It seems strange to me but nobody bothers about how the quites are created. We all understand (more or less) how stock exchange operates and how market makers offer their quotes and how broker is able to fill your orders. But what about spot Forex?
Just where do they come from (the quotes)? I don't understand the mechanics at all. Forex quotes from different brokers seem to be different and at the same time not too much. At times my broker gives spikes which others don't have. But he also reports in a chat window that certain movements are due to "big hedge fund dealing".
Does my forex broker create them (Saxobank)? How does he knows about "big hedge funds"? Or why the price is able to move very quickly sometime - no arbitrage can force him to do it that quickly!
Does he take it from someone else? Does he modify them aftewards?
If he takes them from someone else then how do my orders propagate there? Through arbitrage process only?
My guess is that there must be some central market maker. Am I right? The relationship between this market maker and big forex brokers must be very tricky.
Am I going mad completely?
Just where do they come from (the quotes)? I don't understand the mechanics at all. Forex quotes from different brokers seem to be different and at the same time not too much. At times my broker gives spikes which others don't have. But he also reports in a chat window that certain movements are due to "big hedge fund dealing".
Does my forex broker create them (Saxobank)? How does he knows about "big hedge funds"? Or why the price is able to move very quickly sometime - no arbitrage can force him to do it that quickly!
Does he take it from someone else? Does he modify them aftewards?
If he takes them from someone else then how do my orders propagate there? Through arbitrage process only?
My guess is that there must be some central market maker. Am I right? The relationship between this market maker and big forex brokers must be very tricky.
Am I going mad completely?
