Advisory – Nasty Rumors

[quant...@gmail.com]

From the rumor mill.....B.S.O.'s (Bucket Shop Operators) are having
clandestine meetings to discuss the possibility of turning off ALL
EA's if the NFA pending rule of favoring price manipulation in the
clients favor.....

If this happens.....only Manual Trading will be allowed!!!

The days of inflating the spread or stop hunting or creating price
spikes are over!!!! (they MUST refund their clients for the lost)

Response
Well no doubt the NFA is going to have to do something about the
onslaught of traders coming into the system and the Bucket Shop
Operators. But this turning off all EA's idea sounds to me like "Forum
Paranoia BS".

I think the ultimate result will be some kind of 'legitimizing' of the
brokers which is probably inevitable. Those brokers who are trying to
go by the rules like IBFX FXDD and Alpari probably won't have a
problem. It will only be the "bucket shop guys" who will have to turn
off the EA's.

No doubt too though there will be a continued battle against the "true
scalper" type programs by the brokers and supported by the MT4
developers. Since they make there money from the brokers and not from
the users who's side do you think they will be on? This is all kind of
a result of a "hacker" approach to the markets that seems to be the
main thrust of many programmers of EA's. There should be nothing wrong
with trading an Expert that abides by the "rules of the market". And
this has been one of my points all along.

Abiding by the "rules of the Market" means that you construct
strategies in the expert that are "realistic" and commonly used in the
mainstream. You don't use coding that "hides things" from the broker
or tries to be "broker intrusive". It is the guys who do this that
will be the inevitable down fall of Expert Advisor trading if it
should come to pass that they are banned.

The question everyone should be asking them selves is "why would
hedges be banned"? Not from the stand point of being EA paranoid but
from the standpoint of practicality on the part of the NFA. This
cannot be the result of willy nilly thinking or because of some expert
advisor that might be using hedges.

My question about currency hedge funds is the key. There must be
somewhere in the neighborhood of billions of dollars in these funds.
Not only this but because of the "derivatives crash" and the "energy
commodities" crash that brought down the markets and the global
economy it very well could be that all of the money that flowed into
these markets is now being directed at currencies. And the most likely
direction this money will go is into Currency Hedge Funds because they
are the "safest medium" to do in this market. This is "BILLIONS OF
DOLLARS".

For some reason all of these MT4 Expert programmers think they have
some great influence on what is happening in the currency market. This
is Total Bull crap. If you added up all of the money being traded by
Expert Advisers it would be NOTHING compared to what the big boys are
doing.

These hedge funds are so big that they can manipulate the currency
prices just like they manipulated the Oil Commodities Prices. They are
so big they can't enter the Stock Market with large buys and sells
because they will end up creating their own demise by moving the
prices way up when they buy and way down with they sell. This is the
main reason why the derivatives market was created. It was a way
"around" the stock market for these big money players.

Currency hedges also "hold positions" for at least a year which means
constant roll overs. This is all a big head ache for banks. The
currency system was never really designed for this kind of trading.
The rollover rate is every two days which means that the "norm for
holding positions" from the banks stand point is only that long. The
ideal trading system would comply with this as well and should not be
banned.

I think the real problem is much bigger than most guys think it is. It
has to do with the global economic melt down. With the inter bank
borrowing becoming limited the currency exchanges will also suffer.
This isn't an American problem it is a global problem. In the end
everyone involved in the currency trading business is going to be
affected.

Some of this has to do with the rumor that the "EURO" will melt down.
This currency is going to have a problem because of the economic
disparities between the Euro members. Another problem is with China
and the other currencies that are "fixed" to the dollar. There is
going to be a lot of pressure on these guys to end this policy. As
pressure mounts on all currency valuations I would look forward to a
number of changes in the currency exchanges. It may even come to pass
in the extreme that there will be no more currency exchange brokers
and this venue once again reverts to the bank exchanges only.

As you said though we will see in June.

http://www.quantumxcel.com