the true market?


Quoting roel13
Newbie tip: don't rely on anything

Personally, in this context I would offer a rather different newbie tip: "make sure you understand the differences between a genuine broker and a counterparty market-maker before you decide where and how to trade."
  • #9
  • Nov 4, 2015 4:53am Nov 4, 2015 4:53am
Quoting Xela
Why would they be exactly the same, though? You're comparing charts from one genuine broker and one counterparty market-maker, here, I think? IG are trading their own product, essentially. They set their own prices. There's no reason for them exactly to mirror the true market? {quote} Personally, in this context I would offer a rather different newbie tip: "make sure you understand the differences between a genuine broker and a counterparty market-maker before you decide where and how to trade."
I am confused by your posts on this subject, Xela. You keep making this same point (I am not criticising by the way), but when I asked you about IG Index (Brokers and slippages, 16 October), you replied that you would not be worried about their honesty. In the same post, you said you use CapitalSpreads yourself. Since IG Index and CapitalSpreads are both spread betting companies, I am very confused.
  • #10
  • Nov 4, 2015 5:45am Nov 4, 2015 5:45am
Quoting bobbles
I am very confused.

Sorry to have confused you! I live in England, so from my own perspective the overall, long-term advantages of my trading by spreadbetting are that I have to pay no income-tax or capital gains tax on my trading profits, that way. That's a tremendous "edge"!

But in many of the conversations here, in which I make the point that seems to have confused you, I'm aware that I'm replying to people who live in the US and/or in other countries in which spreadbetting isn't allowed/available/tax-free. There would be no point in my detailing all the advantages of my trading with CapSpreads to people trading under those circumstances: what they need to know is that genuine brokers don't trade against them or have any incentive for them to lose, whereas counterparty market-makers do.

Fairly straightforward, really?
  • #11
  • Nov 6, 2015 2:59am Nov 6, 2015 2:59am
Sure there may be even more offset between a genuine broker and a market maker, but checkout different genuine brokers. I think you'll find the same thing.
Not financial advice. For testing purposes only. Do not use on live account
  • #12
  • Nov 6, 2015 3:28am Nov 6, 2015 3:28am
Quoting Xela
{quote} Sorry to have confused you! I live in England, so from my own perspective the overall, long-term advantages of my trading by spreadbetting are that I have to pay no income-tax or capital gains tax on my trading profits, that way. That's a tremendous "edge"! But in many of the conversations here, in which I make the point that seems to have confused you, I'm aware that I'm replying to people who live in the US and/or in other countries in which spreadbetting isn't allowed/available/tax-free. There would be no point in my detailing all the...
The bottom line for me is that true regulation should take care of this problem.
In my opinion the Bucket shops should be declared illegal and only ECN's should be allowed to operate as brokers and secondly only ONE liquidity provider should be used to feed pricing to all ECN's.
The mere fact that price differences occur on charting is enough evidence that true regulation is Not in place. The scammers are using it to their advantage to milk innocent retail traders. The game of soccer has one set of rules and are governed by one central body.
The playing field in retail fx trading is unfortunately not level due to the different broker models.
Never Ever Give Up!
  • #13
  • Nov 6, 2015 5:40am Nov 6, 2015 5:40am
Quoting roel13
Sure there may be even more offset between a genuine broker and a market maker

There is.

There's huge offset between them: they're completely different business models, one of which has an incentive to exploit naive/gullible people and the other one doesn't.


Quoting roel13
checkout different genuine brokers. I think you'll find the same thing.

In my experience, they're only very tiny gradations of it, and in no way comparable at all to the gaping chasm between genuine brokers and counterparty market-makers, mostly because genuine brokers have an incentive for their clients to win, not to lose. It really is as simple as this, overall.


Quoting Cobra
The scammers are using it to their advantage to milk innocent retail traders.

Definitely. But that's so in many other industries, too? I suspect from your comments above that you're perhaps a little more "interventionist" in orientation than I am, and I'm perhaps a little more "libertarian" about it than you are, but I can't argue with the substance of what you're pointing out at all, of course.


Quoting Cobra
The playing field in retail fx trading is unfortunately not level due to the different broker models.

Agreed. The sad thing is that so many people seem not to realise that there are different broker models.

If we were going to introduce any "legal changes" which could be effective worldwide and online, IMO stopping the counterparty market-makers from claiming to be "brokers" might be quite a good one, because they're fooling so many people (including members of this forum) by doing so, the reality being that they're not actually "brokers" at all!
  • #14
  • Last Post: Nov 6, 2015 7:53am Nov 6, 2015 7:53am
abondent hope ............
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