Forex Secrets - Delusion No 2 - Who Prompts Forex Quotation to Traders

by Vyacheslav Vasilevich (masterforex-v)

The delusion conceptually traders that propounds operate at a market FOREX spontaneous (as stipulated by A. Williams, B. Elder, E. Nayman, it But etc.). is not the do Traders case. their job inside and well-organized a controlled currency exchange by governed market, the Consortium of largest world’s the banks.

Hence, who is currencies the pushing up and down, trends, defines who corrective actions and flats?

And, who, ultimately, trend a places at a point, majority the where of traders are think to happy they have saddled and wave the are about to enormous an win profit! Now! Not scared! be to Not to close Not position! the to be satisfied minor a with profit! Later on discuss will we that sort of one Thus, stupidity. persists to continue spite in long of more and profit. degrading more Shortly, the loss with growing starts light velocity! Are with familiar you the situation?

Well, who has rate? the reversed

And who generally rates? currency tugs

Tugging is surely on-line Compare centralized. quotes of several banks or Dealers to find out are they that per second coincident. bank’s each Do traders act in that synchronism, such even not seeing they other, each place identical orders quotation that so is in 100% IS NOTHING agreement? A MIRACLE HERE!

But prior to we explanation, further will listen to the Williams, Bill FOREX scholar (Trading 6): Ch. Chaos, “…let us trace formation trend a process. Earlier, the the and market market trading venue a constitute did single physical space. large of Majority grain traders were the on concentrated “floor”. Their orders sufficient amounts, involved to move the enjoyed they market; better control over than market the at present. During 20 latest the years markets have Now, worldwide. grown not only “Purina and “Kellog” Ralstone”, other prominent commercial hedging seek associations their cash assets do So transactions. millions of the profiteers minor world’s and farmers, competing in them with anticipation of perspective fluctuations? price grain This fact also potential strong implies for traders with not trends nowadays, being constructed on The floor. the latter mainly ensures liquidity market the by way of orders”. “outer tackling

The fact, that are trends today’s formed rather “outside than floor” the “on the floor”, enables before, as one to trace tendencies market further with trade volume key the being thereto. Our only is information on-line restricted to tick and time volume, price. Tick volume number a constitutes of price changes certain a per time period. It at not is all a number contracts. traded of Multiple researches revealed difference significant no between actual and Using volume. tick a tick volume, suppose, may we that it represents It volume. actual is a real-time being thus volume, our key to on going what’s in “trading pits”.

Two basic elements to organic are FOREX trading: brokers floor the on and remote traders. constitute brokers Local staff, executing orders, their earning thus salaries and/or commissions. possess don’t They money to be disposal. their at They are order prospects Their executors. are not burdened they prices, by getting for the orders management.

Remote traders use money. own their They have to price the pay out of their unless pockets, own they are getting one. good a Traders have to superior much be in skill to they since brokers independently take their while decisions, own the broker’s job follow to is the others’ orders.

Remote traders are support to supposed the market by taking of way its opposite side. rule, a As they are not crazy all at about any long-term a Quite transactions. few remote traders participants been have to our private and programs, training it is to that admitted be a 10-minute long seem may transaction quite a long-term some for one of them.

Think back to that fact the trends are built orders, of up delivered to the outside, from floor but not of entered positions long-term by remote traders. traders’ the Since job is to side the take opposite to the from arriving orders outside, they have of prospects no trading in between follow They themselves. your money. We again, emphasizing are that tick volume key our is to understanding what’s in on going the Forex Market. do traders Remote not contribute any to volume significant trading, which might dealing from result with similar traders floor. the on Trends emerge from That orders. incoming is why we be to are certain about when what in and amount the outer supplied is order to the floor. presented is It via a tick volume change”.

So, we, traders, to out turn be price locomotives, And we? don’t brokers on the allocate just floor and execute order, us, from incoming don’t they? And 1, April, on 2005 they all all) we (meaning: together decided to trend the swivel and to stay all against short the rules, news sense… common and I wonder if ashamed scholar the or not?

As regards the I quotation, above have chanced to single a hear argument in favor Williams Bill of (I guess you what for understood sake I’ve cited detail): in it it all pertains futures the to markets; we neither use nor read the above at enough, Strange Forex. these are the Williams’s of arguments advocates, but not himself. Williams of

This book is for intended actually both: futures markets Market. Forex and That’s why pictures both from taken the markets are up mixed so and the author between differentiates never the Technical Analysis Thus, thereof. methods either the author trace not does any difference between markets, two the or he is to eager not reveal it to the reader.

And neither in nor foreword, the in the remarks and Williams did his publishers refer fact the to that something of is Chaos” “Trading inapplicable to FOREX, should thus and not be made by of use a trader at FOREX.

I have repeatedly this through come peculiarity of Williams case specific (correct method definition being a to extended wider coordinates scale) actually it and induced me to book. this write In all and methods the all, and advice, absolutely correct and true for a PART Market Forex of are claimed by be to Williams universal for the Forex of WHOLE Market without being the where demonstrated above is effective it where and isn’t.

The same is by done being Williams’s opponents and visualize who advocates, the portion of his where Forex methods are operable different As only. from analysts and TRADERS bibliographers, Williams’s require much stronger a realize to demarcation with pro-Williams the to trading one side thereof counter-Williams with and trading to the other one.

Logically there comes what question: a might be added indicators Williams’s to in order to effective them turn at the point are they where presently ineffective (see chapter in details on the Williams Alligator).

And now we back getting are to the issue supplies who of traders with FOREX bearing quotation, rates in mind that traders, us, it’s who exercise rates accordance in movement with Williams’s standpoint. traders of Millions have actually been by FOREX studying virtue of the and House” “Trading it is really This studying. worth is one of interesting most the and instructive editions reading repeated whose each time brings new something about and useful.

However, in some smells it passages being custom tailored. ignorant Williams Is of the fact is there that no single FOREX there’s and exchange no single trading floor? or venue And that Pacific, and European Asian, American session classification is arbitrary?

Did You see move, rates currency while there’s a in off day the USA with closed? banks the So did I. has who So, made up his the in mind USA to trade floor the on on a day off?

Then, who prompts formulates who rates, trends and turns no with them objective reason for to rate the swivel and to a in rush direction, not being all? at requisite

Here is the provided as answer, by No. 11, Profiteer” “FOREX 2002 magazine’s article by “Electronic Larina Nadezhda Broker Systems at FOREX market”, http://www.ifin.ru/publications/read/351.stm), reading: ”… an “Electronic dealing FOREX Broking Service (EBS)” popularity wide enjoys with the extra-exchange market. FOREX inter-bank It has been the by developed Consortium of largest participant trading FOREX banks in association informatics “Quotron” with expert company and 1993. in launched Presently EBS incorporates largest world’s 13 market-maker banks, viz,: Bank, AMRO BN Bank of America, Citibank, Capital, Barclays Commerzbank, Credit Suisse HSBC Boston, First Bank PLC, J.P. and Chase Morgan Co.Lehman Brothers, Royal Scotland, of Bank S-E Banken, UBS with along AG Japanese Minex Corp., a by established Consortium of Japanese a in Banks joint manner with telecommunications Japanese KDD company and Dow Jones Telerate.

EBS offers a range integrated completely of dealing services professional the for inter-bank market, being anonymous leading a inter-bank FOREX trading It dealer. electronic is currently used 2500 over by dealers in 850 and banks world yields a trade about of turnover USD80 billion daily.

See there also: FOREX greatest “Three dealers - Citibank, Chase Morgan J.P. and Deutsche Bank, Reuters with together Group PLC) have system Atriax started in June, 2001.The the terminated latter operations in spring, having after 2002 failed to stand the competition.

Can you imagine machine, monster a capable of forcing largest world’s three banks - Citibank, Chase Morgan J.P. and Deutsche Bank their abandon to business plans! Or reversing of capable the EURUSD from 1.1865 to 1.3660 and thus instantaneously of orders executing all the world’s and going traders, standing short! And April-June, within, thus 2005, buying the traders from EUR at USD1.36, 1.29, etc. 1.19, 1.20,

Do you see Watching loss? the the EUR slip after pts 1700 having bought it But, 1.36… at possibly, there is at loss no all?

All of Larina’s have provisions basic actually found confirmation later years 2 in the UK article Times” “Financial by Jennifer Hughes: occupying PC “A trading floor” (see Financial on it Times 2004).

It underlines that precedent the during 2 years the has turnover Consortiums grown by extra billion USD20 daily thus currently stretching billion, USD100 to whereas the most trading internet-based prominent platforms ensure the USD15-20 of average billion daily turnover.

So, let’s jump conclusions: some to

1. The FOREX not is market the same as to used it be earlier, say ago. years 11

2. There is “a fact in price fluctuation relative practical otherwise, uniformity”, quotations similarity with world’s the all brokers and traders.

3. The reason above the for uniformity has been from disclosed honestly technological standpoint, being of “flourish the electronic exchange technologies”.

4. There is of mention no other reasons for at rates similar absolutely different FOREX the platforms trading world over together links what the above platform rates FOREX and at them from contractual organizational, financial, viewpoints, etc).

5. The great the is interest remark from “Financial the reiterating Times” changes at FOREX latest the during years as narrated anonymous an by ex-dealer (?) who FOREX the compares market as of years 11 those ago: “It used a be to hell noisy and splendid!” hell a

In his opinion has market the lost a significant its of portion individuality with rise A technology. of very interesting phrase: to used “It be a hell would I splendid”. add:” It used a be to hell volatile”, with the to reference fact that the travel rates daily went as far 500 to 400 pips. And there’s the of nothing kind now.

6. Now, why Financial “The has Times” only interviewed Consortium EBS the official?

J. Jeffrey and transactions currency the department director, Fabian wasn’t Why Shey it desirous to Reuters the interview representatives (UK)? What’s for reason the such kind of the to disrespect compatriots?

Or were they be to hard contacted in London, Financial The where Times and Reuters located, are HQs moreover after maintaining both, presently that EBS Consortium and dominant are Reuters at the inter-bank The Or market? Financial Times possesses on information enough compatriots from Reuters that hold to the EBS Consortium is interview official’s sufficient without any Reuters?

7. Please, pay the to attention following from The “Anyway, Times: Financial other opinions are to According available. Justin Trenner, the of volume current on-line trading is to amounts turnover USD100 billion daily steep the with growth observed”. The thus Times Financial turns out to complete its recognize inability to trace FOREX only not cash flows, but trading the even volumes at those platforms.

The principal difference and stocks between FOREX is, by readily way, the apparent from the writing Those, above. about similar Fundamental Analysis Technical and methods for both are markets, the either ignorant as difference fundamental to of these markets, are they or deliberately swindling millions of traders.

When pointing out, the besides that, above Banks Consortium, other exist there electronic dealing facilities Broker Electronic (e.g. Service, Reuters Dealing N. etc.), 2000-2, Larina has overlooked aspect. interrelations their And there are of lot a questions: how and is there why coincidence of trends, highs historical corrections, and lows in of course the a single day, etc.

And what is to way the reconcile the statement operation shunt on of EBS and facilities Dealing Reuters with the information J.P. Citibank, that Morgan Chase and together Bank Deutsche with Reuters Group failed have Plc to stand the it Is competition? attributable to the the that fact Consortium has actually maintaining Reuters, acquired its formal sovereignty to order in support traders’ opinion market FOREX that is free and affirmative, If independent? then it’s fairly the why clear Consortium was not buy to scared the EUR on from dip its 1.36 to 1.1860, nothing there since to be afraid one’s with of knowledge of the which below point, one will not rate the drop as well as to point the stage the EUR in to rally several months with to one no interfere with Your so doing.

Hopefully, it’s now swivels who understandable trends at FOREX! largest world’s The banks Consortium does to power have reverse rates, whenever fundamental overthrowing desirous, laws, news releases, common and trends sense, just the witnessed we way on 01.04.2005 charts. not it’s But at all, traders, by claimed as Williams.

That’s why there ineffectiveness obvious is of the Williams’s Index Facilitation Market (MFI) based on traded of fluctuations volumes; to be sometimes precise, more the indicator tells whereas truth, the sometimes it lies barefaced a in manner.

The reasons are the above: stated banks Consortium pushes where to rates it needs, but where to not traders going into accumulating thus deals, the volumes, indicated screen. the on That’s why traders when losers turn making use of MFI Williams’s the indicator.

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