In a full understanding of the rules of the "game" in the FOREX market and is largely the basis for success.
The most sensitive issue in this case is the understanding and
classification of action or a quoted bank dealer dealing center in order
to determine whether an outright "catch" and "slow" or is it a real
market prices and normal reaction. Knowing all the nuances of largely avoiding unsubstantiated claims and actually reduce some of the standard errors.
Consider the specific situation:
On the information terminal went critical data - certainly an
interesting time to enter the market, most traders and immediately
begins to ask quotation.
What if this happens very often (we are talking about a situation when I
got really significant news) - the trader receives a quotation from an
extended delay or spread and perceives this as a blatant and offensive
Let us now look at the situation on the other hand - the dealer bank
starts at the same time to enter the foreign counterparty (the situation
with 100% food and not the withdrawal of orders for foreign markets
will not consider - usually such offices do not last long) and what he
sees - in the most famous gourmet brokers for some time (usually no more
than 30 seconds) at the terminal hangs OFF PRICE.
Throughout the world, is considered incorrect to follow the price in
the first seconds after the news, but if you insist - you technically
represent a spread of 50 points.
On the other hand, based on our six years of experience in this market,
I can say that very many of those who had still "jump" in the market
for news, waiting for deep disappointment - usually always behind this
is a serious movement, direction is very often not the same as the
initial reaction, and sometimes "counterintuitive" that the small
Russian deposits and reckless regard to an acceptable risk of 90% led to
a loss of money.
Of course, for people who gave the world such an interesting game as a
"Russian roulette" chance 1 / 10, even very good, however, everyone
decides everything for itself, we hardly have the right of someone to
Another case - quiet market, the trader asks for non-stop price and get
the real market (in these moments really real market generally
corresponds to the indicative or REUTERS DOW JONES, so that the dual
interpretation can not be), but does not make any deals.
What action does the dealer bank - if it starts at the client with the
same frequency to go to foreign contractors and do nothing, you can put a
bourgeois CHOICE, ie
to give a quotation without spread (say, the guy got - you determine
what you still want to), it would seem remarkable - Dolby Bourgeois, get
choice and be happy - but of choice for the unwritten ethics of the
dealer can not refuse, refuse once - you will receive the title "
Russian sheep "with all its consequences, in general, about the good
deals have to forget.
Of course, choice is not given often - usually just slides apart
spread, as a signal that the number of requests for a fixed market has
exceeded all the correct rules.
From the foregoing, there is a fairly simple question - as an ordinary
trader can see the real market and indeed what it actually is.
Let's start with what he sees every trader in the window of their
information systems (Reuters, Dow, DBC, etc.) - this is indicative, that
is, prices do not mean unconditional pledge from a bank to buy / sell at the stated levels.
Among the financial institutions that they throw back their quotes,
there are banks and businesses of all sizes - from reputable market
makers to Russian, and other SNGeshnyh Malawi, Nauru, handsome. Again - one administered prices "hands", others use various "machines".
"Handles" and as "machines" have a tendency to fail, and to move prices
in the direction desired for a particular speculator (somewhere near
may be large and sweet stopak client, which can be performed to disrupt
7.5 pips - as there not to go).
Equally important is how many contractors have one system or another -
for example, to supply information about Reuters 2.600 banks in the Dow -
1000, DBC - 500. We put all three systems in a number of months and watched the match in their prices realities.
Night on the franc DBC could die for 20 minutes and, in comparison with
Reuters, prices differed by 70 points (enough for a quiet market), with
the DOW strange things happen in moments of strong motion - an
impression that the DOW - an independent brokerage office and at certain
moments gives "slightly" outdated market, then after a while graphics
were built in strict accordance with reyterovskimi, suggesting that they
knew where the market is in these moments.
However, I will not falsely accuse DOW - have a lot of advantages over
other systems, at least in terms of intelligence and novostiynogo flow
in FOREX, but the lag in prices (and not only on quotes forex, but the
indices, etc.) does place.
Since still see a real market?
In the world there are systems that combine only the largest banks, for
example, ELECTRONIC BROKER SYSTEM (EBS), DEALING2000 / 2 (D2). If the bank is in these systems exhibits a price, then it means his unconditional commitment to make a deal on it. These systems serve as a kind of electronic brokers. A number of large banks are machines, translating the prices of these systems. And here's the catch as possible, since the machine is not a man.
For example, if the market for CHF was a second ago, 52-55, and then 52
and the next bid HIT 15 (old bid, say 20 minutes, delivered back), the
stupid machine will average between 15 and 55, razdvinet spread of 5
pips on each of direction and give you the information window of 30-40. In this market is really in the area of 50-53.
At night, for CHF such glitches can last half an hour - hour and at the
same screen will be constantly updated, because other banks are similar
to slot machines.
In the case of the EUR, JPY and GBP the situation described above is
rare, so we need to closely monitor the quotes, put up respectable
Serious attention should be paid to BANK ONE (USA), BARCLAYS (GB), RZB
(AUSTRIA), ALLIED (IRISH), DEMIR (TURKISH), SOCIETE GENERALE (FRENCH),
ANZ (AUSTRALIA) (unfortunately, this is of little help in determining
the real market for CHF in force as described above).
Do not forget about the currency futures (spot market quotes can be
calculated using the forward premium / discount, the data on them are
also in the information systems). Using this, you completely decide for themselves the problem of the real market for EUR and GBP.
We would like to stay in CHF.
The fact is that if the spread is recalculated, which exists in futures
on the currency spot market in spreads, we get 12 points, respectively,
it adds uncertainty in equity quotes you received (in fact, usually
gives a standard spread of 5 pips.)
For these reasons, when determining the level of the market for that
currency in the first place you should pay attention to the currency of
the European group - EUR and to a lesser extent, GBP, and do not respond
to relatively large and sharp changes in CHF, EUR, if standing still.
Many traders prefer to play once again in CHF due to the fact that the
spread of 5 pips there corresponds to about 3 pips on other currencies,
but if you take into account all the above, this advantage is not so
obvious. Perhaps it is worth sacrificing them in order to feel more relaxed and no doubt once again in the untidiness of your broker?
So, summing up. To determine the real market watch for the following sources of prices:
EUR - SOCIETE GENERALE, ALLIED, BANK ONE, FUTURES
GBP - BARCLAYS, BANK ONE, FUTURES
JPY - SOCIETE GENERALE, RZB, ANZ
CHF - FUTURES or CROSS RATE EUR with
And if you're fairly active trader (do a few transactions a day), we recommend the following times for operations: