Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

mohsinqureshii

Stupid Question

Recommended Posts

I know it is a stupid question but no one had answered me this question in couple of sentences yet about this and this question arises in newbie.

 

How much volume come into the forex market when it moves to one tick - e.g. Let's talk about Euro/USD - If the price of euro moves to 1.2910 to 1.2911 - How much volume of buying has came into the market to move it to one tick.

 

Is there any specific mechanism for that ?

Share this post


Link to post
Share on other sites

it was designed to make you think....and there is no such thing as a stupid question. :)

 

Basically it takes whatever minimum volume it requires to record a trade tick.

In futures it would be one contract.

In FX it depends on your broker. They may record a trade when no one else does, and it may be on very small volume...hence my reference to asking have you ever bought a top or sold the bottom as a retail trader. I know I have for various moves.

Share this post


Link to post
Share on other sites
it was designed to make you think....and there is no such thing as a stupid question. :)

 

Basically it takes whatever minimum volume it requires to record a trade tick.

In futures it would be one contract.

In FX it depends on your broker. They may record a trade when no one else does, and it may be on very small volume...hence my reference to asking have you ever bought a top or sold the bottom as a retail trader. I know I have for various moves.

 

 

In spot forex there does not even have to be volume at all to record a tick. All is needed is a new bid/ask price from the bank (or whatever institution) to which your broker is connected.

Share this post


Link to post
Share on other sites

karoshiman - if that is true then I have learnt a new thing....hence there is never a stupid question :)

 

coming from equities I have always assumed it to be exactly the same thing. It needs a trade to be recorded, and given the volume in FX and my trading style I have never needed to worry about it.

I have also never seen it described as you say, everything I have seen implies that it requires a trade to be recorded. (assuming we are talking about the ECN market and not just swaps with a fx broker who may or may not transact with anyone but themselves and never record trades except in house)

 

In equities you can have someone bidding 1.2910, asking 1.2911, and no trades occurring there, and hence no recorded volume.

If say this was on a high point, and the next trade is 1.2908, then that is what would show as the high trade in historical charts. I have never seen it any other way.

 

If that is true that bids and asks and not trades are recorded, then the answer to the original question is theoretically zero....or is it the same answer - the minimum that is required to be on a bid or offer. Or does it again depend on the broker/data provider and how they recorded it, which is why different brokers charts have different ticks recorded?

 

interesting, can you show this is how its recorded? thanks.

Share this post


Link to post
Share on other sites
karoshiman - if that is true then I have learnt a new thing....hence there is never a stupid question :)

 

coming from equities I have always assumed it to be exactly the same thing. It needs a trade to be recorded, and given the volume in FX and my trading style I have never needed to worry about it.

I have also never seen it described as you say, everything I have seen implies that it requires a trade to be recorded. (assuming we are talking about the ECN market and not just swaps with a fx broker who may or may not transact with anyone but themselves and never record trades except in house)

 

In equities you can have someone bidding 1.2910, asking 1.2911, and no trades occurring there, and hence no recorded volume.

If say this was on a high point, and the next trade is 1.2908, then that is what would show as the high trade in historical charts. I have never seen it any other way.

 

If that is true that bids and asks and not trades are recorded, then the answer to the original question is theoretically zero....or is it the same answer - the minimum that is required to be on a bid or offer. Or does it again depend on the broker/data provider and how they recorded it, which is why different brokers charts have different ticks recorded?

 

interesting, can you show this is how its recorded? thanks.

 

 

Well, I'm not an expert in this. I've just read about this in several books and on websites and it makes sense to me.

 

In spot forex a "tick" is defined differently than in futures due to its decentralized character.

 

In the futures market a "tick" is defined like you mention it, as a transaction taking place, irrespective of the size of the transaction (with one traded contract being sufficient). So, by definition, there has to be a trade.

 

But in spot forex you have no central exchange, so a "tick" is defined as a change in price. That comes somewhat close to the above but it's not the same. I guess, in most cases there are somewhere in the world transactions in order for price to change, but theoretically there is no need for a trade to take place to change the price. So, the correct answer is indeed "theoretically zero".

 

The way your broker or data provider records it might also be crucial. Retail brokers have a spread on the prices of their data source (that's where they make their money if they have no commissions). So, differently negotiated spreads of different retail brokers lead to slightly different prices for retail clients. I do not know how ECN's record this. But they cannot deviate too much with their prices from what the large banks bid or offer. I guess, there must be some arbitrage mechanism be in place.

 

The surest thing is to ask your broker or data provider on how they do it exactly.

 

By the way, I do not trade forex anymore but only (non-forex) futures, actually only the ES. And my trading style makes use of volume information. So, for me, that is an argument against trading spot forex. But I've heard/read that some guys trade spot forex and use the corresponding futures volume as a substitute for actual volume. Don't know about their results though.

Share this post


Link to post
Share on other sites

 

...

 

But in spot forex you have no central exchange, so a "tick" is defined as a change in price. That comes somewhat close to the above but it's not the same.

 

...

 

 

 

I'd like to correct my statement above in bold letters. A "tick" in spot forex and the futures market is different. Period.

 

You can have many ticks in the futures market at the same price. So, it's totally a different definition.

Share this post


Link to post
Share on other sites

I had to laugh at myself.....

it is actually a two sided question when you think about it.

 

"How much volume come into the forex market when it moves to one tick - e.g. Let's talk about Euro/USD - If the price of euro moves to 1.2910 to 1.2911 - How much volume of buying has came into the market to move it to one tick."

 

If you are measuring and recording price ticks, then the answer is theoretically zero (or the minimum volume bid required if there is one)

If you are measuring and recording trades, then the answer is what ever trades at a price. If nothing trades it is only a market that has been made and nothing needs be recorded.

 

To actually tell how much volume is required might actually be irrelevant. You just need some one to make a market there to actually move the bids or asks....or is there a minimum required volume necessary....I dont know. Exchange traded market makers normally have minimums, can you supply a bid or an ask in FX without volume - I would think yes - then its up to your customers on how reliable you are to fill volume there. Dont really know now that i think about it. (luckily its been irrelevant to me so far - but a good question)

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • Here’s something few are talking about: The Chinese are printing money like it's going out of style. Not that you'd hear about it in the mainstream news. But Bitcoin knows.   Bitcoin always knows.   Here’s the thing…   When the Chinese government prints money to paper over the cracks, their smart money doesn't sit around waiting to get devalued.   It usually flows into three things: Bitcoin, gold, and dollars.   After years of being beaten down, gold's having one of its best years in decades. But here's the secret -- whatever gold does, Bitcoin's going to do it bigger.   Much bigger.   Since last November, when China started their printing spree, Bitcoin's been moving in near-perfect correlation with the People's Bank of China's balance sheet. Over 80% correlation, maybe even 90%.   Again, few are talking about it.   But here's why this matters right now: This could be the beginning of a huge breakout in the crypto markets.   Bitcoin broke above its July high, and historically, that's led to new all-time highs over 90% of the time. The only times it failed? COVID and the 2022 bear market.   That's it.” – Chris Campbell   Profits from free accurate cryptos signals: https://www.predictmag.com/     
    • Originally Answered: How can I compete with people who are better than me in every way?   So you want to outcompete people who are smarter, better looking and more experienced than you?   No problem!   All you have to do is outwork them.   Will Smith said, "if we both get on a treadmill either you're going to get off first or I'm going to die trying."     Most people just aren't willing to work that hard. Sure, they'll show up for the job interview and maybe practice in front of the mirror for a few minutes, but they won't do hours and hours of research and prepare for weeks. They won't wake up early and stay up late working on their dreams.   So while all those smart, good-looking, experienced people are waiting around for the next opportunity to come their way, you can outwork them and create your own opportunities.   In a few years, you'll be that "smart" person everyone looks up to. But you'll be different. You'll know it was your hard work, your inner strength and your commitment to living a great life that made you successful and brilliant - not luck or good genes.” – Tom Corson-Knowles, Quora Profits from free accurate cryptos signals: https://www.predictmag.com/   
    • @sxiqxx, Well done on making your first post a promising strategy. @everyone, post up if you want this coded into an EA. Although I switched to TradeStation, I still have an active MT5 demo with MetaEditor. I can code it without referencing object oriented programming which should be retroactively compatible with MT4. Let me know...
    • Please allow me to retort (in jest): RESPONSE 1 : Get a job supervising others where you're in control of performance reports and ride those others 100%. This makes your performance 100% with little to no effort.   RESPONSE 2: Feel free to piss off your boss but stay nonviolent. When the side effects of his viagra and testosterone boosters cause him to physically assault you, you have the legal upper hand. This can result in a boatload of trading capital.   RESPONSE 3: Feel free to have intimate relations with your boss if she finds you attractive. Rest assured that mum's the word because once again, you have the legal upper hand. This can also result in a boatload of trading capital.   RESPONSE 4: Don't be fake friends with any enemies... unless you need information from them. Being fake friends with everyone will cause you to become an empty shell of a person with no direction in life.   REPONSE 5: Get your boss to become reliant on your performance (really, just the performance of your subordinates), and then plan an "overheard" conversation wherein you fake an interview with another potential employer. You'll probably get a pay increase or a promotion.   RESPONSE 6: If you can give your 75% percent to a project, give 50% and rely on your legal upper hand(s). Learn to write trading algo's during your other 50%.   RESPONSE 7: Take all of the office boys out to nightclub where you merely sip soft drinks on a weeknight. Upon your return to the office in the morning, inform the security guards that all of the office boys are intoxicated. Your boss will love you for it.   RESPONSE 8: Never try to prove your client wrong or find faults in their processes, but do secretly collect their information in case you jump ship or "someone you know" decides to start his own company.   RESPONSE 9: Never stay in a firm for too long. Instead, use your ill-gotten capital to exit the rat-race and start trading.   RESPONSE 10: Trading pays more than your career. Interpersonal skills are now irrelevant. Use your technical skills for trading. Never stop learning and keep updating your technical skills.😁
    • There are a lot of trading strategies like elliot waves, wyckoff etc so we need to apply those who best suited to our need and are understandable too.
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.