Biggest trading ****up
Discussion
Loads of them. Sometimes/often 5 or 6 figures at once.
As long as you average out on top then its not an issue.
Its also a lot easier when the company stands the losses and still pays your salary after a bad month.
I had 1 trade which took over 12 months to sort out. Financially it wasn't one of the worst, but in terms of the amount of work and hassle, I learnt that lesson pretty quickly!
As long as you average out on top then its not an issue.
Its also a lot easier when the company stands the losses and still pays your salary after a bad month.
I had 1 trade which took over 12 months to sort out. Financially it wasn't one of the worst, but in terms of the amount of work and hassle, I learnt that lesson pretty quickly!
Edited by Condi on Tuesday 20th August 19:24
DonkeyApple said:
It’s quarterly but it’s actually a stupid and I’ll thought out measure as the figure is not just meaningless but deceptive.
The figure suggests that 25% of traders win. It’s poorly worded. What it actually means is that over that period 25% hadn’t lost yet. Over the next period it’s a different 25% who aren’t losing money.
The figure you really want to see would be net gains over account lifespan.
ESMA was right to cull leverage but like the FCA they simply don’t understand that these products have over the last 20 years morphed emphatically into gambling tools while at the same time the end consumer simply does not care about the jurisdiction or protection of their funds.
What this has meant is that all the clients have left the protection of the firms regulated by the likes of the FCA and gone offshore to unregulated B book spark shops which primarily exist to simply funnel the client money into the owner’s account within one minute of those funds clearing in.
The whole B book side of the business became hideously distorted when passporting became available and the FCA didn’t care who the beneficial owners of these firms were or what the firm’s primary activities were. At the same time they seemingly stopped regulating applications for retail licenses. What this meant was that a raft of new firms entered the market and massively increased the available leverage.
A certain amount of leverage is a good thing as it has limited destructive capability but we know that if we give a client too much leverage then they will burn themselves out. The more leverage then the quicker the burn out rate. That means that the B book firms if released to use excessive leverage don’t have to spend time skewing fills against clients to get them to wipe out, or running MT4 back end plugins that manipulate pricing but can just leave them to do it themselves and simply focus on calling teams to get clients to put as much money on account as possible.
It’s no coincidence also that all these ‘traders’ lose when macro fundamental events take place such as Trumps actions recently. This is because they aren’t traders but are gamblers and like most gamblers they don’t actually study the form but instead use gypsy tea leaves to predict the future as it’s easier than doing any actual work or engaging brain.
Excess leverage is what destroys accounts along with excess trading. No client is forced to do either but we know that if we give them the leverage they will five into it quicker than Pete Doherty into a pile of coke and we also know that if we make our comms look artificially cheap on the front end then we will get them rushing in and over trading because it’s so cheap they just have to do it.
20 years ago the spank shops had to work hard to get the gambler's money across to their book, today you’d have to work twice as hard to stop them. They just hurl the money in so fast and so consistently that a very large number of offshore brokers never even place the client funds into the client account but symphonic themnoff instantly to their account.
It’s just become witless gambling by fools.
I'd be delighted if you could find the time to re-write that in laymans terms or with a glossary.The figure suggests that 25% of traders win. It’s poorly worded. What it actually means is that over that period 25% hadn’t lost yet. Over the next period it’s a different 25% who aren’t losing money.
The figure you really want to see would be net gains over account lifespan.
ESMA was right to cull leverage but like the FCA they simply don’t understand that these products have over the last 20 years morphed emphatically into gambling tools while at the same time the end consumer simply does not care about the jurisdiction or protection of their funds.
What this has meant is that all the clients have left the protection of the firms regulated by the likes of the FCA and gone offshore to unregulated B book spark shops which primarily exist to simply funnel the client money into the owner’s account within one minute of those funds clearing in.
The whole B book side of the business became hideously distorted when passporting became available and the FCA didn’t care who the beneficial owners of these firms were or what the firm’s primary activities were. At the same time they seemingly stopped regulating applications for retail licenses. What this meant was that a raft of new firms entered the market and massively increased the available leverage.
A certain amount of leverage is a good thing as it has limited destructive capability but we know that if we give a client too much leverage then they will burn themselves out. The more leverage then the quicker the burn out rate. That means that the B book firms if released to use excessive leverage don’t have to spend time skewing fills against clients to get them to wipe out, or running MT4 back end plugins that manipulate pricing but can just leave them to do it themselves and simply focus on calling teams to get clients to put as much money on account as possible.
It’s no coincidence also that all these ‘traders’ lose when macro fundamental events take place such as Trumps actions recently. This is because they aren’t traders but are gamblers and like most gamblers they don’t actually study the form but instead use gypsy tea leaves to predict the future as it’s easier than doing any actual work or engaging brain.
Excess leverage is what destroys accounts along with excess trading. No client is forced to do either but we know that if we give them the leverage they will five into it quicker than Pete Doherty into a pile of coke and we also know that if we make our comms look artificially cheap on the front end then we will get them rushing in and over trading because it’s so cheap they just have to do it.
20 years ago the spank shops had to work hard to get the gambler's money across to their book, today you’d have to work twice as hard to stop them. They just hurl the money in so fast and so consistently that a very large number of offshore brokers never even place the client funds into the client account but symphonic themnoff instantly to their account.
It’s just become witless gambling by fools.
Huntsman said:
I'd be delighted if you could find the time to re-write that in laymans terms or with a glossary.
Happy to try and explain the bits that don’t make sense if they are deemed jargon. It should be clear for anyone who has ever spread betted or used CFDs but realise that if not there are probably some odd phrases. 
Huntsman said:
I'm good with Doherty and the pile of coke.
ESMA?
B Book?
Leveraging?
Passporting?
MT4 back end plugins?
European Securities and Markets Authority. In Europe, binary betting went totally out of control, followed by cfd trading. Most firms were simply Ponzi schemes. They eventually stepped in and banned parts of the business and changed other parts. The FCA to date have just copied them and all it has meant is that the most vulnerable people that the FCA are supposed to protect have basically been kicked out of UK regulated firms and rushed into the arms of unregulated firms based in Africa, Asia etc. ESMA?
B Book?
Leveraging?
Passporting?
MT4 back end plugins?
B book is where you don’t hedge the client’s position directly in the market but keep the exposure for yourself. The reason being is that two seconds later you’re going to get a trade in the other direction from another client which you can match off against but get to keep the market spread. At the same time you can run a percentage unhedged on the basis that 75% of positions will be loss making at any one time, like a bookie.
Leverage is simply borrowing to trade. You want to do a £1m position in VOD and I’ll lend you £800k so you only need to put £200k down so you are 5x leverages or geared.
Passporting is the practice of the FCA granting UK permissions to a firm with EU positions. The problem with this is that you can go to bent EU regulators and buy a load of permissions and then take them to the FCA who just open the door to the UK retail customer base without checking anything. As a result gangsters from all over the world have been doing just that and plundering the UK retail market.
MT4 is the trading platform of choice for the retail trader. It’s origins are Russian and it was designed for brokers not for clients. It’s purpose was to allow brokers to smack their clients as efficiently as possible. Various plugins exist that brokers can attach to their MT4 to manipulate pricing and fills etc. These are not legal in the UK or EU. Brokers that use them don’t care about that.
So in short, I lend you a farcical amount that is guaranteed to blow your account away with massive losses, I give you a trading platform that allows for price manipulation, I make you lovely promises about how easy it is and how rich you’ll get. You give me all of your money. Job done.
DonkeyApple said:
European Securities and Markets Authority. In Europe, binary betting went totally out of control, followed by cfd trading. Most firms were simply Ponzi schemes. They eventually stepped in and banned parts of the business and changed other parts. The FCA to date have just copied them and all it has meant is that the most vulnerable people that the FCA are supposed to protect have basically been kicked out of UK regulated firms and rushed into the arms of unregulated firms based in Africa, Asia etc.
B book is where you don’t hedge the client’s position directly in the market but keep the exposure for yourself. The reason being is that two seconds later you’re going to get a trade in the other direction from another client which you can match off against but get to keep the market spread. At the same time you can run a percentage unhedged on the basis that 75% of positions will be loss making at any one time, like a bookie.
Leverage is simply borrowing to trade. You want to do a £1m position in VOD and I’ll lend you £800k so you only need to put £200k down so you are 5x leverages or geared.
Passporting is the practice of the FCA granting UK permissions to a firm with EU positions. The problem with this is that you can go to bent EU regulators and buy a load of permissions and then take them to the FCA who just open the door to the UK retail customer base without checking anything. As a result gangsters from all over the world have been doing just that and plundering the UK retail market.
MT4 is the trading platform of choice for the retail trader. It’s origins are Russian and it was designed for brokers not for clients. It’s purpose was to allow brokers to smack their clients as efficiently as possible. Various plugins exist that brokers can attach to their MT4 to manipulate pricing and fills etc. These are not legal in the UK or EU. Brokers that use them don’t care about that.
Thanks - very interesting.B book is where you don’t hedge the client’s position directly in the market but keep the exposure for yourself. The reason being is that two seconds later you’re going to get a trade in the other direction from another client which you can match off against but get to keep the market spread. At the same time you can run a percentage unhedged on the basis that 75% of positions will be loss making at any one time, like a bookie.
Leverage is simply borrowing to trade. You want to do a £1m position in VOD and I’ll lend you £800k so you only need to put £200k down so you are 5x leverages or geared.
Passporting is the practice of the FCA granting UK permissions to a firm with EU positions. The problem with this is that you can go to bent EU regulators and buy a load of permissions and then take them to the FCA who just open the door to the UK retail customer base without checking anything. As a result gangsters from all over the world have been doing just that and plundering the UK retail market.
MT4 is the trading platform of choice for the retail trader. It’s origins are Russian and it was designed for brokers not for clients. It’s purpose was to allow brokers to smack their clients as efficiently as possible. Various plugins exist that brokers can attach to their MT4 to manipulate pricing and fills etc. These are not legal in the UK or EU. Brokers that use them don’t care about that.
dingg said:
And when you do get 'good' at say scalping a few points here and there all day, they assign your account to a dealer who requotes you the wrong side of the spread until you can't scalp to the extent you were before.
Crooked as crooked can be and they hold all the cards in the deck.
I don't understand this. There are platforms and brokers who will give you direct market access, even as a retail trader. Why would someone (if they're any good) use CFDs and spread betting when they can simply buy or sell the underlying product? Crooked as crooked can be and they hold all the cards in the deck.
Condi said:
I don't understand this. There are platforms and brokers who will give you direct market access, even as a retail trader. Why would someone (if they're any good) use CFDs and spread betting when they can simply buy or sell the underlying product?
For the same reason people trade bitcoin on eToro instead of at a reliable bitcoin exchange. It's akin to a gambling addiction. It's easier. It allows people to hop around short term punting 1001 different asset classes. Marketing. As you imply, if they were any good, they'd focus.Condi said:
I don't understand this. There are platforms and brokers who will give you direct market access, even as a retail trader. Why would someone (if they're any good) use CFDs and spread betting when they can simply buy or sell the underlying product?
as the previous poster says ' marketing' and the fact most retail clients start off in a small way and cfd and spread bet companies hoover up these clients and rinse and repeat ad infinitum.dingg said:
And when you do get 'good' at say scalping a few points here and there all day, they assign your account to a dealer who requotes you the wrong side of the spread until you can't scalp to the extent you were before.
Crooked as crooked can be and they hold all the cards in the deck.
Actually, that aspect isn’t crooked but entirely necessary but it is a very common misunderstanding on the client side. Crooked as crooked can be and they hold all the cards in the deck.
When you are quoting OTCs you deliver your quote based on exchange best bid and offer at that moment in time, by the time the client order on that quote arrives the underlying price will be different so you have two options, the first is to requote on the new price but this only serves to irritate clients so you run with the second option which is to fill at the wrong/old price. The result in normal trading is that sometimes you win a little and sometimes the client wins a little bit it all evens out in the wash. What you do is define every market you offer with a certain percentage of slip that works for both parties.
The issue with scalping is that the whole round trip tends to occur very close to or within that percentage so the scalper is, often without realising it, not scalping the market but arbitraging the OTC broker’s slippage.
The solution to scalpers has three fronts. First you move them onto your DMA platform so that they aren’t arbing your book but back to scalping the real market. Second, if you don’t have a DMA platform then you have to facilitate it manually which is the mechanism that you describe above. And third, you don’t accept scalping trades. Some firms who run the third option will opt to inform the client via wide fills.
Even with the DMA option the exchanges have rules about scalping flow and will turn off your feed to all clients if they catch one of your clients breaking those rules.
The other very big misunderstanding among the retail market is that of size at best bid and offer. In the futures market the amount of liquidity available at B&O tends to be tiny, often just a few contracts of not just one. So if someone has the order book they can see that only one contract is available at the quoted price and if they want more then they have to pay the next price out and beyond to get a fill. Ie the correct price for their size is more expensive.
Internally we often have extra liquidity above the exchange and we sell that to the clients often at a loss as we give it away at the B&O price in order to keep the clients happy. But a scalper will sit there hogging it all for themselves to the detriment of the 99% of other clients.
This is also exactly why retail black boxes can never work and why the vendors never understand. They always think that there is limitless liquidity at the price offered so think that all of their clients can just hit the market at the same time on the same price and get the fill.
In reality what they are doing is sending 100 people into the same shop that only has two apples for sale and demanding that the shopkeeper sells them 100 apples at the price of two when only two exist. To fill the clients orders the shopkeeper must bring in 98 additional apples as quickly as possible but that cost money which means those 98 apples will cost the other 98 clients much more.
Behemoth said:
Condi said:
I don't understand this. There are platforms and brokers who will give you direct market access, even as a retail trader. Why would someone (if they're any good) use CFDs and spread betting when they can simply buy or sell the underlying product?
For the same reason people trade bitcoin on eToro instead of at a reliable bitcoin exchange. It's akin to a gambling addiction. It's easier. It allows people to hop around short term punting 1001 different asset classes. Marketing. As you imply, if they were any good, they'd focus.To set up to trade direct onto the exchange requires a capital expense that is typically far greater than the retail trader’s pot, requires exchange memberships to avoid local taxes and then requires a very large trading pot to then cover the ongoing costs.
Retail OTC brokerages are fantastic value for retail punters. Zero costs, all tech maintained by the broker, access to hundreds of markets, no local taxes, pricing feed fees etc.
The simple reason why retail traders then lose money is that they take on trades far too large for their pot. It’s all about risk management. The leverage is there but no one is forced to use it but they do.
The clients who don’t lose money trading are those who employ risk management and a fundamental market analysis overlap to any TA activity. They look to just make around 20% per annum return and if long traders won’t be exposed during macro economic events. 99% of retail traders are the exact opposite. They will be long and wrong over fundamental events and they will take losses that destroy their pot.
But luckily they can blame the broker and carry on gambling at another broker until they’ve lost thatbpot and just rinse and repeat until they are broke of their wife finds out.
DonkeyApple said:
Actually, that aspect isn’t crooked but entirely necessary but it is a very common misunderstanding on the client side.
When you are quoting OTCs you deliver your quote based on exchange best bid and offer at that moment in time, by the time the client order on that quote arrives the underlying price will be different so you have two options, the first is to requote on the new price but this only serves to irritate clients so you run with the second option which is to fill at the wrong/old price. The result in normal trading is that sometimes you win a little and sometimes the client wins a little bit it all evens out in the wash. What you do is define every market you offer with a certain percentage of slip that works for both parties.
The issue with scalping is that the whole round trip tends to occur very close to or within that percentage so the scalper is, often without realising it, not scalping the market but arbitraging the OTC broker’s slippage.
The solution to scalpers has three fronts. First you move them onto your DMA platform so that they aren’t arbing your book but back to scalping the real market. Second, if you don’t have a DMA platform then you have to facilitate it manually which is the mechanism that you describe above. And third, you don’t accept scalping trades. Some firms who run the third option will opt to inform the client via wide fills.
Even with the DMA option the exchanges have rules about scalping flow and will turn off your feed to all clients if they catch one of your clients breaking those rules.
The other very big misunderstanding among the retail market is that of size at best bid and offer. In the futures market the amount of liquidity available at B&O tends to be tiny, often just a few contracts of not just one. So if someone has the order book they can see that only one contract is available at the quoted price and if they want more then they have to pay the next price out and beyond to get a fill. Ie the correct price for their size is more expensive.
Internally we often have extra liquidity above the exchange and we sell that to the clients often at a loss as we give it away at the B&O price in order to keep the clients happy. But a scalper will sit there hogging it all for themselves to the detriment of the 99% of other clients.
This is also exactly why retail black boxes can never work and why the vendors never understand. They always think that there is limitless liquidity at the price offered so think that all of their clients can just hit the market at the same time on the same price and get the fill.
In reality what they are doing is sending 100 people into the same shop that only has two apples for sale and demanding that the shopkeeper sells them 100 apples at the price of two when only two exist. To fill the clients orders the shopkeeper must bring in 98 additional apples as quickly as possible but that cost money which means those 98 apples will cost the other 98 clients much more.
Thanks for the explanation When you are quoting OTCs you deliver your quote based on exchange best bid and offer at that moment in time, by the time the client order on that quote arrives the underlying price will be different so you have two options, the first is to requote on the new price but this only serves to irritate clients so you run with the second option which is to fill at the wrong/old price. The result in normal trading is that sometimes you win a little and sometimes the client wins a little bit it all evens out in the wash. What you do is define every market you offer with a certain percentage of slip that works for both parties.
The issue with scalping is that the whole round trip tends to occur very close to or within that percentage so the scalper is, often without realising it, not scalping the market but arbitraging the OTC broker’s slippage.
The solution to scalpers has three fronts. First you move them onto your DMA platform so that they aren’t arbing your book but back to scalping the real market. Second, if you don’t have a DMA platform then you have to facilitate it manually which is the mechanism that you describe above. And third, you don’t accept scalping trades. Some firms who run the third option will opt to inform the client via wide fills.
Even with the DMA option the exchanges have rules about scalping flow and will turn off your feed to all clients if they catch one of your clients breaking those rules.
The other very big misunderstanding among the retail market is that of size at best bid and offer. In the futures market the amount of liquidity available at B&O tends to be tiny, often just a few contracts of not just one. So if someone has the order book they can see that only one contract is available at the quoted price and if they want more then they have to pay the next price out and beyond to get a fill. Ie the correct price for their size is more expensive.
Internally we often have extra liquidity above the exchange and we sell that to the clients often at a loss as we give it away at the B&O price in order to keep the clients happy. But a scalper will sit there hogging it all for themselves to the detriment of the 99% of other clients.
This is also exactly why retail black boxes can never work and why the vendors never understand. They always think that there is limitless liquidity at the price offered so think that all of their clients can just hit the market at the same time on the same price and get the fill.
In reality what they are doing is sending 100 people into the same shop that only has two apples for sale and demanding that the shopkeeper sells them 100 apples at the price of two when only two exist. To fill the clients orders the shopkeeper must bring in 98 additional apples as quickly as possible but that cost money which means those 98 apples will cost the other 98 clients much more.
It all makes sense 👍
To be totally candid...there is a whole world of finance and investing of which I have zero knowledge.
At risk of falling foul of the name and shame rules, can you give me some examples of who these traders are?
Is this etoro? HL?
Or is this the small town high street stock broker offices?
At risk of falling foul of the name and shame rules, can you give me some examples of who these traders are?
Is this etoro? HL?
Or is this the small town high street stock broker offices?
Condi said:
It's the ones registered outside the EU, not registered at all, or registered in Cyprus, generally.
Yup. Tend to not offer spread betting because that’s a UK only product so they would have to apply for that locally (and probably not get it) rather than getting CFD permissions somewhere lax in the EU and getting it passported in. Worked on a trading floor (not the kind described above) inlcidubg managing a team of traders and then went on to work as a portfolio manager at an asset management firm managing a very leveraged strategy.
Without very good discipline it’s almost impossible to be profitable/have a good track record on a long term or consistent basis. Human nature is to run losses and realise profits....I’ve done it myself and have lost count of the people I have worked with that are susceptible or culpable of doing so. Clearly if you’re less likely to cut a losing position that has lost 20% than you are to realise a position that has a 10% profit then there’s a problem!
As an individual you have one advantage over probably 80% of professional investors, they all have to answer to their clients/investors/managers so they have to manage their portfolios/trading books on the basis of managing daily/weekly/monthly/quarterly revenue or return targets....amongst them there are an awful lot of people day trading with a huge amount of information which it is literally impossible to compete with if you are trading to the same time frame. So for me as an individual unless you have an almost sixth sense for the financial markets you should be looking to invest for a longer term. When I was sitting on a trading desk there were a lot of opportunites that I could see made an awful lot of sense to invest in over a six to nine month period but I just couldn’t tie up the capital for that long.
Without very good discipline it’s almost impossible to be profitable/have a good track record on a long term or consistent basis. Human nature is to run losses and realise profits....I’ve done it myself and have lost count of the people I have worked with that are susceptible or culpable of doing so. Clearly if you’re less likely to cut a losing position that has lost 20% than you are to realise a position that has a 10% profit then there’s a problem!
As an individual you have one advantage over probably 80% of professional investors, they all have to answer to their clients/investors/managers so they have to manage their portfolios/trading books on the basis of managing daily/weekly/monthly/quarterly revenue or return targets....amongst them there are an awful lot of people day trading with a huge amount of information which it is literally impossible to compete with if you are trading to the same time frame. So for me as an individual unless you have an almost sixth sense for the financial markets you should be looking to invest for a longer term. When I was sitting on a trading desk there were a lot of opportunites that I could see made an awful lot of sense to invest in over a six to nine month period but I just couldn’t tie up the capital for that long.
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