Are there drawbacks to working with such a liquid market?

Discussion in 'Forex' started by forextraderpro, Mar 20, 2008.

  1. RedDuke

    RedDuke

    90% of traders loose money, if not even more. Forex has no central exchange, and the feeds come from multiple banks. Your "friendly" MM sees your positions and stops. I am not sure if you traded forex with real $, but if you did, you would see some weird small price spikes all the time. The usual explanation is, "one of the banks gave us this quote". Ever wondered who gets $ from 90% of forex traders who loose?

    If retail forex was real, the broker would love you to make as many trades as you can since they collect spread each time you trade. But if you trade very often, even during non eco news time, you will be warned and then your account will be closed/suspended if you do not stop doing.

    Last time, I checked when you trade real markets such as futures, options, equities, I have never heard of anyone having issues with brokers for trading too much.

    I can go on and on and on. Read some of my older posts on forex, it is all there. Retail forex is nothing more then a virtual world that does not touch intra bank market at all from retail traders prospective.

    You want to trade forex - CME futures is your best bet.
     
    #11     Mar 22, 2008
  2. You noticed that too huh :)
     
    #12     Mar 22, 2008
  3. I'm sorry, I don't know where you're getting your information from but it is totally incorrect on pretty much every point except for perhaps the first line of your post, do you have the fainest idea how a reputable marketmaker operates? Perhaps you've had a bad experience with a marketmaker and given up but not all marketmakers are the same. I'll admit it took me a while to find one which was totally honest, you don't know what they're like until you try them, eventually I found a good fit. The business has been cleaned up a lot since I started out, a lot of the old shops have disappeared and even more will follow now the NFA capital requirements are changing.

    I've been profitably trading cash for a number of years, sometimes off tic charts opening and closing trades within a matter of seconds and no-one has ever asked me to close my account or put me on manual execution for anything other than volatile times such as data releases and the like. In fact when I stopped trading with them in protest at a cancelled order being incorrectly filled they offered me $100 as an incentive to return! I've traded across data as volatile as NFP and interest rate decisions and with the exception of requotes which are to be expected (often in my favor) I have never had a problem. Sure I get the occasional accounting error but I think everyone experiences those and they're usually put right fairly quickly.

    I have never experienced "weird small price spikes all the time", quite the contrary, prices are 'smoothed' compared to an interbank feed and spreads are fixed 24/5.

    It's true that the marketmaker is on the other side of the majority of trades, that much should be obvious, it's the way the business works. The immediate reaction would be 'conflict of interest', in reality there really isn't any because of the way marketmakers operate (depending on their business model and integrity of course!)

    Retail forex brokers quotes (or 'bucketshops' as people like crgarcia like to incorrectly and emotively call them!) closely reflect the underlying market, I ran an interbank feed alongside for quite a while and they are remarkably close most of the time. I realize in effect I'm trading a derivative but so what? It makes no difference to me as long as quotes reflect the underlying market and I get filled at an acceptable price, I don't have any burning desire to be trading in the 'real' market, makes no difference to me who's on the other side of my trade as long as they stay solvent!

    If you like futures over spot that's great, it works for you, I don't have a problem with that. I like spot, it works for me, there's no benefit in switching to futures without a good reason and so far I haven't found one.

    Bring some proof of all this manipulation that you say goes on and I'll listen, until then it smacks of just another conspiracy theorist who couldn't make it in spot and needs to blame it on anyone except himself, there are unsubstantiated stories all over the net from similar people.
     
    #13     Mar 22, 2008
  4. Ari2.0

    Ari2.0

    Now I remember why I stopped coming on ET...

    Liquidity is not a bad thing...unless you're giving prices to clients :D More liquidity equals compression of spreads, less liquidity equals wider spreads.
     
    #14     Mar 22, 2008
  5. #15     Mar 22, 2008
  6. RedDuke

    RedDuke

    All I can say, to each its own.
     
    #16     Mar 22, 2008
  7. Exactly!

    Horror stories exist in all markets, what is it they say about money being the root of all evil [​IMG]
     
    #17     Mar 23, 2008
  8. I personally know a guy at a fund who had an "issue with the broker" by trading futures too much:

    He got a basket full of expensive European goods at Christmas.
    Obviously he generated commissions for the broker being many, many times the cost of the basket.
     
    #18     Mar 23, 2008
  9. I personally know a forex daytrader who got $100 incentive to re-fund his small account with a marketmaker after an issue over a wrongly filled order......me :p

    It's all relative, at the time I was trading peanuts by comparison!

    Next.....
     
    #19     Mar 23, 2008
  10. I disagree with this comment above. Currencies are more volatile and unpredicatable in thin markets. High liquidity lowers risk (since you can readily exit a position without worrying about the price moving too far on you) and it means there are more market participants which generally prevent prices from getting too irrational and out of line.

    Just my opinion.
     
    #20     Mar 25, 2008