Is it possible to beat the big players?

Master tang well said !!!

You as a retail trader possible can’t beat the sharks in this case I’m referring to big banks. You’ll be wiped out in no time. They move the market we don’t. So what we can do is to ride along with wherever they’re heading. You definitely don’t want to be on the other side of the trade. You want to be on their side of the trade.

I’m still a newbie myself but the more I read into forex the more I feel like that’s the only way to survive or make a living off of forex. Instead of making a decision solely on what you think the market is going to be heading. First and foremost learn where the big guys are going to be heading. For that learn to read the charts , look at the volume and candlestick patterns key resistance and support lines, look into key economic news releases have that in mind /but then again it’s all speculative so don’t base on that solely/ but just to have a rough idea.

Hope that helps!
Go out there and start trading even with 100$ after few months of demo trading.

The vast majority of volume (probably 90%+) on all the markets is institutions. Private retail traders like us are a tiny percentage of the market. Therefore almost every time you take a trade there is an institution taking the other side of that trade!

The institutions employ super smart, highly educated people and state of the art computer systems programmed by the smartest most highly paid quants (computer programmers with huge brains and maths/physics degrees) in the world to trade for them.

So how come every trade isn’t a loser then?

Well firstly remember there are people all over the world trading every different time frame and every different chart type (tick, volume, line, etc). Some aren’t even looking at charts and are trading solely based on fundamentals. So what looks like a perfect trade to you on your chart could look completely different to the person (again likely working for an institution) taking the other side of the trade.

Another possibility is the institution who is (probably) taking the other side of your long position could be going short on a much higher time frame and be willing to hold through an early pullback (allowing you a quick profit).

Also they might just have a huge order to fill, and be willing to buy more and more long positions throughout the day despite the market being in a bear trend, again allowing you to get in and out of a short position and make money.

Also the High Frequency Trading algorithms, which are huge players these days, will scalp for only one pip all the way down a trend, even though the very last trade will be a loser, allowing you to get long at the very bottom of a move. Why do they do this? Well their systems obviously show this to be profitable otherwise they wouldn’t! Yeah they are taking a losing trade at the very bottom of this move, but every other trade on the way down was a winner, so overall they made a profit.

Important to remember that no matter how sure you are of a setup, there is always someone somewhere who believes the exact opposite, otherwise you wouldn’t get filled! Also as most of the volume is institutions, you’re taking on the big players every time you trade!

Just think like a banker does

Actually most of your trades don’t even hit the market…although it’s a nice idea what you explained, but only really true when dealing with high end retail accounts with big balances. I should imagine perhaps 75% of all retail trades, if not more, don’t hit the market, but are balanced off in-house by your retail broker. The retail broker would then net off all the client longs and shorts, and place this net difference into the market as an insurance policy.

Entirely true, if one assumes that you HAVE FAILED TO select a broker that offers Direct Market Access. I personally would never trade with a broker who was taking the other side of my trades or matching them up in house. For obvious reasons.

DMA, ECN, NDD…blah blah it’s all lingo to get retail traders excited. What I explained happens day in day out by retail brokers regardless of the account type. Most broker also state DMA style account, as opposed to a True DMA account - yet another trick they like to play with terminology.

Netting off longs and shorts is just a natural activity, absolutely nothing negative about it from a retail traders point of view.

Well. DMA, STP and ECN are all NDD brokers. I really don’t any difference between 'em. Maybe it is a new lingo as Jess says to exite traders to create made up needs. DMA is something new for me, today I have learn that one and what a lot of crap. I was operating with IBFX for a while and well it sucks but it serves it purposes. Now I am with Vantage Fx wich works much better than IBFX.

Fixed spreads are as bad as unstable spreads because the spread variation gives you a hint about what your broker knows about the market (or think they know) and any piece of info can be useful or completely useless. I would not dare to pay commissions so I see no edge on ECN brokers. Off course 2 pips spread difference cannot seem much but helps you on the long way.

I use ProRealTime, a charting provider who also offer a brokerage service. When I unlocked trading permissions for forex, they assured me that my orders would be sent “straight to market, not through a third party or matched to another trade in-house”. Their exact words.

Who then in your opinion is therefore taking the other sides of my trades (if it’s not my broker)? Because the vast majority of volume is institutional, more often than not it would have to be an institution. Right?

Please don’t think I’m doubting what you say, I am just interested… :slight_smile:

All brokers, or at least the vast majority offer white brand solution. It means they act as liquidity providers. So, maybe their liquidity providers are in fact big banks but it also can be other brokers or themselves. If I open my brokerage firm and I use all known brokers (and brokers only) as my liquidity providers I can claim I am an STP broker even if all my liquidity providers are MM’s. So where lies the real market? The difference with the explained and with ECN and DMA’s is just the way they say they provide the service but the principle is the same. MM brokers has no external liquidity provider, it is you against the broker.

Depending on the size of your trade, the liquidity available at market at the point of execution… it’s most probably being matched to a counter trade by another client from your broker. If you’re going long then your broker will have thousands of other clients who are going short; why not net them off.

Now if you do have a [U]true[/U] ECN account (not the same as an ECN style account where brokers let you open them with a few hundred dollars), which are not cheap, usually $20k minimum deposit then yes your orders do hit the market. One would assume when opening such an account that you actually know what you are doing.

A broker is not taking the other side of your trade when they net off longs and shorts. They are not doing anything against your own interest. So yes, I do agree with you that institutional trading makes up a very large proportion of the market, however retail trades do not always hit the raw market - this is common sense, and really a normal logical activity that brokers carry out as a mechanism to calculate their own risk exposure.

And for STP brokers at least if you are a winner I assume they let you be because it would me stupid to let you go if they can use what you know (without letting you know) for make their own copy trade or just sell it to another one. I would do that if I were an STP broker. In case of MM they don’t care if you win as long you don’t hit higher than they do.

My experience with MM brokers like Forex.com and IBFX they don’t care if someday you withdraw everything. But once with VFX I’ve filled my withdrawal request and couple hours later they where calling me to ask me why, if I was making money, Why I was withdrawing. was withdrawing everything. DOn’t worry I’ve started over next month, needed some vacations.

I see. Do you know of any brokers that offer one of these “true ECN” accounts?

Sure, for example purposes you can look at this Pro Account | Professional Trading Solutions | Alpari UK