Anybody trading currencies?

Discussion in 'Forex' started by reno4nook, Jan 18, 2005.

  1. I don't know what size you trade, but you are probably the one that DOES NOT benefit from the 'bigger size, lower commissions' thing. Everybody equal, very low, commissions/spread is fairer in my opinion.

    And again, brokers who hedge their aggregate positions only profit from the spread, they don't own me, nor am I their 'bitch'. LOL.
     
    #31     Jan 19, 2005
  2. Yes, I noticed, he just ignores what I write. I guess the topicstarter has a good idea now about the differences between spot and futures.
     
    #32     Jan 19, 2005
  3. FredBloggs

    FredBloggs Guest

    i thought 1.5 was for each side! yikes, maybe im the bitch then :D

    the spread will exist in all markets and is there to facilitate trade. if there was no spread i could not buy at 5 and then immediately sell at 6 (so i profit if i do this, not the exchange - although they do collect a fee from yours truly for doing this). this provides liquidity to the exchange/market as you and i can make immediate profit if we r quick.

    there is also a spread in the REAL spot fx market. so when you buy at 6, o&a actually buys at 5 and then sells to u at 6 (eg) he wins every time. if you want to get out u can only do so at 4 (eg) cos you now sell to o&a at 4, so he buys from you at 4 then sells in spot market for 5 (eg). you lose both times, he wins both times.

    id rather play on a level playing field and not be the bitch.
     
    #33     Jan 19, 2005
  4. FredBloggs

    FredBloggs Guest

    r u a communist?

    why should i pay the same as some 1 lot superstar that is so typical of et? think of it as buying in bulk.

    if you believe in equality and fairness, why are you trading at o&a and not at a regulated exchange??


    im confused:confused:
     
    #34     Jan 19, 2005
  5. lol, so you pay about $ 30 per round turn in futures?

    I still don't understand the spread part, but can you back up you accusations about Oanda with some kind of proof? How do you know they apply the policy you described above?
     
    #35     Jan 19, 2005
  6. FredBloggs

    FredBloggs Guest

    no i dont pay $30rt. if you read the above posts u may get a better idea.

    as for o&a numbers - well i dont trade there and these numbers are hypothetical which is why i put '(eg)' around the numbers.

    the secret is with trading is to keep an open mind. i dont think it is wise to get to clever when you dont understand what a spread is.

    sorry, but i have more constructive things to do now.

    all the best.
     
    #36     Jan 19, 2005
  7. AC3

    AC3

    Do me a favor and explain what you mean by this:

    And again, brokers who hedge their aggregate positions only profit from the spread
     
    #37     Jan 19, 2005
  8. Yes, I'm from Europe, of course I'm a communist. :D

    Discounts for high volume creates price differentiation, which does not benefit the transparency of the exchange/market. Next to that, there is no benefit of more high volume players for a retail market maker other then extra revenue because they hedge aggregate positions. The local spot market does not become more liquid because more volume is attracted, which is the case in futures if I am correct.
     
    #38     Jan 19, 2005
  9. AC3

    AC3

    I mean no malice by this but you have no idea what your talking about regarding the inner workings of a cash fx brokerage. Aggregate positions.....no such animal... are you implying that a broker takes on positions and hold them and at some future points adds them to other positions and then magically hedges that position........ that would be a recipe for a mushroom cloud
     
    #39     Jan 19, 2005
  10. Clients open short trades for EUR/USD totaling 10 billion.

    Clients open long trades for EUR/USD totaling 11 billion.

    Broker matches 10 bil short against 10 bil long. Market maker has no risk over this volume (10 + 10 bil) as it is matched.

    1 bil long remains. They hedge this with a 3rd party (by shorting 1 bil).

    Summary:

    Revenue:

    10 bil long x 1.5 pip spread.
    10 bil short x 1.5 pip spread.
    1 bil long x 1.5 pip spread.

    Cost:

    1 bil short x 1.0 pip spread [I don't know what the cost is for hedging with the 3rd party, but even higher costs than the collected spread would make them money in total].

    Result:

    They collect the spread over the matched volume and collect/pay a small amount depending on the cost for hedging with the 3rd party.

    edit: maybe 'aggregate' is not the correct word. I just copied that from someone else as my English is not perfect.
     
    #40     Jan 19, 2005