Issue of guaranteed order executions
Hi guys
I came across this thread & certainly info GCI financial helped me to stay away from them. However, I wanted to run some other points across this board.
Looking at so many brokers giving away fixed stop losses, I tried to work out the crux of the matter. Now this is all my thinking & observations. I am not in business to confirm it.
Now if I was a broker, why would I offer guaranteed stop losses? The answer is to offer the little guy peace of mind. And of course, since everybody else if offering it, then I will HAVE to, or you guys will never come to me.
Now should I REALLY be offering guaranteed stop losses? Think about it logically. I shouldn't be. Say something big happens tonight! Like 911 or something similar. Say EUR/USD was tanking for last 2 weeks. Guess where will most of the bets be? Everybody & their granny will be short the Euro & long the USD. So if dollar crashes tonight & next we know EUR/USD is 500 pips higher.
Now expand this scenario beyond our little sleazy merchant in Belize to thousands of forex brokers. Now will there be guaranteed execution? What do you think??? Think again???
I say there is a possibility there can be! Why? Our broker never transferred your orders to the big market. He was holding the other side of the trade for you. He knows 90% of you are gonna lose the money very soon. So he has 90% chance of success in each and every account he opens. So what should our brokerage be called? Its a bucket shop!!
Why else is there offer of a mini account everywhere? Give me a break! Trading the most volatile market with 300 bucks? Its just because they want your money. Anything will do. One dollar will do as Oanda will tell you. I think one broker must have started the concept of mini account, now you gotta have it. They need to provide it cos the little guy can only afford $300. Its like the populist policy of one government. None of the governments after them can change that.
Why doesn't futures industry offer guaranteed stop losses? Why not stocks? Well they can't. Its a marketplace. For you to sell, there has to be a buyer. Yes the marketmakers provide liquidity, but no guarantees mate. How could they have afforded those mercs parked in exchange car parks, if they were to give you guarateed fills. Its all about fill? Where's my fill, dear broker? - I don't know sir.
Right, back to the topic. I don't think my broker can give me guarantees unless he is trading against me. And I dont really like that idea that I have conniving broker as well planning my downfall. So whats the answer? well, I'll leave that open. Lets see if we can work it out.
Sorry for the long winded post. Couldn't resist it.
And Sean, I couldn't work out who 'IB' is. Can't be interactive brokers if you are trading forex.
Regards