highbury fx
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someone who tries to take advantage of a price that is slow to update. usually by fractions of a second.
someone who tries to take advantage of a price that is slow to update. usually by fractions of a second.
darktone
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hi highbury, ive a few questions.
Slippage on market and stop orders exist in any market although slippage on limit orders exists in synthetic markets only (i think 😛)
1) How would you treat a constantly profitable limit order only client who trades with you respectfully. Would there ever come a time when you would negotiate / restrict / remove this situation for the client. Ie so as to protect relationships with your LPs perhaps.
2) Would you or have you ever witnessed a broker coat tailing a profitable client who they deem to be a low risk safe pair of hands.
3) Aside from the clients who exploit your pricing (rely on latency / no slips to profit etc). Whats the general view of broker to client, is it fair to say you always want them, profitable or not.
4) Do your LPs have or every request trading data of individual clients, do they ever pressure you to give a particular client the elbow.
Cheers for doing this btw 👍
Slippage on market and stop orders exist in any market although slippage on limit orders exists in synthetic markets only (i think 😛)
1) How would you treat a constantly profitable limit order only client who trades with you respectfully. Would there ever come a time when you would negotiate / restrict / remove this situation for the client. Ie so as to protect relationships with your LPs perhaps.
2) Would you or have you ever witnessed a broker coat tailing a profitable client who they deem to be a low risk safe pair of hands.
3) Aside from the clients who exploit your pricing (rely on latency / no slips to profit etc). Whats the general view of broker to client, is it fair to say you always want them, profitable or not.
4) Do your LPs have or every request trading data of individual clients, do they ever pressure you to give a particular client the elbow.
Cheers for doing this btw 👍
highbury fx
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hi darktone
1. limit orders normally suit brokers, theyre a take profit instruction (usually) and the emotion of it being filled is much better than when a stop is filled. brokers therefore get far fewer complaints about limit fills than stop fills. the difficulty is limit orders at spreadbet firms are often one touch full amount and that makes it hard if the price is touched once and then retreats - the client may expect the full amount to be done but the broker may have only managed to hedge some of it. as an stp broker the only concern I have with my clients making money is if they upset our lp providers and that may need to be addressed. i'd address it by talking to my lp's and letting them know we had a regularly profitable client that was trading this way. if the client was materially good, ie, his profits regularly wiped out the thousands of other trades from the 'normal' client pool we would look to route his business to an anonymous liquidity stream. we'd be upfront with the client and tell him he was being priced from different liquidity and would he be happy with that. if he wasn't we'd have little alternative but to tell him we cannot accept his business anymore. this has happened to me only a handful of times previously.
2. if a B book firm hedges a profitable client they are effectively coat tailing him by not assuming the risk. systems today allow brokers to hedge, part hedge or over hedge a particular client or product. I've never done it as I don't like the practise, it isn't my model. I never took a position, I always inherited the other side of positions from my clients. STP firms are allowed no market risk and therefore cannot coat tail.
3. we always want as many clients as we can get. we do not want clients that need to be managed individually unless they are game changing. we want clients that slot in to our business and form part of a mass model enterprise. we will make money from clients who are profitable so we still want those types of clients. our lp's understand they need to take the bad as well as the good. the risk to the lp is that they get more bad than good.
4. they never request the data. we cant give that to them. our lp's deal with us and our clients deal with us. therefore the only client that our lp see's is us. they cannot identify any particular client individually unless we send those clients trades down a different pipe. it would still be in our name but it would be a heads up to the lp that they are on the receiving end of what is potentially toxic business. an lp wouldn't tell us to get rid of a client but they may tell us to take their pricing away from the blend for that client.
tar
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May i state the bleedin obvious :
For traders with a small account , trade cfds or sb until you grow your account , until then there will be no worries i am sure , then move to DMA , this has to happen sooner or later if you are serious about trading .
For traders with a small account , trade cfds or sb until you grow your account , until then there will be no worries i am sure , then move to DMA , this has to happen sooner or later if you are serious about trading .
joseph1986
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highbury, thanks for taking the time to answer questions.
My question relates to volume. In relation to the rare amazing traders what is the frequency of days they trade? I've come to conclude if you trade every single day the house always wins (just like a casino). I've figured at best you get about 16/20 days the rest (maybe more) are completely random....june 2016 is a perfect example of several random days. My other question is what are the characteristics of these amazing traders in terms of trading the first hour of market open? Do they open their positions right away or wait? Lastly on days like the last 3 days where markets shot straight up.....with no end in sight for a pullback...do you notice anything strange the next day in the first few hours?
My question relates to volume. In relation to the rare amazing traders what is the frequency of days they trade? I've come to conclude if you trade every single day the house always wins (just like a casino). I've figured at best you get about 16/20 days the rest (maybe more) are completely random....june 2016 is a perfect example of several random days. My other question is what are the characteristics of these amazing traders in terms of trading the first hour of market open? Do they open their positions right away or wait? Lastly on days like the last 3 days where markets shot straight up.....with no end in sight for a pullback...do you notice anything strange the next day in the first few hours?
highbury fx
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Hello Joseph
These ' rare amazing traders' tend to sit in their positions for much longer than intraday traders. they will have a position open most of the time. Unlike an intraday trader they wont be so sensitive on spread but they will pay more in rollover costs. they don't tend to concentrate on dealing on opens but they will have a position on for the open.
don't notice anything strange anymore, I've come to expect the unexpected and to look on the down side more often than the upside.
tar
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So let me ask you this , does your previous reply to darktone's questions also applies to long term/position traders ?
highbury fx
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i want all types of traders.
we'll be able to make money out of every client we have but wont necessarily want to continue providing services for some traders once we have evaluated their style. long term position traders aren't worth much to me in terms of spread but they are a valuable group of clients.
highbury fx
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Hi Kalott
During 2016 our clients done best in Commodities, followed by Indices and then FX.
Interesting that that is practically the inverse order of spreads - traders seem attracted like moths to the candle to fx because of the spreads available.
In my opinion, more seasoned traders with deeper pockets tend to take longer term trades where spreads are wider (ie commodities), as spreads are not the main consideration for the attraction to the instrument.
PS thanks for all your input highburyfx - I've learned a lot about the business from the brokers end which helps my own perspective.
Hi HighburyFX,
I trade with a Straight Through Processing broker using MT4 and experience a lot of 'off quotes' messages in the log when entering market orders and closing orders. Their Tech Support have told me this is caused by the Liquidity Provider not accepting my price.
Is this something to do with 'Last Look' by the LP?
Can you expand on what exactly 'Last Look' is all about?
Thanks
I trade with a Straight Through Processing broker using MT4 and experience a lot of 'off quotes' messages in the log when entering market orders and closing orders. Their Tech Support have told me this is caused by the Liquidity Provider not accepting my price.
Is this something to do with 'Last Look' by the LP?
Can you expand on what exactly 'Last Look' is all about?
Thanks
highbury fx
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Hi Leemo
STP (A book) brokers will hedge wherever the market is then add their minimum capture and fill their client.
B book brokers will approve trades that have moved from the execution price within a set tolerance. That tolerance is the difference between where the deal was trying to be done and where the price is now. You need to take a 'last look' at the live market to determine whether the trade can be executed within the permitted tolerance.
It sounds like you're doing a bit of scalping during big moves and failing the tolerance limits. Your STP broker will be able to explain to you what their tolerance is which will allow you to decide whether to accept it and stay or move to another STP broker and get all your deals done albeit at levels you may not be profitable at.
I believe the tolerance you mentioned above is the 'deviation by default' on the MT4 platform. I have that set to a ridiculously high number so that my trades can be filled. I'm generally looking to make 30 points on dax cfd so not really scalping, by my definition. Still a lot of trades don't get filled. Very frustrating 🙁
I now know why I had so many rejected orders.
http://www.zerohedge.com/news/2017-...ker-fxcm-shut-down-and-permanently-banned-nfa
http://www.zerohedge.com/news/2017-...ker-fxcm-shut-down-and-permanently-banned-nfa
Seems like FXCM's definition of 'last look' is for the Liquidity Provider to determine whether the initial move is for or against them. If against, then don't allow the trade. FXCM will give this LP lots of business in return for kick backs.
This is an amazingly crooked business 🙁 One way or another the broker takes the other side of the trade, whether DD or STP 🙁
No wonder the share priced went down by more than 50% on 7/8 Feb!
So they mot only have pissed off the clients bu also investors! 👎
and people are taking class action! Good on CFTC for taking such an action 👍
Silver lining is they have not gone out of business and clients will have their money intact becasue with FXCM being an FCM there was no SIPC protection in USA !🙁
