Annu wrote:Michael, i am curious, have you archieved any profits with this method? I think your strategy is sound, but i somehow doubt the viability to implement it for retail traders (internet latency for example). Another thing is, banks hate to be picked off. I know its possible on Currenex that a bank can put you on their "s**t list" (prohibit trades against counterparty #xy). Its probably possible on other multibank-venues too.
One way to eliminate the latency-issue would be to host your system at a brokerage. MB Trading i.e. offers that service. That would put you only a few milliseconds away from their ECN.
p.s.: im curious how this turns out, altho i wouldnt try it myself. I hope you post some updates on your progress.
my automated FPI framework is not done yet as I'm also working on a couple of other projects as well. So me and the clients who are getting the FPI framework are going to trade it live as soon as it's finished.
I don't know whether a bank can addresedly
put you on an "unwanted" list on Currenex, but I know that they can say "hey, Currenex, we at Lehman Brothers don't like your customer #456789. If this guy will be active at your ECN next month, we'll stop providing a liquidity to Currenex."
That might happen and this way, you actually don't care about what the Lehman Bros. guy thinks as there are many other
liquidity providers available at that ECN, but you might get 100% legally kicked out of Currenex by Currenex itself
as the Currenex would not want to lose the bank's business in return for getting yours. They are not obliged to provide a service to you by a constitution
The good news is that by contract, these multibank platforms (Hotspot, FXAll, Currenex, FXInside etc.) should never disclose the identity
of the customer that's actually behind the ID. So although your ECN ID might not be particularly the favorite one at some banks, they should not come to know that it's the Joe Trader behind the ID, thus they should not be able to send a couple of beefy fellows to your address who would discuss this business matter in a more detailed way with you on a personal basis
Putting a server running an FPI framework closer to the broker should not harm anyone, but still, as you were talking about MBT (EFX), I sort of doubt they are being provided the liquidity directly by the banks. The more probable scenario is that EFX is getting liquidity from one or more of the multibank
platforms and also, one of the banks might be doing a prime brokerage for EFX as a backup.
That means that at the end of the day, your orders will save a couple of ms on the way to EFX's ECN, but they will have to go thru the multibank platform and then
to the bank. Of course, this is only true if you don't hit a price of some non-bank subject directly on the ECN
(either on EFX's internal ECN or on the multibank platform's ECN). In such a case, you are lucky as your order will be processed more swiftly. But that would come at a cost of probably not having the highest liquidity possible as some "ordinary" ECN participant is simply not
bidding or offering at the same size
as the banks are.
One of the possible solutions would be to use a broker that's directly connected to the bank platforms, or rather, to their APIs. IB is such an example, although for some strange reason there are better prices
to be seen on EFX on some, mainly the non-primary pairs. That's why I would give EFX a shot with FPI nevertheless.