[Trader's Handbook] Draft articles, "out of pocket" discussions - page 9

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Forum on trading, automated trading systems and trading strategy testing

Traders Guide: Orders, Prices, Deposits, Funds, Currencies

hrenfx, 2013.06.03 19:03


It is obvious from what I wrote earlier that market makers are algotraders.

Toxic flow.

This term is used by market makers. Toxic flow is a systematic profitable flow of trade orders. It comes from the very ones that capitalize on the imperfection of MM algorithms. In practice, 99% of the toxic flow is accounted for by algotraders.

So it turns out that market makers (aka algotraders) create MM algorithms in order to create a toxic effect on the market and then profit from the flaws in the MM algorithms?


where am i wrong or misunderstanding?

ZS: this is a bit of a recursion:

I am an algotrader(aka MM), created the MM algorithm. After that, as an algotrader, I create a 99% toxic flow (i.e., a new MM algorithm, because I am an algotrader aka MM) to make money on imperfection of the algorithm that I created earlier, and then I create an algorithm that makes money on imperfection of the previous algorithm, and then I create an algorithm that makes money on imperfection of the previous algorithm and then I create an algorithm that makes money on imperfection of the previous algorithm, and after that I ...

don't boil the pot.)

 
If MMs are ripping each other off, then everything falls into place (it's understandable), then the question is: what is the meat for?
 
sanyooooook:
If the MMs are ripping each other off, then everything falls into place (it's understandable), then the question is: what is the meat for?
If I understand correctly, the toxic flow is the flow of profitable trades against the MM, it can belong to anyone - an alt trader, another MM, a clicker, but not to the MM for whom the flow is toxic.
 

An MM algorithm is a subset of algotrads.

P.S. Just as squares are a subset of rectangles.

 
what do you mean $8 mio. ?
 
sanyooooook:
what does $8 mio mean. ?

Mio (mio) is the slang name for a million in the Forex market. ))

 
tol64:

Mio (mio) is the slang name for a million in the Forex market. ))

Yeah, I guessed it when I read it.

but if it's "mio" then write "mio", not "mio", if it's russian then write "million", like the handbook says

I don't give a shit, but you're not writing for yourself, you're writing for someone else.

 
sanyooooook:

Yeah, I guessed it when I read it.

but if it's "mio" then write "mio", not "mio", if it's russian then write "mio", like the handbook says

I don't give a shit, but you're not writing for yourself, you're writing for someone else.

No criticism, or he'll go off to other forums to write.

He is already struggling to persuade me to finish the lecture.

he started with a quorum of 10 readers (collected votes for 2 days), then raised it to 30 (collected for a week) and demanded a 100% understanding of the material presented.

Where are we going to get votes?

let him write as he writes - sergeev will correct him.

 

added for completeness

According to the SRO NP CRFIN,they define their members as Forex brokers, which in turn are divided into 3 categories:

extract:
".......3.1.Group A forex brokers are legal entities providing, but not limited to, transactions in over-the-counter financial instruments of the forex market to individuals and legal entities and having sufficient equity capital to cover the market risks of default to clients.
3.2. Group A forex broker may:
3.2.1. open sub-accounts for clients and accumulate client funds accepted as collateral for transactions;
3.2.2. independently decide on the necessity of overlapping client positions on external counterparties;
3.2.3. act as an external counterparty for Group B forex brokers.

3.3.Group B fore x brokers are legal entities that provide operations with OTC financial instruments in the Forex market to individuals and legal entities but are not limited to it and do not have own capital sufficient for covering market risks of possible default of obligations to clients.
3.4. Forex brokers of Group B:
3.4.1. have the right to open sub-accounts for clients and accept client funds accepted as collateral for transactions;
3.4.2. must overlap the aggregate client position with external counterparties;
3.4.3. must place client funds accepted as collateral for transactions on their sub-account with an external counterparty to ensure dynamic overlap of their clients'open positions.

3.5Group C forex brokers(introducing brokers) - legal entities and/or individual entrepreneurs who attract clients for forex brokers in order to receive remuneration from them.....". add for completeness

 
papaklass:

I have encountered a slightly different definition of toxic flow.

Toxic flow in high-frequency trading systems is a flow of false trade orders whose sole purpose is to hide the true trade orders of the TS. That is, in other words, the toxic flow is used to protect a profitable TS to make it harder to break a profitable algorithm.

Dickfx calls the profitable flow of trade orders toxic, i.e. harmful. It is not usual to call profit a poison. :)

One man's profit is another man's loss.

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