Liquidity

[astondan]

Apologies if this is covered elsewhere or i have posted in the wrong section of the forum.

I have a rather broad question about liquidity, specifically, liquidity in forex, and in particular, Fiber and Cable. I'm trading these pairs off 5m/1H with regular (i.e. measurable) success, and i'm agressively increasing position size/value.

However, at what point is my infinite excel calculations lol going to become redundant? £500 a pip? £1000 a pip? Obviously i expect to hit trouble with a bucketshop spreadbet firm and growth cannot concievably go on forever, but i have yet to experience trading with an ECN which is my planned 'next stop' - do you hit the same problems with them?

(FYI, my preffered ECN would be Dukascopy, so if you have any experience of them, please let me know).

Thanks in advance,
Dan

 

[N Rothschild]

depends on the time of day but you should be able to move several 100 lots quite easily, gammajamm is your man though if you want more of a detailed reply on liquidity

 

[astondan]

depends on the time of day but you should be able to move several 100 lots quite easily, gammajamm is your man though if you want more of a detailed reply on liquidity

Thank you Rothschild. European session only, i'm only interested when it's moving.

Hopefully GJ will stop by and have some input.

Thanks again,
Dan

 

[GammaJammer]

wtf is fiber?

 

[astondan]

wtf is fiber?

eurusd

 

[gooseman]

i was also confused by this. did you amke it up?

 

[astondan]

i was also confused by this. did you amke it up?

No. Apologies, i thought it was a commonly used term.

 

[everyonerich]

forex market is multiple pools of liquidity combined.. wondered what else.. lol

 

[Largesse]

forex market is multiple pools of liquidity combined.. wondered what else.. lol

omfg, you still post here?

 

[GammaJammer]

No. Apologies, i thought it was a commonly used term.

In a word, absolutely not

Where did you hear it, and what on earth does it mean?

 

[astondan]

In a word, absolutely not

Where did you hear it, and what on earth does it mean?

All over FF. I have no idea what it means. I used all over URLTraders as well and no one picked me up on it, hence i thought it was widely used.

 

[BSD]

First time I ever heared that.

 

[Rhody Trader]

I wonder if it comes from the same folks who call offsetting positions "hedging".

 

[GammaJammer]

either way it's bollox, sorry mate. Anyway - back to your original question.....

 

[cr6196]

i have a question about liquidity that i could perhaps ask here...what is the difference in liquidity at lunch time on cable, say between 1-2? does it differ greatly from say 10 in the morning? i mean can price be pushed about more easily...weird question i know but was just wondering...

 

[GammaJammer]

Ok so basically what do you consider 'problems' when executing in size? Greater slippage I guess.

First thing is to start thinking in terms of position size in nominal terms, not in £ per point (which is basically an SB way of thinking).

Trading EUR/USD, you can basically get away with selling, say, eur 20 million without pushing the price too far (usually).
In SB terms that would be $2k per point. But you can't necessarily get the same size away in cable with the same consistency of result. Of course, if someone has interest to buy it then that's a different story, but on average I'd say cable is maybe 1/4 to 1/2 the liquidity of eurusd. Total anecdotal guess, but thats how it usually feels to me. And liquidity is patchier as well - it's in pockets. There are just less people / institutions trading it.

 

[cuotes]

Just in order to add a little more detail, I'd dare to say that Dark Pools Liquidity's world is an interesting one

A tiny intro from investopedia: What Does Dark Pool Liquidity Mean?

A slang term that refers to the trading volume created from institutional orders, which are unavailable to the public. The bulk of dark pool liquidity is represented by block trades facilitated away from the central exchanges

Also referred to as the "upstairs market", or "dark liquidity", or just "dark pool."

The dark pool gets its name because details of these trades are concealed from the public, clouding the transactions like murky water. Some traders that use a strategy based on liquidity feel that dark pool liquidity should be publicized.

If interested in this fascinating ( to me ) thing, you can start from here:
Dark pools of liquidity - Wikipedia, the free encyclopedia

 

[gooseman]

if it goes onto the exchange it's public but sort of decent explanation.

 

[Directional]

Trading EUR/USD, you can basically get away with selling, say, eur 20 million without pushing the price too far (usually).
In SB terms that would be $2k per point.

Basically, available liquidity is never going to be an issue for the sort of size that 99.9% of traders on T2W do.

Whether or not a bucket shop will still slip you at £1 per point is a totally different issue, and nothing really to do with proper "liquidity".

 

[astondan]

Basically, available liquidity is never going to be an issue for the sort of size that 99.9% of traders on T2W do.

Whether or not a bucket shop will still slip you at £1 per point is a totally different issue, and nothing really to do with proper "liquidity".

Hi Directional,

I have no qualms with my SB company at all at the moment, but there's obviously a world of difference between my £10 a pip and £1,000 a pip, which is where i'd like to be in time. I have seen my SB's price come with a single decimal of my stop and reverse, but if my position size was of considerable size, would they be so honest? (If i were them, i wouldn't)

I understand that dealing with a bucketshop has little to do with real market liquidity, hence my initial question regarding ECN's and should i achieve that level, what does it actually 'look' like (phsyco babble aside).

Thanks
Dan