[MickMason]

Originally Posted by DW

Thank you for responding. I'm still somewhat confused about how FX brokers work as compared to trading the NASDAQ I suppose. I didn't know it was possible to take advantage of a brokerage, if there is such a thing. My assumption is that the brokerage is making money off the spread of my trade regardless of whether or not I make a profit. Is this concept an illusion in forex?

Those wanting to take advantage of marketmakers are finding it harder as opportunities are limited now, the trader who wanted to double his account on NFP release is finding either his trade is reversed (as the fill price never existed) and/or he's put on manual execution. Marketmakers profits come primarily from spread (plus shade), but they also have their own market analysts and depending on their risk management policies will hedge all or part of their clients net aggregated positions in the market. In essence they prefer you made money, that way you'll stay trading, they need us just as much as we need them.

Ok, to be specific. I found that on my current practice account the brokers bid/ask price sometimes lags behind the chart price. Sometimes the brokerage price leads the chart and sometimes the chart leads the brokerage price. I have been able to consistantly make money on my practice account and repeat the results over and over again. Even with several small losses each session I can easily pull 30-40 pips per session in an hour or so. I want to be able to do this with a real account, however; in my never ending search for a good broker, I have read countless post on this forum and others that say using this technique is called "Picking" by the brokers and "Scalping" by normal traders and is forbidden. How can that be?

It's a kind of variation to platform arbitrage in many ways, if you can find two platforms where one lags the other consistently then excellent. I think most traders have another price feed up, either charts or another brokers platform, I do, one lags the other by a pip or two but not enough to trade on exclusively, the most it does is save me a pip or so on spread. The 'problem' would be guessing which price is lagging, you've got that sorted by the sound of it if your primary (live trades) broker lags, very nice!

The firm that I'm practicing with at the moment has been refered to as a bucket shop on several web sites including some post from this forum. I desperately want to be able to use this technique using real money if I can find a broker who will allow me to do so, have a three pip spread or less on GBP/USD, have one click trading and immediate fills. Please tell me I'm not dreaming.

You're not dreaming, and there's no reason why a broker should be able to spot what you're doing if you're not too blatant. As long as you're giving them the opportunity to hedge your position and don't leave them holding the baby then why should they care? I'm guessing you're talking about FXCM when you mentioned bucket shop? They'll never close you down anyway, no matter what you do, but they may invite you to trade via Propfx on the Currenex platform. As a contingency plan it may be worth asking them to let you demo Currenex and checking if your strategy works on it seeing as you're exploiting potential quote differences. FXCM's spreads aren't the best though, have you thought about Oanda? Spreads are tight but widen before/after news/data, and they're not one click, or how about CMC? I have a live account with them and never had any problems, one-click, fixed spread, very occasional requote around news/data, immediate fills, you could do worse.

I have traded and studied and traded and studied for years. I've made a small fortune and lost a small fortune in the learning process these past years. I've finaly had the "Ah Ha" moment that traders dream of, when everything becomes clear and suddenly makes sense and your able to trade for a profit time after time AND this technique suits my trading personality perfectly! I am so desperately searching for an experienced forex trader to help me put this into action. There has to be a way...your thoughts would be very much appreciated. Thank you again. DW

Oh I know that feeling! When the light finally comes on then comes the apprehension about whether it really can be done, and all the sayings like 'if it's too good to be true it probably is' come to mind. The bottom line I guess, and the only way to find out for sure, is try it and see, if they (the broker) gets upset then so be it


Cheers


Mick