Hi pete.
I tell you, that this the very same question disterbing me for long time once. Sure you wont find any information on it, as the information out there is only what they want people to know. Even if you send email to your broker or talk to him on phone, he wont give you clear answer - he'll talk about all the things around it, but never give you a direct answer to this one. And in some way - it doesnt really matter whether they are bookmakers of interbank trading participants. And even though I couldnt get a clear answer on it till now, things are easily explained using simple logic.
First of all, one thing is for sure - noone will take a mini contract (10k) to real market - its a joke.
Now lets think about 100k contracts...hmmm. Well, considering the huge liquidity of this market one may assume, that if they are attuched with 10s and hundreds of brokers, market makers and banks, they may at any given moment put togather 10 contracts of 100k and go out to interbank session. But once you enter interbank - there's no "what you cick is what you get"... Therfore no guarantee they can do it, and even if this is not enough problem, here's another problem with this scenario: not all market makers have exact same quotes at any given moment, so how can they put a trade, joining 10 contracts with different quotes into one interbank trade? If they do so - they risk to loose their profit - spred. Therefore, market maker means you're buying and selling directly with them. What happens next and what are their activities on interbank market is up to them.
I talked to some people who worked there and as far as I understood - most of the time trades are balanced; i.e. there's more or less same buy and sell contracts - usually. Mu guess is, that in case there is a disbalance, they start clearing more stops, and when balance is ok - they collect less stops. In worst case, maybe they even intervien in interbank to move prices slightly in theis favor if price is not that far (though I doubt many are able to influence and move market in significant way). Maybe when they got lots of trades in particular side, they do take their money to interbank in order not to pay for the potencial profits...and so on - they may have much more sophisticared tricks not to loose money, I dont know. But in general - your trades are complitely isolated within their organization. No market maker or broker will admit it, but in fact, when you win - they loose. They deny sush claims as in this case they are playing against you - and that;s not perception they want potential clients to have. After all - who will go and trade forex knowing market maker itself is playing against you
Regarding the longer term and shorter term traders...I dont think its that important for them - all they care is buy contracts against sell contracts at any given time - not more. Sure, the more trades client does - the more spred they get. But thats it.
But as I said - its not something trader
must be aware of. Its part of business. After all - go to interbank market - noone promices your trade will be executed ; there's no "no requoting", "no slippage" - who needs 100k on interbank market
So, as far as there is oppotrunity for us to trade smaller contracts - I say thank you. So what if they are clearing stops here and there - everyone does it - you're a trader, and knowing that, try to put stop to have better chance to survive. They cannot hold or push prices more than 5-20 pips away from market. Is this what does you a trade? Maybe - if you're trading for those very 5-20 pips per trade. As for me, I'm trading with 50-100 pips stops and 100-300 pips targets, having ave 14 trades a month. And though from time to time my stops are hit (its part of trading), I'm not that worried whehter its my broker or not - I know its mainly market move (well, maybe in the end broker pushed a bit prices, maybe not. but main move was of market). Main thing is - if they are practicing stop clearing too much - leave. Find amongst them respectible one and enjoy
. Ater all - they have to make money, and thats the way they have to act sometimes in order to maintain profits.
Thats my view, and nothing more... So lets concentrate on making money
as for sure, market makers are.
And yeah - if you think of those playing against you - all those buying when you sold are against you, and all those selling when your long are also betting against you - you're always betting against someone. So what? Think of broker manipulations as another market participant who tries to make money playing against you.
Back to market now
Good Luck and thanks for good thread.
Rezo.
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