Hello dear friends. I ve been reading up on the school of pipsology and have a basic understanding of how things work, but i feel i have a few questions that have not been adressed. Mainly how does a transaction work in the sense that …the open of a transaction is clear, you propose to buy x sum of dollars in exchange for euro…but in order to close a deal doesn;t it have to exist a mutual consensus of the closing of a deal…how exactly can you instantly close a transaction all by yourself , don t there have to be at least 2 people willing to close a deal (at the same time)…this boggles my mind.
also, if i want to buy 500 dollars in exchange for euro…if there is a person that wants to sell 150 dollars in exchange for euro a person who wants to exchange 300 dollars in exchange for euro and one that wants to exchange 600 dollars for euro…will the broker take 150 dollars from one person 300 from one person and 50 (from the person with 600) in order to give me 500 dollars ? still i don t really understand how the hell can you close transactions unilaterally.
thanks but i would like a bit more complete explanation if you can give me one. if i want to sell a house the transaction is closed only when both parties have signed the contracted…here it seems to be closed when only one party has signed the contract. in my logic there are only 2 ways of doing it both flawed if one part closes the deal than the other part is forced to close the deal (or part of the sum involved in the deal) witch means if i open a transaction it can be fully or partially forced closed by someone else that closes their part …or you are closing the deal with your broker (witch means the broker can either gain or lose in a transaction)
What you say is true, but what you are “Trading” is not “Real” like a house - it’s just a bet - like what horse will win the 2:30 at Doncaster.
You don’t own the horse, and you don’t even know the owner, neither does the bookie. The only difference is that you can close your bet at any point in time, so you can still “Win” if the horse is in the lead - if it is in second place and you stop fancying it to win, you can close the bet for a small loss, but if it is limping along in last place, the bookie will only pay you a tiny amount. That is a big loss - such as trading “News” can make.
The chart you see on your screen is approximately what the “Real market” - where the “Real traders are” is doing. the bookie will pay out a win or take a lose from your account, according to when you tell him to. He actually takes a little money away from your “winnings” or adds it on to your “Losings” - This is the “Spread” and in theory it is his profit.
None of this has any human contact at all and you never “Own anything” - except a “betting slip” which is the moving position of your profit / loss on your screen.
Nothing really wrong with this - except if you get a “Bad broker” or he has a “bad software” in his computer. Why the industry promotes this romantic image that your money is actually changing hands in some “super trading floor” situation like on “The Wolf of Wall Street” - I don’t know - You’re just betting against a bookie mate.
“Because the “Other party” is a database on the bookie’s (broker’s) computer, which your account is linked to.”
that i can understand, but sorry, i don t find it a very complete answer…still not understanding how exactly does this imply consensus of the other party in a transaction.
i have 2 more questions if i may
1 why are you saying the odds are in his favour even more than a casino ( i tought trading is not gambling if you are clever at doing it)
2 if the chart doesn 't show trades what does the chart actually signify?
The broker acts as a bookmaker, he gives you absolute control (so long as you have sufficient funds) over the transaction - when you may enter, how much, when you exit, either partially or wholly - it’s all your decision.
The broker says that you unilaterally close the transaction when you choose, he will leave that entirely in you hands, if you close your part of the wager, he will close his, win or lose.
After a while of doing just that - you begin to feel that the market knows exactly when you are betting and deliberately chooses to turn around so that you lose every time.
In a way it is doing just that of course, but only because it is an expert in human psychoolgy !
or should you just bet the oposite of what people are thinking they shoud do? or does it actually transform in a game of who calls the signals and who calls the opossite of the signals resulting in gambling?
I don’t think that is necesarily true - in the sense we generally understand the word.
The bookie has a lot of bets going at any time, some of which will lose (most will lose most of the time) - but that is mainly due to the way the “Market” moves and the way we have been taught to trade it !
And stupid “Wisdom” like " A bird in the hand is worth two in the bush" and “Nobody ever went bust taking a Small profit” - Well in this game they are BOTH wrong !
A roulette wheel is random - the market moves in ways which are complicated and some think of as “Random” - but with a roulette wheel 50% of the time you win say the same amount as you stake (betting on black) - except for if it hits a Zero or 00 That is the casino’s edge.
The bookie takes his “Spread” - whether you win or lose, but you will see the market jump up for two or three bars - sometimes a lot more. What do you do in those circumstances ?
Now you need to read the babypips school and set up and trade a “Demo account”. Treat it like a computer game and learn it’s tricks and devices until you recognise some of them - that then can be “YOUR EDGE” - Just always remember the market is Not neutral - if it was any silly sod could make money out of it - It doesn’t matter whether it is “Rigged” or not - it will Feel like that !
Just bet against it until you can guess what it is going to do next, then you can learn to “trade WITH it !”
if you are trading (betting) with your bookie, than what does the chart signify if it doesn;t show trades? (because you and everybody is just betting with their bookie, devoid of any connections to other betters)
The charts are the records of some of the trades - because the markets are not centralised they vary a tiny amount depending on which trades the chart provider is working on - but don’t worry about that, if the difference was anything other than very small, “Arbitrage” would take place and the charts woud immediately be brought back “into line” - For our purposes, they are “near enough”.
Sorry to have brought that one up - lol
Hope this has helped to “Put your feet on the pedals” - I hope to watch your progress through the forum !
The ability to trade forex 24 hours a day 5 days a week is the service your broker provides you. This is similar to how your supermarket provides you the ability to buy groceries (though you can’t sell groceries back to them ) during store hours.
Supermarkets buy groceries from their suppliers at wholesale prices and sell them to you at retail prices. Similarly, forex brokers are able to buy and sell currency pairs at institutional prices, and offer you the ability to trade with them at retail prices.
Retail forex brokers can manage the risk on the other side of your trades in one of three ways, and each method has its pros and cons. We explain them further in this earlier discussion: Who is the counterparty in an exchange?
but if you are trading just with your broker (bookie) and everybody does the same…than how is the chart generated because as of my current understanding people just trade 1 on 1 with their brokers. or does the broker trade with other brokers and that’s how the chart is generated?
i hope my question is clear enough
this is my final question for now, i promise and thank you!
