By the same token you could ask why US residents do not enjoy the freedom every other individual in the world takes for granted, namely to be allowed to trade foreign futures and options. Or why if I send an order to buy an option to the AMEX I am not allowed to simultaneously send an order to sell that option to the CBOE, and I am not allowed to enter ANY options order for like 15 seconds after the first one.
ALL spot markets are effectively over the counter and all OTC trading will by definition be an un/under-regulated free-for-all. Try trading in the OTC oil/gas markets. Exchanges have standardized contract sizes, standard deliveries, uniform pricing, etc. - spot markets and anything traded over the counter is bound to be highly variable and the size of the deal and who you're dealing with will make a difference. If you want uniformity and a unitized quote stream, trade the exchange traded currency futures. The spot forex market is primarily for inter-bank and other large players. So, you have to take what you get. When you're shopping in a street bazaar in Mexico, you can't complain about disparities between the vendors and lack of uniform pricing
arch, thanks for the cogent post. i am still trying to get an answer to my inquiry concerning SPOT forex as in single price option transaction, and the spot forex market. am i correct in thinking that the SPOT option market is simply an anacroynm and is different from the spot market which is simply currency pairs as offered by the myraid of dealers ? thanks, surfer
Hello everyone. SPOT (single payment option transaction) is options trading and has nothing to do with traditional spot currency market except for market prices. The name is misleading. Its just kind of options trading, but in simplified form. The difference is that unlike in regular options, you are not allowed to sell. I am interested in this trading and currency options in general. I see it as good market to use together with traditional spot. I agree it looks like gambling, but then, doesn't any trading look like this? For anyone thinking trading is amusing, any kind of trading will turn in out to be gambling in the end. Now to Forex discussion in general. Trading, and especially forex is not as easy as it seems. I will quote one very experienced and professional trader (head of CTA), as I cannot say it better to describe and point out the differences of Forex: "markets, in general, are less efficient than touted. Most are shaped as bell curves with fat tails, especially currency markets, which have greater inefficiencies because many participants don't trade it to make money but for other reasons. For example, central banks routinely lose money trading currencies. The Bank of Japan will intervene to push the yen lower...a commercial bank in Japan will repatriate yen assets overseas just to window dress its balance sheets for the end of the fiscal year. These activities create liquidity but it is inefficient liquidity that can be exploited" Yes, currency markets are not as transparent and open as other market may be, but liquidity is enormous. I like forex, and being in this for quiet some time, I know a little about the combinations brokers are able to do due to volatility and price action (differences in prices), but its not that big of a deal as its represented here on this thread. I don't see a problem if broker has ability to manipulate the price 1-2 (or even 5 pips) up n down. For me, this market is something I feel and know, but still I never take my decisions as a must, and I don't think any market should be treated like this. I don't understand all the fear/caution given to the forex market. Yes it became retail, yes its not as regulated as others, but what sufficient advantage do you get as a trader on other "regulated" marker? Market regulates itself, and no one can claim otherwise. Regulatory organizations are to control the financial health of participants, and their integrity towards the market. The fact that some broker has 1-2 (5) pips difference from another is and should not be a problem for trader. Any other problems? Ok, when market hits huge rally or seloff, broker has much wider space for manipulation, but its only during these times...So be smart, and never jump into such market. I never jump into moving train...I prefer waiting for the next one to come, and not when the risk to fall is so great...Stop hunting on side of broker, re quoting...ok - do you want to see the real interbank market? No problem - go there and try to execute 500k order...no one will look at it. 1mil - maybe. Do you want guaranteed order fills? sorry, no can do - if there will be counter order at your order price (probably there will be), you get filled, but if not - sorry, but once some huge player comes in and throws out couple billions out on market - he gets all the fills, and not your order, so no guarantee that even if there was order at your price, YOU are the one to get filled at it...OTOH, retail brokers give you fills - we discussed it on recent thread - guaranteed fills of up to 10 million size...I think for most of retail traders here and out there who want to trade retail forex, this figure is more than enough... Regards, Rezo p.s. I am not trying to defend forex because this is the market I trade, AND I am not encouraging people for any trading activity. I am just contributing my 2 c and sharing my thoughts and the little knowledge. I agree this market may look as a "disaster" for most of those, used to trade "regulated" markets...I just as want to say its not as bad as it may seem from distance. Its not necessary to trade forex. I think everyone should trade the market he/she feels conformable with.
There have been several attempts to provide a single source forex realtime quotes feed because it's potentially a lucrative business. On their 'charts' page fxcm offers several free chart programs with data feeds from different quote vendors, including themselves. Quotes vary, by a few pips. As has already been stated, their is no central exchange as in the examples of stocks, futures and options; until the 1970s forex trading was the sole domain of banks and countries. It is not to say that fx is an 'unregulated' market. While still optional, US and other countries regulate brokers, and in the US this is done by the Commodity Futures Trading Commission (CFTC)since that's the category online fx trading has been dropped into. "FXCM offers a firm "no slippage" policy on all stop and limit orders -- meaning your stop and limit orders will be filled at exactly the rate you enter. In addition, FXCM offers fixed and transparent spreads, updated in real-time, along with instant execution of all orders." One wonders how hard the NYSE 'specialists' are fighting to retain their 'rights' and avoid an electronic exchange. Wallace.
It is not exclusive to forex: a stock broker can deal directly with the clients order (the legal justification is to provide better liquidity to the market). Of course they know that clients don't like that because of conflict of interest so they can hide that by transmitting your order to an external backoffice which can just be by their mother's firm (there are other means of course than mother's firm this just an example). The difference is that you ignore it since they are not obliged to tell you. You can only know it by reading the law (Law is variable : in 1929 it was forbidden but there were so many means to circumvent the law that law is just a facade at least when it is edicted by experts that come from the same brokers industry). You can also suspect it when fees are so low compared to competitors that you can logically wonder where they do make their profits...
rezo, thanks for the clarification of SPOT vs. spot currencies. it seems to me to be another ill fated attempt to confuse and mislead. best, surfer
Here are the links to the various warnings and consumer advisories regarding forex on the CFTC's Web site: Division of Trading and Markets Advisory Concerning Foreign Currency Trading By Retail Customers, March 2002. Note: This is an Adobe PDF file. Link: http://www.cftc.gov/files/opa/opaforexupdateadvisory3-19-021.pdf Advisory on Foreign Currency. Link: http://www.cftc.gov/opa/press01/opaadv06-01.htm Consumer Alert: "Beware of Foreign Currency Trading Frauds", Link: http://www.cftc.gov/opa/enf98/opaforexa15.htm Same as any other sector of market - frauds trying to make quick money on newbies, and for others this market is a serious job. Good Luck!
I was initially interested in Refco S.P.O.T but now I see it as do -- it stinks of gambling. The cheesiest thing is how they say it can help you manage your risk. That's the real clanger.