that is not exactly true. a MM can provide you with near instant execution since they are your counterparty, ie they take the other side of your trade (when they do not hedge it in the real market, that is) so there is no delay because they don't have to match your order with someone else's order in the real market, that is, the market that exists outside of the MM systems and execution engine. so execution speed, if instant, may prove your order is not hitting the real market, but since order size matters, a small order hitting the real market usually is instant (because of the sheer amount of liquidity available to fill the order), so this factor in the end is not a good gauge of anything.
also, the EU avg spread is now at 0.1 on some broker systems that have Tier 1 banks as LPs and also cater to pro and institutional players.
re slippage, if you trade some of the most liquid pairs such as EU or UJ, and your ticket (order) size is less than 1M (million), an ECN system that's plugged into all the major price feeds coming from Tier 1, Tier 2 banks, and other ECNs, you should always be able to find a counterparty to your trade at your chosen price level simply because the amount your are trading is so small and insignificant; think of it like this: if you are trying to buy 500M euros (EU pair) @ 1.1243 and there are no sellers @ 1.1243 in the same amount of 500M, perhaps there are a few sellers for a total of 40M, which means your order will be broken up: the system will buy 40M for you, and then keep trying to find another 460M worth of sellers at a higher price, thus starting slippage because the order is so large.
also think of it this way: if on average you have about 20M or so at each pip on the price ladder and you are trying to find a counterpart to your trade and say your trade is only 100K in size, you will find it without slippage: 20M > 100K, so there is plenty of match possible for 100K in a pool of 20M.
all this applies during normal market conditions. i am not considering news time and other market dislocations caused by major exogenous events.
in other words, the retail trader should never experience any slippage on major pairs due to ample liquidity being available to get a fill for your order.
so size does matter, and in this case it favors the retail traders. the pros or institutionals, who need to move huge amounts, have to deal with slippage issues and widening spreads more than retailers because precisely of available liquidity than might not be there when they need it because their orders are too big even for the FX market. you get the idea.
also, the EU avg spread is now at 0.1 on some broker systems that have Tier 1 banks as LPs and also cater to pro and institutional players.
re slippage, if you trade some of the most liquid pairs such as EU or UJ, and your ticket (order) size is less than 1M (million), an ECN system that's plugged into all the major price feeds coming from Tier 1, Tier 2 banks, and other ECNs, you should always be able to find a counterparty to your trade at your chosen price level simply because the amount your are trading is so small and insignificant; think of it like this: if you are trying to buy 500M euros (EU pair) @ 1.1243 and there are no sellers @ 1.1243 in the same amount of 500M, perhaps there are a few sellers for a total of 40M, which means your order will be broken up: the system will buy 40M for you, and then keep trying to find another 460M worth of sellers at a higher price, thus starting slippage because the order is so large.
also think of it this way: if on average you have about 20M or so at each pip on the price ladder and you are trying to find a counterpart to your trade and say your trade is only 100K in size, you will find it without slippage: 20M > 100K, so there is plenty of match possible for 100K in a pool of 20M.
all this applies during normal market conditions. i am not considering news time and other market dislocations caused by major exogenous events.
in other words, the retail trader should never experience any slippage on major pairs due to ample liquidity being available to get a fill for your order.
so size does matter, and in this case it favors the retail traders. the pros or institutionals, who need to move huge amounts, have to deal with slippage issues and widening spreads more than retailers because precisely of available liquidity than might not be there when they need it because their orders are too big even for the FX market. you get the idea.
DislikedHere is a list what I am usually checking when choosing a broker: 1. Market execution. 2. Trade execution should be between 200-350ms. 3. Low trading cost. For example EUR/USD average spread should be 0.3 pips and commission 2 per side. Even if spread is 0.1-0.2 pips higher it will have a huge impact on your profitability. Of course it also depends on trading strategy. 4. Low negative and positive slippage.Ignored