100+ pip spread

Gcapman · Dec 25, 2009

So I was just thinking about this possibility and maybe it's due to my lack of knowledge on how this sort of thing works

But if a bucketshop wanted to take out a client trader who has been doing fairly well - let's say he grew his account balance significantly over the past year (for example, $50,000 to $190,000)

Then all they would have to do to blow this trader out is make the spread 100 - 200 pips on any given position

Is this not possible on their end? Or is this just even tooo much for a bucketshop?

cstfx · Dec 25, 2009

Yes. It is possible since they control the quotes.

And yes it is probably a little too much for even the most crooked bucket shop.

Gcapman · Dec 25, 2009

I was also thinking that it might **might** be over the top

I've never heard of such a thing having had happened

But that does not mean that it has not

Just means that I haven't heard about it happening

I mean, I remember once for no good reason in the Aussie, there was a 50 pip spread for a split second (it was around 5pm EST)

If I had been over-leveraged, I surely would have been margined out!!

The reason it hasn't happened to many traders is because the majority of FX traders are not profitable traders...99.99999999% to be exact

I truly believe that if a trader is very good and the bucketshop picks up his scent, they will ""make"" the spread 100-200 pips the first second they can and not only that but disable his trading platform for the next 24 hours and say that it was "network failure"

I even doubt that ****anyone**** who posts in the currency section on ET is a successful trader - meaning actually makes net profit versus breaking even or losing a little money

PlusMinus · Dec 25, 2009

Quote from Gcapman:

I was also thinking that it might **might** be over the top

I've never heard of such a thing having had happened

But that does not mean that it has not

Just means that I haven't heard about it happening

I mean, I remember once for no good reason in the Aussie, there was a 50 pip spread for a split second (it was around 5pm EST)

If I had been over-leveraged, I surely would have been margined out!!

The reason it hasn't happened to many traders is because the majority of FX traders are not profitable traders...99.99999999% to be exact

I truly believe that if a trader is very good and the bucketshop picks up his scent, they will ""make"" the spread 100-200 pips the first second they can and not only that but disable his trading platform for the next 24 hours and say that it was "network failure"

I even doubt that ****anyone**** who posts in the currency section on ET is a successful trader - meaning actually makes net profit versus breaking even or losing a little money

This is why you should trade spot FX on an ECN or with direct market access to a multi-bank feed and without high leverage, or in some cases even more preferably with FX futures.

southbeach4me · Dec 25, 2009

Quote from PlusMinus:

This is why you should trade spot FX on an ECN or with direct market access to a multi-bank feed and without high leverage, or in some cases even more preferably with FX futures.

I couldn't agree more...

Those who open accts with non ECN brokers deserve to have their ass handed to them.

Personally, I trade spot FX thru MB Trading. Excellent ECN...

Oanda and Interactive brokers are also very good...

PlusMinus · Dec 25, 2009

Quote from southbeach4me:

I couldn't agree more...

Those who open accts with non ECN brokers deserve to have their ass handed to them.

Personally, I trade spot FX thru MB Trading. Excellent ECN...

Oanda and Interactive brokers are also very good...

Does Oanada provide a real ECN? Meaning, orders are matched between traders? Is Oanda FXTrade different from their ECN offering? I couldn't find evidence of an ECN system through them. The problem with these brokers saying they give ECN is that a true ECN must have decent liquidity in order to operate transparently.

The downside to FX Futures of course btw is that there's no swap to earn (or pay) on and if you hold past maturity you need to deal with roll yield.

cstfx · Dec 25, 2009

Quote from Gcapman:

I was also thinking that it might **might** be over the top

I've never heard of such a thing having had happened

But that does not mean that it has not

Just means that I haven't heard about it happening

I mean, I remember once for no good reason in the Aussie, there was a 50 pip spread for a split second (it was around 5pm EST)

If I had been over-leveraged, I surely would have been margined out!!

The reason it hasn't happened to many traders is because the majority of FX traders are not profitable traders...99.99999999% to be exact

I truly believe that if a trader is very good and the bucketshop picks up his scent, they will ""make"" the spread 100-200 pips the first second they can and not only that but disable his trading platform for the next 24 hours and say that it was "network failure"

I even doubt that ****anyone**** who posts in the currency section on ET is a successful trader - meaning actually makes net profit versus breaking even or losing a little money

There are quite a few guys who post here on and off (and some who have abandoned the forum due to all the noise) who do ok for themselves. And you know what their secret is? They don't use FXCM.

BTW, nice scientific extrapolation on the success of winners vs losers. The current administration could use you.

to southbeach: Oanda is not an ECN model broker, but they are one of the better dealing desk brokers out there.

southbeach4me · Dec 25, 2009

Quote from PlusMinus:

Does Oanada provide a real ECN? Meaning, orders are matched between traders? Is Oanda FXTrade different from their ECN offering? I couldn't find evidence of an ECN system through them. The problem with these brokers saying they give ECN is that a true ECN must have decent liquidity in order to operate transparently.

The downside to FX Futures of course btw is that there's no swap to earn (or pay) on and if you hold past maturity you need to deal with roll yield.

Correction... Oanda is not considered an ECN.

........my mistake

MB Trading, Interactive Brokers, Hotspot FX, and Dukascopy are ECN

.....nice thing about MB Trading is that they offer Metatrader platform for those that like to use it.

Gcapman · Dec 25, 2009

Quote from cstfx:

There are quite a few guys who post here on and off (and some who have abandoned the forum due to all the noise) who do ok for themselves. And you know what their secret is? They don't use FXCM.

So what you're claiming [or hinting at] is that they would not otherwise "do okay for themselves" if they were trading with FXCM? And if so, why FXCM specifically?

You seem to have some good knowledge of how the fx game works so I have one question: Is everyone's bid/ask deal rates the same or different?

For example, if I see EUR bid 1.5000/ask 1.5005 ---- does everyone using the same broker and trading platform as I am see the exact same quotes?

Thanks

PlusMinus · Dec 25, 2009

Quote from Gcapman:

So what you're claiming [or hinting at] is that they would not otherwise "do okay for themselves" if they were trading with FXCM? And if so, why FXCM specifically?

You seem to have some good knowledge of how the fx game works so I have one question: Is everyone's bid/ask deal rates the same or different?

For example, if I see EUR bid 1.5000/ask 1.5005 ---- does everyone using the same broker and trading platform as I am see the exact same quotes?

Thanks

In a true ECN, the answer is yes. This is also true on an exchange, such as the CME, or Eurex, with regards to futures.

As for spot FX brokers, I have no idea, but I would not expect everyone to see the same price, because the broker is not obliged to show the same price.