Is it possible for a broker to give each client on their platform different price feeds? A broker with sufficient computing power could analyse a client’s trading style over a period of months and then supply price quotes that would make the client’s trading strategy fail no matter what he/she tries.
Truth is even though I use the same broker as say “Tom Jones”, I have no clue what his price feed looks like and he has no clue what mine is. The broker can take advantage of this isolation of clients from each other and give each client what’s gonna make them lose.
Who is monitoring the brokers to make sure they are not doing things like this? How can clients band together to protect themselves from this kind of shady practice if it exists?
Price feed levels cannot vary greatly from the underlying because it would leave your broker open to arbitrage.
If you suspect that your price feed is distorted then one simple way to cross-reference would be to open a demo account with another broker and compare.
For example, I have two other apps on mobile which I use to check prices when I am away from home, one has a small open account and the other no account at all. My main trading account is separate but also has a mobile app, which is a bit clumsy, hence the other two!
I do often check prices on each of these and I have never spotted anything other than very small variations between them.
Whether brokers adapt spreads to particular types of clients or as price approaches stops or targets, then that is another matter.
I would suggest that to be impossible. The only entity to gain from that would be the broker with your position and therefore the only source that would implement such an attempt would be your broker. How would they know which other feeds you are using to check?
Beside, I doubt any reputable, regulated broker would consider risking their licence for the sake of gaining your $50 - especially since 80% of traders lose their money without any such “help” from their brokers.
And even if you did feel you have been ripped off by such a hack and price manipulation then you can obtain a price history from other sources and check it out.
Simple answer - if you are that paranoid about your broker’s intentions, don’t trade.
Unless you’re trading big positions on a small account, it’s not even going to make a difference. There are so many references to a currency pair’s value out there that they’d get caught easily if it was more than a tiny amount.
Think I have a clearer idea on this now.
Both of the issues highlighted will likely not happened cos of arbitrage risks and the possibility of losing an operating license. It plain isn’t worth it in the end.
Hate to tell you this (Tom) but I looked at that other thread where that Russian dude (who was obviously trying to flog something because I see his last post was flagged) was posting and this isn’t impossible though I don’t think. If you think about the thousands and thousands of different price quotes and different brokers out there: logic dictates that it’s probably indeed possible to arbitrage between retail brokers with some speedy hardware and software in place. And really no different to what HFT algorithms do with orders on the exchanges.
Sure, its technically possible with the right software but a trader is far more likely to daytrade their money away before anything more exotic hits them. More risk of being mugged on the way back from the coffee shop.
I think if I was arbitraging my SB firm, their software would pretty quickly pick it up. That would be easier to set up than to carry out a hack I think - by trading I would effectively be giving the firm my fingerprints and the smoking gun.
I think that’s what the piece of software was that he tried to demonstrate actually. Now whether or not that was real trading on real accounts I don’t know. But I got the concept anyway. Not sure it’s something that I’d be interested in i.e. it’s not really trading is it. But then that’s just me (being dumb probably). And actually: I don’t think there’s any rules being broken either i.e. you’re only taking one side of a trade at one broker so no different from an EA I guess.
No, the T&C from my firm specifically ban clients from using unfair techniques - including
(i) using any electronic device, software, algorithm, or any dealing strategy that aims to manipulate or take unfair advantage of our Services;
(ii) exploiting a fault, loophole or error in our software, system, the Platforms;
(iii) collusion;
(iv) using trading strategies designed to return profits by taking advantage of latencies in a Platform, delayed prices or through high volumes of Transactions opened and closed within an unusually short period of time as compared to the ‘average’ client and/or targeting tick fluctuations rather than movements reflecting the correct underlying prices;
etc. etc.
Arbitraging would be definable under one or more of these. Remember they don’t have to prove you’re doing it, just find a trading pattern that resembles it.
