Best Thread Other Side of the Screen

[BSD]

@ BSD Some questions for you please, if I may.

Sure mate.

Gambling is ok for me because the rules are clear, ie everyone knows you don't have an adge, the casino has the edge.

Poker apart,, that is,where you can win.

My issue with CFD's and spreadbetting is that they are pretending to provide you with a real market and fair and transparent prices for you to be able to make a profit from but the reason they're not providing you with the real prices from the futures markets but instead with made up prices no one can confirm or check because the underyling doesn't exist in a regulated environment is this:

The foreign exchange market (forex or FX) is an unregulated global market in which trading does not occur on an exchange and does not have a physical address of doing business. Unlike equities, which are traded through exchanges worldwide, such as the New York Stock Exchange or the London Stock Exchange, foreign exchange transactions take place over-the-counter (OTC) between agreeable buyers and sellers from all over the world. This network of market participants is not centralized, therefore, the exchange rate of any currency pair at any one time can vary from one broker to another.

It is possible for market makers to manipulate currency prices to run their customers' stops or not let customers' trades reach profit objectives. Market makers may also move their currency quotes 10 to 15 pips away from other market rates.


Nothing much has changed since Jesse Livermores days in those regards:

The term Bucket Shop is a defined term under the criminal law of many states in the United States which make it a crime to operate a bucket shop.[2] Typically the criminal law definition refers to an operation in which the customer is sold what is supposed to be a derivative interest in a security or commodity future, but there is no transaction made on any exchange. The transaction goes 'in the bucket' and is never executed. Without an actual underlying transaction, the customer is betting against the bucket shop operator, not participating in the market. Alternatively, the bucket shop operator "literally 'plays the bank,' as in a gambling house, against the customer.

Again, if tehy wanted to provide a fair and level and transparent platform for their customers they would let you trade on official futures prices you could confirm on the regulated futures exchange.

 

[BSD]

Anyway outta this thread had my say and this stuff is giving me bad karma haha.

Cheers and amen to that !

 

[LLSS]

So they told you to keep a close eye on winners ?

Absolutely,

In this case the client has a large account balance and often trades in hefty sizes and will skew our book. To negate this we will often hedge a lot of his business, trying to beat him on his entry and exit.

The benefit we have is we don't ever have to really speculate or time our entry/exit. The hardest decisions are made for us and this could be considered our edge. It is so rare for someone to pick a bottom or top, all we do is wait a little while until we can get a better price then place our hedge. It's the same with the exit. If we can beat the client on a few cents each side then it makes for some decent earnings. We also do have stops in mind all the time in case they do pick the top/bottom but its rare.

We have a number of large clients who can skew our book so that we are too heavily long/short a certain product. As such we will often monitor them throughout the day and keep an eye on their positions against the book so if they are short and more smaller clients go long we can unwind some hedges etc.

 

[sonofcablemonster]

Anyway outta this thread had my say and this stuff is giving me bad karma haha.

Cheers and amen to that !

has she got red stocking on?

 

[sonofcablemonster]

Absolutely,

In this case the client has a large account balance and often trades in hefty sizes and will skew our book. To negate this we will often hedge a lot of his business, trying to beat him on his entry and exit.

The benefit we have is we don't ever have to really speculate or time our entry/exit. The hardest decisions are made for us and this could be considered our edge. It is so rare for someone to pick a bottom or top, all we do is wait a little while until we can get a better price then place our hedge. It's the same with the exit. If we can beat the client on a few cents each side then it makes for some decent earnings. We also do have stops in mind all the time in case they do pick the top/bottom but its rare.

We have a number of large clients who can skew our book so that we are too heavily long/short a certain product. As such we will often monitor them throughout the day and keep an eye on their positions against the book so if they are short and more smaller clients go long we can unwind some hedges etc.

thanks for your insights. I would be interested to know what your company considers a large client, are we talking 100k account or 1m account?

 

[wackypete2]

has she got red stocking on?

If she was with me she wouldn't have anything on

Peter

 

[BSD]

has she got red stocking on?

Going to have to check into that then won't I !

 

[darktone]

2) The folks who do do well, is there any pattern to how they trade? ie do they generally use limits,trade with/against major trend, big stops, little stops, no stops etc"

2) Let me get back to you on this one as it's 1am and I have to be in the office fairly early tomorrow and I would like to give a detailed response which will require some thinking. Let me say this though, the best traders I see are those who have strong risk management and who know when to take a loss. They often only trade a few select markets and make trades that, when you see them, make so much sense yet I would find it hard to pinpoint how they see it in amongst the noise of the markets.



Hi Darktone,

Let me build on this a bit. Successful traders can vary in their methods, I have seen some who are quite successful trading ranging markets, and others who can take advantage of trends. Then there are those who can do both successfully.

As I previously stated, one thing that they all have in common is good risk management. They know when a move is going against them and they know that if it's not working it's better to close out and start again. They also know good levels to take profit. They will often have a TP set above a level. They close out and wait to see how price reacts at this level, and will then re-enter depending on the move. Even though it seems simple enough, this has seen them make good money where others waited for the break or got greedy.

Most will trade specific markets. We have one trader who only trades Crude and he is most active ahead of US inventories. He often plays the ranges before and after, but will hardly ever remain in a trade through the figure.

Another thing I have learned concerns risk:reward. It always makes sense to have a reward greater than the risk when making a trade. You want to take out more than you will put in. I used to only consider the entry and where to place my stop. Once I had these two things sorted I would then consider my exit, which was solely based on making more than I was putting on the line. It had to be greater than my risk. This would hamper my trades though, because sometimes my TP would be past a level and would get close, but never quite reach it. What I learnt was, knowing where to exit is as important as the entry and that if you cannot exit the trade with a good R:R and will face resistance at a level before your TP then perhaps the entry is not good enough and you should wait it out. Sometimes you will miss out on a good trade, but you will likely save yourself more money in the long run.

These are a few examples of what I have seen/learnt. There are many ways to trade and as we all hear a lot, what works for some will not work for others, but being patient and having good money management are certainly key.

Interesting stuff. Thankyou

 

[VielGeld]

Funny thing LLSS is saying about profitable traders is... it seems I'm right on there on the edge of profitability. So it hits a bit home considering I've been thinking of quitting, lol.

Very good stuff, LLSS. Anything you're willing to impart is welcome.

-------

As for the rest, getting slipped, etc. I've only ever seen this during large news items... but you're not supposed to be trading during news, eh? I'm also with Oanda, a so-called bucketshop. Never had anything funny happen here.

If broker shenanigans are really your concern, then I would suggest only trading through an exchange as LLSS suggests. That's the only way to be sure.

 

[darktone]

How ftse price is calculated.
http://www.trade2win.com/boards/first-steps/32431-how-ftse-calculated.html#post435058

Originally Posted by LLSS
Once again you are referring to market participants that I have no operational knowledge of. I am offering a perspective of a market maker and cannot comment on what the whales of the markets do to win, at the end of the day we are not outside of their cross-hairs.

Originally Posted by LLSS
Like I said, when trading an OTC product it is based on supply and demand, we offer you a price, you decline or accept. However customers usually get such good prices nowadays because competitions is fierce and technology allows people to gain access to the best deals easily. We mainly deal with CFD products and do not offer any cash products. CFD's are based on the underlying markets with a wider spread to compensate for commissions you normally pay a broker and also the fact we want to beat your prices when hedging

All good stuff imo. Have to admit to being largely ignorant to how the OTC market works. As i understand it, its just a bunch o guys quoting their price of xyz. Where they dont want to play they will price themselves out of the market.
Im guessing this is whats meant 'feeds'.

 

[tar]

How ftse price is calculated.
http://www.trade2win.com/boards/first-steps/32431-how-ftse-calculated.html#post435058




All good stuff imo. Have to admit to being largely ignorant to how the OTC market works. As i understand it, its just a bunch o guys quoting their price of xyz. Where they dont want to play they will price themselves out of the market.
Im guessing this is whats meant 'feeds'.

Thats different that's the underlying index , yes there is a feed for the index but we don't trade on that feed ...

 

[darktone]

Funny thing LLSS is saying about profitable traders is... it seems I'm right on there on the edge of profitability. So it hits a bit home considering I've been thinking of quitting, lol.

Very good stuff, LLSS. Anything you're willing to impart is welcome.

-------

As for the rest, getting slipped, etc. I've only ever seen this during large news items... but you're not supposed to be trading during news, eh? I'm also with Oanda, a so-called bucketshop. Never had anything funny happen here.

If broker shenanigans are really your concern, then I would suggest only trading through an exchange as LLSS suggests. That's the only way to be sure.

Jeez dont quit now V, its the only way you can truly fail.

Re dont trade news: Really? Im starting to wonder. what feelings do most traders experience around news time, fear > relief they didnt participate > regret they didnt participate. Well i do anyway
Trading in the zone is a great read if you havent dont so already, link in sig

 

[tar]

Thats different that's the underlying index , yes there is a feed for the index but we don't trade on that feed ...

"The index is actually calculated every 15
seconds on every week day (excluding
UK public holidays), from 8 in the
morning (market opening) until 4.30 in
the afternoon (market close)"

 

[VielGeld]

Forgot to ask a couple Qs, actually, if you're willing to say as much. Not expecting an answer to everything, btw. Apologies if I come off as a bit pushy.

- What is your % of profitable customers?

- Any statistics for their trades? I'll understand if this is confidential.

- How's the industry doing? Growing, stagnating, etc.?

- How difficult would it be for a new player (broker) to get up and running?

- Any advantage to going to your broker (or similar) over DMA? Over exchange-traded products?

- Would you say some products/strategies offer an easier time making money than others?

If you can think of any extra info here, that would be terribly welcome!

 

[VielGeld]

Jeez dont quit now V, its the only way you can truly fail.

Re dont trade news: Really? Im starting to wonder. what feelings do most traders experience around news time, fear > relief they didnt participate > regret they didnt participate. Well i do anyway
Trading in the zone is a great read if you havent dont so already, link in sig

Ah, thanks for the encouragement. It's just tough to be consistent, you know? Up one day, down the next, and life gets in the way too. Been thinking it's not worth the effort. But it feels like I'm on the verge of "getting it", so I'll at least explore that.

As for news, I meant right as they announce it. I wouldn't mind trading the moves before/after or even getting in prior to it if I can see where it's going, but right as the news hits things get too volatile and the spread widens quite a bit. If anyone can trade this, more power to him!

Yes, read TiTZ cool a year or two ago. Good book, though the guy does give in a bit to his philosophical whims at times. I think this book is more intended for the trader who already knows what he's doing than someone starting out.

 

[darktone]

@manipulation : This shows mate that you didnt understand what we are talking about its not really manipulation its your market , ie . there is no FTSE cash , especially after 9 pm.

Im confused.
We agree there is a price for the ftse100 that is calculated by xyz method (the underlying).
But you say that there is no cash market?
Would it be more realistic to say the cash market is provided by the dealers who make prices from the underlying?

@DOW cash feed : The feed is derived from the futures++ but there is no bank feed for DOW cash , is there a bank feed for FTSE cash ? NO , the product is offered all day long even when the futures are closed , i gave you a screen shot showing a big move in FTSE cash after 9 pm while the futures are closed and the US futures didn't even move ! Thats why they call the DOW = Wall Street , is there a market called Wall Street ? NO , and the DAX is called Germany 30 . And that's why sometimes there is a difference between SB brokers quotes .

Im more confused
You say that the Dow cash feed is derived from the futures, does that mean it isnt calculated in a similar manor to ftse100?
You say that that there is no bank feed for the Dow cash. Couldnt prices quoted by a MM at bank/wherever based on underlying/whatever be counted as a 'DOW cash' feed?

 

[darktone]

Yes, read TiTZ cool a year or two ago. Good book, though the guy does give in a bit to his philosophical whims at times. I think this book is more intended for the trader who already knows what he's doing than someone starting out.

We all see it different eh, I see it as a great first step.
Imo he goes to great lengths to get the reader to understand that the net result market is a price, information, nothing to fear. That it us, the participants who create our perception of that information through what we believe. Fascinating stuff for me. Just kicking myself i didnt read it earlier, but not that hard

 

[Jason Rogers]

the nation's largest Forex dealer.

I notice you've linked to the same article a few times over the past couple of days. FYI, that case was dismissed back on 29 November, 2011.

 

[darktone]

Hope we all learning some in this thread
I know I am, Ive even learnt about some stuff that happens on the other side of the screen! :cheesy:

 

[LLSS]

thanks for your insights. I would be interested to know what your company considers a large client, are we talking 100k account or 1m account?

A large client will be upwards of $250,000 but most large ones are in the $500,000 to $2m range. They could potentially hurt us so we like to keep tabs on them.

Funny thing LLSS is saying about profitable traders is... it seems I'm right on there on the edge of profitability. So it hits a bit home considering I've been thinking of quitting, lol.

If it's worth anything, we also have a few clients that are actually decent traders but who make small mistakes that keep them from winning consistently. One guy for example tries too often to go for the 'big one'. He looks for the $20+ move in Gold every time or the big moves in FX. Sure they come along now and then, there was a $15 move earlier today in Gold, but if he took profits sooner then I believe he would be a net winner for sure. He often misses out by a few points and markets will pull back to hit his SL.

Forgot to ask a couple Qs, actually, if you're willing to say as much. Not expecting an answer to everything, btw. Apologies if I come off as a bit pushy.

- What is your % of profitable customers?

- Any statistics for their trades? I'll understand if this is confidential.

- How's the industry doing? Growing, stagnating, etc.?

- How difficult would it be for a new player (broker) to get up and running?

- Any advantage to going to your broker (or similar) over DMA? Over exchange-traded products?

- Would you say some products/strategies offer an easier time making money than others?

If you can think of any extra info here, that would be terribly welcome!

- % of profitable traders? I don't have an exact figure but it is probably around 10-20% if I had to guess. Most clients lose though for sure. What is interesting is that often we get the best side of a move even when flat; for example, we have 50% of clients long 100 lots and 50% short 100 lots. We are net flat and the market moves up, those who's trades are now profitable will close out a lot sooner than those who are losing, resulting in risk free profits for us. Another example of the 'letting your losses run' mentality. If clients literally reversed their tactics they would be net winners!

- Unfortunately we don't have statistics as such and I cannot divulge info on anyones trades in detail.

- The industry is actually not too bad from what I can tell. The interesting thing I have noticed with UK clients is people often hold multiple accounts and bigger clients drift from broker to broker looking for the best deals. I would say that it could be fairly easy to set it up, get a good salesman to manage some hungry graduates to bash the phones. If you have the adequate capital then the hardest is capturing clients and probably getting a licence.

- Yes there is but to be honest to get the best deal you need to have a decent chunk of change (like anything I suppose). A piece of advice, always try to haggle, the offers you get are not the best, and almost every broker I know will cut their spreads etc if your business is good enough. Mostly though the benefit is that you can trade with decent leverage with a small amount of capital. I use a common SB to trade myself as do most people here as I don't have the capital to barter for a good deal and if I went DMA I wouldn't trade enough volume to get good commission rates.

- Certainly, I personally like bullion the most, in particular gold, which I have started focusing on in order to specialise in. I think FX can be the hardest to trade as the amount of variables involved in a currency pair can vary massively. USDJPY can be the most random and I gave up trying to make sense and rationalise the moves in that pair long ago. If I were you I would choose a few things to really focus on though, it helps if they are linked too (EG Crude + Brent)