Does the Market Plays Against You?

When traders face a series of losing trades, they begin to suspect that their trades are the market’s target. There are many pictures proving that the price gets back to its initial level after triggering a Stop order.

Of course, it all sounds ridiculous until the trade size exceeds, for example, 50 lots. With a greater lot size, it’s hard to say which order the price really “stopped out” of the market.

This is why this question, just like the previous ones, will never get a straight answer.

Plausible answer. In 99% of cases, the price DOESN’T hunt your trades in particular. However, It’s a different story if you’ve placed your trade at the same level as all the other market participants have done. If this is the case, you will see an entire cluster of, for example, Stop Loss, and the price is very likely to trigger. By the way, we have an indicator of such clusters.

There are also cases when a certain broker sees volatility happening in an absolutely calm market and the price immediately triggers your particular Stop Loss and comes back. However, this looks rather like a foul play of your broker against you, and it’s not the market’s fault.

Conspiracy answer. Even assuming that the market is governed by one authority, it’s hard to imagine the latter is playing against anyone in particular. Indeed, when someone buys, someone else sells at the same time, so the only possible thing that can happen is that the market is playing against the majority. The last phrase makes sense, but there’s no conspiracy, since the market nature is that the majority loses and the minority wins.

Are Your Trades Submitted to the Interbank Market?

Lots of blood has been spilled in the battles over the subject, and all of this has been for nothing since there is no answer to this question either.

Why do traders care about this issue so much even though it doesn’t actually affect anything in reality? The point is that people, by their nature, don’t really like when somebody makes money on them, especially when that someone directly cooperates with them.

If a broker had openly told you about making money on your loss, you would have never opened an account with this brokerage company. It’s a different matter when brokers declare that they charge only their modest fees; if you have incurred loss, a trader just like you, but on the other side of a trade, will make that money.

That’s why regardless of the fact that a trader hasn’t yet learned to make money, it’s already important for them that trades – even the smallest ones – are submitted to the interbank market.

Is there any way to confirm a submission of a trade to the interbank market? Even if we’ve established contacts at the brokerage level and learned whether a particular broker submits trades to the interbank market, or rather, whether it submits all trades to its liquidity provider, it doesn’t mean that the liquidity provider itself passes them further. This provider often uses “bucket shop”-style methods, but on a much larger scale.

Plausible answer. Nowadays access to the interbank market is by no means something unique, and many brokers actually provide this service. So, it’s nice when a broker specifies which of its accounts have access to the interbank market and which don’t.

For example, if we look at the specifications of various brokers’ accounts, we can see a selected number of accounts that have access to the interbank market, and it does seem plausible.

Therefore, brokers might submit trades to the interbank market, but they don’t necessarily submit each and every one of them. From a business perspective, it makes much more sense to introduce a series of filters, so that the trades of potentially losing customers remain inside a brokerage company, and potentially winning ones are submitted to the interbank market. This is a hybrid model – you can read more about this and other models in this article.

At the same time, there are also limitations on the order lot size. For example, it would be naive to think that 0.01 lot order will be submitted to the interbank market, since it is cheaper for a broker to pay for it out of their own pocket.

Taking into account the facts mentioned above, the dilemma of choosing a broker submitting trades to the interbank market is absolutely unclear. When making your choice, it’s wiser to pay attention to the broker’s reputation, their lifetime and overall reviews.

For example, choosing a brokerage company with 10 years of experience, your risk is significantly lower compared to opening an account with a young broker that supposedly “submits” trades to the interbank market.

Conspiracy answer. The interbank market was established so that only banks could trade there. Forex trades are passed to as far as a liquidity provider and more likely meet their counter orders there or the provider acts as  a counterparty.

The only connection between Forex and the interbank market is the fact that in order to hedge its risks, a liquidity provider can open an aggregate position on every financial instrument in the interbank market.

What is it That Drives The Price?

There are ongoing debates in a trading community on what is the primary source of the price: EUR futures, interbank market, Forex market or a spot market? Which of these instruments is a leading one, and which ones are following?

Disputes become very fierce when it comes to the source: which data can be trusted, and which should be ignored.

Here is a simple example: trading volumes. Can one give a precise answer which volumes are more informative: futures or Forex, from exchange №1 or №2? Taking into account that the term “correctness” is not accurately defined in the Forex market, there is no answer to this question either.

Plausible answer. Every single source of the price has its own asset price determined by trading results inside the source. At the same time, the prices from all sources are synchronised by trades, also known as arbitrage.

Imagine walking down the street and seeing two exchangers – and the buying rate of the first one is higher than selling rate of the second one. Without hesitation, you’ll start carrying money over from one exchanger to another and benefit from the difference in the exchange rates. It will continue until the prices become equal in both exchangers due to the dramatically increased demand in the second exchanger and the excess supply in the first one.

This is how the sources of Forex prices are interconnected, but in a little more technological manner. However, it’s quite likely that there might be a great demand among population in the spot market itself, which would result in the prices moving up/down.

Conspiracy answer. Asset price is established in one market (stock exchange), and other prices just follow it. It’s interesting that Forex traders often believe that the Forex market itself is the driven market, but not the leading one. That’s probably how they try to justify their inability to make money particularly in the Forex market; if they’ve traded in CME (Chicago Mercantile Exchange), things would have been different.

Centralized stock markets – but not the Forex market (due to its decentralization) – are most often considered to be the leading markets.

Who’s a “Market Maker”?

Traders have long been haunted by the idea that there is someone else on the market, apart from them – a much larger and a more powerful player, who knows what they don’t. How can they safely trade knowing this? Perhaps, they can do this if only they learn to look at the market as a market maker.

Can one give a more precise answer to the question: “who’s a market maker, and what’s it like? Is there just one or are there many market makers?”

Unfortunately, ordinary traders like you and us will never be able to answer these questions, since they are simply beyond the reach of the organisations that can hypothetically be the market makers. It’s like when humankind allows a possibility of the existence of other civilisations, but cannot tell exactly how many of them there really are and what they’re like – and it might never even find out.

Plausible answer. All the market participants that have sufficient capital to somehow influence the price movement in their favour fall into the category of “market makers”. It could be various corporations, funds, banks or even individuals from, for example, the Forbes rating. The national government can also act as a market maker on behalf of a central bank.

All the above mentioned participants create an image of a “market maker”, but their actions are not coordinated, i.e. they are motivated by personal interests and rarely cooperate, either by agreement or by a sheer chance. The only thing they have in common is the need for a financial or political benefit from the market.

Conspiracy answer. There is also an idea of a single market maker or an organisation that has such a powerful influence that even central banks are only small fish to it.

There’s a lot of talk about a secret society which consists of the most powerful people, and there are also mentions of the Masons. In addition, the role of such a market maker is not only to take money from citizens, there’s also a higher purpose that we cannot understand.

Does Anybody Make Money on Forex?

Meeting a profitable trader is like finding a needle in a haystack.

At the same time, there is no guarantee that a yesterday’s profitable trader will not become a losing one today. It is very hard to find a trader who makes money precisely because past success doesn’t guarantee future profit. In addition, temporary luck is often behind the income.

A well-known phrase, which people find necessary to mention quite often, states that 95% of traders lose their money. However, we’ll never know for sure the exact percentage: is it 95%, 99% or even 99,9%? We prefer the last option, since one profitable trader per thousand makes more sense than five profitable traders per hundred.

Plausible answer: for the most part, Forex market allows only temporary profit. For example, if we look at the traders’ profitability statistics on various brokers, we’ll see that a fairly large number of traders (~33%) manage to make money during a quarter. However, if we increase this period up to one year, the percentage would switch closer to 5% and then to 1%, etc.

You can ride the wave and make a certain amount of money; if you keep on going you’ll be “chewed up by a shark” , you’ll lose everything you’ve earned. So, if you hit the jackpot by, for example, opening a PAMM account and making a significant amount of money, it’s best to stop and not continue.

As for regular Forex earnings, it’s possible only if you’ve already learned how the Forex market works and thereby possess the information that most other traders simply don’t have.

Here is a simple example: imagine an organization willing to sell a very large amount of euro. Of course, it’s interested in selling it at the best price and saving a few hundred thousand dollars. To do that, it will play out a scenario (price movement) to reach its goal with the existing market liquidity – including our trades – and thereby not crash the market itself. And now ask yourself: “which indicator or strategy can predict what this organization is about to do and when it plans to move forward?“

Of course, the strategy of “trading against the crowd” is worth mentioning at this point, since it’s one of the few that takes these scenarios into account.

Conspiracy answer. The probability of any given individual to make money in the Forex market is close to zero, and those single instances where it seems as if someone has earned something are just to prevent people’s “faith in the money making” from dying. The Forex market itself is a better version of a Ponzi scheme where you don’t need to pay interest and there’s no need to return deposits.

The impossibility to make money is due to the fact that the price movement is almost chaotic and doesn’t have any regularities, and therefore, doesn’t make it possible to earn anything.

Why do individual investors get used to losing money in Forex?

Most retail investors end up losing money in Forex. Despite the fact that they receive the appropriate training and educational material (or at least the same as certain other successful merchants can perceive) many fail because of the rules and / or lack of bad money management discipline. The latter is the most frequent.

The rather difficult, on the other hand, does not calculate or predict where to enter, how much to trade and / or what its limits should be; You stick to your strategy and continue forward with one hundred percent discipline.

Forex market: What are the best weblogs of the currency?

There are a number of places on the website to find a good forex related weblog, in truth, many brokers have their weblogs too; But with the intention of continuing to be unanimous I will advise a non-broker weblog. Among the most useful weblogs for both beginners and veterans alike the merchants is on— there is a periodic update of current market movement, such as countless information and also ideas of return copy that is expressed.

FOREX the best way to invest money?

It is very difficult to say if it would be the best as long as there are numerous ways to invest money and they will depend largely on what the individual is familiar with; however, it is among the best, in large part to the fact that in contrast to market / residence actions — an investor can get money regardless of the least the way in which the instrument therefore makes sales / purchases of this instrument (or doing both things — known as hedging).

In the Market Exchange it is only possible to invest in the success of a share — however, in the currency that the two can acquire / sell a certain currency in front of another and therefore always and at all times there is a possibility that the advantages that were made.

Likewise, the fact that the currency is frequently traded on leverage, allows exchange operations to become among the most volatile and consequently leaves greater gains (and losses) than was made — if they have been traded properly.

Has anyone ever made money exchange operations?

Yes! Not only do people make money from currency trading, but many have made a livelihood!

While most of the retail merchants would not be as successful as they would be professionals, this is largely attributed to poor money management strategies and lack of discipline in the survival of their strategy.

With one hundred percent discipline and a good money management approach, there is no reason why someone should not have a good chance of getting money from exchange operations.

Forex Trader: Who is the best forex trader?

There is no person better forex trader — or at least there is no clear way to measure this (is it the amount one has earned or the percentage earned with it). In addition to this, as many of the most essential forex traders on the planet do not negotiate with their money, but the funds and capital of the company, this means that there are different conditions of psychological hunger and danger for different operators and as such It makes the cut equate such successful merchants with those who negotiate with their capital.

The only thing to know is that what countless forex traders do have in common is their hunger for success, their diversified portfolio and willingness to take measured dangers.