Peer to Peer trading?
Peer to Peer trading in FOREX and Exotic FX Options products is a legitimate financial framework whereby clients trade against each other with a Licensed and Regulated independent settlement party known and serving as the Exchange Administrator. The Flatbook Exchange Administrators are regulated Banks and Custodial service companies.
In the Peer to Peer model, the loss of Client A is used to fully offset the win of Client B at all times without a possibility of default by any of the parties in the trade contract.
Our Flatbook Exchange trader products include FOREX and Exotic FX options and they are traded either based on TIME or PENDING ORDER methods. The Exotic options products are as follows:
1. At The Money, In The Money and Out Of The Money Strikes of Digital Calls and Puts: A digital call option is an option whose payout is fixed if the underlying asset price expires above the predetermined barrier or strike price. While a digital put option is an option whose payout is fixed if the underlying asset price expires below the predetermined barrier or strike price.
2. One Touch: A one-touch option is a type of exotic option that gives an investor a payout once the price of the underlying asset reaches or surpasses a predetermined barrier.
3. No Touch: A no-touch option is a type of exotic option that gives an investor a payout if the price of the underlying asset does not reach or surpass a predetermined barrier.
6. Range In: A range in option is a type of exotic option that gives an investor a payout once the price of the underlying asset expires inside two predetermined barrier levels.
7. Range Out: A range out option is a type of exotic option that gives an investor a payout once the price of the underlying asset expires outside two predetermined barrier levels.
8. Motion Strike Option: This is a structured option whose strike price automatically resets to a new strike price as the underlying spot price moves. The strike price stops resetting as soon as the underlying spot price is at or above the options strike price.
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Benefits of Peer to Peer Exchange model over OTC (Over-The-Counter) models such as A, B and C books.
1. Because of the regulated independent third party settlement system of the Peer to Peer trading, the safety of your deposits and profits are always fully guaranteed.
2. Unlike the traditional OTC trading environment where there is always risk of Broker/Dealer bankruptcy and liquidation, the Peer to Peer exchange model does not have any inherent bankruptcy or liquidation risk. The traditional OTC trading environment does not have a full deposit refund scheme but a compensation scheme which is paid only after certain legal processes have been concluded. Profits made by the clients are not paid during bankruptcy because profits are not usually part of the compensation scheme in the traditional OTC trading environment.
Any voluntary closure of the Peer to Peer business means all Clients will within 72 hours get their full deposits and profits back to their respective bank accounts.
3. Because there is no traditional OTC Market Maker involvement, there is no spread and no tick cost, only the official Bid price which is used as the reference price. Also, there will never be a risk of default of market makers because of the Peer to Peer Exchange trading model. The spread of a financial instrument is simply the difference between the Bid and Ask price of that instrument which are usually determined by the market makers MMs or liquidity providers LPs. Spreads are income derivatives of OTC market makers.
It is never possible to have spreads, swaps and slippage costs in a genuine Peer to Peer (Client to Client) model. This is because if the seller is made to recieve the spread, swap and slippage as income while the buyer is made to pay the spread, swap and slippage as costs then everyone will only sell trades and there will be no buyer. This would then lead to absolutely no liquidity and so the market will be dead.
Also if OTC market makers come and participate and provide liquidity to a genuine Peer to Peer Exchange environment, they will only be able to participate as Clients of the Exchange and not as independent market makers. So they will not be making income from spreads, swaps and slippage.
4. Individuals and Corporate trading Clients have the ability to structure their own Spot FX and Exotic options contracts and expiry according to their respective strategies. All trading strategies are allowed.
5. Because the Peer to Peer trading model has an official Spot price and the open, stoploss, take-profit and options prices for both the buyer and seller are always the same, price manipulation is not possible. There is no Dealing Desk, no Re-quote.
6. There is NO slippage! Consequently, there will always be a guaranteed stoploss and take profit with no cost. Stoploss hunting is also impossible.
7. With a Peer to Peer trading model, there is no need for the Exchange Administrator to maintain a margin or mark to market rule or out-source funds to pay the winning clients because the loss of one client is instantly used to fully offset the win of the other client who sold and bought the specific spot or options contract. In other words, there will never be a deficiency because the funds will already be in the account to pay the winning clients.
8. Because the Flatbook trader will not allow you to place a trade greater than your account balance and because it is compulsory for every client to first make their deposits to the Exchange Administrator before a LIVE trade can be bought or sold; there will never be a risk of profit payment default of market makers.
9. Because of the Peer to Peer style, the European options rule is the trading style of the Exchange. This means that open options positions cannot be closed before expiry and open spot positions cannot be closed until either the stoploss or take-profit prices are reached.
In a true Peer to Peer exchange environment, it is not possible to be able to close out a position anytime after entry unless the losing party agrees to take the loss at the time of closure without considering that the trade could eventually end in his favour.
It is basically not a good trading and money management style to exit trade positions early and too often. Consistently profitable traders base their trading signals on accuracy rather than guess work. So they make sure that before they open a trade position, there is a satisfactory or high probability that the market price will move in a certain direction (sometimes in a certain way) to a certain price level over a certain period of time.
These type of traders in most cases hold their trade positions until either their take profit or stoploss price is triggered or until the options trade expiry. They usually combine short and long term fundamental and technical market research to get the best market probabilities.
10. With a Peer to Peer trading style, all trading accounts are traded solely with US currency (USD).
This will ensure that there will never be exchange rate fluctuation risk either to the Exchange Administrator or to the Client during final cash settlement of the Spot FX or Exotic options contract. This will also ensure that at all times the Administrator's Books are balanced or flat, hence the idea of the name 'Flatbook'.
11. With Peer to Peer trading model, you enjoy the break-even rule when the spot/futures market price expires at your strike or barrier price. In the OTC traditional models, this results in a loss in most cases.
13. Trading with OTC models means that there are market makers who eventually clear your orders. There is always the tendency of having a conflict of interest with the market makers someday.
If you are a consistently profitable trader, then with Peer to Peer trading model you can be sure to achieve your long or short-term financial goals.
With the Peer to Peer model, your interest is aligned with our interest because we only make profit when you make profit.
On the Flatbook Exchange platform you trade without trading cost. This means whether you win or lose, you pay no spread, no slippage and no overnight swap for the trades. By default settings, you are only obligated to share 25% of your profits with us after each win while you share nothing if you lose.
For example, you open a position with $10,000 and make a profit of $5,000, then you share $1,250 (25% of $5,000) with the exchange. This is deducted automatically when the position is closed.
However, the broker or escrow company offering you the platform for trading is able to choose whatever profit share % they want their clients to pay.