A Question About So Called "volume" and Forex

[AWOL 10]

Hello everyone,

 

Great forum , i wish i had found this place a long time ago...

 

I have a question and as lacking in wisdom as it may be i will ask anyway.

 

I understand all the talk about how volume is non existent in forex and tick volume is pointless due to there not being a centralized exchange but my question is as follows.

 

If the volume i see on a chart is not "real" volume then how do i know that the price i am seeing is also not the real price.

 

How can all of us see the same price no matter where we are in the world but none of us can see the volume.

 

How can every broker manage to correlate the price but not the volume ?

[flyingdutchmen 10]

 

How can every broker manage to correlate the price but not the volume ?

 

welcome to this forum, hope that you will enjoy your stay here.

 

to your question

they cant

 

fx is tradet at socalled bucketshops as it doesnt trade on any exchange

like a stock or future does. they do try to keep price correlated

you may feel free to open several demo-accounts at random forex brokers

and you will notice differences in price at all times

 

while broker a. will have a 1,5030 quote for eur/usd broker b. will have a 1,5034 quote

and broker c. 1,5028

 

if volume plays a part of your strategy try obtain it from their futures, for eur/usd this would be symbol 6E

[Kiwi 16]

There is more truth in a bucketshops (or anyones) price than the completely unreal volume.

 

Why? Arbitrage. If the price is too far from the "agreed" price too often then a player can buy the low price and sell the high price and then close both positions when the prices get closer together. So price variations are short and calculated to make the profit gained higher than the risk of your customers arbing you.

[AWOL 10]

Hallo flyingdutchmen, G'day kiwi,

 

Thanks for the replies and i agree about the bucketshops and variable prices between brokers.

 

As for volume i have never ever used it in forex but after listening to Tom Williams i wanted to clarify my original thoughts...so thanks for that.

 

The other reason i ask is because my best friend is a senior broker with one of the largest firms in the UK and we have had some great conversations on so called "volume" in forex .... he also says that the majority of succesful people who take the most money from them use EA's.

 

I look forward to contributing here.

Edited September 7, 2009 by AWOL

[zdo 20]

Some random comments of fx price and volume feeds…

 

The Currenex price feed can be considered the reference feed. It is just slightly less reactive ie Gain, etc feeds will on sparse occasions overshoot and/or vacillate more for a few seconds. In some pairs, it is still possible to pick up a few pip arbitraging the two feeds (with automation and must wait for a counter arb opportunity for the out ) but the net is negligible after slippage and spread/commissions

 

Up until recently Currenex volume correlated well with / could be attributed to bb/banks and Gain/sweatshop volume feeds correlated well with / could be attributed to the ‘small’ players… but Currenex has recently 'corrupted' itself with mini’s

 

TickCount ‘volume’ patterns will be out of synch with Real volume patterns at times.

And, it should be noted, at times the TickCount ‘volume’ patterns can be more accurate than Real volume patterns…

And if the peeps realized how correlated slope change patterns were to volume patterns, (particularily for automation) they wouldn’t be so enamored with (either kind of) volume feeds in fx or fx futures..

 

(Welcome, and how long have you been) AWOL,

re “we have had some great conversations on so called "volume" in forex”

Like what?

[BlowFish 10]

If the volume i see on a chart is not "real" volume then how do i know that the price i am seeing is also not the real price.

 

 

The short answer is you don't As there is no centralised exchange different participants can be conducting trades at different prices. Of course if things get out of line arbitrage opportunitiues would exist so things would be brought into line fairly quickly.

 

I see other people have already said this but as I have typed it already I may as well post.

[weiwei 10]

AWOL, can you clarify on what is EA's? thanks

[BlowFish 10]

Metatrader 4 speak for "Expert Advisor" I believe.

[AWOL 10]

AWOL, can you clarify on what is EA's? thanks

 

What Blowfish said...