Discussion in 'Forex Brokers' started by pabmove, Sep 12, 2008.
Anyone know if there is a list of known forex "Bucket shops" on this site.
GCI is one!
That's a start.
It would be easier to list the ones that aren't bucket shops!
cable< that's true
Any brokers that aren't bucket shops? (if there is such a thing)
Actually, I want to know why people still flock to well known bucket shops. I was looking at the capital of these brokers:
Most of them are MM and they have a lot of capital. But, if the theory is that they are playing 'against' customers, isn't this shooting oneself in the foot to have a trading account with these guys? SO why are they so popular. Can't be just newbies?
IB isn't a bucketshop
Consistent losers....did they jump or were they pushed?
For the well-known mainstream marketmakers that's all the 'conflict of interest' is....theory.
Although unquantifiable the stats suggest >90% of traders lose money, of their own volition and solely through their own inexperience of trading and risk/money management. If that figure is anywhere near accurate then there really is no need for MM's to actively trade against their clients, all they need to do is take the other side and leave the trader to commit financial suicide all by himself. Money in the bank!
From what I gather a lot of these MM's run two books. Non-hedge for consistent losers, hedge for consistent winners. Probably a lot of complex statistical analysis goes into what constitutes 'consistent' but that's the gist of it and it makes perfect sense. To the trader it makes little difference who ends up with his money, the market or the marketmaker, they're going to lose it anyway unfortunately. In any event MM's have the option to limit risk by hedging aggregate above certain thresholds which is exactly what most of them do. They'd still make a handsome profit from spread and shade even if they hedged everything.
That's not to say some marketmakers lack integrity enough to shift quotes to suit their book on occasions (there's an example of one of the biggest, Oanda, doing exactly that in this post), either to provide in-house liquidity or for the obvious financial benefits of running stops for example, but that's more of an exception than a rule for the well-known shops.
The benefits of a bucketshop over say a true ECN are smaller account balance requirements and trade size minimums (some allow from 1 unit upwards!), smoothed pricing, fixed spreads, automatic fills even across some of the most volatile data, no slippage, requotes, even weekend trading which allows trades to be made and orders adjusted (useful for times like the Saddam capture and other geopolitical events which unexpectedly happen over a weekend or this weekend's anticipated Lehman news, buy dollars ahead of the Asian open on Sunday maybe?)
For the paranoid who think their losses are down to their marketmaker there's always futures, although it's very rare that their losing trend suddenly changes if you get my drift
cabletrader, could you clarify what you mean by shift quotes.. does that mean they provide bad data or are you talking about the premium they charge within a spread? thanks!
Hi Trader Neal, both, they can move price to suit their book and sometimes widen spreads ridiculously to discourage scalpers during (for them risky) volatile market conditions, which is of course their prerogative and all perfectly legal. Makes you wonder how anyone makes a living trading with these bucketshops when they can decide the cards we get dealt
when it comes to me losing my doh, I'm pretty paranoid
Thanks for the link you've included. How is the fight with Oanda going? Did you switch brokers? I woud swap ASAP - blatant piss take spike.
I'm not sure if MM's are suffering just like the overall economy but if they are I'm sure most will use 'kick in the nuts whilst looking the other way' tactics.
Have you tried fx from Deutsche Bank? What's your comment on using these brokers. Sure these guys are on (almost) on the level?
I'm still trading accounts on Oanda, they've been behaving themselves lately
To be honest I don't like ECN's, I prefer bucketshops who fill pretty much everything thrown at them, usually without too much slippage. Oanda were really useful to have this weekend after the bailout agreement, where else would it be possible to buy USD (Sell Market Gbp/Usd 1.8440 Sept 27, 09.33) and manage open trades on a Saturday morning, certainly not on an ECN that's for sure!
Up over 500 pips on these three trades since Friday thanks to being able to place and manage trades at the weekend, you gotta love Oanda at times like this!
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