FxNewbie

Thanks. This is an excellent application

Hi I never got an activation email sent to me. Does anyone have a code to post or pm? TIA

I found these MQ4 to MQ5 conversion tools. I haven't used them but downloaded them in case they did come in handy later.

 

hxxp://[email protected]/X6TEK0AO26

The Structure of Forex Brokers

 

There has been much discussion of late regarding borker spreads and liquidity. Many assumptions are being made about why spreads are widened during news time that are built on an incomplete knowledge of the architecture of the forex market in general. The purpose of this article is to dissect the market and hopefully shed some light on the situation.

 

We will begin with an explanation of the purpose of the Forex market and how it is utilized by its primary participants, expand into the structure and operation of the market, and conclude with the implications of this information for speculators. With that having been said, let us begin.

 

Unlike the various bond and equity markets, the Forex market is not generally utilized as an investment medium. While speculation has a critical role in its proper function, the lion’s share of Forex transactions are done as a function of international business.

 

The guy who buys a shiny new Eclipse more then likely will pay for it with US Dollars. Unfortunately Mitsubishi’s factory workers in Japan need to get their paychecks denominated in Yen, so at some point a conversion needs to be made. When one considers that companies like Exxon, Boeing, Sony, Dell, Honda, and thousands of other international businesses move nearly every dollar, real, yen, rubble, pound, and euro they make in a foreign country through the Forex market, it isn’t hard to understand how insignificant the speculative presence is; even in a $2tril per day market.

 

By and large, businesses don’t much care about the intricacies of exchange rates, they just want to make and sell their products. As a central repository of a company’s money, it was only natural that the banks would be the facilitators of these transactions. In the old days it was easy enough for a bank to call a foreign bank (or a foreign branch of ones own bank) and swap the stockpiles of currency each had accumulated from their many customers.

 

Just as any business would, the banks bought the foreign currency at one rate and marked it up before selling it to the customer. With that the foreign exchange spread was born. This was (and still is) a reasonable cost of doing business. Mitsubishi can pay its customers and the banks make a nice little profit for the hassle and risks associated with moving around the currency.

 

As a byproduct of transacting all this business, bank traders developed the ability to speculate on the future of currency rates. Utilizing a better understanding of the market, a bank could quote a business a spread on the current rate but hold off hedging until a better one came along. This process allowed the banks to expand their net income dramatically. The unfortunate consequence was that liquidity was redistributed in a way that made certain transactions impossible to complete.

 

It was for this reason and this reason alone that the market was eventually opened up to non-bank participants. The banks wanted more orders in the market so that a) they could profit from the less experienced participants, and b) the less experienced participants could provide a better liquidity distribution for execution of international business hedge orders. Initially only megacap hedge funds (such as Soros’s and others) were permitted, but it has since grown to include the retail brokerages and ECNs.

 

Market Structure:

Now that we have established why the market exists, let’s take a look at how the transactions are facilitated:

 

The top tier of the Forex market is transacted on what is collectively known as the Interbank. Contrary to popular belief the Interbank is not an exchange; it is a collection of communication agreements between the world’s largest money center banks.

 

To understand the structure of the Interbank market, it may be easier to grasp by way of analogy. Consider that in an office (or maybe even someone’s home) there are multiple computers connected via a network cable. Each computer operates independently of the others until it needs a resource that another computer possesses. At that point it will contact the other computer and request access to the necessary resource. If the computer is working properly and its owner has given the requestor authorization to do so, the resource can be accessed and the initiating computers request can be fulfilled. By substituting computers for banks and resources for currency, you can easily grasp the relationships that exist on the Interbank.

 

Anyone who has ever tried to find resources on a computer network without a server can appreciate how difficult it can be to keep track of who has what resources. The same issue exists on the Interbank market with regard to prices and currency inventory. A bank in Singapore may only rarely transact business with a company that needs to exchange some Brazilian Real and it can be very difficult to establish what a proper exchange rate should be. It is for this purpose that EBS and Reuters (hereafter EBS) established their services.

 

Layered on top (in a manner of speaking) of the Interbank communication links, the EBS service enables banks to see how much and at what prices all the Interbank members are willing to transact. Pains should be taken to express that EBS is not a market or a market maker; it is an application used to see bids and offers from the various banks.

 

The second tier of the market exists essential within each bank. By calling your local Bank of America branch you can exchange any foreign currency you would like. More then likely they will just move some excess currency from one branch to another. Since this is a micro-exchange with a single counterparty, you are basically at their mercy as to what exchange rate they will quote you. Your choice is to accept their offer or shop a different bank. Everyone who trades the forex market should visit their bank at least once to get a few quotes. It would be very enlightening to see how lucrative these transactions really are.

 

Branching off of this second tier is the third tier retail market. When brokers like Oanda, Forex.com, FXCM, etc. desire to establish a retail operation the first thing they need is a liquidity provider. Nine in ten of these brokers will sign an agreement with just one bank. This bank will agree to provide liquidity if and only if they can hedge it on EBS inclusive of their desired spread. Because the volume will be significantly higher a single bank patron will transact, the spreads will be much more competitive. By no means should it be expected these tier 3 providers will be quoted precisely what exists on the Interbank. Remember the bank is in the business of collecting spreads and no agreement is going to suspend that priority.

 

Retail forex is almost akin to running a casino. The majority of its participants have zero understanding how to trade effectively and as a result are consistent losers. The spread system combined with a standard probability distribution of returns gives the broker a built in house advantage of a few percentage points. As a result, they have all built internal order matching systems that play one loser off against a winner and collect the spread. On the occasions when disequilibrium exists within the internal order book, the broker hedges any exposure with their tier 2 liquidity provider.

 

As bad as this may sound, there are some significant advantages for speculators that deal with them. Because it is an internal order book, many features can be provided which are otherwise unavailable through other means. Non-standard contract sizes, high leverage on tiny account balances, and the ability to transact in a commission free environment are just a few of them…

 

An ECN operates similar to a Tier 2 bank, but still exists on the third tier. An ECN will generally establish agreements with several tier 2 banks for liquidity. However instead of matching orders internally, it will just pass through the quotes from the banks, as is, to be traded on. It’s sort of an EBS for little guys. There are many advantages to the model, but it is still not the Interbank. The banks are going to make their spread or their not go to waste their time. Depending on the bank this will take the form of price shading or widened spreads depending on market conditions. The ECN, for its trouble, collects a commission on each transaction.

 

Aside from the commission factor, there are some other disadvantages a speculator should consider before making the leap to an ECN. Most offer much lower leverage and only allow full lot transactions. During certain market conditions, the banks may also pull their liquidity leaving traders without an opportunity to enter or exit positions at their desired price.

 

Trade Mechanics:

 

It is convenient to believe that in a $2tril per day market there is always enough liquidity to do what needs to be done. Unfortunately belief does not negate the reality that for every buyer there MUST be a seller or no transaction can occur. When an order is too large to transact at the current price, the price moves to the point where open interest is abundant enough to cover it. Every time you see price move a single pip, it means that an order was executed that consumed (or otherwise removed) the open interest at the current price. There is no other way that prices can move.

 

As we covered earlier, each bank lists on EBS how much and at what price they are willing to transact a currency. It is important to note that no Interbank participant is under any obligation to make a transaction if they do not feel it is in their best interest. There are no “market makers” on the Interbank; only speculators and hedgers.

 

Looking at an ECN platform or Level II data on the stock market, one can get a feel for what the orders on EBS look like. The following is a sample representation:

 

You’ll notice that there is open interest (Level II Vol figures) of various sizes at different price points. Each one of those units represents existing limit orders and in this example, each unit is $1mil in currency.

 

Using this information, if a market sell order was placed for 38.4mil, the spread would instantly widen from 2.5 pips to 4.5 pips because there would no longer be any orders between 1.56300 and 1.56345. No broker, market maker, bank, or thief in the night widened the spread; it was the natural byproduct of the order that was placed. If no additional orders entered the market, the spread would remain this large forever. Fortunately, someone somewhere will deem a price point between those 2 figures an appropriate opportunity to do something and place an order. That order will either consume more interest or add to it, depending whether it is a market or limit order respectively.

 

What would have happened if someone placed a market sell order for 2mil just 1 millisecond after that 38.4 mil order hit? They would have been filled at 1.5630 Why were they “slipped”? Because there was no one to take the other side of the transaction at 1.56320 any longer. Again, nobody was out screwing the trader; it was the natural byproduct of the order flow.

 

A more interesting question is, what would happen if all the listed orders where suddenly canceled? The spread would widen to a point at which there were existing bids and offers. That may be 5,7,9, or even 100 pips; it is going to widen to whatever the difference between a bid and an offer are. Notice that nobody came in and “set” the spread, they just refused to transact at anything between it.

 

Nothing can be done to force orders into existence that don’t exist. Regardless what market is being examined or what broker is facilitating transactions, it is impossible to avoid spreads and slippage. They are a fact of life in the realm of trading.

 

Implications for speculators:

 

Trading has been characterized as a zero sum game, and rightly so. If trader A sells a security to trader B and the price goes up, trader A lost money that they otherwise could have made. If it goes down, Trader A made money from trader B’s mistake. Even in a huge market like the Forex, each transaction must have a buyer and a seller to make a trade and one of them is going to lose. In the general realm of trading, this is materially irrelevant to each participant. But there are certain situations where it becomes of significant importance. One of those situations is a news event.

 

Much has been made of late about how it is immoral, illegal, or downright evil for a broker, bank, or other liquidity provider to withdraw their order (increasing the spread) and slip orders (as though it was a conscious decision on their part to do so) more then normal during these events. These things occur for very specific reasons which have nothing to do with screwing anyone. Let us examine why:

 

Leading up to an economic report for example, certain traders will enter into positions expecting the news to go a certain way. As the event becomes immanent, the banks on the Interbank will remove their speculative orders for fear of taking unnecessary losses. Technical traders will pull their orders as well since it is common practice for them to avoid the news. Hedge funds and other macro traders are either already positioned or waiting until after the news hits to make decisions dependent on the result.

 

Knowing what we now know, where is the liquidity necessary to maintain a tight spread coming from?

 

Moving down the food chain to Tier 2; a bank will only provide liquidity to an ECN or retail broker if they can instantly hedge (plus their requisite spread) the positions on Interbank. If the Interbank spreads are widening due to lower liquidity, the bank is going to have to widen the spreads on the downstream players as well.

 

At tier 3 the ECN’s are simply passing the banks offers on, so spreads widen up to their customers. The retailers that guarantee spreads of 2 to 5 pips have just opened a gaping hole in their risk profile since they can no longer hedge their net exposure (ever wonder why they always seem to shut down or requote until its over?). The variable spread retailers in turn open up their spreads to match what is happening at the bank or they run into the same problems fixed spreads broker are dealing with.

 

Now think about this situation for a second. What is going to happen when a number misses expectations? How many traders going into the event with positions chose wrong and need to get out ASAP? How many hedge funds are going to instantly drop their macro orders? How many retail traders’ straddle orders just executed? How many of them were waiting to hear a miss and executed market orders?

 

With the technical traders on the sidelines, who is going to be ****** enough to take the other side of all these orders?

 

The answer is no one. Between 1 and 5 seconds after the news hits it is a purely a 1 way market. That big long pin bar that occurs is a grand total of 2 prices; the one before the news hit and the one after. The 10, 20, or 30 pips between them is called a gap.

 

Is it any wonder that slippage is in evidence at this time?

 

Conclusions:

 

Each tier of the Forex market has its own inherent advantages and disadvantages. Depending on your priorities you have to make a choice between what restrictions you can live with and those you cant. Unfortunately, you can’t always get what you want.

 

By focusing on slippage and spreads, which are the natural byproduct of order flow, one is not only pursuing a futile ideal, they are passing up an enormous opportunity to capitalize on true inefficiencies. News events are one of the few times where a large number of players are positioned inappropriately and it is fairly easy to profit from their foolishness. If a trader truly wants to make the leap to the next level of profitability they should be spending their time figuring out how identify these positions and trading with the goal of capturing the price movement they inevitably will cause.

 

Nobody is going to make the argument that a broker is a trader’s best friend, but they still provide a valuable service and should be compensated for their efforts. By accepting a broker for what it is and learning how to work within the limitations of the relationship, traders have access to a world of opportunity that they otherwise could never dream of capturing. Let us all remember that simple truth.

Hello, I hope this is in the right thread. I have collected some information about forex markets from various locations and thing it is very useful information for sharing. I hope you agree it is worth reading and thinking about.

 

Posted in 2006.

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"I corresponded with Bill Willams in the summer 2006, at that time I have been crazy about Trading Chaos. And he constantly repeated, that he trades in futures and shares.

And I have always answered him, that I am involved with Forex.

 

And just now, probably, I understand, why did he dissuade me from Forex trading.

I think, that Bill Williams already knew about Forex controllability. I would like to share with you this information. It's quite interesting and instructive.

 

A material below he has sent me by the separate letter, and he has named it

" Reasons why I do not trade Forex ".

 

10.07.2006

....reasons why I do not trade Forex (bill wms)

 

WHEN TO NOT TRADE FOREX

Because so many people bombard us with requests about forex, we teach people how to trade it. Better to teach them the right way than to let them commit financial suicide. Nevertheless, we do not advocate forex trading unless you have a particular reason as to why you need to trade during the middle of the night, or you have a specific need to trade in currency pairs that do not involve the U.S. dollar. If the U.S.dollar is involved and you are able to trade during U.S. market hours (7:20am-2:00pm U.S.Central Time) you are much better off trading currencies in the Chicago currency futures markets. Here is the reason why:

 

* Brokers deceive you about there being no commissions. $30 minimum/round turn(called spread) is in reality a commission that eats up your capital at an astonishing rate. Even winning traders lose money and end up with negative results because of this outlandish overhead. Trading futures, you never have to pay a broker more than $10/round turn, and usually quite a bit less than that.

 

* Guaranteed fills. True but... The only way a broker can guarantee fills is for the broker to become the buyer or seller of last resort. That means the broker is running a bucket shop. All forex brokers are the buyer and seller of last resort.

 

* Brokers do not tell the truth about volume. They show the volume for all forex trading, which doesn't even come close to the volume they truly have at their own brokerage, which is where you are trading. Volume in currency futures is considerably higher than the volume traded at any single forex broker, often greater by a factor of ten.

 

* Leaning. Brokers say they are charging you a 3 pip spread to trade the popular currency pairs. But in reality a broker may be making as much or more than 10 pips on your trades. He does this by skewing prices. Since you are not trading at an exchange, the broker can feed you any price he wants to feed you. He can buy at the bank for perhaps 7 pips less than he sells to you. He then charges you 3 pips for the privilege of being ripped off for a total of 10 pips.

 

* Unregulated. Forex may sound like an exchange but it isn't. It exists entirely in cyberspace with every broker and every bank having different prices for any particular currency. There is no regulation,even for brokers who register with the CFTC and the NFA. Forex brokers do not have to mark to market each day as do futures brokers. If your forex broker files for bankruptcy or absconds with your money you have zero recourse.

 

* No guarantee. If a forex broker does go out of business, you could lose all your money. There are no guarantees and no one standing behind it. Futures brokers are required to mark to market every day. They have to put up cash to cover every open trade on their books. Future brokers have gone broke, but no future customer has ever lost one cent of the money in his trading account because of a failed broker. Nor have they had to wait for their money. It is immediately available.

 

* You can get exactly the same action in the euro fx futures as you get in the"Euro" forex. Commissions are as low as one tenth per round turn depending on volume, through a regulated broker, trading electronically at an exchange where you know the true price of the currency.

 

* What is the true price? A forex broker can only give you the price of a currency as quoted to him by the bank through which he trades. Banks have differing prices for a currency. You never know what the real price is because there is no central exchange through which all prices flow. Besides not knowing the true price from the bank, you can also be deceived by "leaning" or "skewing" of the real price at the bank. Forex brokers commonly lean the prices.

 

* Forex brokers are not truthful. They lure people in with hype and false advertising: "No commissions!" "Guaranteed fills." "24 hour trading:" Who in their right mind is going to trade in the middle of the night unless they have a special need. While it is true that total forex volume is greater than in the futures, futures volume at the exchange is greater than the volume at your broker for the most popularly traded currencies. The only place where the liquidity differential matters is in currencies like the Mexican peso, the Brazilian real, and somebody's drachma.

 

Those thinly traded currencies may be more liquid in forex. But if you trade anything but the few most liquid and popular currencies, you are going to be paying at least 5 pips, and often more. Unless you have a particular commercial need to deal in Polish ziotys, Indian rupees, or some other thinly traded currency, you don't need forex.

 

* You are told by forex brokers that there is little or no stop running. This is one of their biggest and boldest fabrications. The truth is there is far more stop running in forex than in futures, and possibly as much stop running as in the stock market. I have friends who work in forex as well as many traders who of necessity have to trade forex. One of my students is a market maker in forex. These are people who should know, but in case you don't want to believe me or them, simple observation of forex trading will reveal the vast amount of stop running that takes place there. Who is it that runs the stop? It's your friendly forex broker, that's who. The broker has a vested interest in seeing to it that your orders are filled. Stop running is nothing more than order filling. The broker sees to it that everybody's orders get filled.

 

* Probably you have heard that if your are winning regularly in forex, you may be barred from trading. Is this true? Yes it is. The fact that is true is just another proof that when you trade forex you are trading at a bucket shop.

In the book, "Reminiscences of a Stock Operator, " we are told that Jesse Livermore was banned from trading a certain stock brokers because they couldn't stand him beating the housel. The same thing is true with many forex brokers.

Since they are the ones guaranteeing you a fill they in effect the buyer and seller of last re-sort. The truth is that most forex brokers have precious little liquidity at their firms. In order to give you the impression that there is liquidity, it is the broker who gives you your fill. It is the broker who does the stop running that supposedly doesn't exist in forex. But if you are regularly beating the socks off the broker, he will ban you from trading at his firm.

 

Now you know the truth about forex. I challenge any and all forex brokers to prove that I am wrong.

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I have received numerous requests for readers to share this information on other forums. I have no problem with anyone doing so provided they include the following statement, and a link to this page, prior to posting the content:

 

“Originally posted by Darkstar at FF.”

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Do a search on MQL codebase. I saw an article explaining how to do this task. It is doo-able

there are some newer Belkhayte Indicators and an EA about. I saw them recently but can't recall where

another good one is http://www.forexeasysystems.com - the indicator/app FX Pulse v1.0 is free but we have to register. The news updates are faster than FFCal / forexfactory and Newsupdater.

Simple way to do this:

1. Copy and paste the text into a note-pad file or another editor-file or into Windows Word document.

2. Save it and rename it with the .mq4 suffix.

For example: You save it as SpanishDayline.doc , the rename it to SpanishDayline.mq4

 

3. Copy the SpanishDayline.mq4 to Mt4 Experts/indicator folder, then start Mt4 ( close and restart if it is running ).

Mt4 will compile it to an .ex4 file and you will find it in the navigation tab together with your other custom indicators.

 

Thanks for this tip. As soon as I read it I thought "of course". Saves me creating a "new" indicator in MetaEditor and pasting the content over the default indicator template. Good tip :)

I came across this site when I was searching for an easier way to know about session times around the world. I thought others might be like me sometimes getting mixed up about session times with all the changes in daylight saving etc at your local time and other places. This site has it all at a glance. You can configure to HH.MM am/pm or 24h and show detail or compact.

 

http://www.2011.worldmarkethours.com/Forex/index.htm I guess it'll change to xxx.2012.world..... next year.

 

I hope you like it and also I hope I have not breached a rule in posting this URL.

Thanks for the DLL file Django. Is this educated? Does it call home? DLL's worry me sometimes

Surely you have a trade plan to execute at a particular time? Some criteria other than just the

Or are you looking for a a News type EA that places Pending Orders at a particular time.

I wonder if there is any truth to what I read a little while ago about vendors of the most popular EA's actually counter-trade their own EA because they know a zillion people's EA will "kick in"

There are many EA's that will execute based on day of week and/or hours open close. Some even have Open1/Close1. Open2/Close2. I can't think of one right now but if you look around you will find. Either look at the MQ4 settings of each one you examine to see options for trade times or load the ex4 file on MT4 and press F7 and look at the options box. Also, if you make your own EA using say EA Builder you can select these blocks of code (day filter and hour filter). So all is possible. I hope this helps and sorry (again) that I can't think of one off the top of my head right now.

I take it the purpose of this is to use Maxedd to analyse an EA and come up with optimised settings?

I was interested only in the 3G MA indicator. I included the EA because it was with the indicator when I downloaded it. I have not even looked at the EA but I find the indicator to be very useful. It's definitely more responsive to change. The reason I posted was because the scientific trading one discussed above was an executable file with a dll. I found a public domain MQ4 one available. So I shared.

 

I like the 3G indicator. I am observing it's behaviours and relationships to other indicators I already use (the _!_Moving averages Tavo.mq4 indicator I posted earlier in a different thread)

For GBPUSD on M1 under present market conditions the SMMA 200 on Price Typical gives the most intersections. For M5 the best fit is SMMA 775. These figures change and need re-evaluation weekly and the same values are not generally valid or useful when applied to a different pair i.e. each pair is unique but there is some "group" (similarities).

 

(post note: I didn't realise this post was 3 pages long when I replied - I was replying to #1 - adding my observations. Sorry about this - better to explain than delete)

Here is MQ4 3G Moving average indicator (File name 3rdGenMA.mq4 - you need to compile it to make the ex4 file). I read the rationale is the same as the one promoted above i.e. M. Dürschner (2011). The second file included in the zip is called Adjustable_MA_3G and this is an EA based on the MA Indicator. I have not used the EA but thought to include in case someone does try it and finds it useful (then let us all know :-) )

 

hxxp://xxx.multiupl0ad.c0m/H86PJ1DYTL

Can I apologise to the forum administrator? I did not realise this rule and in a post I left a URL. I now know this rule and won't do it again.

I am very impressed with this method. I have added a MA26 Mode:LMWA Price: Typical and removed several other indicators. It works on any pair and time frame though I think H1 and H4 are most likely best because of fewer crosses. If there is no distinct separation of the three lines then do not enter any trade. On H1 it seems to be good for 30~40 pips in a trending market.

Trailingator is hopeless. There are many free excellent trade manager EA's on TSD or google terms like Swiss Army Knife, Dream EA, BreakEvenExpert, ManageTP2-4, sRs Trade Manager etc. They are all vastly superior and more versatile. I don't have copies to post but had notes about what's out there and easy to find and download free legit copies.

Hello, I don't know if this is helpful or not but my partner is Russian. She has zero interest in forex but she has done translating for me when she knows it's important to me. I would be happy to ask her to translate if there is a needm especially when there are nonsense characters that need to be ignored by a human but Google attempts.

Here is the complete set and instructions. It does repaint but its a cool indi set. PLay with the settings - I dont have any images or preferred settings but it's definately worth adjusting. Enjoy

 

hxxp://xxx.multiupload.c0m/3JS194XSDF

 

p.s. I must say I understand now why people prompt to say Thanks. I see my downloads have reached 450 and yet only got 30 thanks. I like to help where I am able and share and I like the good spirit at this site

Hello, has anyone heard about this trading tool? Sounds good.

 

hxxp://xxx.forexpeacearmy.cOm/public/review/www.4xcircle.com

I was in a trade before the sudden change. I have to say it is the most spectacular trade I have ever been in by far. I had a SL but no TP. I wasn't even aware the market had gone berserk - I exited the trade after the retracement but very happy :)