Quote from trade2live:
In Market Wizards, Bill Lispchutz , the sultan of currencies is quoted as saying FX is all about relationships. That was in the days trading was done over the phone. I understand trading is still done that way for some type of trades for ex. between institutions and corporate treasuries. So my thinking is it must be
easy for bank market makers to exchange infos on transactions between themselves and with big customers and then collude to move prices a certain way. Has the FX market ever been investigated by regulators ?
As a FX trader I can almost feel the manipulation, , price will almost always go to where the maximum pain for traders is , just before reverting. I am convinced FX is manipulated at least in some ways, but what I don't understand is since it's mostly electronic nowadays , the manipulation should be on the decline, but it seems to be the opposite, in more than 5 years of FX trading, the B.S. has become the rule rather than an occasional occurence.
One explanation could be that one channel of info used by manipulators ( relationships) was replaced by another , dealers some of them control a large portion of retail trading know the stop orders and may be able to exploit them. Some firms , for ex. Dukascopy even seem to have developed programs that trade prop funds to take advantage of that kind of info (their managed account info used to state if I am not mistaken that they were able to take advantage of their position to achieve their returns) .
To me it seems that the door is open for the most egregious manipulations by those processing orders.
Everybody I guess would agree that B.S. is now a daily phenomenon, but would people with institutional experience agree that the B.S. moves are mostly engineered rather than the consequence of too many players chasing the same opportunities ?