Retail forex traders don't move the market at all?

Discussion in 'Forex' started by crgarcia, Feb 13, 2008.

  1. Because most trades aren't offset in the interbank market, but only "bucketed", since most traders lose money?

    Besides retail traders are less than 2% of the overall Forex market.
  2. Yes and yes.
  3. I think you got confused. There is no 'the market'; fx is decentralized (i.e. many markets). Your trades do not affect the market because the size is too small, not because the trades are 'bucketed' (whatever that may mean). All these small markets are in sync, because the broker often ofsets net exposure in another market and because of arbitrage. If you would place a large enough order on the retail level, you could move the market.
  4. From my experience it takes about $50 million in low volume time to actually move the market.

    So the answer is no, the retail traders will never affect the market for a major pair.
  5. Bucketed means that the trades you place on your broker never (or at least very seldom), actually go into the interbank market at all, directly or indirectly.

    Forex brokers (bucketshops) do so because most traders lose money.
  6. There are some good stickys at that run down the bucketshop model visa vis a retail ECN, if you're interested.