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Are you sure that your broker can't spy your trades and worspaces?


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Are you sure that your broker can't spy your trades and worspaces?

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  #1 (permalink)
plastic
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How is it possible to be sure that the broker can't see your trades and your workspace?

Are there plateformes that are more secure on this side? (maybe Metatrader?)

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  #2 (permalink)
 bobwest 
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plastic View Post
How is it possible to be sure that the broker can't see your trades and your workspace?

Are there plateformes that are more secure on this side? (maybe Metatrader?)

Well, your broker doesn't need to spy on you to know your trades. They know your orders when you make them. How else do they get executed? You use the broker to trade.

As to your workspace, that's on your computer for most platforms, and unless you think the manufacturer of the trading platform for some reason has worked with brokers to make it available, it's not. And why would any broker care? Perhaps on some platforms that were entirely developed by the broker, this could have been built in... but, realistically, what you are doing with your indicators or systems or charts or whatever is just not very valuable information. And the broker will always know your trades anyway.

Finally, why do you think a broker would gain an advantage by knowing about your trades? In the case of trading with a central exchange, they don't. In other cases, they can, but don't need to spy on you, since they already know your trades when you enter the orders.

In spot foreign exchange trading and CFD "trading," you are trading directly with the broker and they both know your trades (which they always do) and they are quoting you the bid and ask prices that you will trade with, which always will benefit them. If this bothers you, don't trade these instruments. Consider this a cost of doing business, or stay out of this type of trading.

Sometimes we get questions from traders who are sure that the reason they have losses is that someone is secretly manipulating the market to make sure they lose, or is positioning trades against them, individually, to make them fail. Sadly enough, your trades (or mine) just aren't that important.

Worry about things that matter, like how you make your own trade decisions.

Bob.

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-- Cervantes, Don Quixote
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 matthew28 
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Meta trader? I thought that was used solely by forex CFD type companies that are market making companies. So by definition they can see your trades as they are taking the other side of them or order matching with opposing trades and are continuously monitoring their company's risk exposure.

Or maybe you are talking about stocks, or options, hard to tell from your question which I have never traded.

Or if talking about futures then the orders get sent through to the exchange as quickly as possible. Brokerages must monitor their overall position exposure, just as good business practice, and because they will are putting up the margin but they aren't going to be looking to see whether you just bought a couple of ES contracts so they can front run you, they don't care (this trade could win the next could lose, you could make money this week, lose it next week, make money for three weeks, blow it in a week). And lastly futures are a regulated market policed by a strong regulator.

Some traders will make money most will lose money. The very successful traders one hears about or read about seem to be quite happy placing huge trades and making big profits. I am sure the brokers couldn't care less what an individual small trader's positions are, or even a large trader, as they are 100% guaranteed a profit on every real trade taken through the commissions. That's their edge just like a casino has an edge for a large sample size.
All a brokerage needs to do as they are guaranteed a profit on each trade, is to increase volume which they do with anybody who is trading seriously, by having a good solid reputation for reliability and trustworthiness. That would be shattered by a federal investigation in to illegal business practices which in effect risked the company's guaranteed profit by choosing to do illegal high risk trades that might or might not be profitable.

Edit. Should have guessed Bob would be typing too

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Symple
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@plastic

Not all brokerage houses are big enough to have a department where analysts can monitor the trades of their best traders in real time via a platform they provide.

But there is another way when it comes to analyzing trades, because everyone has to make their orders somewhere, whether by phone or directly electronically. There is then clearly visible where, when which trade was made and depending on the trader also in which context in a traded hedge strategy. Simple spoken: Your filled orders will give this inside view.

In HFT the order flow is the point where I can catch you, as I see what is in the line in front and behind me or others.

But, and here comes a lesson to know: As long as you do not have a large number of orders and can be content with small amounts of contracts, then you are mostly completely uninteresting as a trader. It also means: just don't get greedy in the market, or you will be led to the slaughter table at some point.

Symple

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 AllSeeker 
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As people have mentioned, by default they know what you are doing, they don't need to "spy".

In fact, they can not only see what you are doing they can also directly interfere in some cases, for example you hitting max drawdown limit your broker might have set in case of leveraged trading. You will be squared off from brokers end. You see you are not just a customer, you are also a type of risk to them.

(On that note: And hence no matter what your broker tells you when you enter the leveraged game, stay clear of leveraged trading, because when sh*t hits the fan, I can assure you that its flying in your direction only. )

Also, I've had a case where there are people complaining about certain broker in India for maintaining "Star trader" list and automatically copying their orders in their system. That's very much illegal, but these kind of allegations have been around for a long time, and they will be around for foreseeable future. Many brokers do get shutdown for malpractices after all.

As an individual small retail trader though, I would echo above posters sentiment in, "if you are small enough, no one really cares about you". Hard fact of the industry.

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 bobwest 
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AllSeeker View Post
(On that note: And hence no matter what your broker tells you when you enter the leveraged game, stay clear of leveraged trading, because when sh*t hits the fan, I can assure you that its flying in your direction only. )

No problem with most of your post, but "stay clear of leveraged trading" means no futures or options trading, all very leveraged. Perhaps things are different in India, or perhaps "leveraged" means something else in the context you mean.

But without leverage, close futures.io down, nobody's trading.

Bob.

---------------------

Edit: obviously, irrelevant to the "spying" question. Just a note.

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-- Cervantes, Don Quixote
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 AllSeeker 
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bobwest View Post
No problem with most of your post, but "stay clear of leveraged trading" means no futures or options trading, all very leveraged. Perhaps things are different in India, or perhaps "leveraged" means something else in the context you mean.

But without leverage, close futures.io down, nobody's trading.

Bob.

---------------------

Edit: obviously, irrelevant to the "spying" question. Just a note.

Leveraged there implied trading with capital x5 x10 x20 from brokers side.

Here is an example, Lets say I've account of INR 7500/- (around usd 100)
I can trade fine with 1 lot of Nifty option which is having premium of 100, because its lot size is 75, so usual calculation comes down to 75*100 = 7500 /-

But brokers usually offer leverage to above person, which enables them to trade multiple lots if chosen so, see this is far more dangerous than just trading with a one lot (even if its option or futures which are in itself leveraged instruments as you have pointed out), now I can suddenly go up to x5 x10 x20 lots with same capital, which can wipe out my small account with just movement of 10 points (which is extremely negligible in Index).

Differentiation here is fact that this leverage is provided by broker and usually differs from broker to broker and also account can have these activated separately or not if user wishes to for a small annual fee.

Just last year SEBI (Indian organisation which sees over trading and trading related activities) has cracked down on this kind of thing and started reducing this leveraged activity slowly. Which in tern has kicked out most of the small time traders who used these kind of things and later would blow their accounts and face ramifications, as now they would be indebted to broker to pay LOT more, in multiple of x5 x10 x20 which originally they could've gotten away with completely fine by just paying original loss of premium of one lot, which they could easily even though account was extremely small.

Hope I managed to explain.

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 bobwest 
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Hope I managed to explain.

Yes, perfectly well. And thanks. It's always good to know more, and I was not aware of this.

I would only say that while this practice obviously is unwise and should be avoided by traders, just as any severely undercapitalized trading should be avoided, I believe it applies, at least in this form, to trading in India and not generally. So to advise against "leverage" when the situation does not generally apply creates ambiguity and possibly an impression that you did not mean. I doubt if it was understood by very many who read it, because most traders probably are not familiar with the practice and don't operate in markets where this is done.

But is is good to know the practices that exist in other markets. And I think you're correct about the unacceptable risks it involves.

Now, back to the topic. Sorry for the diversion. Sometimes I can't help myself.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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 qsceszwasdx 
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plastic View Post
How is it possible to be sure that the broker can't see your trades and your workspace?

Are there plateformes that are more secure on this side? (maybe Metatrader?)


I don't think Metatrader is more secure, bcz most bucket shops use Metatrader.

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  #10 (permalink)
 bobwest 
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qsceszwasdx View Post
I don't think Metatrader is more secure, bcz most bucket shops use Metatrader.

Well, the fact that you are only trading with your broker (for spot FX with a "dealing desk" and CFD), who is both executing your trades and taking the other side against you, means that your trades will always have a built-in profit for the broker and a bias against you, in terms of the quotes you are given. It comes with the territory and should be understood, assuming you want to "trade" there. You will get clipped a little bit on every trade.

But the broker doesn't need any help from Metatrader or any other platform to know your trades. The broker is executing your trades, and making the market you are trading in, and is the party you are trading with. How could they have a more favorable position than that?

The same applies equally well to any situation where you are not trading on a central, regulated exchange. If you are only trading with your broker, the broker has everything they need to guarantee their success, at your expense.

There is a moral here about the types of things you should trade, which I will not keep harping on.

Bob.

When one door closes, another opens.
-- Cervantes, Don Quixote
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