An interview with highbury fx

tar said:
How many traders scale-in/average down ?
Click to expand...

typically 17% of our clients scaled in to positions during November. Only 3% scaled out.

this tells me clients are adding to losing positions to make their average better. that's not normally a good idea.
 
highbury fx said:
typically 17% of our clients scaled in to positions during November. Only 3% scaled out.

this tells me clients are adding to losing positions to make their average better. that's not normally a good idea.
Click to expand...

Thanks , important note here is that who didnt scale-in at November may as well scale-in later . Scaling out is rare as expected .
 
Oscar Reed said:
Hi highbury

Do you get traders not compounding there accounts and look to take regular profits out.

Also what is your typical day/week like.

Thanks for sharing.

Oscar
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yes but not many manage to do that. our clients accounts are typically <£10,000 so you have to be pretty decent and consistent to withdraw regular profits on an account that size.

my typical day - get up at 5am, run 12 miles to work, have 4 meetings before 10am and then trade trade trade :innocent:

lots of meetings, mostly about regulation it seems. i'll meet with my heads of departments each day and we'll discuss any issues that have arisen. I try not to plan to far ahead as I want to be flexible to adapt to what the day brings. my dealers keep an eye on risk so I don't have to but we'll talk about spreads and margins regularly. we're always trying to get introducers to bring us business so our head of sales will be updating with me progress on the deals I've taken an interest in. bit of travel, not too much these days as I tend to send others if possible but i'll still be in either Cyprus, South Africa or Australia once a month or so.
 
Good . Do you have a number for the clients who are profitable for at least 3 years plus ?
 
counter_violent said:
I think RhodyTrader did some figures on all this as part of his phd thesis. Might be worth a search.
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Ya i know , it was around 0.5% :LOL: . The problem is he based his research on quarters profitability back to back for atleast 4 qs. You dont have to be profitable every q .
 
Ok well I have a question.

Do traders who automate fare any better?
 
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counter_violent said:
Ok well I have a question.

Do traders who automate fare any better?
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its a fairly general question so i'll generalise with my answer. I find that the traders that fair best of all are traders that take a position, attach a stop and a limit order and walk away until one of them is triggered. to be more accurate with an answer for automated systems we would need to catogorise them such as scalping systems, intraday systems, high leverage/low leverage, long time frame. They're all so different that you couldn't get an accurate view unless you separated them in to categories.

the trouble with automated strategies is they break. so many of them work away taking a few pips here and a few pips there but once the market spikes or something unusal happens a lot of them break or go haywire. It isn't unusual for us to face a blackbox that is having some reasonable success only for it to go nuts and blow up the accounts. brokers will tend to be patient with these systems for that very reason.
 
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Hi highbury fx,
Thank you for your insights and for being so candid.

I'm sure you won't comment on anything that you don't want to but, by the same token, I don't want to put you in the position of having to politely abstain from answering or side stepping 'difficult' questions! With this in mind, I'll keep my question very general - feel free to ignore it altogether if you wish . . .

SB firms take the other side of their clients trades - this is well known and accepted. By extension, many people will argue that SB firms actively want/need their clients to lose so that they win. Some folk claim that the SB firm will employ dirty tricks (price spikes, cancelled orders, slippage plus a bit more etc.) to accounts that are consistently profitable. Ultimately, if that doesn't work and the client remains profitable, they will decline that client's business and close the account.

My (general) question is: would you care to comment on any of the above?
Thanks in advance,
Tim.
 
timsk said:
Hi highbury fx,
Thank you for your insights and for being so candid.

I'm sure you won't comment on anything that you don't want to but, by the same token, I don't want to put you in the position of having to politely abstain from answering or side stepping 'difficult' questions! With this in mind, I'll keep my question very general - feel free to ignore it altogether if you wish . . .

SB firms take the other side of their clients trades - this is well known and accepted. By extension, many people will argue that SB firms actively want/need their clients to lose so that they win. Some folk claim that the SB firm will employ dirty tricks (price spikes, cancelled orders, slippage plus a bit more etc.) to accounts that are consistently profitable. Ultimately, if that doesn't work and the client remains profitable, they will decline that client's business and close the account.

My (general) question is: would you care to comment on any of the above?
Thanks in advance,
Tim.
Click to expand...

Hi Tim

thank you, no prob.

it all depends what type of license or model the spreadbet firm has.

SB firms that run B books want their clients to lose. they may say otherwise but that is how they anticipate making most of their money.

SB firms that run STP models/A book models want their clients to do lots of volume, not make too much money (in order to not annoy their liquidity providers) and not lose too much money (in order to stay in the game).

SB firms don't need to resort to dirty tricks such as price spikes or cancelled orders. Slippage is different - its hard for the client to really prove that they shouldn't have been slipped 1 pip or half a pip. lots of half a pips really add up and if a broker decided to slip each order or every 3rd order 0.5 pip, 1 pip, it would be a dirty thing to do but I wouldn't like to say for sure that that doesn't happen. It used to back in 06, 07 that kind of time but now? maybe - even probably at some places.

B book firms can deal with profitable accounts by hedging them and giving their liquidity providers (i'll call them LP from now) a heads up that they may wish to widen spreads in certain products so they avoid that flow and it can be passed anonymously to the market. it isn't so much the making profit that upsets brokerages, its the manner in which its done by some clients that causes offense. these clients are usually sent on their way.
 
Highbury – thanks for an extremely informative and interesting thread. Two things are apparent to me:

1. People such as yourselves know more about their customers and how they work/don't work than they do themselves.
2. The amount of research and data analysis you must do on your customers' trading is quite remarkable – and of course you wouldn't do it if it wasn't worthwhile.

There's some good guidance in your answers for those who wish to pick it up. Many thanks.
 
highbury fx said:
Hi Tim

thank you, no prob.

it all depends what type of license or model the spreadbet firm has.

SB firms that run B books want their clients to lose. they may say otherwise but that is how they anticipate making most of their money.

SB firms that run STP models/A book models want their clients to do lots of volume, not make too much money (in order to not annoy their liquidity providers) and not lose too much money (in order to stay in the game).

SB firms don't need to resort to dirty tricks such as price spikes or cancelled orders. Slippage is different - its hard for the client to really prove that they shouldn't have been slipped 1 pip or half a pip. lots of half a pips really add up and if a broker decided to slip each order or every 3rd order 0.5 pip, 1 pip, it would be a dirty thing to do but I wouldn't like to say for sure that that doesn't happen. It used to back in 06, 07 that kind of time but now? maybe - even probably at some places.

B book firms can deal with profitable accounts by hedging them and giving their liquidity providers (i'll call them LP from now) a heads up that they may wish to widen spreads in certain products so they avoid that flow and it can be passed anonymously to the market. it isn't so much the making profit that upsets brokerages, its the manner in which its done by some clients that causes offense. these clients are usually sent on their way.
Click to expand...

Is it safe to say that :

1- Profitable swing traders dont bother you one bit .

2- Profitable scalpers may force you to put them on your watchlist - you keep an eye on their activity - .
 
tar said:
Is it safe to say that :

1- Profitable swing traders dont bother you one bit .

2- Profitable scalpers may force you to put them on your watchlist - you keep an eye on their activity - .
Click to expand...

swing traders will generally do better than day traders so its not entirely true to say they wont bother me. its strange because none of it bothers me too much and all of it bothers me. I trust my model is right and that we will have swings in our pnl depending on volatily but that doesn't mean to say we're nonchalant about anything. our clients are trying to win money from us and we need to make sure we know all about them and what they're doing. we don't want to be a nuisance and get in their way but by the same token we have to provide evidence all of the time that we are on top of our business. if things go wrong at a brokerage you lose your shirt potentially.

profitable scalpers are a problem even though we're stp. they wont win the money from us but they will win it from people that provide me services for me to be a profitable business. if I can help protect my lp on occasion then I will for the better conditions that that will ultimately give to all my other 'non profitable scalper' clients.

my problems aren't so much the day to day trading - that's all taken care of by remarkable infrastructure that firms like us operate within. the problems are regulatory, that's what takes our time and efforts. for example its easy to say ok the new rule is the leverage cant be more than 50:1. ok, no worries we have to accept that and for all new clients and clients with no open position they can be moved to groups that have new leverage limits in place. but what about someone who has $900 on his account and 1 lot of eur/usd open? once I move the leverage to 50:1 it's going to put him on margin call and close his position automatically. how do I ensure that we act in a fair way to those clients? that has to be considered, planned and implemented and that will take up far more of our time than watching someone swing trade or take 0.1 pip off me 50 times a day.
 
Hi highbury

Have you heard of WH Selfinvest? What sort of DNA do they have?

What do you think about FxPro's DNA?

Thanks
 
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Hi Highbury, this thread's great! My question is: What is your definition of scalping?
 
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