The CBS news-magazine [I][B]60 Minutes[/B][/I] ran the following segment this evening on [I]legal[/I] front-running in the trading of stocks in the U.S. — and what’s being done about it:
This video exposé deals only with the stock market, and does not relate directly to the currency market.
However, a similar sort of front-running goes on continuously at the big banks in the interbank network, where those banks literally “make” the market which we trade. The banks establish the world’s currency prices — fairly, or unfairly — and we trade on what they give us.
How severely our retail spot forex market is affected by the front-running of large currency trades at the interbank level is a complex issue, and likely beyond the expertise of this forum. Nevertheless, we all need to recognize that currency prices are driven by many factors, and [I]manipulation by the banks[/I] is one of them.
The situation with HFT brokers front-running stocks is ridiculous, yet apparently legal. The SEC have defended it even though it is akin to insider trading.
Currencies are different as the spot prices are much more difficult to rig. Of course your broker can feed you bad prices, but in terms of affecting the entire market, it’s a much bigger game. That said, the WM/Reuters Closing Spot Rates can and allegedly are rigged by the major banks (see news article) but this would have little affect on retail traders.
What you can be sure of is, if the banks can find a way to rig it, they will.
This is very intense. Assuming the market is real, this is fraudulent activity on a grand scale. What about brokers? I’m sure if banks are doing this so are the brokers!
What? The Forex market is the most manipulated in comparison to any market.
First off, we are part of the unregulated interbank liquidity pool, secondly central banks are in league with market makers to ensure that currency does what they want, the market makers must all play ball if all are to benefit after all if the currency market was to become the exclusive territory of the banks again no one will make any money. They need our dollars and sterling.
Oh! HFT in the FX market extends to even Joe public with cheap robots acting in a sub optimal manner essentially rigging markets and destroy idea of pure price action.
Retail trading is only a small portion of the currency market. Of course banks and central banks make up most of the liquidity. Some is speculation on their part but most is banks / brokers buying and selling currency for their clients to facilitate international trade. I don’t really know what your point is here
Oh! HFT in the FX market extends to even Joe public with cheap robots acting in a sub optimal manner essentially rigging markets and destroy idea of pure price action.
HFT [I]does not [/I]extend to the retail market. HFT is measured in nano-seconds, where brokerages pay millions to co-locate their machines as physically close to the matching-engines inside the banks / exchanges as possible. A robot taking trades on an MT4 tick chart at the end of a broadband connection is most definitely [U]not[/U] HFT! And again, the retail traders doing this don’t impact the Spot FX market.
If you have evidence to the contrary I’d be most interested to see it.
The situation with HFT brokers front-running stocks is ridiculous, yet apparently legal. The SEC have defended it even though it is akin to insider trading.
I love a brain bot… They are usually broke and never really traded. Another matter.
Yes, I do know HFT is nano seconds blah, blah… That is why you can’t even get office space around the LSE. yes, I know all about front running, layering, blah, blah… I know all about the quote stuffing that goes on why all the big banks including good old GS is making this a public event.
Now the Jargon busting is out the door… The FX market is the most rigged
Currencies are different as the spot prices are much more difficult to rig.
Such bull****… You sound like a bucket shop owner.
Recall your Bull@$% statement…It just is.
I was well aware what I mean’t by comparing robots to HFT since the problem with all these robots takes away the opportunity to make serious money. While the two are quite different the idea is the same. @@@@ the human trader so he has no choice but to get involved in this robotic game.
The good news is HFT will be responsible for the next stock market crash at that point heads will roll and these algo guys can go get real jobs with Google and leave the markets alone.
On your statement. The FX market is the most corrupt and is loaded with algo behavior like stocks central exchange or not…
I was well aware what I mean’t by comparing robots to HFT since the problem with all these robots takes away the opportunity to make serious money.
Maybe for you. Perhaps you’re just doing it wrong?
the human trader so he has no choice but to get involved in this robotic game.
That’s crap. Manual trading works just fine… if you know what you’re doing.
The good news is HFT will be responsible for the next stock market crash at that point heads will roll and these algo guys can go get real jobs with Google and leave the markets alone.
It’s always been the same. Someone finds a loophole, exploits it, makes a fortune, regulators plug the hole and create a new one, someone finds it… And the market crashes from time to time. Algo is just a new feature to deal with. It’s not the end of the world.
On your statement. The FX market is the most corrupt and is loaded with algo behavior like stocks central exchange or not…
Algo behaviour doesn’t necessarily equate with corrupt behaviour. What’s your evidence that the market’s loaded against you? Sounds to me like you can’t trade so you’re getting angry at everyone else.
Bill O’Brien, president of [B]BATS Global Markets,[/B] obviously thinks [I]his ox is being gored[/I] by Michael Lewis’ book [I]Flash Boys[/I], by the [I]60 Minutes[/I] segment on the book, and by Brad Katsuyama’s decision to set up a “clean” exchange (called [B]IEX[/B]) which is not “rigged”.
Here’s a 25-minute debate (shouting match would be a better description) on CNBC earlier this week —
If you think that O’Brien is obnoxious, and should be fed a knuckle-sandwich, you’re not alone. But, if you listen closely, you can pick up some key points about stock market order flow, and high-frequency trading.
For forex newbies reading this thread, everything being described here pertains to the U.S. stock market, not to the decentralized, off-exchange forex market. In our market, manipulation, front-running, and insider trading are just as prevalent and just as corrupt as in the stock market; but, in our market, those things are perpetrated in ways that are totally unlike the tactics being described by Lewis and Katsuyama.
On Thursday, [B]Interactive Brokers[/B] announced that it will be offering its customers the option of directing their trades through Brad Katsuyama’s IEX exchange. Here’s an article —
It’s funny how this quickly gets to bank balances and not being able to trade. You don’t want to see my bank balance mate…
Even Goldman Sachs agrees with me. Anton Kreil once said he has no interest in FX from a speculators point of view it is really a long-term game as volatility has been taken out of the market. This means on the odd occasion you get those 1200 pip dips like what happened to AUD on the interest rate drop. Now you have to be content with taking the odd 50 pip here and there. I guess you don’t know who hell I am talking about?
In any case I am certainly not angry I just don’t like seeing statements like you made. Misleading…
I have healthy trading account and I am happy with both spot and futures market. I just will never say it is not rigged. Algo trading has entered the trading arena and it is disrupting markets at all levels. Undeniable… Algos hardly make any money in the long-term. This is a fact.
[QUOTE=“emeraldorc;618342”] It’s funny how this quickly gets to bank balances and not being able to trade. You don’t want to see my bank balance mate… Even Goldman Sachs agrees with me. Anton Kreil once said he has no interest in FX from a speculators point of view it is really a long-term game as volatility has been taken out of the market. This means on the odd occasion you get those 1200 pip dips like what happened to AUD on the interest rate drop. Now you have to be content with taking the odd 50 pip here and there. I guess you don’t know who hell I am talking about? In any case I am certainly not angry I just don’t like seeing statements like you made. Misleading… I have healthy trading account and I am happy with both spot and futures market. I just will never say it is not rigged. Algo trading has entered the trading arena and it is disrupting markets at all levels. Undeniable… Algos hardly make any money in the long-term. This is a fact.[/QUOTE]
I feel your pain. They just open their mouth and sh** just falls out. Yes it is “rigged” so to speak. Brokers go against our interest and trade against us, HFT Algo’s push the market on nano second levels we can even see… And our orders and stops are placed only to be reviewed by the banks to take advantage of us… I hope to prove you wrong on the last sentence on Algo’s. I made one and trade it but it’s me + algo no algo by itself. I manually trade it’s results after correct interpretation (I get all kinds of answers it spits out). I’m not HFT, I trade Dailies. But we will see. Wish you luck man.
I think price action was on the way out with electronic trading, HFTs are just the nail in the coffin. Today’s ‘price action’ that is taught is actually candlesticks and nothing to do with the movement of price reflecting bids and offers in the market.
[QUOTE=“goldenmember;618361”] I think price action was on the way out with electronic trading, HFTs are just the nail in the coffin. Today’s ‘price action’ that is taught is actually candlesticks and nothing to do with the movement of price reflecting bids and offers in the market.[/QUOTE]
Today’s price action is just visual interpretation of the market. Modern PA doesn’t even take into account the fundamental driving force of the market… Money! Precisely why I do not believe in modern day PA. If it’s working great for you now, congrats, but it will not be long before this modern approach is yet another nail in the coffin… lucky to yield small positive return. Banks are becoming more aware of these price action strategies and are countering them more and more as time goes by which in turn is causing PA to lose its “edge.” What do the big players do? Pretty much the opposite of retail. Retail represents the losers in the market minus the elite few.
Maybe we need to define what “rigged” means. Your broker ripping you off isn’t the market being rigged. You think any institutional player cares where your stop loss is? Really? You think they’re going to “rig” the market simply to flush out retail traders? The risk involved wouldn’t get close to the potential reward.
Rigging in the sense of what we’re seeing in the US stock market (where HFT firms are routinely given privileged information [I]for the sole purpose[/I] of intercepting orders to buy and sell in front of you) does not happen on your retail spot FX orders. If you’re being quoted a price, that’s the price you pay. Rarely do you get an Off Quotes error but if you do, you should be able to see a legitimate reason for it.
And HFT - it moves the currency market. What of it? [I]Volume[/I] moves the market and HFT is a part of that. Moving the market does not equal fraud.
As I said in my first post, 12 banks are being investigated for rigging the closing spot rate. That does not equate to rigging “the forex market” - it’s one tiny element of it. As I also said in my first post, that banks will use nefarious means to rip you off is beyond doubt, but that does not mean the whole market is rigged. It is decentralised and too big for anyone other than central banks to hold influence for very long.
I asked before and I’ll ask again, if you are so certain that the currency markets are rigged, provide some evidence.
And let’s see if you can manage it without your pathetic insults.
Maybe I should have revised my post about banks seeing our stops. You are right banks don’t care, but brokers do trade against retail and do move markets to take out stops that are placed too closely. This has been widely disputed though.
I’m on the same page as you. HFT’s move the market… But primarily on a nano second level we can not see. Messed up and put can in my first post. I suppose you could say HFT does overall move the market but second to institutions, banks, and businesses that have to swap currency for business not for profit. If you can prove otherwise I would love to see the information. Last time I checked, HFT was actually dying down in the market place.
Algodude.com has some good information regarding HFT’s check it out.
As far as insulting comments go… I did not think I posted anything insulting. Unless you are a huge PA dieheart. If you are, like I said good luck.