Baby Clanger
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Tenapenny
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This might help http://www.learnforexpro.com/metatradertutorial/metatradertutorial.pdf scroll down to page 24/25.
Baby Clanger
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thank you
I think everyone is mental. Thinking brokers try to stop you out. To start off with, noone here trades big enough size for them to even care about trying to stop you out. Secondly i don't think any spreadbetting companies have the technology to manipulate the price to stop you out. What you have to remember is that if they stopping you out they might be filling someone else on a limit at the same time. It's a bit complex and they arent as clever as you may think.
Baby Clanger
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SB’s hedge their clients trades, as most clients lose the SB’s win. If clients start winning then the SB’s start losing, so it’s in the interest of the SB’s that their clients lose.
I agree that stop hunting may be counter productive and therefore difficult to implement, but slippage and re-quotes may be used on individual profitable accounts.
The SB’s are market makers, they create the market. The price you see is not the true market price but has been manipulated by the SB, therefore they must have the technology in order to create the business. Metatrader have created both the client software and the SB management software for use on their dealing desk.
I’ve no idea at what point the SB’s start to implement these strategies, if at all. If the majority of their clients are losing and their winning clients are just over break even there may be no need to use these strategies. Some SB’s are better than others. From what I’ve read, SLM are one of the better SB’s.
If you are now unhappy about SB’s having read the above, then you need to consider a move over to an ECN/STP broker that do not use a dealing desk. Profits are made from spreads and/or commission, they do not trade against you and their prices come directly from the market. It is in the brokers interest that you are profitable, otherwise they loose your custom and their profit. Unfortunately, you will have to pay tax if you are from the UK, but at least you will know whose side the broker is on.
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andycon
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SB companies without any doubt trade against their clients, because they are better at trading than the majority of their clients. When they get a client that is consistently better than them they hedge ( or as a bookie calls it lays off the bet). This can causes some people problems because the trade is no longer instant and will cause a short term trader / scalper to loose there advantage. If the trader is a longer term trader then it is not a problem, the SB company can hedge the bet and make money on the commission and the trader will win or lose depending on there system. If you are a profitable scalper then you can not use a SB company, you must move to a broker account and then your system has to generate enough profit to exceed the trading costs. You can't have your cake and eat it, if you expect a SB company to continually lose money to you then how do you expect them to stay in business.
Einsteins definition of insanity is doing the same thing repeatedly and expecting a different result.
Einsteins definition of insanity is doing the same thing repeatedly and expecting a different result.
Baby Clanger
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I can understand that because most traders are losers it pays for SB’s to trade against all trades, but what I don’t understand is why they don’t trade with the minority of constantly profitable traders. This way the SB’s wins both ways.
There will be no need to implement shady stop loss hunting, re-quotes, slippage and high variable spreads etc driving away aggrieved traders. This should increase their profit margins and allow them to become more competitive against other SB’s and brokers.
Once word gets around I’m sure that other clients will come running or other SB’s will be forced to follow suit. Therefore everybody wins.
There will be no need to implement shady stop loss hunting, re-quotes, slippage and high variable spreads etc driving away aggrieved traders. This should increase their profit margins and allow them to become more competitive against other SB’s and brokers.
Once word gets around I’m sure that other clients will come running or other SB’s will be forced to follow suit. Therefore everybody wins.
andycon
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I think they look at it on a strict financial basis, why have 5% winning when you can have a 100% losing. They couldn't care less about reputation they are just looking to part customers from there cash as quickly as possible. They can always use the money they save on some advertising and marketing to generate more clients.
magicdogsbrain
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I should imagine that they do not trade against the individual punter at all.
Its more a case of matching buyers with sellers of a currency locally (using the brokers own book), and any imbalance that forms, risk is hedged by the broker entering a trade with their liquidity provider.
The problems occur I think when the broker tries to hedge and fails or does not get the price he needs to completely hedge - when that happens, the MM turns to the clients and takes the risk away from there - freezing their prices, re-quotes, slippage, big spread - who knows what!
Its a way for the broker to de-risk - he does not want to end up speculating on the currency markets like us suckers - he wants to provide a service so that we can do it - and make a lot of money out of it.
Its more a case of matching buyers with sellers of a currency locally (using the brokers own book), and any imbalance that forms, risk is hedged by the broker entering a trade with their liquidity provider.
The problems occur I think when the broker tries to hedge and fails or does not get the price he needs to completely hedge - when that happens, the MM turns to the clients and takes the risk away from there - freezing their prices, re-quotes, slippage, big spread - who knows what!
Its a way for the broker to de-risk - he does not want to end up speculating on the currency markets like us suckers - he wants to provide a service so that we can do it - and make a lot of money out of it.
Baby Clanger
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Hi anycon & magicdogsbrain.
Thanks for your reply.
I’m sure that there is a large dollop of truth in both your replies.
Makes me want to move over to a no dealing desk ECN/STP broker sooner rather than later. The markets have enough inconsistencies without factoring in the SB.
Thanks for your reply.
I’m sure that there is a large dollop of truth in both your replies.
Makes me want to move over to a no dealing desk ECN/STP broker sooner rather than later. The markets have enough inconsistencies without factoring in the SB.
busfarehome
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Funny you should mention that.
I just opened a demo on both ThinkForex and FinFX for that reason.
One of the things that attracted me to SLM was the non variable spreads because I often trade out of hours, last night the pair i trade on the spread more than doubled.
The 2 companies I mentioned above also have variable spreads in times of less liquidity but still well under SLM.
I just opened a demo on both ThinkForex and FinFX for that reason.
One of the things that attracted me to SLM was the non variable spreads because I often trade out of hours, last night the pair i trade on the spread more than doubled.
The 2 companies I mentioned above also have variable spreads in times of less liquidity but still well under SLM.
Baby Clanger
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magicdogsbrain
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I have a real thinkforex account and I think (although I have not done a very scientific study) the spread on the standard account is wider during the Asian session than SLM.
Baby Clanger
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busfarehome
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I have been comparing TF and SLM spreads on a number of pairs all day and it is pretty close, some better some worse but the out of hours was worse on SLM.
Just taking a look at Alpari UK and they have low spreads. GBPUSD 1 EURUSD .5
EURGBP 1.1 GBPJPY 2.5 AUDCAD 2.3.
You can,t offset your losing trades against tax on Spread betting, but you can on a brokers account. This is often overlooked .