What constitutes edge / why is my system working?

[Xela]

Interesting. You guys are so negative about brokers.

The guys may be - I'm not.

I'm negative about counterparty market-makers who pretend to be brokers, many of whose clients really don't understand that when they "trade" against them, they're not dealing with someone who acts on their behalf in a market to which they don't, themselves, have access, but simply having a side-bet against a counterparty who holds their deposited funds, makes up their own prices for their own "products", and also makes up and interprets all the rules governing the transactions.

Many are expert marketers, not expert brokers. They know exactly how to attract the type of customer they want.

I'm not denying that there are some good, ethical, honest, well-regulated ones, too ... but those are actually comparatively few and far-between and the picture I'm describing is in reality far more characteristic of the industry in general.

So what makes you think they do this?

My knowledge and experience of the industry over the last decade or so, and a bunch of colleagues and friends who have considerably more knowledge and experience than I've had, directly, myself.

 

[nooby_mcnoob]

The guys may be - I'm not.

I'm negative about counterparty market-makers who pretend to be brokers, many of whose clients really don't understand that when they "trade" against them, theyre not dealing with someone who acts on their behalf in a market to which they don't, themselves, have access, but simply having a side-bet against a counterparty who holds their deposited funds, makes up their own prices for their own "products", and also makes up and interprets all the rules governing the transactions.

Many are expert marketers, not expert brokers. They know exactly how to attract the type of customer they want.

I'm not denying that there are some good, ethical, honest, well-regulated ones, too ... but those are actually comparatively few and far-between.





My knowledge and experience of the industry over the last decade or so, and a bunch of colleagues and friends who have considerably more knowledge and experience than I've had, directly, myself.

I can see that for sure and so should be accounted for in your trading plans. OK, so who is reputable in the Forex market from your perspective?

 

[Xela]

OK, so who is reputable in the Forex market from your perspective?

Interactive Brokers, for sure (but they're a genuine broker, not a counterparty market-maker, and these days they're not effectively available to all, either).

As far as counterparty "brokers" go, everyone has their own opinion, based sometimes on their own experiences, and sometimes on what they've heard from others they trust and believe, and sometimes from other third-party participants in the industry.

My own opinion is that it's really pretty difficult, overall, to do better than Oanda: it's true that their spreads aren't quite the best in the world (though they're certainly not terrible, either) and that those spreads perhaps aren't always quite as competitive now as they were 5 years ago, but Oanda seem ethical and honest, efficient and reliable, and they're about as well regulated as you can get. For myself, if going back to a spot forex counterparty market-maker brokerage, I'd probably look no further. Just my perspective.

 

[nooby_mcnoob]

Interactive Brokers, for sure (but they're a genuine broker, not a counterparty market-maker, and these days they're not effectively available to all, either).

As far as counterparty "brokers" go, everyone has their own opinion, based sometimes on their own experiences, and sometimes on what they've heard from others they trust and believe, and sometimes from other third-party participants in the industry.

My own opinion is that it's really pretty difficult, overall, to do better than Oanda: it's true that their spreads aren't quite the best in the world (though they're certainly not terrible, either) and that those spreads perhaps aren't always quite as competitive now as they were 5 years ago, but Oanda seem ethical and honest, efficient and reliable, and they're about as well regulated as you can get. For myself, if going back to a spot forex counterparty market-maker brokerage, I'd probably look no further. Just my perspective.

Sweet, those are my two top choices as well! I use IB though.

 

[Xela]

Sweet, those are my two top choices as well! I use IB though.

I don't actually trade spot forex (or trade "retail") any more, but I used to use IB. None of what I'm describing as "pretty typical of the industry" applies to them at all. My only minor, intermittent problem with them was that I found their customer service very variable (that wasn't why I left them.)

Before that, I happily used Oanda.

 

[sle]

Can one get access to institutional aggregator venues via guys like IB?

 

[digitalnomad]

what works - works always ...and anywhere...

Fuck Ernest Chan

Chan the man. How dare you besmirch his good name? Just kidding

On a serious note though, when you say works always, I’m hoping you don’t mean “in the black” everyday. What is your definition of always?

 

[radiusvector]

Interactive Brokers, for sure (but they're a genuine broker, not a counterparty market-maker, and these days they're not effectively available to all, either).

As far as counterparty "brokers" go, everyone has their own opinion, based sometimes on their own experiences, and sometimes on what they've heard from others they trust and believe, and sometimes from other third-party participants in the industry.

My own opinion is that it's really pretty difficult, overall, to do better than Oanda: it's true that their spreads aren't quite the best in the world (though they're certainly not terrible, either) and that those spreads perhaps aren't always quite as competitive now as they were 5 years ago, but Oanda seem ethical and honest, efficient and reliable, and they're about as well regulated as you can get. For myself, if going back to a spot forex counterparty market-maker brokerage, I'd probably look no further. Just my perspective.

Curious, what was the size of your account at Oanda if you don't mind sharing? Overall, agree with your Oanda assessment.

Arguably I haven't traded any meaningful account size for them to trade against me, but I've been impressed with what I've seen over the last 5 years or so - I've been able to double/triple my micro-lot account with some hand trading. With this new set of systems, I might actually scale in further with Oanda.

 

[hoffmanw]

Is that true? They are a market maker for a reason: the spread.

Most big fx players are high-net worth individuals, governments, big insurance and financial institutions, sovereign wealth funds, hedge funds and global international companies like Samsung, Apple or Nike. They all use prime fx brokers e.g. Nomura, UBS, Goldman Sachs to hedge currency risks and speculate on forex movements. If you are big enough and have an account with these brokers, they don't really trade against you. They make money on volume spreads. They have an inner bank system connecting to each others and other deep liquid providers and banks. When you trade on their system, they simply wire your orders to match with other players in their system.

If you are a small retailed trader with a retailed fx broker, most likely your brokers will trade against you. Trading in any form has risk. No one like risk. Even the small retailed brokers. They would rather make money on volume than trading against you. But they don't have choices. There is no enough money to be made on small volume with small retailed traders. If you trade several million dollars a day, even these small brokers most likely send your orders directly to their liquid providers to be filled. They would rather make money on commissions than trading against you.

 

[Jack1960]

Beware these days simple systems simply do do not produce profits over a large number of trades.