How manipulation in the FX works (and why you shouldn’t worry)

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Traders who lose money is to see conspiracies, it’s a totally human reaction to losing in the markets. In general, if you feel like someone is conspiring to make you lose money trading FX, you need to take a break.

The probe into FX market manipulation is grabbing headlines and people who don’t understand exactly what’s happening are using it to solidify their belief in a conspiracy.

Don’t believe it. What traders need to understand is that this is something that happened for one or two minutes, on occasion. There’s definitely a chance you made or lost money on it if you had a position open but large orders coming through at the London fix have never been a secret.

Here’s everything you need to know about the investigation into rigging the FX market.

Author: Adam Button

Adam Button is the managing editor of ForexLiveâ„¢. He was previously the chief currency strategist at XForex and has also worked with Intermarket Strategy. Adam believes there's an edge in knowing every tidbit of news. He was formerly the head of the markets team at the Canadian Economic Press and is a graduate of Ryerson University. Adam lives in Montreal, follow him on Twitter: @FX_Button.




Adam Button


  1. Oghhh really?:) When about half of speculative FX turnover is made by maybe 10-20 players (nobody knows how many FED stockholders there are..)… It would be a zero sum game for them if not the liquidy of lured in smaller fishes. Look at weekly E/U chart since the begining of August – almost every red’ish/bearish close was fallowed by bullish breakout and every green’ish/bullish close was fallowed by bearish breakout. How many breakout movements are postponed daily during NY session just to continue within next London (more liquid) or next monday?:) Why price always searshes for the least predictable way to change a direction? :) Thats neverending hunt for liquidity and all the Fibs, TL’s and MA’s are here for you to take the oposite side of THEIR entries:D

  2. Adam, what about data been leaked and all those inside dealings? I am sure this is happening.

  3. Alright Adam you caught me. I have been unloading thousands of Mexican Pesos right at the London Fix since the first of the week. I believe the butterfly effet of those near 10’s of dollars caused the ripple creating the slide in the Euro this week. Its just a theory.

  4. You’ll open a tin of worms with that post Adam. ;) Conspiracy theorists don’t seem to like like it when you question the existence of their singular global mega conspiracy. There’ll be a dozen replies now attacking your ignorance for failing to see the ‘conclusive proof’ that their conspiracy is real, and the clearl involvement of the Fed (or as conspiracy theorists prefer to write it – “the FED”), Goldman’s, Obama, the ‘liberal’ media, Scientology, the Freemasons, Israel, the Free Syrian Army, NASA, and the extra terrestrials that landed at Roswell.

  5. The global currency markets are what keeps the “money changers” and CIA / Mossad in business.
    How’s that for conspiracy theories?
    On a lighter note, I think the likes of large macro fund managers looking for yield, thanks to Chairsatan & Cos. ZIRP policies will drive outsized moves/trends in the F/X markets…
    Take the loss and reverse your trade if it’s moving against you. Everyone has their own ” Risk Tolerance” level. Live to fight another day, and preserve your margin.
    Learn the pairs that suit you, and master them. Just because eur/chf or nzd/usd is outperforming, doesn’t mean eur/gbp isn’t! LEARN & MASTER the trades you feel comfortable with. Each trade has it’s own idiosyncrasies. master the trade and you’ll be richly rewarded. It might not be 10 big figures over 60 days, but you’ll win in the end.

  6. oh well just use H4 chart to trade stop this FX manipulation BS (no pun intended);

  7. Barclays Plc (BARC) has suspended three currency traders, including a chief dealer in London, amid a probe into potential foreign-exchange MANIPULATION, according to a person with knowledge of the decision.

    Regulators in the U.K., Switzerland, the U.S. and Asia are probing the $5.3 trillion-a-day foreign-exchange market after Bloomberg News reported in June that dealers in the industry said they had been front-running client orders and attempting to rig the benchmark WM/Reuters rates by colluding with counterparts and pushing through trades before and during the 60-second windows when the benchmarks are set

  8. And i forgot, when you use H4 chart makes sure to hedge (hold) your position at 3:29pm on last Friday of the month…. because that will save you an heart attack. or dont trade on last Fridays of the month like me;)

  9. Personally I just don’t see it as ‘manipulation’ – if there’s something that really needs to change it’s the fix calculations and even reliance on such fix pricings.

    Trying to profit as the intermediary (the bank) is really no different than your local petrol station pushing up the price a cent on peak days/times. (which in many places they do too).

  10. Every edge will be exploited in this market including those found by CB’s and the BIS. If traders have information of large orders coming in they have almost an arbitrage situation, but considering there bet will be placed in the market for seconds they could also be facing a losing situation if price unexpectedly moves against them. Since they have an advantage, they will most likely be able to pick up the gain. The one thing that you can be sure of is that if their is collusion or conspiracy it cannot last forever. It may last seconds or minutes just as long as an edge was exploited, but no longer. This market is capable of breaking anyone including CB’S, but for the average trader, just like the guy who goes into the casino, walking out broke in a short time thinks the casino must have cheated. The casino never cheats it is the odds in the casino’s favor who beat the guy fair and square. In the currency market a trader who places his order and seconds later is 10 pips under and then an hour later is 100 pips under water is certainly looking for a reason to blame conspiracy or that someone is not playing fair, the truth is that any move in this market is countered by an opposite and equal effect. Had the trader been on the winning side and been holding a 100 pip gain, I am sure he would not be claiming the same thing. Anything that happens in the market is too big for an individual trader to claim the market is out to get them. It could be that they are just a bad trader and have no idea to trade. But there are inefficiencies in this market that can be exploited by big and small traders alike and that is the nature of the market. I am just after 20 pips a day 1, 2, or more here and there, but CB’s and super funds can rip 100 pips if they see an edge and it just goes with the territory. That has to be priced into any risk management plan, or you will never be successful in this market. A good part of any risk management plan is that the market should be able too rip against you obscenely and it shouldn’t be able to break you. Like the article says, it is the Wild West, a true battle field and all sides are playing for keeps and will use any means to get what they are after. When George Soros bet against the BOE and made his billion, he could have lost 10B dollars in the process, but he saw and edge and exploited it. I am sure that same order now would get stop hunted by the BIS in a flash trade, but that is another conversation. ;) Also, one more for the conspiracy theorists out there, Did you ever wonder about Goldman Sachs and George Soros having the same GS initials? It is no coincidence. ;) …Caveat Emptor.

  11. @Colin Reimer: I will change my name into Garry Spencer (GS)……;=)

  12. That will work too Bud, I mean Garry. ;)

  13. This isn’t a problem? Tell that to the chief FX traders suspended at Citi and JPM.


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