Are all retail traders aware of this??

J

John_Wensink

I have had a retail FX trading account (no need to name the firm) and was comparing the interbank quotes I have to the retail firm's quotes and noticed the retail quotes weren't quite right.

I called the brokerage firm and asked them what they base their quotes off of because clearly they aren't based on the actual market and asked if they run some kind of algorithm that bases their quotes on where they believe the market will be, not what it actually is and the rep replied yes, that's how their system works.

I was actually quite shocked to hear this so between the fixed spreads and the fantasy market the retail firms create I find it to be a miracle these firms even stay in business.

Are all FX traders aware of this????
 
if the differences between these retail firms are substantial compared to the spread, wouldn't that be an arbitrage opportunity?
 
John,

There is no single price for a currency in the cash market; remember, your run of the mill retail brokerage is actually a market maker. Most of them will typically have a stream of quotes coming in from various banking partners. From this stream of rates they will make the market that they present to you. Even in the interbank market there is no "real" price, only a set of bids and offers presented from one trading partner to the next. Since there is no central exchange no single entity aggregates the prices.

Best regards,

Louis
 
Quote from NoWorries:

if the differences between these retail firms are substantial compared to the spread, wouldn't that be an arbitrage opportunity?
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Absolutely, you could have done it easily between the two systems I am watching.

I know it's their quotes but to tell me they are quoting me not based on a or the market but based on where they believe the market will be seems like a scam.

I know the deck is stacked against you with these retail firms but I guess I just didn't know it was that much.

I guess you get what you pay for. I am going to invest in a handheld to trade the interbank mkt.
 
not really sure how it matters if the quotes are not exact. i run a matrix of 5 dealers plus the CME futures prices here and rarely see a substantial difference. when i do, its money making time!

if it concerns you, just trade the CME future products.


please forgive my ignorance, but what's a "hand held" to trade interbank directly? like a portable reuters 3000 machine or something? if so, FUNNY! better watch the connectivity when swinging the big stick!!

thanks,

surfer
 
It doesn't concern me really because it's just nickles and dimes it's the principal of it, so between that, the fixed spreads and not being able to deal within the rates you are playing in a rigged game and I guess it just burns me that they are so able to remove money from people's pockets so easily and people are so willing to give it to them.


I'll be happy when they make the CME/ Reuters centralized market and put these shysters out of money.






Quote from marketsurfer:

not really sure how it matters if the quotes are not exact. i run a matrix of 5 dealers plus the CME futures prices here and rarely see a substantial difference. when i do, its money making time!

if it concerns you, just trade the CME future products.


please forgive my ignorance, but what's a "hand held" to trade interbank directly? like a portable reuters 3000 machine or something? if so, FUNNY! better watch the connectivity when swinging the big stick!!

thanks,

surfer
More...
 
Quote from John_Wensink:

It doesn't concern me really because it's just nickles and dimes it's the principal of it, so between that, the fixed spreads and not being able to deal within the rates you are playing in a rigged game and I guess it just burns me that they are so able to remove money from people's pockets so easily and people are so willing to give it to them.


I'll be happy when they make the CME/ Reuters centralized market and put these shysters out of money.
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Hope you are a big trader. CME/Reuters min size will be $1MM.
Marketsurfer gave you the best advice... if you dont like the way the spot game is played, then trade the CME futs product.

Good luck.
 
John, hello. CME will not be a centralized market, it will be just what we have now, with the theoretical "integrity" of the CME behind it. If the world governments cannot even agree on what the greatest immediate threat to humankind is, how can they regulate the international banking community, who would enforce the rules, the UN? :D


The Ever Venomous VIPER
 
Quote from John_Wensink:

It doesn't concern me really because it's just nickles and dimes it's the principal of it, so between that, the fixed spreads and not being able to deal within the rates you are playing in a rigged game and I guess it just burns me that they are so able to remove money from people's pockets so easily and people are so willing to give it to them.


I'll be happy when they make the CME/ Reuters centralized market and put these shysters out of money.
More...

Please re-read the comment from lrm he described it very well. There is NO centralised market in FX, the fact that you see some quotes on Reuters doesn't mean you or anyone would be able to trade on these even if you were in the interbank market.
FX market is "rigged" only to the extent that "life is a b...ch" :)
 
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