Broker Horror Stories??

Discussion in 'Forex Brokers' started by bigmrfrank, Jan 1, 2006.

  1. I use FXsolution over two ears .There was few problems but they fix it .They are very fast with withdrawals, I feel out form and two days later have check in mail .One think I don’t like is the account statement, they have only up to 65 days so I have to do it 6 times to get the all ear statement for my income tax.
    #31     Feb 9, 2006
  2. You say that applies to PropFX. What about on FXCM's tradestation?? Since you made the distinction one can assume you actively stop hunt and spike your FXCM customers right? Sounds hard to believe that stops and orders are stored on the client side. Might as well not have any to begins with.
    #32     Feb 10, 2006
  3. Amazing how selective FXCM is in responding to posts.
    #33     Feb 11, 2006
  4. they are all bucketshops
    #34     Feb 11, 2006

    Recently I came across the work of professor Richard Lyons, Haas School of Business, U.C. Berkeley and his colleagues' work on currency price action ("New Micro Exchange Rate Economics";, and studded it with great interest. I was excited to discover such rich academic research covering a field I had been analyzing myself for some time. His reports are rigorous, empirical, insightful, and indeed quite valuable. I say valuable because I consider there to be a pressing need for greater public scrutiny of financial markets, including the currency market. Academic efforts like this form one important prong of such scrutiny.

    I characterize his research as one small, but important, step in what will invariably be a longer "work-in-progress." Metaphorically, the work can be viewed as a flashlight illuminating a small part of a rather large, dark space. The sometimes frustrating aspect of investigative work like this is that finding the answer to one question often generates numerous subsequent questions as a result.

    For example, Prof. Lyosn has discovered that order flow is more valuable than traditional macro-economic variables in predicting price direction in the spot market. The next logical, and to my mind, more analytically-ellusive question is: what are the determinants of that order flow? Not macro-economics - Lyons's own research confirms this. What then, are the true factors that influence speculative market participants (spot buyers and sellers of actual currency attempting to profit from predictions of future price direction) to place their orders?

    My respectful assertion - and this gets to why I'm writing - is that a substantial amount of spot order flow is placed in a competitive manner by larger participants (in terms of trading capital, or buying power) to manipulate price action via that flow with a view to ultimately forcing the contra-party to the trade (who is less capitalized) to exit their trade at a loss, and pocket the profit.

    If this is true, then a substantial amount of price action itself (necessarily, as the new research has proven) is the result of competitive speculative forces. Precisely how much, particularly in relation to the powerful macro-economic variables, is a research topic. This seems unremarkable to me in light of my personal experience trading and analyzing financial markets, including the spot, but it may surprise academics or a public schooled in searching traditional macro-economic principles as the sole source of a causal relationship with price action.

    Of course this scenario - of competitive speculative forces manipulating price action to profit at the expense of other such forces - is only possible (or rather, profitable) if there exists an imbalance, an advantage available to only some speculative forces and not others to realize profit. The imbalances that I am currently aware of take two forms: informational and transactional.

    Informational imbalances entail some speculative forces enjoying access to restricted information that empowers them to accurately predict the extent to which their manipulative order flow will drive spot price action to their benefit. Lack of access to this information seriously disadvantages the ignorant (or restricted) participant vis-a-vis his more enlightened and well-capitalized contra.

    I have experience trading numerous financial markets, and have maintained a keen interest in analyzing these markets from a theoretical/philosophical perspective throughout. I began trading the spot currency market only recently, and was intrigued (I won't say surprised) to observe that imbalances are evident in this market in addition to the other markets in which I have participated. My observations of the spot market coincided with my discovery of the new research; that's why I got excited enough to write.

    The insight derived from the research of Lyons et. al. was only possible because they were granted special access to otherwise-restricted data sets by certain (few) of the large, institutional participants in the spot market. They were provided a very brief glimpse of the orders constantly flowing through these opaque institutional channels. This information was largely inaccessible by non-intra-bank participants when the research was first conducted in 1995, and this informational imbalance remains largely intact today.

    I believe that the overall competitive imbalance, as between a select few institutional participants and the larger public, is even greater in the spot market than in the equities markets. That is because in the equities markets non-institutional participants at least have access to order flow information - to volume - via a mandatory, consolidated, publicly-available tape.

    All equities trades, including their size, time, and the identity of their transactional sub-market, must be reported to the tape. This consolidated reporting is one important, informational aspect of a true "National Market System". Lyons et. al. had limited access to a similar "tape" during their research into spot market order flow. Of overriding significance, however, is the fact that in the spot market, non-intra-bank participants do not normally have access to such volume information.

    Of course, knowledge of volume is crucially important to competitive speculation in any market because it empowers trading participants to recognize valid opportunities from the price action. Traditionally it has been the better-capitalized, institutional participants who have benefited from informational imbalance (or any other imbalance) at the expense of the much more numerous, but far less-capitalized non-institutional participants. The new research poignantly highlighted the woeful lack of spot currency order flow "data sets" publicly disseminated and available for research or speculation.

    There is another instance of imbalance - in this case transactional - explaining price action in a financial market, and I would appreciate any feedback as to my analytical framework with respect to this scenario. I believe that a collaborative approach to exploring this phenomenon (imbalance between competitive speculative forces as a driver of price action) by interested observers is necessary to effectively advance valuable public knowledge.

    Although informational imbalance is largely redressed in the equities (and some other) markets due to the aforementioned consolidated reporting, nevertheless, a transactional imbalance exists there. This advantage enables instructional participants to successfully compete in speculative order flow manipulation vis-a-vis non-institutional participants. Informational parity does not guarantee transactional parity; knowledge of an instrument's price action does not guarantee access to all of the sub-markets in which it trades, even though the trades flowing from those markets are transparently reported.
    #35     Feb 11, 2006
  6. :/
    #36     Feb 11, 2006
  7. FXCMFXCM Sir, i have reservations about FXCM's services, past behaviour, in a number of respects, however, i find your responses on this thread to be extremely honest, professional to professional, no smokes & mirrors, and i really wish this shld be the norm between traders & brokers going forward (no brokers -> no traders). Thank you.

    As for Aug 2004 NFP, perhaps its time for people to realize how extraordinary the circumstances were then, and if there is a time for a firm to invoke the fine contractual print not to go bust or suffer extremely heavy losses out of a totally off figure, then THIS was the time...

    Have a great week-end all!
    #37     Feb 11, 2006
  8. But I think if a broker can act so obviously in such a bad way then they should never be trusted and shows how they believe a business should be run.

    If they had simply filled all the stops at the first price (ie 1oo+ pips higher) then they would not have lost and the customers would have all been sitting on large losses. This is how the 'interbank' market would have treated any stops at the time. Traders could not have expected zero slippage - it was never going to last and FXCM had changed the small print in advance. I would not have a problem with that.

    However to take the price lower to ensure that people who had stops below the market would be entered into the market when in reality this price action never took place is extremely wrong, and not required, in my opinion. This was not done to protect their position - simply to create more profits for themselves.
    #38     Feb 11, 2006
  9. i hate to say this but... u r screwed mate, they r a scam... but honestly, u not smart either... why didn't u investigate in the 1st place????
    #39     Feb 11, 2006
  10. good thing u guys let us know! thks. at the same time i did take a look at, as an fx broker first (when i was helping my mates set up their biz in tokyo), and as a trader as well (thats what i do for a living). and our assessment was that was a total black box type scam...
    #40     Feb 11, 2006