There are some very knowledgeable people on this forum. And these questions are for them. What amount of money is safe to trade at the retail bucket shop? What account balance is needed to think about going to a prime broker and how do we do it? How exactly does the pb side of forex differ from the retail? I"d imagine you gain this knowledge as you advance as a trader since if your a shitty trader you won't have to worry about getting out of retail. But for some traders getting out of retail is a goal and how to do it is a question i think many traders have.
not that i am any more knowledgeable than the guy next door but... 1. safe: $0 , other option, use a (pair of) reputable retail broker or an ECN / ECN-type, not a bucket shop... run a search on ET and you'll find quite a few... as a rule i wldn't leave more than $100K with a forex retail broker though, unless their credit rating tells me otherwise... 2. north of $200K 3. its more complex cause the real world IS more complex, and its meaner, cause... yeah, the real world IS meaner... therefore its fairer, but not necessarily in a way you'll find pleasant... no kidding...
there are few people whose prose I admire, even fewer on ET. This is cool. Although I disagree that the world is fair. But it will be, one Day. *** About PB vs. retail, I can offer my opinion: the same way bucket shops differ from true brokerages. Bucket shops are tertiary markets.
Here's a good thread about the subject: http://www.elitetrader.com/vb/showthread.php?s=&threadid=65449
checked out a lot of posts and the big fuss about retail seems to be stop hunting. It all reminded me of jesse livermore's "bucket shop" trading days. We all know he could make a lot of money at these shops getting the same done to him as forex brokers are now. What i think is that many forex traders have an itchy trigger finger. Maybe try moving to a line graph that just shows the close instead of a candlestick which shows the spikes that so often represent stop hunting. I'm sure they do stop hunt, why wouldn't they? Soft regulations shitty traders, its a no brainer to keep exposure low. Livermore went from bucket shop intraday plunger to a "real" account on the street. For us small fx traders, it'll be the same just from retail forex bucket shops to a prime account at a bank. One thing i took from lon eagle to protect funds is: Say you made a good couple trades and your account is up to 20k. Now you have the risk tolerance to up your lot amount. Say your comfortable trading 4 100k lots now. Take out 15k and use the full 100:1 with your remaining 5k to trade the 4 lots. That way you have the margin to trade and you have the majority of your funds safe at a bank. Obviously a balance of anything less than 10k would be a waste of time to do this but if your approaching 50k or more it might be a good move.
I have no reason to change from my present dealer/marketmaker. They can handle the size I require and do not play those publicized games/tricks that the others do...I however do condone to fragment your holdings between more than one dealer/marketmaker, but have yet to decide which one my second one will be. I have been with them from July 2004 and I have only been with them and do not know about the others. so perhaps I am biased without knowledge. But if I had several million to trade, I still do not find a compelling reason to move. I get paid nearly 5% interest for my cash balance and I do not have the additional work of sweeping T-Bills... The Wild West of Forex has far less big retail players than say the regulated markets of Futures. If you wanted to trade directly with banks...I do not think that you can do that like a Citibank and a B of A transaction. I think the dealing desks can do telephone transactions and perhaps there is some software that they use to communicate with one another...Keep in mind they throw tens of millions of $'s at each other, daily...This is global stuff, not the little markets of the USA..Mr Buffet when he entered (s) his Forwards goes through a dealing desk...but I do not think he fires up his puter' in his boxer shorts in the living room and speculates... here let me take it one step further..When Mr. Buffet took on a position, what do you think the bank did with his order?...say he wanted to short the $...they hold his order until they can weaken it to a point where they will enter him... Michael B.
yes you deduced correctly...They're not really a Broker, but I know what you mean....They are a MarketMaker as you know...