I will add CME Globex to my prorealtime subscriptions and check their behavior, maybe they are real alternative. All what interests me is their volatility on 5 sec chart. I had a chat with many brokers and they all say that unless we are really high frequency (automated) scalpers or scalp with really large positions (20+ mil), banks are very unlikely to specifically target us. We are below their radar. The only real reason a average scalper can get slammed by bust would be tech glitch, which is no different to regulated marked. Well, that's the point. We can't, except maybe making sure that our account can sustain 200 pip ride of any given position without being margin called. Which is a good idea anyway. For now I naively think a average (<200k) trader can mostly avoid busts by: * Using a good broker AND system which is as near to EBS market as possible, the farther your hub is, the likely is the chance of glitches I was told. FXi wins vs currenex here because to my understanding while some CX hubs are perfect, others are pretty far away from the EBS. * Avoiding news trading time * Riding 6-12pip wave of the 'nothing unusual happens' daily market * Keep positions to <5m $ size Once a trader has 200k, he should go to anonymous service such as CAX FX, not just for anonymity but also for good customer service. Please correct me if I am too "blue eyed" here
Thats good information. Still disconcerting banks consciously target big scalpers by reversing trades. And goes against interbank mechanics I presumed to know. From my understanding, Banks are supposed to act as market providers. Not market makers. What I mean by that is, their bid/ask is *supposed* to reflect buy sell orders of private clients, other non-related banks, and *maybe* their in-house deal desk. All risk is on private counterparties, with the PB Bank taking the commish. Or, perhaps the deal desk takes the other side and has exposure?? Which negates the purpose of trading interbank to begin with, no? With an in-house deal desk taking the other side of a private traders orders - even if its just some of the time - it becomes a glorified bucketshop. But a bucket to be sure.. Maybe I don't get it. Banks act as counterparty for any private trader using their facility to trade interbank. When any order is executed by that private trader, the order is simultaneously counterpartied and stamped as PB Bank order and matched with any other bank on EBS or Reuters. So if the private trader closes that position in a few pips, what does the PB Bank care if some other unrelated bank gets whacked? Where is the negative exposure here unless we're talking deal desk? Not at all. It appears you know much more than I. So thanks for being so open about the process. The ideas are good. Sweeping a trading account every month to minimize exposure is another one. But that really limits capital growth potential. Now maybe I'm the guy whose starry-eyed. But thats a big one. If indeed this info is true (which I believe it is), there's a real Cap on how big a private scalper can trade.... under 5 MIO or prepare for an shelacking... And that raises another interesting point. Scalping is entirely subjective. Hold time? Average take profit? Average Stop? Who determines? Its a big grey area and I'm afraid my strategy falls dangerously close to what most banks or brokers would consider scalping to be - 10 to 20 pips moves at 10 pip stop..... But then again, you're right. If a trader goes anonymous on an ECN wholesale, one would think that alleviates a big part of the problem right there.. Then again, how anonymous can any platform truly be unless its centralized under one clearing party? For instance, some bank has to counterparty a trade. If its FC Stone or DB or whoever. If a scalper - whilst remaining anonymous - continually hits a number of banks for a quick trip, the offended parties will approach FC or DB, cite the ticket# and have the scalper booted. Right? This is all just speculation, tho. If I'm wrong, let me know!
Wow, reading this thread makes me appreciate my virtual-world bucketshop marketmaker even more! Sure he 'smooths out' and shades price but at least he fills pretty much everything I throw at him and doesn't ask for the money back later if I win! The 'real' interbank market? The heck with that, give me candy-coated pricing and bucket fills any day of the week over the crazy interbank world, those guys play too rough!
Yes, this is correct. And you don't have to be a scalper for this to happen. If a bank gets hit for directional trades in amounts more than they are prepared for, they will also complain. From that point, it depends on how much your broker likes your business, and if you don't bend a little, you may get 86'd.
How would a trader be expected to 'bend'? Higher commish? It seems u have first-hand knowledge of interbank 'etiquette'. If Banks are such Big League Pussies when it comes to the wrong side, it appears Spot Forex is unbeatable. At any moment, a traders Prime Broker could sell out to maintain relationships, reverse a few critical trades, whoops, sorry Mr Brown, your account is down 300 pips.... Down 60% on a whim. Live or die by your Counter-Parties good graces. Anyone else find this beyond ridiculous?
You don't earn (or pay) yields on FX futures, unless of course there is an inverted futures curve, so long term strategies using FX futures have a higher tcost and require more active management on the part of the trader.
Ok, a few points: The banks have a last look right on most platforms; if they don't like the trade, they can bust it. Most of the time, they don't, but they got fed up with a few bad apples in the high frequency trading community. On some platforms, it is also not possible to hide behind the PB. If a bank doesn't like your business, you won't be able to trade with them full stop. Until recently, the CME wasn't entirely anonymous either due to some weakness in its clearing protocols. You can earn the carry using futures, as the future price fully incorporates the forward points. In fact, it could easily be argued that by using futures, you get less ripped off on the roll - some of the OTC providers have a habit of nicking a little bit here and there. Hope that helps.