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Trading and Misquotes

While viewing a chart, you are actually looking at two different prices: a historical price and a current price.

When you first open a chart, Alveo doesn’t have a history of current prices so it must backfill the chart with data from our “Historic Data” server; this is called historical data.

Once a chart is open, Alveo starts receiving “Current Price” data from our “Quote Server.” Apiary Fund has multiple liquidity providers who send their current price quote to our Quote Server which collects and organizes the different quotes, finds the best price, and broadcasts it to your computer.

The challenge with current price data is that occasionally we get an incorrect quote from one of our liquidity providers – called a misquote.  Since Alveo doesn’t know whether a quote is correct or not, it will “print” that quote on the chart.

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As you can imagine, misquotes are problematic for many reasons.  First, misquotes are not a true reflection of price and any analysis using a misquote will be inaccurate.  Second, the misquote may trigger pending orders. If the price limit of the pending order is between the current quote and the misquote, then it will trigger the pending order and give you a fill that is outside the current price.

No data or quote providers guarantee perfect data.  However, Alveo takes extra steps to make sure it has an impeccable record of clean data.  We have sophisticated systems in place to catch misquotes sent to us by our liquidity partners.  These systems catch the vast majority of misquotes, but again, no data is perfect and occasionally a misquote will slip past our watchful eyes – about one in about 100,000 misquotes to be precise.

Most of these misquotes are so close to the current price that you’ll never notice, but occasionally a misquote may pop up that is more apparent. If you suspect there is a misquote on your chart, you can find out by refreshing your data.  This will cause Alveo to pull historical price data.  If the spike on your chart goes away, then you’ll know it was a misquote.  If the spike on your chart remains, then you’ll know it was a good quote.

Happy Trading!

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All About Apiary VPS

June 2015 Apiary launched a new service called VPS.

VPS is designed to help people with Apple Mac, and increase trader mobility.

A fast computer with a fast internet connection is a necessity for a trader. It’s crucial in order to execute trades for the prices you want. However, a fast computer is costly, and not everybody is computer savvy and knows how to maintain their computer. No matter how fast a computer is, without proper maintenance it will slow down eventually. In the last few years, it’s become a trend to use VPS (Virtual Private Server) to increase trading performance.

Virtual Private Server acts like a computer, but in the cloud. A trader installs their trading platform (such as Alveo) and all of their trading activities are executed through the VPS. The trader’s computer or laptop only acts as a ‘keyboard’ to control the VPS.

The benefit of using VPS are :

  1. VPS works faster in transmitting the orders then an ordinary computer or laptop. This may reduce slippage.
  2. Trader can trade from anywhere with different machines (computer,laptop,iPad, tablets, etc). Say a trader’s laptop is broken, the trader doesn’t need to worry about his/her trading because all of the trades are in the VPS. The trader just needs to find/borrow a laptop with an internet connection then login to the VPS to secure his/her trading positions. In the past, traders have needed to reinstall all software and equipment again in order to access the trades.
  3. Save money because trader does not have to buy ‘high end’ computers to get fast trade execution.
  4. In case of power failure event,  VPS will keep the trading position (including Take Profit and Stop Loss), so all strategy and pending orders will proceed as normal until the trader has access to VPS.
  5. A trader will not need to waste time maintaining their computer, since VPS usually already has their own IT team to make sure it runs 24/7 without problem.
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What your Forex Broker Doesn’t Want You To Know

When it comes to trading foreign currency, most investors have at least heard of the two main camps that most forex brokers fall into. There are Electronic Communications Networks (ECNs) and Market Makers. Let me begin by first introducing each of these.

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Market Makers behave pretty much as you’d expect from their name – they “make” the market. They have the ability to internally set both the bid and ask price of the quotes they provide and they can do this because of the actual liquidity that a typical Market Maker brings to market. In other words, they have to take the opposite side of your trade. So order fills can be a bit better with a Market Maker, as long as you understand that the “fill” you are getting begins and ends with your broker. Another important point with a Market Maker is they will usually have smoother spreads. What I mean by smoother is that the spread they offer is usually more predictable. Because they aren’t making money through commissions (usually), they make most of their money by offering a spread that they set. So as you might imagine, if you were a Market Maker you might think the same way – “This is my money that I’m using to fill your order, so I’m going to give you the price that works best for me.”

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ECNs operate a bit differently. A true ECN will aggregate prices from multiple providers (like banks and even Market Makers) and offer you the best bid and the best ask. Their philosophy is very different from a Market Maker, because they will not manipulate the quotes nearly as much. They offer this because their money isn’t made in the spread, they make their money in charging you a commission on every trade. A fill on an ECN is not always guaranteed, which can make some traders miss their ideal price. Because ECNs offer quotes from many different sources, their prices are often more volatile which, depending on your style, can make it very difficult to be profitable. A common limitation that an ECN will have is on their servers. Due to the fact that they pull in multiple quotes from different sources, when those are aggregated they are also throttled. It wouldn’t be possible for them to provide every quote they receive to each of their traders. That would be very difficult, or at the very least it would be fiscally detrimental. Now that we have introduced both, let me explain how the Apiary Fund works.

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Apiary Fund operates like a hybrid of each of these camps. Lets just say we made our own camp. We have an interest in adjusting the spread like a Market Maker, except we don’t want to widen it for our profit. We want to tighten it so that the trader can profit. Also, we don’t take a dime of commission on any trade because we don’t want to add burden to any order regardless of direction. Like ECNs, Apiary works to negotiate with multiple liquidity providers to offer the best bid and ask with every quote. Unlike ECNs, Apiary works very hard to ensure that every quote we receive makes it to our Alveo trading platform. This is evident by watching a quote screen on Alveo compared to a quote screen on other platforms. When getting a new quote means the difference between your trade being profitable or not, wouldn’t you like to get them from a fire hose instead of a garden hose? We certainly think so.

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Bottom line, where in the world does the Apiary Fund make money if this is true? The answer is simple. When our traders make money. We want to make that very clear. When one of our TRADERS MAKE MONEY then APIARY MAKES MONEY. It’s that simple. Our goal is to create as many profitable traders as we possibly can. So as you can see, our incentives are aligned with that of our traders. Just like in a beehive (aka apiary), the more honey each bee makes, the more sustainable life is for everyone. That’s our philosophy.

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One Million Reasons Apiary’s Alveo Trading Platform Is Set To Succeed

It happened sometime during the wee hours of the morning on January 26th 2015…

Since it’s official launch in October 2014, Apiary’s new trading platform – Alveo – has officially processed 1,021,602 trades.

Processing 1 million trades is a major development for Alveo and Apiary.  It represents a significant milestone in a project that is over two years in the making.

While MT4 is the industry standard trading platform in the forex market, we realized long ago that the risk of building Apiary’s trading tools on top of a platform that is notorious for changing the rules of the game on a whim was not in our best interest.

During a 6-month period last year, MT4 conjured up over 80 updates to its server or client software. It caused Apiary to be in a constant state of “fixing” broken tools.  The sheer number of hours dedicated to keeping Apiary working on MT4 quickly crossed the line of diminishing returns; couple that with an ever increasing cost structure in both software and hardware resources, and we realized that we needed to make a change – fast!

And so in October 2014, amid pressure from hardware providers, Apiary launched the Alveo trading platform.  However, squaring up with the MT4 Goliath has not been easy.  In fact, the first couple of months were down right rocky.  We found ourselves fighting both a battle of stability (trying to keep the platform stable) and perceptions (trying to maintain confidence in the platform). All while we worked out a major connectivity issue with our liquidity providers.  These issues are not new to financial software, but they are wrinkles that a 10-year head start seems to smooth out.

Undaunted, we’ve trudged forward – fixing bugs, stomping out errors and putting in countless hours to develop stability and connectivity.  However, this time they were hours well spent – hours we know we won’t have to repeat with every new version or update.

While processing 1 million trades is certainly a drop compared to the ocean of trades being processed by MT4, it does illustrate the progress being made by Alveo.

Like a breakout trade that builds confidence, speed, and momentum, Alveo is experiencing a breakout moment. We want to share with the world a million reasons why Alveo is positioned to be a great trading platform, but for now we’ll just stick with the speed, liquidity, slippage, and income earning advantages of Alveo. We are very excited with this milestone that we’ve hit, and can’t wait to see what else Alveo can accomplish.

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