I am sharing my experience and the following: What I believe Twelve major banks seek dismissal of forex price-rigging lawsuit http://www.reuters.com/article/2014/05/30/forex-lawsuit-idUSL1N0OG2G920140530 FOREX Trading Platform Scam Ends In Guilty Plea http://www.forbes.com/sites/billsinger/2012/03/19/forex-trading-platform-scam-ends-in-guilty-plea/ Currency Trading: Donât by Barry Ritholtz - June 24th, 2010, 10:30am http://www.ritholtz.com/blog/2010/06/currency-trading-dont/ Forex is a scam! http://theessentialsoftrading.com/Blog/index.php/2008/06/19/forex-is-a-scam/
I don't understand the benefit in investing in Forex when you can invest in Futures. 1) In Futures you pay no spread. So you don't pay a pip to enter and then exit a trade. Instead you pay a small commission just like for trading stocks. 2) Maybe the leverage is higher in Forex, I am not sure, but truthfully the higher the leverage you actually use the more likely you will lose your money. 3) Real data volume that is the same for all Futures traders from all brokers. Whereas at any given time the price of for example the EUR/USD can be different on a chart depending on what Forex broker you are trading with. 4) Futures brokers are not trading against their own clients or keeping their clients trades within house. Instead all trades go to the same place so even if I lose my internet connection if I have a stop and target set, they can still be filled during my down time. 5) No strange spikes. You will obviously have movement during a news report but if no report has happened, you don't get a random spike appearing on a future chart that stole your money by hitting a stop and then going back to normal. I will say, you should trade during normal market hours since there is a wider difference between the bid and ask after hours and more stop hunting.
This is not how IB works. 1. With futures you do pay a spread or have to work the bid. With IB's ECN model, there are a dozen or so liquidity providers making markets with spreads often as low as 0.1 of a pip. (that' much tighter than Futures markets). Add in the ability at IB to join the bid, improve the bid and also have your order match against other IB clients and you get as good and usually a much tighter market than the exchange futures. IB has no markups on the spreads, just a small .2 or .1 pip commission depending on turnover. NO EXCHANGE fees. Nevertheless, the products do compliment each other and there is a place for both spot and listed future FX. 2. You don't have to use all the leverage given at IB but you can tailor your size to match your exact hedging or currency needs. 3. The data at IB is real and tight. If different than the futures, go ahead and arb it. 4. IB does not trade against it's clients. 5. Spikes: That may be the modus operandi at bucket shops but not at IB. The firms making markets do not have any knowledge of stops and if they were to try to go stop hunting, they'll most likely lose money (for starters they most likely wouldn't get both sides of the trade since the other market makers would be have better prices on the reverse sides of the trades. Of note, at IB, FX is physical cash. I.e. if you buy YEN, you can wait 2 days for settlement and remove the Yen from your account. You don't need to take leverage on your trades. The OPs comment about JPM doesn't make sense with IB. JPM may be one of the banks making markets and may be one of many settlement banks IB may utilize but that has nothing to do with the fills.
I buy EUR/USD at 1.3300 and sell it at 1.3600 (for a 300 pip profit), for example, where is the scam here??
Interactive Brokers can defend all that they want. At the end of the day FX is a scam. 1. You can say what you want 2. Make your bias point after another 3. IB overall can be like every other broker and be the banks gopher in this case JP morgan 4. FX creates no value its a gimmick 5. I am glad IB came out to defend, i like there commercial with the owner stating they do not trade against their clients, and i am sure this could be true. The fact they clear through JP Morgan this i am sure is not the case with JP Morgan. 6. So affliation with JPM is the conflict Be fair warned, IB clears through JPM which will take your money.
But of course, ALL Forex transactions clear through the biggest banks and other major financial institutions, that's how currencies are bought and sold in the first place! How?? The Forex market exists so that people can buy and sell foreign currencies all over the world, for commercial, investment, hedging, speculating or personal purposes. Trillions of dollars must change hands every day for these very legitimate reasons, so this is certainly not some "gimmick" like you think.
You seriously don't think there's a spread in futures or equities? Any liquidity takers in such markets are paying the spread. And please don't tell me you'll be a 100% passive liquidity provider in every single scenario. 2) Both spot and futures markets have sufficient leverage available for a trader to blow their brains out. 3) Currency futures only represents a fraction of the total currency and currency derivatives market volume. It's a nice way to infer what the volume levels are like on spot/forwards/swaps/etc.. but it's just as much of an incomplete picture as the volume feeds you get from spot brokers (tick volume.) Further, the pricing being different might be true, but the prices are typically not crossed (unless the feed provider likes getting arbed to death,) and variances are just different feed's spread. Speaking of spread differences, ever compare the futures contract spreads for AUD/NZD with spot? Or the pound crosses between spot and futures? Really, outside of the few major pairs, futures can be both illiquid and have much wider spreads. 4) What? Firstly, on a fair price feed, who cares who the counter party is? Second, most common retail FX platforms do not require your computer to actively trigger stops; they have server-side stop loss orders like you'd find in other markets. Where is this FUD coming from? 5) This is a problem if your broker is shady... and there are a lot of overseas, unregulated, brokers out there. However, assuming you're comparing a half decent spot broker with futures, then when liquidity is pulled in spot it is often pulled in futures as well.. spreads widen on both fronts during news or during less active times of day. I get it, you're a futures guy.. your other posts make that clear... but just because you went one way instead of the other doesn't make one product superior. There's some advantages that futures have over spot, and some that spot has over futures.. Pick the shade of gray that best fits your needs...
def, this one point of yours... given the carry/interest priced into futures based on their settlement date, unless you're trading them near settlement there's going to be the appearance of prices being "different than futures" to people who simply don't understand what goes into pricing futures. Your statement might get a bunch of noobs into what effectively amounts to an interest rate play without realizing it... or perhaps when price doesn't immediately correct itself, they'll start to dig deeper and find out what exactly they just did. Just saying. (And thanks for chiming in..)
Jack, you are right. Ditto for anyone trading a spot pair w/o taking into account holidays. But then again I didn't respond to the thread to give trading lessons - only an attempt to try to clarify some misconceptions. thanks