How to beat the market makers?

[anon46773462]

this is not true , all the orders return to interbanks unless the broker is cheap and not reputable that any time can rip you off , and most of the positions in any range , all has an effect directly or not direct you changing their book balance and slowing down the momentum
give me a demo account and i turn it to trillion

Thanks for your comments here. I think that maybe you have missed the point that was at issue here - i.e. the claim that a broker will match your trades with another trader’s position as your counterparty.

I do not believe this is done, or even possible - what do you believe about this?

But if my trade of, lets say, long 5 lots was matched against your position of short 5 lots, how could I or you affect one another’s positions? And what would happen to your position if I closed all or part of my position? And from the broker’s perspective he has nothing to gain or lose whichever way it goes as either I or you would gain and the other lose. This simply does not happen. in this way.

This is not the same thing as a broker matching opposing positions back to back to calculate his own outstanding overall net exposure as the counterparty to all his trades as MM. This will change constantly as client multitudes continually enter and exit their trades.

In addition, it is a fallacy to always accuse the broker of ripping off their clients. Yes, there are dubious brokers and there are suspicious examples. but on the whole the broker is far more interested in building up an active clientele of regular traders that deals in large size and on a frequent basis - and they do have such clients! They even offer discounted commissions on trading size.

It is true that the multitudes of Newbie accounts that come and go do add an appreciable income to brokers in gross terms as they blow their accounts (which they do without any concerted interference from the broker), but in net terms, these small Newbie accounts can often cause more overall costs to the broker than they actually make from the trading losses/spreads/commissions and are more bother than they are really worth - especially as they would have to constantly be marketing and advertising for fresh “meat”.

Interesting input @m.k.a, thank you.

[m.k.a]

This is not the same thing as a broker matching opposing positions back to back to calculate his own outstanding overall net exposure as the counterparty to all his trades as MM. This will change constantly as client multitudes continually enter and exit their trades.

i meant for market makers , as most of the short term trade all route back to market markers some one must pay for money you gain and if they lose and you gain they paying it , they can trade against you with leverage in any time, there is not eve 1$ free there in a market , why they claim 80% of day traders are losing

[Trendswithbenefits]

Our world is totally a phantom structure of non-existent foreign exchange “transactions” - if it did then we would also require a back office structure transferring funds between the counterparties’ various bank accounts in all the various currencies in which we trade.

My point exactly…

“Totally phantom structure of non-existent foreign exchange transactions that do not actually exist in real terms”

Possibly open to manipulation and and fraudulent activity away from any true market regulation.

The broker is always the counterparty. It is a very different matter that he may match “exposures” between client positions. The broker is really not interested in following individual positions, nor does he have the resources to do so, nor does he even need to. His only concern is his overall net exposure to market direction.

See, this is the usual catch cry from the FX Industry…The broker cannot follow individual positions…

They don’t follow individual positions… they follow zones in the market. Zones where maybe 1000’s of SL’s are placed.

And the ripples of scams in the real finance world are even less than in that example.

So the last big scam…the GFC was a just a ripple…

I regularly and routinely keep simultaneous price feeds from two or three brokers open on my screen whenever I have a significant position open and I never see a significant deviation in price quotes occuring in response to my positions. But I HAVE seen very significant changes in spread quotes between brokers.

I don’t think anyone would claim that the financial markets are squeaky clean, and the broker fraternity is no doubt even more suspect from a retail trader’s perspective. But the risks are from practices other than simply “moving the price”.

So we can safely assume that brokers do manipulate spreads…But practices of “moving the price”. I didn’t insinuate that brokers move price, I have seen revealed how many dollars per second it takes to move a particular pair, and with the leverage in these markets it isn’t as hard as one would think…

But on the whole the broker is far more interested in building up an active clientele of regular traders that deals in large size and on a frequent basis - and they do have such clients! They even offer discounted commissions on trading size.

See here’s where the whole thing gets murky…"The broker is far more interested in building up an active clientele of regular traders that deals in large size and on a frequent basis’’ Think about that for a while… the Broker wants to have clientele that are MORE successful and therefore take MORE money from their liquidity provider.

So how do you think the LP looks at this… yes, fantastic we want more clientele like that, less profit for us…Larger deals, great even less profit for us… Not large enough?.. No, we will give you a discounted commission to go for even bigger positions… awesome… we are losing even more… what a great business model we have developed…hold on…WTF. Now…think about it again…

The brokers need their LP. They are symbiotic, to operate… to survive, so you can be certain that their affiliation and loyalty is with the LP and not with you the client.

Why is it that ALL traders would prefer a true ECN (STP) account?

Why has the fact that ALL retail traders have actually been dealing with MM’s, obviously an industry secret (read deception) until recently?

Manxx?

[anon46773462]

again…

Trendswithbenefits:

Why is it that ALL traders would prefer a true ECN (STP) account?
Why has the fact that ALL retail traders have actually been dealing with MM’s, obviously an industry secret (read deception) until recently?

Manxx?

I guess you are asking my opinion on this?
I think we have both commented on this already and are in agreement about it.

The only reason is the assumption that ECN eliminates the broker as MM and broker spreads are largely, but not entirely,replaced with commissions instead.

We all agree, I think, that it is primarily the spread manipulation which can do the damage to positions. The broker does not move the actual current price against its clients and certainly not against specific individuals. Even if they did then this could only amount to a few pips and would catch only the very short term of pip-traders.

I have on occasions suspected that a broker could manipulate the price feed within the platform to the extent that it holds back as it approaches a limit order and advances as it approaches a stop order in order to gain a marginal “edge” over its clients. But I have sometimes backtracked with the same broker’s price feeds in simulation without positions and never seen a discrepancy.

Regarding large position successful traders and the interbank market - believe me, there are very few private traders dealing through brokers that are of any significant size to even raise an eyebrow with the LPs - on the contrary, the greater the size and frequency the better the LP can perform- Don’t forget they are also market-makers - they just want volume and plenty of interest so they can be in and out of their trades in secs. It matters nothing whether a trader is consistently successful big time or not, the interbank just provides the market, absorbs the position and then passing it on…and on,and on and on. And like I said earlier there are huge players in forex that are not there for speculation, only for loading or unloading there interests at specific levels that work for them.

It is hard to remember that not all the world is actually just speculating…

[anon98339083]

funnie little charlie bite me

Now you’re just trolling, really. It’s what you resort to, when your lack of knowledge and experience is shown up for what it is. Still, I suppose most others can see it for what it is.

[Trendswithbenefits]

Regarding large position successful traders and the interbank market - believe me, there are very few private traders dealing through brokers that are of any significant size to even raise an eyebrow with the LPs

Your post reads as if there is a few of them…there is 100,000’s of retail traders in the markets at any given time. Maybe even more open positions trading Millions of Dollars per pip. So I’m pretty confident there is more than just an eyebrow raised by the profit potentials…

Why has the fact that ALL retail traders have actually been dealing with MM’s, obviously an industry secret (read deception) until recently?

Please point out where you covered this question?

Aimed @ the thread…I see the Cheer Squad is along for the ride… Good Evening Ladies…

[m.k.a]

Now you’re just trolling

someone need to say this to you , only when you say something like [removed due to Forum Violation] to me
the name just it reminds me somewhere on internet i don’t know nothing personal

[anon46773462]

Your post reads as if there is a few of them…there is 100,000’s of retail traders in the markets at any given time. Maybe even more open positions trading Millions of Dollars per pip. So I’m pretty confident there is more than just an eyebrow raised by the profit potentials…

Yes there are a good number but it really is nothing! It is totally irelevant. The marketmaker sits at his “desk” literally non-stop with a bid/offer for any client that comes along provided it is an acceptable client and within the available client exposure limit for that client.
If he takes in 100mill on one side it is out again on the other in the same instance to another customer or interbank partner - it is just a constantly flowing market and size and volume only make it smoother. That is the market maker business and function, it is was they do.

[anon46773462]

Manxx:
Why has the fact that ALL retail traders have actually been dealing with MM’s, obviously an industry secret (read deception) until recently?

Please point out where you covered this question?
[/quote]
I’m not sure I actually did cover it, we have been going through this at quite a speed!

I am not sure what you are getting at here but I think in the past small retail traders have always been dealing through MMs because that was all there was. I don’t think ECN systems have been available for this particular market for very long. I don’t think the LPs were all that interested in handling such small size.

It is interesting how whenever people gain some improved service they immediate criticize what was there before. If we compare the MM market with the earlier trading environment of a screen and a physical phone call to a broker at intl telephone rates and even before that when charts were hand drawn, we can see how, in comparison, the MM market is a vast step forward. Then came ECN (or something like it).

[Trendswithbenefits]

If you go back through older BP threads, you will find that most traders up until mid last year, were under the assumption they were dealing in a true ECN market. It’s only recently that the story started to change…

I could go back through and find the relevant posts that show the sudden awareness that we were all dealing with MM’s.

Very informative thread Manxx with enough information for potential traders to go and research the topic for themselves.

Please fact check for yourself and as with the real world Where there’s smoke, you generally find fire…

[m.k.a]

Even if they did then this could only amount to a few pips and would catch only the very short term of pip-traders.

bro that few pips counts , believe me most of day traders there for that few pip , the thing is just doesnt move much unless with loading on margin,

ok im done with this , only one question why in demo account its easy to turn 100$ to 100k in a month BUT its never happened in real life
i think you forgotten the hft and algorithms represent there in the market for reason

[anon46773462]

Very informative thread Manxx with enough information for potential traders to go and research the topic for themselves.

Please fact check for yourself and as with the real world Where there’s smoke, you generally find fire…

Thanks to you, too (and everyone else here) for an interesting journey into the world beyond our trading platforms!

Certainly, we should all constantly check facts and learn as best we can, afterall, this is our business that we engage in. I readily acknowledge that there is much that I do not know in this area.

One rather more positive observation. When ECN (or whatever your broker actually calls it) is working properly, we are actually getting better than Interbank itself! The broker is supplied with a range of quotes from its LPs and gives you the best of both sides. One may doubt this but, at least with my broker, my quotes on pairs like EURUSD frequently have zero spreads, and I just pay a Small commission. In fact, I often get positive slippage on my exits. I have no complaints with that whether it is genuine ECN or not!

Actually, it has always surprised and disappointed me why our broker colleagues on this site do not (or cannot) contribute to these types of discussions about how they function. (yes, I know, maybe that is another sign of “conspiracy”!). They could clarify a lot concerning the mechanisms and practices from the broker’s side of the fence…

But in spite of the bad cases and suspicions that are reported here from time to time, there are surely thousands of traders who are happily just getting on and along with their trades. I cannot even remember the last time I actually contacted any of my brokers about anything other than routines and agreement updates etc.

But I must stop here as I just got this pop-up message:

[quote]
Consider replying to more people
You’ve already replied 3 times to @Trendswithbenefits in this particular topic.
Have you considered replying to other people in the discussion, too? A great discussion involves many voices and perspectives.
If you’d like to continue your conversation with this particular user at length, send them a personal message.[/quote]

So I wish you all a very happy Christmas season!

…now where was that turkey…

[soohia]

Which trading market has no market maker? In my recognition, The only thing a retail trader can do is try ones best to find out what the market maker is going to do, and follow, and watch out carefully, because if too many people follow, there will be a new trap waiting in front of majority retail trader. Always be the minority, stand together with market maker, as evil as them, a retail trader may survive to have bloody profit too.

[Falstaff]

You’ve not been here long and you haven’t said that much as yet, but you’re right 1 - It doesn’t really matter whether the market movers are all trading like true gentlemen with their counterparts, or whether they are really on the phone to each other conspiring to bust our stops and reverse the moves on “News” as has been suggested.

We need to make assessments “as though” “Composite man” is out to get us personally and trade that assumption. It’s easy to know what “retail” is doing - you just have to read forums like this and read “analysts” forecasts. But 95% of retail busts out !

So, if we can - "They can do it too !

HAve a great Xmas

[soohia]

Thanks, i think one of players who had been well trained and warned before enter the trading. it’s the first forex forum I participated since I started forex trading this month, and found its so interesting with people talking about truth and their experiences. Wish you merry Christmas and happy new year.

[anon98339083]

Which trading market has no market maker?

It’s not about “which market has no market maker”.

It’s about whether the inevitable market maker holds the other side of your trade and holds your deposited funds and makes up the rules.

It’s about whether your “broker” is actually a broker.

In practice, the problems arise when your “broker” is your market maker and holds the other side of your trade.

If the market maker is one centralized exchange, like a stock exchange or a futures exchange, then it’s better for your broker if you win than it is if you lose, because your broker isn’t betting against you and is just earning a commission, which is how brokers make a living.

It’s not hard to understand at all, once you understand that the spot forex “brokers” who allow retail mini-accounts aren’t really brokers at all and make their own living from your trading losses rather than from your commissions.

They want customers who don’t quite understand that, and they know that gimmicks like bonuses and competitions are the way to attract the naive customers they want.

[anon46773462]

It’s not about “which market has no market maker”.

It’s about whether the inevitable market maker holds the other side of your trade and holds your deposited funds and makes up the rules.

Funny you should mention this, LC. I was just mulling over this thread last night and the same thought occured to me that it would be useful to highlight precisely this point!

It is not the “Market Maker” activity that leads to problems at all. It is the fact that the broker actually also becomes the counterparty to the transaction that creates the potential for problems because you can only undo the transaction through the same agent!

If one buys, say, USD 5mill through an interbank marketmaker then that sum is transferred to your USD bank account and you have no further connection with that particular marketmaker. You can sell it again through any market you wish and can choose which price is best - and the marketmaker does not know beforehand whether you are selling or buying.

But with a retail trader transaction with a broker, the broker remains the counterparty and you can only undo the trade with that same broker. Therefore that broker has the edge in knowing your direction, size, and, often, also the price at which you are going to act. It is this counterparty situation which is the problem not the fact that the broker is MM.

One could imagine a very nice model where one’s retail trading account is held in a neutral 3rd party “bank”. And that you could buy/sell through whichever broker you like and that broker then transfers the trade to your equity “bank”. When you eventually want to close the transaction you again sell/buy through whichever broker you like, regardless of where it was opened, and that broker would transfer it to your equity account and it would be closed out. The broker, in both transactions, whether the same or different would then handle their side of the transaction however suits their policy and just earn from the spread and/or one-side commission.

It could never actually work that way (I guess!) but it gives some idea of the difference between pure marketmaking (constantly offering a bid/offer) and the counterparty impact on one’s options.

[anon98339083]

all the orders return to interbanks unless the broker is cheap and not reputable that any time can rip you off , and most of the positions in any range , all has an effect directly or not direct you changing their book balance and slowing down the momentum

Completely, absolutely wrong - and completely, absolutely missing the point, unfortunately.

It is not the “Market Maker” activity that leads to problems at all. It is the fact that the broker actually also becomes the counterparty to the transaction that creates the potential for problems because you can only undo the transaction through the same agent!

Exactly the point.

But sadly it’s a point that’s universally missed, in this forum, in discussions of this all-important subject.

Thanks for your post, Manxx, and Merry Christmas!

[m.k.a]

i have no interest to you and your thoughts charlie keep it to you get it please dont requote and go ahead i leave this to you.now that you guys solve the biggest puzzle out there you can go and use it as your advantage and make some money!
happy christmas everyone

[ontario]

So why do you afraid of them? Are they rigging quotes? Charge higher spreads or intentionally distort market data? There is no point of concern unless they execute unfair practices but competition in this industry is so high that such dirty players will be squeezed quite quickly.
Market making makes trading costs cheap and its the only way to deliver forex services to your monitor with such lower capital threshold
Cheers.