Forex Secrets – Delusion No. 2 – Who Prompts Forex Rates for Businesses
The delusion conceptually propounds that traders operate at a spontaneous FOREX market (provided by B. Williams, A. Elder, E. Nayman, etc.). But it is not the case. Traders do their work in an organized and controlled currency exchange market covered by the consortium of the world's largest banks.
Therefore, by pushing the currency up and down, who defines trends, corrective actions and apartments?
And who ultimately places a tendency to a point where most traders are happy to think they have saddled the wave and is gaining a huge profit! Now! Not to worry! Not to close the position! Not being satisfied with a small profit! Later we will discuss the kind of stupidity. Thus, one still remains wide despite more and more degrading profit. Short, the loss begins growing with light speed! Are you familiar with the situation?
Well that has turned the price?
And as usually tugs exchange rates?
Tugging is secure centralized. Compare online prices of several dealers or banks to find out that they are per second coincide. Do each bank operators act in such synchronisms that not even see each other down the same orders, so that the quote is 100% agree? Nothing is a miracle HERE!
But prior to any further explanation, we will listen to Bill Williams, the FOREX scholar (Trading Chaos, Ch. 6): "… let us trace a trend formation process. Earlier, and market trading amounted to a single physical space. Majority of large grain traders focused on the "floor". Their orders amounts involved are sufficiently to move the market, they had better control over the market than at present. Over the past 20 years has been growing in the world. Now, not only "Purina Ralston "," Kellog "and other prominent commercial associations seek hedging of their cash transactions. So do millions of the world less profiteers and farmers who compete with them in anticipation of perspective grain price fluctuations? This fact also means great opportunities for traders with today, trends not be built on the floor. The latter in particular, ensure market liquidity by addressing "external" orders.
The fact that contemporary trends formed rather "without the word" end "on the floor", as before, make a track to further market opening trends in trading volume is the key therefor. Our only online information is limited to cross-volume, time and price. Tick volume represents a series of price changes at a certain time period. It is not a number traded contracts. Several researchers showed no significant difference between the actual and tick volume. Using a tick volume, we can assume that it represents the actual volume. It is a real-time volume and thus is our key to what happens in "trading pits."
Two fundamental elements are organic to FOREX trading: brokers on the floor and remote retailers. Local brokers are employees, executing orders in order to earn their salary and / or commissions. They are not in possession of money to be available to them. They are athletes. Their prospects are not burdened by prices they get for the orders management.
Remote traders use their own money. They must pay the price out of their own pockets, unless they get a good one. Operators have to be much superior in skill to brokers, as they independently can make their own decisions, while the mediator's task is to follow others' orders.
Remote operators are expected to support the market in terms of taking its opposite side. Usually they do not love no long-term transactions. A lot of remote operators have been participants in our private training programs, and is to be admitted that a 10-minute operation may seem rather long for some of them.
Think back to the fact that the development is built up of orders delivered to the floor outside, but not long-term positions keyed by remote operators. Since the operators' job is to take the opposite side of the orders coming from outside, they have no opportunities for trading among themselves. They follow your money. We stress again that cross the volume is our key to understanding what is happening in the forex market. Remote merchants do not contribute anything significant to trade which may result from dealing with other traders on the floor. Trends arising from incoming orders. Therefore we must be sure when and in what amount the outer order is delivered to the floor. It is presented through an intersection volume change ".
So we, dealers, proves to be price locomotives, is not it? And brokers on the floor balance and execute orders, inbound from us, do not they? And April 1st, 2005 they all (meaning: all of us) together decided to turn the trend and stay map of all rules, news and common sense … I wonder if the learned shame or not?
Regarding the quote above, I happen to hear a single argument in favor of Bill Williams (I think you understand for what cause I have mentioned it in detail): it all belongs to the futures markets, we either read or use the above in Forex. Strange enough, these are the arguments of Williams lawyers, but not Williams himself.
This book is actually designed for both parts: the futures markets and Forex Market. That is why photos taken from both the markets are so mixed up, and the author never distinguishes between the technical methods of analysis thereof. Thus, either the author does not trace any difference between the two markets, or he is not eager to reveal the the reader.
And neither in the preface or in the remarks did Williams and his publishers refer to the fact that some of "Trading Chaos" is useless for FOREX, and thus should not be exercised by a trader on FOREX.
I have repeatedly come through this peculiarity Williams (correct case method definition extends to a wider scale coordinates) and it actually moved me to write this book. All and all, the methods and advice, absolutely true and correct for part of the Forex market is claimed by Williams must be uniform throughout the Forex market without having to be satisfied when the above is effective and where it is not.
The same happens when Williams adversaries and advocates, who visualize the portion of the forex where his methods served only. As different from analysts and Williams's bibliographers, require of traders much stronger to realize a borderline with pro-trade Williams to one side thereof and with counter-Williams trade to another.
Logically, there comes a question: what can be added to Williams's indicators in order to make them effective at the point where they are currently ineffective (see detail in the chapter on Williams Alligator).
And now we come back to the question of who provides the trader with FOREX rates quote, considering that it is we, the operators engaged in rates of movement according to Williams's position. Millions of traders have actually been studying FOREX through "Trading House "and it is really worth studying. This is one of the most interesting and instructive texts, if repeated reading each time brings about something new and useful.
But in some passages smells tailored. Williams is unaware that there is no single FOREX exchange and there is no single venue or floor? And the Pacific, Asia, Europe and U.S. session classification is arbitrary?
Do you see exchange rates move, while there is a holiday in the U.S. with the banks closed? So did I. So, there did up his mind in the U.S. to act on the floor on a day off?
So that prompts rates formulate trends and turns them with no objective justification for the rate could be rotated and shooting in a direction that is not needed at all?
Here is the answer, as the No. 11, 2002 FOREX speculators "magazine article by Nadezhda Larina "Electronic Broker Systems on Forex Market" http://www.ifin.ru/publications/read/351.stm), reading: "… a FOREX treat" Electronic Broking Services (EBS) "enjoys wide popularity with the extra-exchange interbank FOREX market. It has been developed by the consortium of the largest FOREX trading participant banks related with "Quotron" informatics expert company and launched in 1993. Currently EBS incorporates 13 of the world's largest market-maker banks, namely: BN AMRO Bank Bank of America, Barclays Capital, Citibank, Commerzbank, Credit Suisse First Boston, HSBC Bank PLC, JP Morgan Chase and Co.Lehman Brothers, Royal Bank of Scotland, SE Banken, UBS AG, together with Japanese Minex Corp., established by a consortium of Japanese banks into a common way with KDD Japanese telecommunications company and Dow Jones Telerate.
EBS offers a complete integrated range of treatment services for professional inter-bank market, is a leading anonymous interbank FOREX trading electronic retailer. It is currently used by more than 2,500 dealers in 850 world banks and offers a trade turnover of approximately USD80 billion daily.
See also: "Three biggest FOREX dealers – Citibank, JP Morgan Chase and Deutsche Bank together with Reuters Group PLC) has begun Atriax system in June, 2001.The latter completed operations in spring 2002 after failing to appear for competition.
Can you imagine a monster machine that could force three largest banks – Citibank, JP Morgan Chase and Deutsche Bank to abandon their business plans! Or to reverse EURUSD 1.3660 to 1.1865 and thus immediate execution of orders from all the world's traders yesterday and is short! And thus before the buyer from April to June, 2005 EUR from dealers at USD1.36, 1.29, 1.20, 1.19, etc.
Can you see the damage? Watching the EUR release 1700 pts after having bought it at 1.36 … But perhaps no loss at all?
All Larina's basic rules have actually been confirmed 2 years later in the UK "Financial Times article by Jennifer Hughes: "A PC obsessed trading floor" (see it on the Financial Times 2004).
It emphasizes that under the precedent 2 years Consortiums turnover has grown with additional daily USD20 billion as currently extends to 100 USD billion, while the most prominent internet-based trading platforms ensure the average of USD15-20 billion daily turnover.
So let's jump to some conclusions:
1st The FOREX market is not the same as it used to be earlier, say 11 years ago.
2nd There are in fact "one price fluctuations relative uniformity", otherwise, practical quotations, like all the world brokers and traders.
3rd The reason for the aforementioned uniformity is honestly published the technological viewpoint, the "bloom of electronic exchange technologies ".
4th There is no mention of other reasons for similar prices at absolutely different FOREX trading platforms worldwide, what connects the above platform FOREX and rates them from economic, organizational, contractual views, etc).
5th The great interest is the comment from "Financial Times" repeated changes in the FOREX in recent years as told by an anonymous ex-dealer (?), which compares the FOREX market which, in these 11 years ago: "It used to be a hell of a noisy and a damn nice! "
In his opinion the market has lost a significant part of his individuality with a rise of technology. A very interesting phrase: "It used to be a hell excellent". I would add: "It used to be one hell volatile", with reference to the daily rates trip went so far 400 to 500 grains. And there is nothing of the sort now.
6th Now why has "The Financial Times" only interviews EBS Consortium official?
J. Jeffrey and foreign exchange operations department director, Fabian Shey Why had not wanted to interview the representatives Reuters (UK)? What causes this kind of disrespect for fellow countrymen?
Or were they hard to be contacted in London where The Financial Times and Reuters HQ is located, whenever to maintain that at present both EBS and Reuters Consortium is dominant in the interbank market? Or, The Financial Times has sufficient information on rural women from Reuters claiming that EBS consortium official's interview is sufficient without Reuters?
7th Please, note the following from The Financial Times: "Anyway, other opinions are available. According to Justin TREN, the current volume of online trading, the turnover amounts to 100 USD billion daily with the steep growth observed. "The Financial Times shows itself to acknowledge his complete inability to track not only FOREX flow, but even the trading volumes on these platforms.
The main difference between stocks and FOREX is, by the way, readily apparent from the above. Those who write on the same fundamental and technical analysis methods for both the markets, either ignorant of basic difference in these markets, or they are conscious frauds of millions of workers.
When points out that in addition to the above Bank consortium, there are other electronic processing facilities (eg Electronic Broker Services, Reuters Handling 2000-2, etc.), N. Larina have neglected their relationship. And there are a lot of questions: how and why there is convergence of trends, corrections, historical highs and lows during a single day, etc.
And what is the way to reconcile the Declaration of shunt operation of EBS and Reuters management facilities with the information, Citibank, JP Morgan Chase and Deutsche Bank together with Reuters Group Plc has failed to stand the competition? Is it attributable to the fact that the consortium has actually acquired Reuters that maintain its formal sovereignty to support traders believe that FOREX market is free and independent? If yes, then it's pretty clear why consortium was not afraid to buy EUR at its dip from 1.36 to 1.1860, since there is nothing to fear with a knowledge of the point at which it will not drop the rate and identify phase EUR rally for several months with no one to interfere with your doing so.
Hopefully it is now understood to be rotated trends in FOREX! The world's largest Consortium banks do not have the power to reverse rates when WISH overturn fundamental laws, press releases, trends and common sense, just the way we saw at 01/04/2005 charts. But it is not at all, traders, as claimed by Williams.
That is why there are obvious inefficiencies Williams's Market Facilitation Index (MFI) based on fluctuations in volumes traded, to be more precise, sometimes the indicator tells the truth, while it sometimes lies in a rude manner.
The reasons listed above: banks Consortium pushes space where it needs but not to where dealers go to bid in order to accumulate the quantities shown on the screen. That is why traders ride losers when making use of Williams's MFI indicator.
Full text of this article and pictures of examples http://www.masterforex-v.su/
About the Author
Vyacheslav Vasilevich (Masterforex-V)
Professional Trader from 2000 year.
President of Masterforex-V Trading Academy.
Author of Books:
1. Trade secrets by a professional trader or what B. Williams, A. Elder and J. Schwager not told about Forex to traders.
2. Technical analyses in Trading System MasterForex-V.
3. Entry and Exit Points at Forex Market
Books web site http://www.masterforex-v.su/
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