There is nothing wrong with trading against the house, everyone can still win. People should try and get that out of their heads. The problem is some brokers are not honest and so they should be avoided like the plague.
ok, could you please explain what the term bucketshop means? i like the oanda, interbankfx model of fully electronic (no human intervention) of trading...big guys/little guys get the same treatment. cmc looks pretty good as well, offers tight fixed spreads but a $2000 minimum. as for hedging, i've tried the demo out for cms, fxsol, and interbankfx. cms: i just thought was bad...slow, reqoutes, difficult interface. interbankfs charges a commission so that's a no way. gci offers hedging but they are not registered with nfa. now the 2 oanda account approach seems interesting, i just don't know if i could handle trading on two different screens like that.
note: I have two computers and two separate instances of the platform open. It can be done, and I find other benefits to using Oanda's platform. But my 2 main systems that I trade are written exclusivley for Oanda use. I believe that you must use your tools available to you and write your systems to utilize as much of them as you can. Michael B. P.S. Now if I could learn C or Java programming language, I could automate using Oanda's API, but this is very unlikely at my age...I have noticed in the last ten years, I am not as nimble minded as I was...But I still try to exercise that mass (air) between my ears regularly.
I hedge to capture volatility in both directions and to earn interest on the carry.... Mechanically it sort of automates this...before, I did not understand why anybody would want to hedge....but after finding a method (not mine) and trading it, I see the light... There are many logical arguments against hedging, and I have been on the other side debating them...But I have found a valid use for hedging from one of these boards in Spot Forex Trading. If the shoe fits wear it. If you can find a style that works for you...trade it! In the long run it will be more efficient to find your style and grow from there. Michael B.
Bucketshop mean ... like a casino. They take the other side of the transaction. Your loss equals their gain. This means your market maker has an interest in not letting you gain money. If you trade somewhat larger swings you will probably be ok, but shorter timeframes could be harder to trade. Things like: driving the local market the other way, requotes or manual execution are often tricks of market makers to stop out clients' positions and make money. For example, Oanda hedges their exposure, which mean they do not have an interest in your trading. IB also does not hold a stake in clients' positions I believe. I don't know about other market makers.
ElectricSavant, the two pc setup isn't hard...i'm a programmer and have 5 machines in my house. 3 in my soho. java programming, how/why do you need to use that? my concern w/ 2 oanda accounts is that i will be using 2x the margin whereas when hedging is offered you don't need the extra margin. otherwise, it seems fine. i'm also a little worried about the 50:1 leverage oanda offers, i've been trading 100:1 on most demos and feel i like it more.??? for me to hedge is simple, P/L is only realized when you buy/sell. but you can't hedge all the time...i guess each one has their own trading system.
forgot, TradingWise: thanks for the def for bucketshop. how easy/hard is it to spot the bucketshops? is there a tell or is it through time spent w/ a broker? i know in demoing cmc's platform, i got reqoutes on nearly every trade i placed through...very frustrating. i think w/ my mentality and previous experience, i'll end up being a scalper (i think i got it right). in demoing, i average 15 trades in 2-3 hours. which broker will that get me kicked out of or which broker will let me do that?
The ability to hedge by going both long and short on the same pair is just a way for them to make more money. An IB rep wrote this and it makes sense to me. He said psychology traders feel they are better off doing the hedge rather then getting out of a position because they hate to be wrong. It is a win for the broker because they get more transactions out of you. Think about why you really want this hedge - you are probably better off exiting and then re-entering. MK