Quote from marketsurfer:
spot forex and SPOT (single payment option transaction) forex are different things with the same name ?? this seems to only add to the confusion. anyone ??
surfer
Hello everyone.
SPOT (single payment option transaction) is options trading and has nothing to do with traditional spot currency market except for market prices. The name is misleading. Its just kind of options trading, but in simplified form. The difference is that unlike in regular options, you are not allowed to sell. I am interested in this trading and currency options in general. I see it as good market to use together with traditional spot. I agree it looks like gambling, but then, doesn't any trading look like this? For anyone thinking trading is amusing, any kind of trading will turn in out to be gambling in the end.
Now to Forex discussion in general. Trading, and especially forex is not as easy as it seems. I will quote one very experienced and professional trader (head of CTA), as I cannot say it better to describe and point out the differences of Forex:
"
markets, in general, are less efficient than touted. Most are shaped as bell curves with fat tails, especially currency markets, which have greater inefficiencies because many participants don't trade it to make money but for other reasons. For example, central banks routinely lose money trading currencies. The Bank of Japan will intervene to push the yen lower...a commercial bank in Japan will repatriate yen assets overseas just to window dress its balance sheets for the end of the fiscal year. These activities create liquidity but it is inefficient liquidity that can be exploited"
Yes, currency markets are not as transparent and open as other market may be, but liquidity is enormous. I like forex, and being in this for quiet some time, I know a little about the combinations brokers are able to do due to volatility and price action (differences in prices), but its not that big of a deal as its represented here on this thread. I don't see a problem if broker has ability to manipulate the price 1-2 (or even 5 pips) up n down. For me, this market is something I feel and know, but still I never take my decisions as a must, and I don't think any market should be treated like this. I don't understand all the fear/caution given to the forex market. Yes it became retail, yes its not as regulated as others, but what sufficient advantage do you get as a trader on other "regulated" marker? Market regulates itself, and no one can claim otherwise. Regulatory organizations are to control the financial health of participants, and their integrity towards the market. The fact that some broker has 1-2 (5) pips difference from another is and should not be a problem for trader. Any other problems? Ok, when market hits huge rally or seloff, broker has much wider space for manipulation, but its only during these times...So be smart, and never jump into such market. I never jump into moving train...I prefer waiting for the next one to come, and not when the risk to fall is so great...Stop hunting on side of broker, re quoting...ok - do you want to see the real interbank market? No problem - go there and try to execute 500k order...no one will look at it. 1mil - maybe. Do you want guaranteed order fills? sorry, no can do - if there will be counter order at your order price (probably there will be), you get filled, but if not - sorry, but once some huge player comes in and throws out couple billions out on market - he gets all the fills, and not your order, so no guarantee that even if there was order at your price, YOU are the one to get filled at it...OTOH, retail brokers give you fills - we discussed it on recent thread - guaranteed fills of up to 10 million size...I think for most of retail traders here and out there who want to trade retail forex, this figure is more than enough...
Regards,
Rezo
p.s. I am not trying to defend forex because this is the market I trade, AND I am not encouraging people for any trading activity. I am just contributing my 2 c and sharing my thoughts and the little knowledge. I agree this market may look as a "disaster" for most of those, used to trade "regulated" markets...I just as want to say its not as bad as it may seem from distance. Its not necessary to trade forex. I think everyone should trade the market he/she feels conformable with.
(Law is variable : in 1929 it was forbidden but there were so many means to circumvent the law that law is just a facade at least when it is edicted by experts that come from the same brokers industry). You can also suspect it when fees are so low compared to competitors that you can logically wonder where they do make their profits...