If you do deep research into the realities of Retail Forex… examples such as below come up over and over again…
Author wished to remain anonomyus…The difference between the old platforms and the current platforms is how it’s being used. The original platforms were strictly data pushers used to pass numbers back and forth with reliable accuracy and record of the transaction. Just like paying for something with your pay pal account: it processes the numbers and transfers the money for you.
Trading platforms for the over 10 million dollar accounts function as order transfer processors – same as before.
Trading platforms for the smaller “retail” accounts are no longer a tool that a broker uses to transfer orders back and forth between people. Your orders are not sent to any bank or other traders. It’s an all in one programs that runs your trading against a simulated trading program. There’s no counter party. It’s just like playing on line slots. You put real money in an account and virtually pull the lever and see if you win. You know its rigged to make you loose. So are the trading platforms. (you didn’t loose your touch in the last 5 years- they just started cheating).
Your playing against a machine that’s designed to adjust the action based on every move you make. The broker’s job became babysitting a computer hub- monitoring the platform performance- watching for program glitches.
The trading platforms are programmed to cause you to do 2 things.
Add more money to your account (by letting you win up to double your initial investment. It’s psychology) and cause you to loose your entire fund.
How do I know all this?
In 2012 I was asked to trade a million dollar charity fund. Contracts were signed. Then just days before the account was funded I was talking to a CEO at FXCM who suddenly told me “don’t trade the account””you’ll loose everything” he explained the whole set up to me in detail- the most important information being this:
Since FXCM started using the trading platforms - not one single customer has ever walked away with one cent of their money. They have paid out nothing. He’s the one who told me they created a system of allowing customers to profit easily as long as they leave the money in the account - (FXCM collects the interest on all accounts) as soon as they try to withdraw any of it - they turn the market against them and cause them to loose their whole account and even causing them to owe money to FXCM. He said - they never ever fail to achieve total loss - its what the program does. While it sucks that the industry has become so corrupt - I’m forever grateful for him telling me the truth.
Author: How true this appears to be, in 2016 FXCM where busted by the US regulators for lack of transparency and unscrupulous trading against clients positions.
If your holding a winning position , the fake market will suddenly move in the other direction - very quickly - to eliminate the gain. The broker can adjust the program to avoid set profit limits - always turning right before the trigger point. Stop loss limits are intentionally hit to scoop the money. (do not set stop loss limits, wait it out if possible)
The fluid market
Doesn’t exist. There is no actual people pushing the prices up an down- no thin, no thick. The chart movement is generated by a program that uses current foreign exchange market prices, past chart movement patterns and movement controls to generate an algorithm that drives the movement feeds. The goal is to produce a chart pattern that seems to mimic the live foreign exchange market conditions- but watch it closely and you will notice that the movement follows you. If you place a big order way out- in the wrong direction - it will spike to fill them - then crash to blow your margin. Put in stops - it will hit them every time. Put in order limits - and it will always just miss them - or fail to trigger them - then crash drastically.
How to outsmart the Platforms:
Don’t follow any regular trading pattern - it will learn it and use it against you!
Never use bot traders– they are programmed to work together with the platforms to make you loose.
Buy and sell the biggest lot size possible that leave you 1/2 your margin.
Don’t be greedy- minute trade (scalp) large lot sized – hold til your ahead by 3-12 pips then get out.
Once you’re clear a few trades you will have to get out at 9 pips.
Only trade highly active pairs - moving at least 7 pips per zig zag (Renko will help with this).
Do look at every pair in 30 minute view compressed till you can see at least a full year.
This will show you what position to take for holding longer amounts of time.
Always hold positions in 2 sets of pairs at the same time- that move opposite of each other.
This prevents the program from moving the market away from you because it will cause your other pair to gain.
Stay in front of your computer and manually enter and close trades.
How to outfake the Fake?
A programmer created an EA called “BankerBoy” … a fake out strategy which went long into the market and put a buy limit buy above where the EA had entered and a sell stop at the bid side (this is in reverse of what a trader would do – which would be put a stop loss limit on the ask side) the program would then run to the stop, at the last moment… it would flip the script on the chart and cancel, then simultaneously put a limit order (take profit) the market could be lead around by the nose all day long – then my platform would “go to sleep” with no market volatility on either side.
Then, a few days later after their “updates” the market would be in vicious whipsaw… but I wasn’t watching the markets, I was watching a computer program… everything on your platform is a prop.
This is in addition why some RFED brokers accused and took profits from traders who “injected price” into the platform – cause the platform was the market – and someone figured how to manipulate it to inject a better price (a glitch in the software – much like a video game hack).
The broker claims seemed so ridiculous cause you thought “who could manipulate FOREX from their own platform?” You weren’t, you were just manipulating your own feed…
Some foreign currency contracts are traded Off Exchange?
They make it sound like it happens occasionally instead of 100% of the time for all retail customers with less than 10 million in assets.
All simulated trading groups have to be registered as a FCM. Therefore, all RFED FCM registered entities are trading on gaming systems. Not the real foreign exchange.
If you want the truth about your broker - just ask them - are you FCM registered? If they say yes- close your account unless your willing to loose the money - because these games are programed to always make you loose in the end… Always!!
OTC (over the counter) = means trading on a gaming system - like online poker against your personal computer- no other real players are involved.
Off-Exchange is simulated trading no actual transactions are occurring between you and other traders. You are trading against a computer program written by the individual firm your trading with or against a single RFED simulated trade group hired to act as the counter party to all transactions - to avoid having to state that they are their own counter party, done to further trick people.
Retail market – simulated trade market that is a virtual game.
(FCM) Futures Commission Merchant is an entity that solicits or accepts orders to buy or sell futures contracts, options on futures or retail off-exchange forex contracts* and accepts money or other assets from customers to support such orders.*fcms that are not primarily and substantially engaged in on-exchange futures business activities must be registered as RFEDs to act as the counter party to a retail off-exchange forex transaction
(RFED) Retail Foreign Exchange Dealer is an entity that acts, or offers to act, as a counter party to an off - exchange foreign currency transaction with a person who is not an eligible contract participant.
If your trade broker/platform/agent is a RFED it means their primary business is conducted off-exchange and they are acting as the counter party, if they say they aren’t their own counter party - ask them who it is. A new trend is to be each other’s counter party to hide the nature of their business.
FXCM acted as counterparty for Gain Capital… Gain Capital acts as the counter party for another group…
Even the devil himself would have cringed when the first version of this plugin was made available for the Metatrader platform. Metatrader is the most commonly used Forex trading platform in the world. Its not the best but its everywhere. As a trader, you can’t avoid it.
Every broker, when they sign up to become a broker have to get an MT4 or MT5 license from Metaquotes Software, the guys who produced MT. Typically you don’t deal directly with MT but through your liquidity provider or broker sponsor or whoever is helping you setup the brokerage. That intermediary is the one that gleefully gives you the option of whether you wish to run a “B-Book” brokerage or an “A-Book” brokerage.
What? What’s the diff? Well the diff is this:
A-Book means a real ECN or STP broker such as us.
B-Book means a dealing desk.
These scumbags then go ahead and make a presentation to you about the benefits of running a B-Book and how it is just “the most powerful money making machine on the planet” – you bet it is…
In a B-Book brokerage what happens is that instead of your trades being passed onto the liquidity provider (which is what is meant to happen), it is handled internally by the brokers own dealers. These dealers have much more information about the price movement and control over the trading conditions compared to you. They can, at the flick of a switch turn the market against you (as you saw in the example above) and pocket the loss you make as their profit.
Now as technology has evolved, brokers have become more and more greedy and decided that they no longer wish to maintain a desk full of dealers messing with your trades so they got developers to build a “Virtual Dealer” plugin that fits into MT platform and does everything a real dealer would do…just that its all automated now.
I was offered this plugin by someone I hired to consult with when I was setting up the XXXXXX brokerage. The cost was a mere USD 8,000 one off. They were going to charge me $3 for every lot traded through this plugin. The guys even presented me with a spreadsheet of calculated numbers based on 300, 500, 1000 and 2000 traders in the brokerage. The numbers were mind-boggling. So why didn’t I take it? Because I have some conscience left in me. I don’t need to make millions. I am happy to make whatever I make from the spread I give to my traders. This is risk free for me and I don’t have to hate myself for literally stealing people’s hard earned money and look myself in the mirror the next morning. I will sleep better and earn the respect of my peers. That’s why I didn’t take it.
Do you want to know what else this Virtual Dealer plugin can do?
SLIPPAGE, LATENCY & EXECUTION DELAY
Dealing desk brokers have an allergic reaction when they see you’ve figured out a way of making money from the markets. Particularly they hate high frequency traders, algorithmic traders, scalpers and most of all latency arbitrage traders. Why? Because all these strategies have a high win rate in general.
Enter the SLED protocol or Slippage, Latency, Execution Delay protocol.
There is a manual out there that talks about “how to protect your brokerage against smart traders”. That manual (which I have seen with my own two brown eyes) provides a “best practices guide” to understanding how these traders can be stopped dead in their tracks using the tools available to a broker.
This is also something that is handled by the Virtual Dealer Plugin in some brokerages.
How does it work?
The SLED protocol has systems that detect the speed and ratio at which your algorithms or your Eas are placing orders. They then calculate the win rate. Based on all this, they analyse your dependency on slippage or execution time for a successful trade.
If you’re trading the 1 hour candle and holding positions for a long time, then the SLED protocol is not interested in you. The virtual dealer or the Levels manipulator will catch you out. The SLED protocol is mainly for traders that rely on fast execution and low/no slippage for a high win rate.
One such trading strategy is latency arbitrage. In order for your latency arbitrage EA to be successful, you need very low latency and almost no slippage. Only then you’re going to make money from Latency Arbitrage.
I’m a big fan of Latency Arbitrage and have used that strategy for a long time but with little success,…why because of 3 Russians who have built an anti-arbitrage plugin for MT. They now have a way of spotting an arbitrage trader (not just latency arbitrage but other types of arbitrage too) and stop them from winning.
There’s an Anti-Arbitrage plugin, an anti-scalper plugin, and many other plugins to combat smart traders. If the SLED protocol cannot easily determine which type of trading style you’re using, then it falls back to its default setting which is to either force manual execution of your trades (very unlikely) or add a permanent execution delay of X milliseconds for every request you send.
Imagine being a trader. You have an algo that you saw doing really well in demo account. You went live and the sucker doesn’t work anymore. You go back and check your algo and in the process you keep changing your settings until you win. After some time your algo is well and truly stuffed because you don’t know how many changes you’ve made and which change had a positive affect. See how the SLED protocol gave you the bunta?