Exactly, however a lot of traders seem to ignore this or just don't believe it.
Difference between forex and stocks trading to take note?
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Exactly, however a lot of traders seem to ignore this or just don't believe it.
At wholesale level it is very difficult to manipulate spot.. The market is simply too deep. But fat finger spikes do happen once in a while during times times of little/hardly any liquidity, like cable in 2016 when during Tokyo hours just after opening a bank trader sold a few hundred millions too much.
The Libor fixing scandal is a different thing, these were rates submitted in concerted fashion to the BBA, which has since then be taken over by ICE.
The Libor fixing scandal is a different thing, these were rates submitted in concerted fashion to the BBA, which has since then be taken over by ICE.
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The idea that your broker could be feeding you intentionally bad data and you really would not know makes no sense to me at all. I can easily obtain Forex prices from countless sources anytime I like. If a particular broker were using bad data, I can’t imagine it would go unnoticed for long, eventually ruining their reputation. I have no fear whatsoever using a reputable broker in a heavily-regulated market (like the USA, where I trade). For a reputable broker to try profiting off bad data just wouldn’t be worth it.
From everything I (think I) know, an individual stock would be much easier to manipulate than, for instance EURUSD. First of all, you don’t hear the phrase “pump-and-dump” being thrown around in Forex like it is in equities.
Second, executives have been known to doctor the books to create false impressions regarding their companies’ values. It’s a bit more difficult to doctor the books to hide your country’s currency’s value—unless you’re China, of course.
Third, the sheer size of the Forex market means that the manipulation that goes on by big institutions is often quite insignificant relatively speaking (like pennies) and cannot be maintained for long.
To quote the conclusion of an article published at EarnForex…
Big banks still have the capability to manipulate the foreign exchange market. However, the net impact on the exchange rate will be a matter of only 20-30 pips. Furthermore, regulators have plugged most of the loopholes to avoid a repeat of such incidents. Top banks have realized that they can no longer afford such misadventures. So, retail traders have nothing to worry about it. However, selecting a proper Forex broker is a must to avoid price manipulation that may cost dearly soon.
My assumption is that I am going to run into manipulation no matter what instrument I trade—currency pairs, stocks, or anything else—but honestly, it doesn’t concern me all that much because I trade with the trend, so what do I care? If an entity is forcing price in a particular direction, it does not really affect me because I too will be trading in that same direction!
Most of the Forex “manipulation” I’ve heard about involves a small group of financial institutions’ proprietary desk traders sharing information in a chat room so they know what they all will be doing near certain levels to eliminate their own risk by removing the mystery regarding where price is likely to go for the next five minutes or so. But there is no guaranty that even this will work every time.
Exactly, the broker is the only thing that matters since as a retailer you will never be trading the interbank market.
That being said, as i have mentioned before most brokers take the other side of your trade and that shouldn't be a problem either. Most traders are losing so it does make sense for them to do so, as long as they are giving you good fills, low slippage and good commission, pay your profits when you want to withdraw and have a good reputation there is nothing to worry about.
However a lot of those retail brokers that are based in countries with no or close to no regulation are shady, there is no protection if they go bust. I would stick with Forex brokers based in Australia, UK, Switzerland and some parts of the EU and only choose brokers that have many clients and have a lot of information about them online.
If you choose to select a broker that no one ever heard of before, well then you are asking for problems.
I really do not have an approach now, because I have not actively traded forex for a few years.
Theoretically if I reentered , my approach would be to study the markets by observing one pair and watch the factors that move that pair. I would try to get in the "flow" with that pair, by trading tiny amounts by a system that looks like it would work. Note the results, particularly what time zone/market they work well and bomb in. It takes a while to find the pairs that work for you.
I did very well with 1 pair,
Good with 3 others
Break even with others, and dreadful with others.
Obviously you play the winners, and forget the others. Many do very well playing only 1 pair, I was just a little to A.D.D. to watch one , so watching 4 seemed to keep my head in the game.
I had a trading buddy who lured me into forex years prior. He did well trading longer term trends, the best I could do with his system was struggle to break even. So you have to develop your own system.
Bottom line , I found no shortcuts, but a lot of screen time and study.
Hope you reap big profits.
So are you a believer that fundamental factors like economic performance, trade and capital flows, etc. can determine the performance in the long-term? Because short-term trading is noise and there is no low hanging fruits available after algo. They all fail in long-term so is there the edge then?
First, no longer trade Forex so IDK. Second, I rarely trade long term, so
again IDK.
If I " think " I have no edge, why would I trade ?
Its possible I am self deluded and I surviving as a statistical outlier.
I have never been able to spot the low hanging fruit at trade entry, a skill I seem to be void of. Some of the times I thought I saw it and picked it up it was rotten to my account.
I hope you prosper in your trading.
