Monday, March 29, 2010

Forex Manipulation and the EUR/USD...

The spot Forex market is certainly not a place for the faint of heart. Over the weekend on Sunday, my primary broker/market maker opened for business as they usually do... at 10:00 AM Pacific Standard Time. PIP spread on the EUR/USD was set at 10 pips as it normally is. Volume was incredibly anemic during these times as there is no world market really even open yet... pre-market trading only.

Just before 11:00 AM, someone (or multiple someone's) decided to bid the EUR/USD up significantly, triggering both my EUR/USD sell positions and then my stop loss order within minutes. Of course, no other price feed was showing this sort of "spike", primarily because no world market was even open yet!

You win some, you lose some, right? This is precisely the reason why I do not advocate setting stop losses or take profit levels through automatic means. I am not saying that my broker/market maker engineered such a spike, but I always try to keep in mind that they make money off my transactions (in the form of spreads and interest on margin balances), AND they take the other side of my trade. If I win big on the trade, they lose. The system is set up with a natural bias toward the market maker. They know what levels my stop losses and take profits are at because they manage the system that accepts them. Again, I am NOT saying that I believe that my broker engineered this spike... I honestly have no idea whether they did or didn't. The spike could just as easily have been engineered by someone with significant leverage who had no affiliation with my broker. Pre-market, very low volume... you get the picture.

Needless to say, I will not be placing automatic orders anymore, or at the very least, not allowing them to live through off-market hours.

Off my rant now... onto the business at hand. Elliott wave count updates...

While the rally from last week persists, we still havent broken through the lower tip of wave (i). That keeps the primary count I posted still on the table. I am keeping it primary right now, but it certainly doesnt "feel" like a wave (iv). It is really long compared to wave (ii), and with todays back and forth action, appears to have further to go on the upside. It also doesnt appear to be a clean impulsive wave off the lows either, so I have taken the bullish case off the table as the alternate, and place the 1-2 series long shot that I posted last Friday as the alternate. I have also seen an ending fifth wave diagonal count potential pop up overnight, that should the rally continue in a 3 wave form and then turn back down, I would have to consider. I do not have much confidence in any of these structures right now, as there are issues with any count at the moment. What does seem to be probable though is that there is more downside left. The lack of a clear impulsive rally off the lows at least gives us this to work with.

Have a great week! Will post more soon.


  1. I would like to advise that you go with the most recommended Forex broker - AvaTrade.

  2. Get daily suggestions and methods for generating THOUSANDS OF DOLLARS per day FROM HOME totally FREE.


Ping your blog