If you go with a fx shop make sure your data feed has fx quotes that are supplied by a vendor that has multiple banks. Futuresource, cqg, & esignal are just a few who do. List of some of the banks that a reputable vendor would have.
I do not think this is a big problem. If you open position in right direction your FX dealer can do nothing agianst you ( of course if you choose right company to deal with).
WarEagle, Then the question arises... How does a bank dealer discern direction ? Yes, he may have the spread in his favor, but even he has to have an idea where the market may move to.
I would assume that if you are right and the market moves in your favor that they can turn around and offset it in the interbank market at a more favorable spread. But if they have enough orders on either side then they can offset between customers, kind of like a bookie. I'm just speculating though because I haven't traded with any of them. Its just stuff I learned when I was researching FX trading.
WarEagle, That makes sense. Just as in the same manner in which a NASDAQ marketmaker would in a similar OTC market. Pick off someone else making a market or someone else reflecting an order, or utilize one's orderflow. IC, I understand now. Thanks, J-Law
That's right. Dealer first offsets between customers and then if needed offsets at interbank only net value he gets in result.