No - it is not. You are equating Location with Volume and that is not correct. Not by a long shot. It misses the entire point. The BIS report does not conclude anything based on a longitude/latitude transactional model of some sort. That's a very simplistic look at what the graph actually means. It is a Currency Type specific graph that you just posted, not a Logistical implication of where the transactions are actually taking place, who the counter-party to each transaction happens to be and in what manner each transaction is being initiated. Again, you can't look at that graph and conclude anything specific about Retail Forex transactions -vs- Time of Day they occurred. I'm very surprised that you did not understand that (shocked).
Wait a minute, slow down. You are conflating facts. My conclusion was that based on my observations of the FXCM platform, I was noticing plenty of times where spreads were widened just before a significant move and that such widening did not always take place during the daily swap period. That is a distinction with a definite difference and not the other way around.
I just posted yet another pic showing that outside of the swap period, the FXCM spreads were holistically silly in terms of their wideness. If you check this intermediaries FX prices Monday through Friday (not weekends), you will not a major difference in the spreads as compared to FXCM. Sure, they charge a commission - but the commission as compared to the actual Pip Cost derived from the higher spreads that FXCM "charges," proves to be a rather small concession.
Real Time Forex Spreads.
And, I'm 100% certain that each bank in the FXCM liquidity pool knows absolutely nothing about what each other is quoting - right?
So, I don't know how this business works? You describe Encoded Slippage to me and somehow, I'm the one not getting it?
Did you not read my post. I specifically said that I never get the off-set coming the other way. It never is the case that my filled level is an improvement over the quoted price on my screen. I specifically said that IF there was a true fairness in the price stream, then the instances of both
Negative and
Positive Slippage would return straight back to the mean of
Total Slippage.
I would not continuously see Negative Slippage in the aggregate to a level that dwarfs Positive Slippage in the aggregate. Unless you are prepared to tell me that Negative Slippage on the FXCM platform has left sided skew coupled to positive kurtosis, then a return to the sample mean should be exactly what Total Slippage does in the long run.
Positive Slippage is also one of the risks that you assume equally. You can't have it both ways. If the pricing is fair, than slippage should moments of both left and right sided skew and it should establish a mode that is readily identifiable through statistical analysis. There cannot possibly be a case where Negative Slippage sustains perpetual positive kurtosis in a fairly priced market. Either you are playing me for a fool, or you don't understand your own business half as well as you think you do.
As positive kurtosis in the sample set increases it would do so to an historical peak that should be readily identifiable. That peak would be part of a sub-set of historical Bid/Ask spread data that would likewise have a density probability associated with it. You should be able to calculate the probability for both the Location of increased spreads about its Mean, as well as its Frequency - or Rate of Occurrence over a specified time frame.
This is not rocket science and the data simply does not lie. I'm seeing not only highly skewed instances of negative slippage, but sustained highly skewed instances of negative slippage and that my dear friend is supposed to be statistically impossible in a fairly/freely priced market. Stats 101.
FXCM controls both the Bid and the Ask price that are seen on my platform! FXCM does this through a computed algorithm that determines what the spread should be based on its already determined per transaction revenue model. FXCM is not charging a "stated commission" but the inverse is exactly the same net/net result. FXCM makes its money by artificially widening the spread and pocketing the differential - Wholesale to Retail Pricing.
I'm not blaming FXCM for doing this - that's not the point. You keep missing the point. The point is the resultant absurdity of the spreads and the perpetually left sided skew coupled with endless positive kurtosis in the Total Slippage. That's my point.
Those states for Positive Slippage don't come anywhere near my stats for Positive Slippage on the FXCM platform. Not even remotely that close. I'm seeing virtually 99% negative slippage and that is not supposed to be possible in a fairly/freely priced market.
If they are seeing what each other is quoting (and they do) then much of that NDD gain is negated by the fact that they can "fix" prices within a range and never have to speak a single word to each other to do it.
To prove all of this - why not simply switch the FXCM model to a pure Commission basis and then let the providers fight it out over who gets the Retail business by truly keeping their spreads somewhere closer to the surface of the earth, as opposed to the other-worldly type of spread scenarios I encounter far too often on the FXCM platform. Encode a
true Depth of Market window into the platform (not the fake one used for marketing hype on the HF platform that FXCM offers). This would give Retail traders an opportunity to trade inside the pip on far more occasions. If a couple banks decided to widen their spreads to epic levels, then the Retail market (through a true DOM) could simply decide to go where the pricing reflects sanity. Or, encode a Spread Monitor window into the platform that showed the actual spreads of each provider (even better). That would take care of DOM. In fact, it would create a significant portion of the DOM.
Sit back. Collect the reasonably priced commission and let the Free Markets take care of themselves. Stop manipulating the thing to death. Show me ALL the spreads. I will go where I see the best spreads and the level of liquidity that meets my trading needs. That will do more to create competition among your providers than anything else. After all - you implied that creating competition among your providers is something that FXCM is concerned about for its customers sake. Well, prove it. Go commission basis, expose the spreads and the DOM and let the chips fall where they might.
Still think I don't know anything about this business?
