Link: Brokers monitoring your pattern of trade
March 24, 2008 – 8:50 pmI found this post on Forexfactory today. Pretty useful post to explain how retail forex brokers manage their order flow. Before complaining about retail forex broker or spot forex market etc , read this article and understand how it works.
Pattern of Trade. You create a pattern of trade each day that is easy to follow, and with the help of technology is something that is simple to track and report. If for example you regularly trade the same currency, you use the same Lot size, and you tend to hold the trades for set periods of time, your new Order can be reliably swapped with another that is going the opposite way. Once you have an account balance at a set level, and a set pattern of trade that can be followed, your Orders will not often leave your Broker’s doors if they have an active Desk. Your trading footprint can be easily followed and monitored, and there are positives in what your Broker can do with data for you as well in providing liquidity.
Trading Bio. A trading Bio of your habits, your Trends, your Stop areas, your Take Profits, and even the length of time that you are in a trade is a great tool for a Broker to leverage in being able to set the criteria in deciding whether Orders go to the Market or not. If a Broker needs liquidity in a certain Pair, that may tip their hand in that decision as well. Technology and Automation are revealing more about each trader than most would realize, as the Broker works to get you filled at the prices that you see.
Slippage and Spikes. There is nothing underhand with a ‘Broker Big Brother’ (BBB), and nothing to worry about so long as your Broker does not have ‘unusual’ looking price spikes, holds off order fills , or creates slippage on a regular basis. Spikes, slippage and failed Orders are a reflection of one thing in general; the fact that there are no Interbank Orders on both sides of the quoted prices, there is no conspiracy in the Interbank to manipulate prices, it is just a time and a price point that for whatever reason does not contain Orders. Spikes will occur until a price point is reached that houses Orders, it is the natural flow of the Market.
From the desk of Tradergav.com
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