Is it a fair business ?

[Sasha]

I'm really new to all of this but what I just can't understand is...

Everything is fast now. Why can't it be automated where if a trader presses "BUY" the order goes directly through the broker to intrabank where it is bought. The broker keeps the spread and makes his money there. If the client looses or wins, the broker still makes money.

Surely the intrabank is offering cheaper spreads than the broker offers to the client, so why would this system not work? In more simple terms, being a broker is a service provided to the individual. They take the low volume that the intrabank wouldn't normally have time to deal with, take a couple bucks for their troubles, and send the trades into the intrabank. What's wrong with this?

In this case scalping would work. Unless you're saying the prices posted on the charts aren't true. If thats the case where are they coming from?

There should be intrabank charts where you buy and sell on those prices. Maybe its just simple thinking, but sometimes its the simple thoughts that bring sence back into people.

It seems to me liek the brokers are just greedy, and want to make money off the loosers on more than just the spreads.

But then again as I said before I am so new to trading its almost sad.

[Hayek]

Hope we will see the day when all individual fx traders in the world can make transactions directly through EBS and all their orders are processed with a 'First In First Out' mode. Let the more advanced information technology wipe out those greedy intermediary dealers.

[jasperforex]

Originally posted by Sasha
I'm really new to all of this but what I just can't understand is...

Everything is fast now. Why can't it be automated where if a trader presses "BUY" the order goes directly through the broker to intrabank where it is bought. The broker keeps the spread and makes his money there. If the client looses or wins, the broker still makes money.

Surely the intrabank is offering cheaper spreads than the broker offers to the client, so why would this system not work? In more simple terms, being a broker is a service provided to the individual. They take the low volume that the intrabank wouldn't normally have time to deal with, take a couple bucks for their troubles, and send the trades into the intrabank. What's wrong with this?

In this case scalping would work. Unless you're saying the prices posted on the charts aren't true. If thats the case where are they coming from?

There should be intrabank charts where you buy and sell on those prices. Maybe its just simple thinking, but sometimes its the simple thoughts that bring sence back into people.

It seems to me liek the brokers are just greedy, and want to make money off the loosers on more than just the spreads.

But then again as I said before I am so new to trading its almost sad.

Don't forget that brokers are doing you a favour by letting you trade 10k lots with your $500. They can't offload those smaller lots one by one so will collect them up and match them off for the "better" traders and leave the losing traders positions to run off. At least that's how it works at one place.
The more money you have and the larger size you trade, the more say and control you'll get. But even then, you'll find that "retail" interbank isn't without problems, such as liquidity at certain times which is masked by your bucket broker isn't at retail interbank.

[PittsburghFX]

Originally posted by MickMason
Paranoia warning!

I see marketmakers improving their charts and trading platforms all the time, maybe it's just to get more market share but do they have a way of watching what indicators traders are using or when they're about to place a trade or is that a bit far-fetched?

Mick

Every single click and position is in real time in their database. Before you trade they see all Interbank positions, volume, everything. IF someone wanted to move the market as a Market Maker, they could easily, but you would never get away with it. Clients watch other companies price feeds as well. Anytime FXCM had a bad tick or something, clients called immediatly and said that 5 other MM didn't move. So everyone knows they are being watched by hawks.

Think about it. People in MM's dealing rooms, don't you think they of all people would be experts in regards to TA, FA, and Psy of trading. They are, they are also awesome traders themselves. I got to hang out with them after work. They are the heart of any MM. Thats how I got FXCM right out of college, because I was fluent in TA. I wanted dealing room in a few years but decided I'd rather raise some kids up back home near mom and dad.

All market makers know every single position and account being traded. Period. How do you think they find pickers and scalpers. The entire net positions can be summed up on 1 trading station screen. Its all computers man.

[PittsburghFX]

Originally posted by bobnat
Pittsburgh,

This has turned into a very fascinating and informative thread. I hope you don't mind some more questions.

You say that the MM needs time to offset their aggregrate positions in the IB. So, does this mean that no matter what the bet and size, there is always a bank somewhere willing to take the other side? This concept really fascinates me for some reason. Maybe because it hints at the fact that there are so many ways to view the markets, from so many time frames.

Nat

You own a house. A sewage treatmant plant goes in or something like a truck stop goes in next to you. That is going to change the risk involved when you decide to sell your house.
When you want to sell, I will still gladly buy it from you, but for 40% of what you paid for it. It is still worth something, but the risks have changed dramatically in the future.

[PittsburghFX]

Originally posted by Hayek
Hope we will see the day when all individual fx traders in the world can make transactions directly through EBS and all their orders are processed with a 'First In First Out' mode. Let the more advanced information technology wipe out those greedy intermediary dealers.

I hope your either joking or sarcastic man. If your not, dude I don't know where to begin! LOL.

[PittsburghFX]

Originally posted by Sasha
I'm really new to all of this but what I just can't understand is...

Everything is fast now. Why can't it be automated where if a trader presses "BUY" the order goes directly through the broker to intrabank where it is bought. The broker keeps the spread and makes his money there. If the client looses or wins, the broker still makes money.

Surely the intrabank is offering cheaper spreads than the broker offers to the client, so why would this system not work? In more simple terms, being a broker is a service provided to the individual. They take the low volume that the intrabank wouldn't normally have time to deal with, take a couple bucks for their troubles, and send the trades into the intrabank. What's wrong with this?

In this case scalping would work. Unless you're saying the prices posted on the charts aren't true. If thats the case where are they coming from?

There should be intrabank charts where you buy and sell on those prices. Maybe its just simple thinking, but sometimes its the simple thoughts that bring sence back into people.

It seems to me liek the brokers are just greedy, and want to make money off the loosers on more than just the spreads.

But then again as I said before I am so new to trading its almost sad.

Brokers, no matter what you may think is automatic and instant, is only for your end. The way they can provide instant execution is through credit relationships. In order to offset a position it is no way ever instant. It takes time just like anything else. You are trading with the market maker and the market maker is trading with the Interbank. The market maker is not just going like a Walmart to a supplier, that is not the case at all. They are trading just the same to do their best to be flat. Market Makers will sometimes gain and sometime lose when the market ripps. It doesn't matter if the client loses or wins, because odds are MM's can match it up internally or have a big lot trading or offsetting.

The brokers do not always make a spread either. The Eur Interbank spread is 2 pips, the tightest spreads are 2 pips for interbank. Eur, JPY, CHF 2 pip, GBP 3 pip.

""""Surely the intrabank is offering cheaper spreads than the broker offers to the client, so why would this system not work? In more simple terms, being a broker is a service provided to the individual. They take the low volume that the intrabank wouldn't normally have time to deal with, take a couple bucks for their troubles, and send the trades into the intrabank. What's wrong with this?""""""

Because the Market makers are trading against the interbanks. You are assuming the Walmart supplier method, this is not the case at all.

Scalping will never work because of slippage. Have you ever traded off of a Interbank platform? I have. Placed a few trades, not many. Just the little trades I have done, there is slippage out the whazooo.

What everyone doesn't understand is that FX IS TOTALLY SUGAR COATED IN EVERY MANNER. Only futures traders could truly be thankful for this and understand where I am coming from.

"""There should be intrabank charts where you buy and sell on those prices. Maybe its just simple thinking, but sometimes its the simple thoughts that bring sence back into people. '''''

Just pull up esignal charts with 10 different price feeds and subtract 3 pips, thats Interbank trading. All IB trading is by trading with a tighter NON FIXED spread. Trading in the Interbank YOU WOULD GET KILLED, PERIOD. Don't mean to shout but plan to drive the message home to all out there. Thats why Retail is sugar coated.

"""""It seems to me liek the brokers are just greedy, and want to make money off the loosers on more than just the spreads.
""""""

MM's make money, lots and lots of money. However, do you consider yourself greedy for going to work and doing your career. I wouldn't think so. Class warfare doesn't have a place in trading. IF you feel sorry for yourself, there is no way you could handle floating losses like I have.

You seem to have a very scewed viuew in trading. I would encourage you to open your mind just a touch and investigate before you make judgements.

If there is anything I can do, please email me.

Kindest Regards,
Former FXCM Trader
Brian Summy

Add a .com to my username and you got my website.

[Hayek]

Originally posted by PittsburghFX


I hope your either joking or sarcastic man. If your not, dude I don't know where to begin! LOL.

Hey, man, technology can change and has changed the world. 50 years ago, who can imagine we can trade currencies in our home by just one click?