Asses or arses, guess that's another forum Ok, let's say you're a marketmaker (come on, play along, wear dark glasses and a wig so no-one recognizes you) 90% of your clients lose money consistently and 10% of your clients are consistently profitable. The 90% take care of themselves pretty much (although even a stopped clock is right twice a day!), they don't need any help and their money is money in the bank for you. But there's always a risk with these novices that they're just crazy enough to bet the farm on some data or other and get lucky so to protect yourself you have a system of requoting and manual execution to prevent orders being filled at prices which basically don't exist in the underlying market. No problem, those suckers are nailed but they probably deserve it, forex is no place for the uninitiated. Among the 90% are a few jokers scalping a pip here and there using latency or some such tactic, no need to close their accounts because they'll probably lose in the end anyway but if they get too risky just put them on manual execution, you're not letting a few chancers take advantage. All sounds fair and reasonable so far. The other 10% make some decent returns with some pretty decent volume from which you earn spread and of course shade, as well as having the convenience of the in-house liquidity they provide. You've got a couple of choices with them, do you screw them by running their stops, reversing their trades, and all the other dubious practices thereby burning their business, the revenue it produces, and your reputation in the industry, or do you run a book and hedge their trades with your liquidity providers? Which is the easier and more viable for you as a businessman? No prizes for the answer!
Good question, and I think it has to do with what you're familiar and comfortable with. I started out in spot, made all my mistakes here, and learnt the business. The thought of having to risk going through all that again would give me nightmares! Apart from that is liquidity and the convenience of knowing that my marketmaker will take pretty much anything I throw at him 24/5, when everyone in the market is selling euro against the dollar on a 75bp Fed cut and having trouble getting filled or partially filled this guy will still buy my euro! There are probably other reasons like margin, trading times, and available pairs but they're not really an issue for me, they might be for some people though.
That's a good idea, then if you're profitable you can see what's available in a year's time, a lot can change and there might be new products available.
I think every experienced FX spot trader recommends not to use stops with a MM. 1/2 the horror stories out there are some type of stop related trading issue...
Individual pricing is such an obvious tactic and so easy to detect and prove I'm not sure any self-respecting marketmaker uses it any more or else we would probably see hundreds of YouTube clips of examples.
YEAH, TODD , how are you ? Your defense of the forex market maker is so admirable and obvious too Your posts here sounded SO familar to another poster on another forum, did some research and found it I am putting together some similar posts you made here and on that other famous forum LMAO Operator is a friend of you ?