Do bucketshops go bust..........

Discussion in 'Forex Brokers' started by Gcapman, Nov 27, 2009.

  1. Gcapman


    after these kind of crazy forex movements?

    Just curious

    I'm guessing not the likes of fxcm, gft and gain but what about others?
  2. Dunno, RefcoFX did, and Oanda will too if they don't fix this crap every time there's a bit of volatility expected.....


    Server Busy????? WTF does that mean, busy doing what exactly! Not processing my trades that's for sure!

    And what's with all this maintenance every weekend?!?

    Geez it's a trading platform they're trying to run, it's not NASA!
  3. Didn't have a problem with oanda all day, on both FxTrade and api servers.
  4. If you placed a trade around 11am EST then you probably would have had.
  5. Doubtful...

    They are typically counterparty to all trades. They control the price feed, order book and execution. They make the spread and additional profits from over leveraged clients through Margin Calls and Liquidations.

    They maintain an overall neutral book, hedging with currency futures and options. The more volume that their clients trade the more they make.
  6. Maybe, maybe not. In the past it was often the case that some customers were affected and others were not by such problems.

    What sucks even more than the problem itself is the utter failure to communicate from Oanda. Every time something is amiss, there is - if at all - some half-arsed statement on the forums hours after the fact.
  7. Gcapman


    Interesting..did not know that about how they hedge

    But what happens when a trader keeps making money? Does the bucketshop still lose money??? or do they switch them over to inter-bank trade executions??

  8. leorc


    would like to know this as well...

  9. They make money on the volume, and also because the smaller accounts frequently max out buying power on 200:1 leverage. They can also skew the rate up or down depending on the direction the client is going. Considering they are the market, this is a natural edge. An overbought account at 200:1 can't hold their position for more than 24 hours in a normal range day for most of the majors or crosses. That is the real edge for the house, leverage. A few ticks against them will blow them out. A client might be successful, in which case after awhile his trades are hedged instead of bucketed (traded against). Even at "lower" 50 or 100x leverage, most people will blow out eventually because 99% of customers have little knowledge of risk management, volatility or position sizing.
  10. They always make their cut either way. Commissions/spread at minimum + profits as counter party on their over leveraged clients orders.

    A portion of Orders from Clients that are making consistent profits are factored into their over all neutral hedge. Once their counter party trading capacity is reached they adjust their hedge or pass the orders on to the market.

    Their cut in just spread/commissions are 0.3% of the total $ traded volume.

    Naturally they pick out all of the low hanging fruit and maintain a neutral order book. No need for the broker to gamble and take excessive risk... Provide 200:1 leverage, sit back and let their clients gamble. Their game is to always be growing order flow and volume while providing customer service for a quality experience for their clients.
    #10     Dec 10, 2009