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High-Frequency Traders Descend onto Forex Markets
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High-Frequency Traders Descend onto Forex Markets

  #21 (permalink)
Posts: 3 since Aug 2011
Thanks: 0 given, 0 received

Tough crowd. I guess I'll go back to watching TS autotrade the futures for me. ES, YM, TF, EMD, NQ and 6S were all kind to me today. I see it's going to trade all the same ones tomorrow + GC -- its volatility is high enough that my intraday trend-following system has a decent chance of succeeding.

Last edited by Dennis H; August 23rd, 2011 at 11:48 PM.
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  #22 (permalink)
Posts: 1,176 since Nov 2009

Dennis H View Post
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.

I am no-one to educate you... as I am always learning myself..... but I can tell you that you are mistaken on your knowledge from my own first hand knowledge from my workplace.. will leave it at that...

if your friend is really doing HFT on FX... then ask him to provide you with a high level understanding.. he doesnt have to in that way explain any of his strategies but rather simple things... and $5M is notwhere near enough to trade at a cost effective level..

also, there is no such thing as colocating for FX.. you can aggregate all the feeds from the major networks and have a decent view of liquidity and things like that.. and reduce your latency by being closer to the networks you are aggregating... but the moment you try to arb, the opportunities are usually gone as they dont last all that long... how long? I have no idea.. there are tons of institutions that focus on FX... it is merely just getting more notice now, but it is something that has been done for decades...

I dont do HFT on FX, or HFT at all in the true sense of the word.. I only do swing on FX as I dont have the capital or funding required to deploy the overall tech and subscribe to all the networks.. and please note that I dont mean FXCM or MBT or anyone else like that...

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  #23 (permalink)
Market Wizard
desert CA
Trading Experience: Intermediate
Platform: NT7, TOS, TWS
Broker/Data: AMP, DT, TDA
Favorite Futures: CL,NQ,YM
Posts: 2,099 since Jul 2011
Thanks: 2,334 given, 1,664 received

Good thread. Interesting new stuff to learn about. I'm a newb to all this exchange jargon and process also. I'll just add that I've heard Al Brooks say on his live webinar that when he saw a bunch of consecutive small trend bars plunging up or down he attributed that to HFT. Interesting he said he welcomed more HFT as it would make the "price action" more "efficient" and clear. I don't know what to make of that. Barry Taylor on his emini-watch.com blog said his "better volume" and "better pro/am" indicators work better on the ES rather than the Forex Futures because there was more complete volume information on the ES while it was lacking on the Forex futures probably because of what you've all mentioned about various interchanging banks and foreign markets for the currencies. (I don't know enough about all this to put it in the correct terminology).

I remember back last year I forget if it was Oct or Dec. when the Japanese government did some infusion or something in order to devalue their currency or something, and I happened to be watching the usd/jpy when suddenly it took off like a rocket at Cape Canaveral!(or plummeted like a meteor? I forget.) I'd never seen anything like it until that time. I wonder if HFT had anything to do with it's sharp movement like if they prepared for the news announcement. I had no idea ; I wasn't watching, listening, or reading the forex news at the time.

And here's the "madhedgefundtrader.com" 's take on the August 8th crash and HFT:


Last edited by Cloudy; September 5th, 2011 at 05:36 AM.
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  #24 (permalink)
Posts: 85 since Nov 2010
Thanks: 25 given, 30 received

GFT Forex' Schlossberg: "HFT Is Destructive And Does Nothing But Frontrunning And Quote Stuffing" | ZeroHedge
(FX is too distributed)

people who don't know what HFT is. in ted.com is good video about it.
introduction video: http://www.ted.com/talks/kevin_slavin_how_algorithms_shape_our_world.html

Last edited by kk240; September 5th, 2011 at 07:05 AM.
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  #25 (permalink)
Edmonton, Canada
Posts: 187 since Apr 2011
Thanks: 12 given, 162 received

sysot1t View Post
care to point out the three places? that would help a lot of the forum members...

Been working (trading) for a while now and have not visited the forum very much lately, so I could not respond.


1) DCFX - Divisa Capital FX

You get DMA over a Currenex Hub with the best retail client/server deployment that I've seen so far. Current EURUSD spread is now 0.8 pips at 18:49:32 hours GMT. In fact, I have a hard time finding a better retail platform or firm to do business with. Trade execution is is sometimes faster than what I get on BARX (believe it or not).

In addition, DCFX publishes its liquidity pool out in the open - they don't hide their partner list. In fact, they put it on their public facing website. Lastly, and very important, they understand trading technology and they've built their Currenex Hub on the CX-AP java object model and it runs very smoothly - which is saying a lot given the J architecture.

2) CitiFx

While you still get the SAXO trading platform experience, which means higher spreads and a rather verbose trading platform for the retail environment, you also get a solid bank behind the platform and that scores points with me personally. I like the idea of trading with a bank and since Deutchabag bailed out on its customers, the door has been wide open for CitiFx to reap the rewards from those retail traders looking to do business with a real bank. I would have preferred that they had taken the time to build their own trading platform instead of the white label with SAXO, but I do understand the technical issues involved in doing so and how that surely played a huge role in their decision not to.

Overall, you can't rule them out of the class of better FX retail intermediaries in the business today.

3) LCG London Capital Group (stay away from spread betting)

For the retail trader, $25k might be a bit pricey to open an account, but you get access to come fairly decent liquidity, fairly good spreads and decent fills over time. They are U.K. based, so you will have to find out if they accept accounts from your country. They do have "Individual Account" set-ups, but if you can grow you account fairly quickly, then you have the option of trading on Currenex, FXall, ICAP, Integral, HotSpot FXi and MT4.

Do your homework and stay informed. The spread betting side of Capital Group, has had some issues in the past: London Capital Group facing Multi-Million Pound Claim . So, be aware of the issues before making any decision about them. I've read the complaint and I am able to compartmentalize Spread Betting and Spot Forex trading and I'm also able to understand the difference between third-party responsibility for lost capital -vs- FX Intermediary responsibility for lost capital.

It is difficult to find a truly reputable and clean Retail FX operation, if you don't know who is out there and where to look. But, the three outlined here are my best retail picks for FX, with Divisa Capital FX leading the class, and with much credit being given to CitiFx for hanging in their and not leaving the Bank run Retail FX channel completely empty, in light of Deutchebag's decision to dump on its retail FX customers.

Do you OWN homework and trade responsibly. The above is nothing by my own personal opinion of the current state of the art in Retail FX today.


I could have thrown SAXO Bank in there, but my heart just won't allow me to do it. However, I will say that having the ability to trade both Spot FX and Plain Vanilla FX Options on the same platform, does open the door for the engineering of ND trade strategies in a much more convenient fashion. That's the only reason why I would (might - I said might) recommend SAXO Trader. They are a quasi-Bank at this point which does help - a little, but not much.

They have a corrupt past, no doubt - but many do in Retail FX. That's part of the nature of a new and under-regulated industry having run for so many years. One more reason why I like DCFX the most for Retail FX.

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