High-Frequency Traders Descend onto Forex Markets - Currency Futures | futures io social day trading
futures io futures trading


High-Frequency Traders Descend onto Forex Markets
Updated: Views / Replies:4,903 / 24
Created: by kbit Attachments:0

Welcome to futures io.

(If you already have an account, login at the top of the page)

futures io is the largest futures trading community on the planet, with over 90,000 members. At futures io, our goal has always been and always will be to create a friendly, positive, forward-thinking community where members can openly share and discuss everything the world of trading has to offer. The community is one of the friendliest you will find on any subject, with members going out of their way to help others. Some of the primary differences between futures io and other trading sites revolve around the standards of our community. Those standards include a code of conduct for our members, as well as extremely high standards that govern which partners we do business with, and which products or services we recommend to our members.

At futures io, our focus is on quality education. No hype, gimmicks, or secret sauce. The truth is: trading is hard. To succeed, you need to surround yourself with the right support system, educational content, and trading mentors – all of which you can find on futures io, utilizing our social trading environment.

With futures io, you can find honest trading reviews on brokers, trading rooms, indicator packages, trading strategies, and much more. Our trading review process is highly moderated to ensure that only genuine users are allowed, so you don’t need to worry about fake reviews.

We are fundamentally different than most other trading sites:
  • We are here to help. Just let us know what you need.
  • We work extremely hard to keep things positive in our community.
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts.
  • We firmly believe in and encourage sharing. The holy grail is within you, we can help you find it.
  • We expect our members to participate and become a part of the community. Help yourself by helping others.

You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

Reply
 
Thread Tools Search this Thread
 

High-Frequency Traders Descend onto Forex Markets

  #11 (permalink)
Membership Permanently Revoked
 
Futures Experience: Intermediate
 
Posts: 1,176 since Nov 2009
Thanks: 221 given, 844 received


JetTrader View Post
For the pure retail trader, there are probably only three places they can go to escape most of the Bucket Shop tactics

care to point out the three places? that would help a lot of the forum members...

Reply With Quote
The following user says Thank You to sysot1t for this post:
 
  #12 (permalink)
Membership Permanently Revoked
 
Futures Experience: Intermediate
 
Posts: 1,176 since Nov 2009
Thanks: 221 given, 844 received

for those that might be wondering... a yard = billion ... and yes, retail is in no way trading yards... but if I was a "retail" customer with a $100 million in the bank (like that guy from east hampton and his atm receipt) .. and the ability to trade a few yards in terms of notional value, I wouldnt be trading the underlying and rather trading vanillas and exotics (KIKO's/RKOF/etc) with a desk like CS/DB/MS/GS/etc., vs. a bucket shop, that would give me access to close to EBS rates... so "retail" definition can vary widely as well...

everything else, I agree with and I have tried to get others to see it as well...


JetTrader View Post
Unless the super (do-it-to-the-max) hedge funds all decide to become high frequency sources of bid and ask in "retail" FX, then the impact if any will be negligible at best. If you want to know how the money flows into and out of FX then you will probably want to stay on top of the Triennial BIS Report: http://www.bis.org/publ/otc_hy1011/triensurvstatannex.pdf.

The one thing I noted about the HFT report above, is that it never "defined" HFT from a technical standpoint. Anyone can be HFT, depending on the definition and the truth is retail FX, since the 90's has had what one could call HFTs. What the report did not put into perspective was the relationship to number of trades to notional value. If that analysis had been done, then it would have been clear in the report that: 1) HFT has been in retail FX for quite some time now, and 2) The projected increase for retail FX according to BIS in 2007, would have easily accounted for the influx of these new HFTs.

As you already know, all of FX is OTC. From the Institutional Platforms down to your basic PayPal Bucket Shop FCM, accepting and opening accounts that allow traders to trade with "$1." (I actually ran across a Bucket that advertised this the other day - believe if or not). So, most of the HFT class that the report refers to will have opening balances that will afford them to "trade-up" so-to-speak and onto a either low-end institutional platform (really a high-end FX retail broker), or a straight-up institutional platform using a PM to access a more realistic pool of FX liquidity, that is closer to true Interbank that anything a pure retail FX trader will ever see.

And, that brings up another point. Most (the vast majority) of current retail FX traders who think they are trading "Interbank Rates" because the marketing company disguised as a Retail FX Bucket Shop told them so, have no idea that neither their Bid, nor their Ask, ever sees the light of day in the real Interbank. And, that is because (as you know) all of the FCM/Retail Broker/MM platforms are receiving "dealing rates" through their "dealing desk" (whether they say they have one or not) that come from a proprietary liquidity pool under contract with that FCM or Retail Broker.

Real interbank transactions move in Yards, notional values that are simply beyond the credit reach of the retail FCM crowd. So, they 'make a market' for the smaller retail trader, algorithmically generate their spreads to appear "stable" and promise their proprietary liquidity pool a certain "volume" per day/week/month/year, while on the other hand they promise their customers (retail traders) "guaranteed low spreads and lightening quick STP execution" - which is a totally misleading statement about what's really going on behind the scenes.

This brings up the issue of how the FCM/Retail Broker goes about "off-setting" the trade to their proprietary pool. More like handing-off, than real off-setting, because each one of these guys are basically taking the other side of the trade and acting as counter-party, before any off-set happens - if the truth be told. All the while, the small retail guy thinks that he's really dealing on Interbank. One would need a PM for that, or one would need to become a bank, which is highly unlikely.

However, after saying that - if you look at these proprietary pools under contract with each retail shop, you will note that for the most part they are all eating from basically the same table. Those transactions are just not being centrally housed and there is no central clearing. To demonstrate this, you can go visit the Divisa Capital FX website (a retail FX intermediary) and compare its list of liquidity providers to say, that which you would find on the FXall institutional platform. They share some of the same sources of liquidity, but not under the same contract.

So, I don't expect much impact at all from the influx of HFTs, because I don't expect any of them to go running to their nearest PayPal enabled retail FX broker, which is where they'd have to end up in order to impact the average retail trader. I don't have anything against retail traders, I was one for a very long time and I still have 5% of my funds on a retail platform for other purposes not related to production trading.

I just don't appreciate how the retail side of the business has set out to hurt the smaller traders by using tactics that undermine the success of the retail trader. For the pure retail trader, there are probably only three places they can go to escape most of the Bucket Shop tactics, but I'm almost certain the HFT types the report refers to, won't fit that trader profile and should be able to escape by way of initial starting balance, a I stated earlier.

Nice thread, good question. Cheers!


Reply With Quote
The following user says Thank You to sysot1t for this post:
 
  #13 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received

Yen Flash Smash Part Two


From Zerohedge:

Just like right after Fukushima the USDJPY waited for the illiquid 5pm session to collapse, here comes part two. Have the FX HFT algos now completely taken over? A 100 pip move is catastrophic for most levered FX desks. It is time someone figured out what is casuing these periodic plunges. Sure enough, someone will gobble this up and hopefully make some money, unless there is actual news that just sent the Yen to near all time record highs.
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).

And another perspective:
Please register on futures.io to view futures trading content such as post attachment(s), image(s), and screenshot(s).


Select ratingCancel ratingPoorOkayGoodGreatAwesome

Reply With Quote
 
  #14 (permalink)
Elite Member
CA
 
Futures Experience: Master
Platform: Marketdelta and Ninja
Broker/Data: Velocity
Favorite Futures: NQ
 
Posts: 670 since Apr 2010
Thanks: 64 given, 521 received

I used to read his posts... But i'm starting to believe that the guy zero hedge is probably full of hot air. He makes too many assumptions about things which i really don't believe he knows anything about. Every post he makes is " this is the end of a world", and then he posts these fancy falling off a cliff charts. In the end, nothing materializes.

Reply With Quote
 
  #15 (permalink)
Elite Member
Aurora, Il USA
 
Futures Experience: Advanced
Platform: TradeStation
Favorite Futures: futures
 
kbit's Avatar
 
Posts: 5,872 since Nov 2010
Thanks: 3,301 given, 3,332 received


Michael.H View Post
I used to read his posts... But i'm starting to believe that the guy zero hedge is probably full of hot air. He makes too many assumptions about things which i really don't believe he knows anything about. Every post he makes is " this is the end of a world", and then he posts these fancy falling off a cliff charts. In the end, nothing materializes.

I don't know the extent of Tylers knowledge on various subjects but he does post a lot of doom and gloom that's for sure.

Reply With Quote
 
  #16 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
Posts: 46,240 since Jun 2009
Thanks: 29,352 given, 83,231 received


kbit View Post
I don't know the extent of Tylers knowledge on various subjects but he does post a lot of doom and gloom that's for sure.

Doom/gloom, gossip, etc - its what sells papers, magazines, no reason internet is different.

Mike

Due to time constraints, please do not PM me if your question can be resolved or answered on the forum.

Need help?
1) Stop changing things. No new indicators, charts, or methods. Be consistent with what is in front of you first.
2) Start a journal and post to it daily with the trades you made to show your strengths and weaknesses.
3) Set goals for yourself to reach daily. Make them about how you trade, not how much money you make.
4) Accept responsibility for your actions. Stop looking elsewhere to explain away poor performance.
5) Where to start as a trader? Watch this webinar and read this thread for hundreds of questions and answers.
6)
Help using the forum? Watch this video to learn general tips on using the site.

If you want
to support our community, become an Elite Member.

Reply With Quote
The following user says Thank You to Big Mike for this post:
 
  #17 (permalink)
Trading Apprentice
USA
 
Futures Experience: Intermediate
Platform: TradeStation
Favorite Futures: Futures
 
Posts: 3 since Aug 2011
Thanks: 0 given, 0 received

In theory, HFT is easier with forex than with stocks or futures. All the stock HFT guys are in the Nasdaq building and competing with each other. Same with the futures guys in the CME building. Forex doesn't have a building but the banks all trade through the same network (SWIFT?). If you opened broker-dealer accounts with a number of banks ($5M a pop) and set up a server near the data hub (Virginia for SWIFT), you'd see the bids/offers ms. before the NY banks and you could easily front-run them.

Reply With Quote
 
  #18 (permalink)
Membership Permanently Revoked
 
Futures Experience: Intermediate
 
Posts: 1,176 since Nov 2009
Thanks: 221 given, 844 received


Dennis H View Post
In theory, HFT is easier with forex than with stocks or futures. All the stock HFT guys are in the Nasdaq building and competing with each other. Same with the futures guys in the CME building. Forex doesn't have a building but the banks all trade through the same network (SWIFT?). If you opened broker-dealer accounts with a number of banks ($5M a pop) and set up a server near the data hub (Virginia for SWIFT), you'd see the bids/offers ms. before the NY banks and you could easily front-run them.

you you really should educate yourself before posting this kind of stuff...

Reply With Quote
 
  #19 (permalink)
Trading Apprentice
USA
 
Futures Experience: Intermediate
Platform: TradeStation
Favorite Futures: Futures
 
Posts: 3 since Aug 2011
Thanks: 0 given, 0 received


sysot1t View Post
you you really should educate yourself before posting this kind of stuff...

Okay, please educate me. I'm a noob here (although hardly a noob to trading) and I'm always eager to learn new things.

PS, I have a friend who's doing HFT forex but I'm only making a WAG about how he does it. For obvious reasons, he won't say much other than the $5M/bank thing.

Reply With Quote
 
  #20 (permalink)
Banned: trolling
NYC + NY / USA
 
Futures Experience: Advanced
Platform: "I trade, therefore, I AM!"; Theme Song: "Atomic Dog!"
Favorite Futures: EMD, 6J, ZB
 
kronie's Avatar
 
Posts: 798 since Oct 2009
Thanks: 216 given, 498 received



sysot1t View Post
you you really should educate yourself before posting this kind of stuff...



agreed!

Reply With Quote

Reply



futures io > > > > High-Frequency Traders Descend onto Forex Markets

Thread Tools Search this Thread
Search this Thread:

Advanced Search



Upcoming Webinars and Events (4:30PM ET unless noted)

Jigsaw Trading: TBA

Elite only

FuturesTrader71: TBA

Elite only

NinjaTrader: TBA

Jan 18

RandBots: TBA

Jan 23

GFF Brokers & CME Group: Futures & Bitcoin

Elite only

Adam Grimes: TBA

Elite only

Ran Aroussi: TBA

Elite only
     

Similar Threads
Thread Thread Starter Forum Replies Last Post
Day traders moving away from high-frequency, computer-driven strategies kbit News and Current Events 0 May 13th, 2011 08:02 PM
High-Frequency Traders Elbow Aside Day Traders – What do you think about this? Arpad Traders Hideout 7 December 17th, 2010 11:42 PM
HFT High Frequency Trading tracking timmyb The Elite Circle 32 December 12th, 2010 03:11 AM
High-frequency Trading fiki The Elite Circle 17 January 15th, 2010 11:17 PM


All times are GMT -4. The time now is 11:21 AM.

Copyright © 2017 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts
Page generated 2017-12-14 in 0.17 seconds with 19 queries on phoenix via your IP 54.227.51.103