Where to trade REAL exotic currency pairs?

[BTM]

Hi Everyone!

Would like to know if there is any trading platform which makes it possible to trade really exotic currencies?

I'm new to forex and was really surprised when I realized that you can only trade with the same 20+ currency pairs by most of the market makers, but some really populated country's currencies (like China,India,Russia,Brazil) not even listed, neither two new EU members: Romania, Bulgaria.

Can someone explain me what is the reason?
Or is there any way to trade with these currencies same way like with the more common ones ?

Thx

	Market Maker A market maker provides pricing and liquidity for a particular currency pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the market maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price.

[DrForex]

It is all about if there is a liquid market. Forex brokers make a market in currencies. If they offer you a price that they can't off-set somewhere else they run risks they don't want to.

The problem is that many of the smaller currencies can't be traded on the retail level (ie. small amounts) in other words, if they offer you a deal on 100,000 USDSSS (USD Seychelle-Sea-shells) they might sit with that risk because their clearinghouse only deal in say 1,000,000 units.

While you must know that I believe it is a dumb idea to trade smaller currencies you will be able to trade about 150 pairs through Saxo Bank. www.saxobank.com

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[BTM]

@Dr.Forex

Thank you for your reply, but there are some points where I can't agree with you.

In your reply you brought an example of a small island,a holiday destination ... I can see your point, but I was talking about countries with huge population, and huge part in global economy.There is a BIG difference.

I understand the viewpoint of market makers:covering all risks possible, widening spreads when needed, or simply freeze trading by news events.These acts have one good reason: maximize profit and close out the chance of ANY loss.Simple, I understood,I accepted.I also understand the market levels (internbank-retail).If retail market maker offer a currency, then set the price offered to retail customers with the profit built in.Ok, still undertsand.

Only thing I can't understand: why is Hungarian Forint or Slovakian Korona is more attractive currency for a market maker to put on offered list of products, then Russian Rubel or Indian Rupia for example?
They can offer EUR/HUF with 25-80 pips spread(depending on market situation), I guess if they offer it, they can earn on it...

Sure, 80pips is HUGE spread to deal with, but if you had a short on EUR/HUF in the past 2 week, you don't give a damn...


Please, don't misunderstand me.I'm not trying to complain here in any way "Why market makers don't do this or that..."
I only want to see clearly the reason why and learn.
Thx

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	Market Maker A market maker provides pricing and liquidity for a particular currency pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the market maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price.

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[DrForex]

The bottom line is the following:

The MM need to be able to offset his risk somewhere. On popular currency pairs like the majors a lot of this is offset by short term trading and clients buying and selling all over the show.

But on exotic and minor currency pairs these options doesn't exist. They must basically take the trade and the risk or hedge it with a bank / other counter party. The same principle applies for that counter party.

The problem is their banks will only deal in certain transaction sizes, usually quite large and this means the market maker have to carry the risk of the trade and what if they were on the other side of your short eurhuf trade the last two weeks?

Also they are in the volume business not the specialized needs for exotic clients business.

That is the reason as far as I know but maybe one of the other experts have better ideas.

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	Market Maker A market maker provides pricing and liquidity for a particular currency pair and stands ready to buy or sell that currency at the quoted price. A market maker takes the opposite side of your trade and has the option of either holding that position or partially or fully offsetting it with other market participants, managing their aggregate exposure to their clients. If a market maker chooses to keep the trader's position without offsetting it in the market, the trader's profit is the market maker's loss and vice versa, leading to a possible conflict of interest between the trader and his market maker. A market maker earns their commission from the spread between the bid and offer price.

[jaybird]

Originally Posted by DrForex

Chance favors the prepared mind.

In case any of you are wondering, "Dr. Forex" didn't come up with that quote. Those words came from Louis Pasture in the context of scientific observation...which I suppose is very much like trading. (I'm a stickler for citing sources.)

Anyway, depends on how deep your pockets are and who you have access to. If you have a good relationship with a global bank or clearing firm, you can pretty much ask them to set up anything for you.

If you're a simple retail trader, then you're probably stuck with Saxo Bank and Oanda. Both are decent. With Oanda at least, you can scale your position size in a much more flexible way than with just about any other broker. I'm not sure about Saxo Bank, because I've only had experience with their demo and that was over five years ago.

With Oanda you can trade CNY, CZK, DKK, HUF, INR, PLN, SGD, TRY, TWD, and ZAR. BRL was offered at some point, but not anymore. While not quite "exotic", MXN, NOK and SEK can also be traded. (I trade these three frequently.) All the spreads are very competitive, if not the best.

If you don't see a currency that you're interested in, you can always ask the bank/broker whether they can support your trade. They may even have proxies for you that are the equivalent and perhaps less "risky".

I realize this thread is ancient, but want to post this information for future readers.

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