Originally posted at forexfactory on Jan 2, 2011
Well, it is perfectly sound and logical argument against trading if you are just beginning and you hear all this talk about big players in the market, and conspiracies, and central banks, and all the other people who have all these other advantages over you.
Let me toss my post out the window with facts, instead of sarcasm. Because my post just doesn’t stand up to the facts.
The buying AUD/USD at 0.9550 and selling it at 1.0250, as well as shorting EUR/USD at 1.4275 and buying it back at 1.3000, all those prices existed. They existed not just for central bank players, but for retail traders as well, even if you had above average spreads. You could of executed trades there. Nobody is stopping you from doing so. Not central banks, not the FED, not Deutsche Bank, etc. There was someone on the other side of those transactions. Maybe it wasn’t a large order, but it was order flow nonetheless. Now you may say I exaggerated, how could you pick the top and bottom. Yes I exaggerated, but the prices existed and you could of executed trades there. The only thing stopping you from doing so is your own skill level, nobody else is stopping you. If you think the spot fx market is stacked against you, then you can go to futures market, commodities, stocks, bonds, etc.
Yes there are other market participants that have advantage over retail traders, but they are FAR from perfect. They take losses like many other traders, and can be caught on the wrong side of the market many times. These are human beings with emotions and are inefficient at best.
Even with all the advantages that other market participants have over you the market still can be mis priced every day! Every time the market makes a 30 pip move, 50 pip move, 200 pip move, or 1,000 pip move, that represents a mis pricing that can be capitalized on. Nobody is stopping you from placing amazing trades except your own skill level.
Remember, a lot of these banks are the same ones that got destroyed and took huge losses when the housing market collapsed. What happened to those ivy league educations, quant junkies, supercomputers, information advantage, politicians in their back pocket, deep pockets?
Well, if only they understood what generates order flow…
Have a great New Year FF Factory!
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