Who do I play against?

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tequaz

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Hi,

Can You explain me who do I play against on FX, CFD and FSB markets? Do I understand good that in FX and CFD market I play against other players.. big players. On FSB market from the other hand I play against broker. Does it mean that it should be harder to win on FSB market in long term? How does broker defend from players who invest big one on long term positions?
 
By FSB u mean spread betting?

If you take a long trade with a spread betting company your long will usually be offset by all the other customers who have gone short in the same market, i would think the spread betting company would try to stay neutral.

If for example all there customers where long Gilts then they would be massively exposed to having to pay out a lot of money to their customers if Gilts prices went up, therefore I'm sure they offset such risk using the actual markets accordingly (I.E Long X amount of Gilt futures). Therefore everybody in my example is a winner, money coming from all the players "short and caught" in the futures market.

Hope that makes sense?

I also have a question though, do spread betting company's have prop trading desks who may choose not to offset risks and take positions in the markets or do they strictly try to stay neutral?
 
Mp -- Who Ya Trading Against ??

It works in a couple of ways, including what you have posted. If you will notice, during ANY 24 hour period, the market moves up and down ---- the newer people "tend" to take a longer approach, holding long in an uptrending market, but having to live thru the drawdowns that happen like clockwork in the markets.

Invariably, in a mistaken idea it will protect them, these "newbies" set stop losses to protect their accounts if the direction goes against them and INVARIABLY they set them too tightly, allowing the brokers to HIT these stop losses (either because the price actually dropped to that point, or thru a "spike" to the downside which could have been intentionally down, in order to take out a stop loss point") If and when this happens, the broker now gets that portion of the account, wiping out your gains and producing a loss for you but a gain for themselves !

There are a number of other things used also --- often a trader will only trade long in an uptrending market, and the "house" makes money on the inevitable and recurring short side positions that happen continuously, or they will "fake" a downside move (called a "headfake" of course) to scare you into selling, which then gives them MORE shares, bought at a lower price, that they can sell to those who will be buying the uptrend !

They have MANY ways of making money, some pretty obvious and some that "could" be called a tad underhanded, but thats the game you play and its not really hard to stay on top with experience !

enjoy and trade well

mp




black-star said:
By FSB u mean spread betting?

If you take a long trade with a spread betting company your long will usually be offset by all the other customers who have gone short in the same market, i would think the spread betting company would try to stay neutral.

If for example all there customers where long Gilts then they would be massively exposed to having to pay out a lot of money to their customers if Gilts prices went up, therefore I'm sure they offset such risk using the actual markets accordingly (I.E Long X amount of Gilt futures). Therefore everybody in my example is a winner, money coming from all the players "short and caught" in the futures market.

Hope that makes sense?

I also have a question though, do spread betting company's have prop trading desks who may choose not to offset risks and take positions in the markets or do they strictly try to stay neutral?
Click to expand...
 
mp6140 said:
It works in a couple of ways, including what you have posted. If you will notice, during ANY 24 hour period, the market moves up and down ---- the newer people "tend" to take a longer approach, holding long in an uptrending market, but having to live thru the drawdowns that happen like clockwork in the markets.

Invariably, in a mistaken idea it will protect them, these "newbies" set stop losses to protect their accounts if the direction goes against them and INVARIABLY they set them too tightly, allowing the brokers to HIT these stop losses (either because the price actually dropped to that point, or thru a "spike" to the downside which could have been intentionally down, in order to take out a stop loss point") If and when this happens, the broker now gets that portion of the account, wiping out your gains and producing a loss for you but a gain for themselves !

There are a number of other things used also --- often a trader will only trade long in an uptrending market, and the "house" makes money on the inevitable and recurring short side positions that happen continuously, or they will "fake" a downside move (called a "headfake" of course) to scare you into selling, which then gives them MORE shares, bought at a lower price, that they can sell to those who will be buying the uptrend !

They have MANY ways of making money, some pretty obvious and some that "could" be called a tad underhanded, but thats the game you play and its not really hard to stay on top with experience !

enjoy and trade well

mp
Click to expand...

I don't understand? SB company's are not allowed to create artificial prices are they? I thought they had to follow the underlying market pretty closely, and they cannot move the underlying market to hit their customers stops.

If they are, then wow they can print money all day, see a load of stop orders, wipe them out and continue business as normal....
 
black-star said:
I don't understand? SB company's are not allowed to create artificial prices are they? I thought they had to follow the underlying market pretty closely, and they cannot move the underlying market to hit their customers stops.

If they are, then wow they can print money all day, see a load of stop orders, wipe them out and continue business as normal....
Click to expand...

That's correct. The man selling the tickets always wins.
 
tequaz said:
Hi,

Can You explain me who do I play against on FX, CFD and FSB markets? Do I understand good that in FX and CFD market I play against other players.. big players. On FSB market from the other hand I play against broker. Does it mean that it should be harder to win on FSB market in long term? How does broker defend from players who invest big one on long term positions?
Click to expand...


Its YOU.

Don't worry about the rest!
 
black-star said:
I don't understand? SB company's are not allowed to create artificial prices are they? I thought they had to follow the underlying market pretty closely, and they cannot move the underlying market to hit their customers stops.

Well, allowing them the highest level of "goodness" I can state, they can slip a bit to hit a stop that might be close by, and then of course, there are those unexplainable SPIKES that they often take, for no reason anyone can figure out !

If they are, then wow they can print money all day, see a load of stop orders, wipe them out and continue business as normal....
Click to expand...

Theyre only gonna try to get away with what they can get away with, and remember THAT is only ONE way --- they got PLENTY of other ways to get your money also.

dont know where you peeps are, but here in the states 95% of new traders fail, and they fail MOSTLY because their stops get taken out although I would bet most of those stops are hit honestly ---- the dealers are a whole lot smarter than most retail traders, so they REALLY dont have to work very hard to get your money !

BUT if youre experienced, aware of tricks, headfakes and spikes, you stand a danged good chance of making legal money in some very desireable amounts !

enjoy and trade well

mp
 
mp6140 said:
Theyre only gonna try to get away with what they can get away with, and remember THAT is only ONE way --- they got PLENTY of other ways to get your money also.

dont know where you peeps are, but here in the states 95% of new traders fail, and they fail MOSTLY because their stops get taken out although I would bet most of those stops are hit honestly ---- the dealers are a whole lot smarter than most retail traders, so they REALLY dont have to work very hard to get your money !

BUT if youre experienced, aware of tricks, headfakes and spikes, you stand a danged good chance of making legal money in some very desireable amounts !

enjoy and trade well

mp
Click to expand...

too tight stops are the root of all evil :)
 
tequaz said:
How big can be brokers influance? Can they, for example, drop 2% of price of the product? How tight should the stop be to avoid such moves from big firms?
Click to expand...


You can't expect an answer to this. You really have to look at Graphs and decide for yourself....How can anyone answering know what you are trading, what time frame you are in, how long you are holding, what your attitude towards risk is.....the list is endless.
 
fully agreeing with "windowsill", let me also add that in "real life", this conversation takes on a bit of the "how many angels . . . . ", because in "real life" there are a number of things that prevent this activity --- first and foremost is that I NEVER trade with stop losses (before the yells and screams, I IDENTIFY the trend of the currency and ONLY trade in that direction, knowing that if i miss my profit taking point today, it will be there tomorrow and I maintain "scrupulous" money management techniques that do not place my margin in jeapordy, so dont try this at home unless you can tell what a trend IS and are willing to limit your exposure !)

If you choose to use a stop loss, you MUST be aware of the average daily pip movement for the currency youre trading. For instance, if one is trading GU, one would be rather dumb to set a stop loss less than 120 pips or so.

Retreating back towards the original question anyway, all of these things are within the power of the "house" to do, and while there will be moments that you see an "unusual" move or spike in the price, the dealer probably does it less than WE claim, and more than THEY claim ! (LOL)

I tend to feel a bit sorry for the "newbie" because, with 36 years trading experience and 7 years in forex, its rather simple at this point (for the most anyway -- not to say there are no "gotcha's" in my life) and understand that the only way forward is to learn and study and observe and then finally one day, as if G-D appeared on the streets, an immense HID light goes off, illuminating the sky, roadways and perhaps the Red Sea and you fall into your most comfortable chair, impaling yourself on your favorite pipe and see what and why things have been so difficult to grasp !

I refer to MY lightbulb as "reality trading" which is nothing more than cutting away the "hype", theory and silliness surrounding the markets and taking a good long look at its realities, which we all know is to MAKE MONEY AT ANY COST !!!

I would love to share knowledge freely, but after many a year I also know that until a newb learns what they DONT know, teaching you to be a sprinter, without teaching how to walk, becomes an enormously frustrating endevour !

Allow me to close with a simple truth --- if it is meant, you will find the way --- perhaps a tad "confucian" or "zen" in its outlook, but SO truthful in mine and probably better stated by the ever popular "when the student is ready, the teacher will appear !"

Proceed slowly but with determination and patience --- it takes at least a year and usually more to become "competetent" but you are trading against mere mortals (they just have MORE experience !)

ok, ive prattled on enough !

enjoy and trade well

mp





Windowsill said:
You can't expect an answer to this. You really have to look at Graphs and decide for yourself....How can anyone answering know what you are trading, what time frame you are in, how long you are holding, what your attitude towards risk is.....the list is endless.
Click to expand...
 
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