Peterma said:Very valid point, was for Livermore, many times he was aware that his trades were moving the market - hence he always, actually got into the habit of, entering his trades by averaging up - I wonder do the large movers in FX still do the same?
Absolutely they do... but they aren't limited to it.
The large guys use all sorts of tools to manage execution of large orders.
For instance: The buy side traders who work for funds/firms (as opposed to sell side traders who work for liquidity providers / banks / dealers / etc.. and aren't taking a trade so much as just filling an order,) could just put a TWAP/VWAP algo (buy/sell program) on to process the order gradually (often with slight variations in each execution to reduce signaling risk.)
Others might just RFQ (request for quote) their large order to their dealer and see what price they can get the whole thing processed for up front. This would be like saying "yo, JPMorgan, I need $800MM worth of Euro like, right now dawg, what's it going to cost me?" and JPM looks up the spot price, depth, etc, and gives them an off market quote that hopefully is better than what the trader would pay should they just market the entire order and experience hella slippage getting filled.
There are many other options as well.
So it all depends on that firm/fund's style and what they've determined to be the best order processing method for their trade idea. But yes, the risks of large orders are still there.
Heck, Soros (when he "broke the BoE") went out of his way to not only average 'up', but tell the world what he was doing (accepting signaling risk) so others might join in and help pressure the currency against the BoE. He needed the help after all, since he was fighting a central bank, and that's usually a ticket to the poor house.
While FX is the most liquid market in the world, people still have to deal with the risks that come with ultra large orders (relative to the market's depth and liquidity) and how such orders are processed. But, just how they deal with such risks can be very different depending on order sizes, strategies, counterparties they are dealing with and related relationships, etc...
So with all that being said, thankfully FX is just 'money' after all, and that means the liquidity available is high enough that most of us retailers won't ever have to deal with such problems. I mean, it's easy for banks and liquidity providers to pair off their risk when they fill your order (if they want to) so finding liquidity isn't very hard. (Unlike buying Steel like the Livermore example that is.)