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Market Makers & ECN’s, Is the grass greener?

  • #21
  • Edited 4:12pm Sep 17, 2006 4:07pm | Edited 4:12pm
Quoting Pipsman
Hi FXO,

Thanks for starting this interesting thread.

One more question re. MBT's Stop Limit order: suppose in a news splike and the price shot up, hit your stop but enable to fill your order within your limit, does you order stay alive or get killed automatically?

Thanks.

PM
Hello Pipsman,
I don't know how the software is designed to work, but the orders do not disappear from your screen. You would have to ask someone at MB that question. Let us know what they say.
Profit is where readiness meets Opportunity
  • #22
  • Sep 17, 2006 5:21pm Sep 17, 2006 5:21pm
Quite frankly I find the argument that "everyone is trading the news profitably" or words to that effect preposterous. Not only have the last 2 weeks shown that price can very easily go 30 pips one way and then jolt 100 pips to the opposite side, it has also proven that supposedly dollar negative news can have a dollar bullish price result...

Any you are telling me that any retail broker using Joe can see through all this, within a few split seconds predict the potential outcome of the figure that was just put through the newswire, decide whether or not it will have a true effect (behave like how it sounds like it should) or it was already priced in and expected(and goes totally opposite to expectations and logic)?
Excuse me?
Not to insult anyone, but I believe the half dozen traders(or a multiple therof) on this forum that can manage to profitably trade all news releases are very likely matched up with about 900(or a multiple here, too *smile*) who can not...so quite frankly I don't believe this conspiracy theory of retail brokers / bucket shops slipping you because "so many people" are suddenly "making easy profit", but they are rather doing this for the same reason it was written above for ECN's: you can't offer nonexistant prices!
ECN's just don't claim it on their webpage that they can....

And quite frankly, a lot of retail brokers don't either, instead they have normal stop/loss orders and then they have GTD, which guarantees to fill you at the specified price no matter what happens, for an additional fee and special conditions only (like 100 pip distance to the price at the time of order issue...)...

By the way, if someone wants a really good webpage on dealing-desk abuse you can google for nondealingdesk, it's hosted on blogspot....it's run by a part or full-time journalist I believe and there is quite some interesting information and articles on there

Not sure if I would be allowed to link directly, so I just wanted to mention it =)
Trust price. Know yourself.
  • #23
  • Edited 6:35pm Sep 17, 2006 6:22pm | Edited 6:35pm
Welcome to the discussion seekinglight,

I agree that not all traders are trading news profitably. There are enough sad stories right here on Forex Factory to confirm that. But the fact remains that most (if not all) of the market making brokers have empolyed strategies to combat these increasing losses at news release time. Traders everywhere will confirm that spreads are wider. Brokers that never previously widened spreads have done so. Traders also report that brokers that previously guarenteed fills no longer do so. One of my favorite all time brokers that was good for news releases widened spreads when they had not done so previously.

If I understand your point of your post correctly, you are saying that market making brokers are not manipulating the slippage on their fills?

If this is indeed your point, it is pretty much the point of my article. How would you know?? Without transparency you cannot know.

Let me offer you this, there are many many brokers out their with many many software programs that determine how they fill you. Each with a different situation and different strategies and settings. Unlike the ECN model, there is no taker on the other end. There is just the broker. And they have to actually decide how to fill you when designing and setting up their software. Think about that. You really don't think they will be tempted make an adjustment or two if they are getting kicked in the pants???

Here is the deal. Good broker software lets you control everything. Slippage, spreads, the amount of price deviation before the price your retail traders see change, time delays all of it. I can remember back when I first got a reliable price feed and watching how far behind my broker would get. This was not a software problem my friend, it was a software function. It was also good way to get a clean entry back then

Back to the origional point of my article. The move toward transparency is the key to ending the distrust. You can say it is not happening, but how would you ever now?

-The FxOpportunist-
Profit is where readiness meets Opportunity
  • #24
  • Sep 18, 2006 6:15pm Sep 18, 2006 6:15pm
I would like to hear how everyone views the coming of fxmarketspace. Do you think it will change our Forex world? Are you excited about its potential? Are you pessimistic that it will be even as good as what we have?

Does anyone know what kind of leverage will be available? When it is projected to be up and running?

Tell us what your take is.
Profit is where readiness meets Opportunity
  • #25
  • Sep 18, 2006 6:52pm Sep 18, 2006 6:52pm
Quoting FXopportunist
I would like to hear how everyone views the coming of fxmarketspace. Do you think it will change our Forex world? Are you excited about its potential? Are you pessimistic that it will be even as good as what we have?

Does anyone know what kind of leverage will be available? When it is projected to be up and running?

Tell us what your take is.
FX MarketSpace is an institutional only platform that has an anticipated launch date of early 2007. It will not be open to the retail trader (retail = anyone reading this )

Will it revolutionize forex? Probably not, it will most likely just piss off people who find that their broker doesn't track well with Reuters.

Phil
  • #26
  • Sep 18, 2006 7:22pm Sep 18, 2006 7:22pm
FxOpportunist,

Mate your post is very well written but what is your definition of an ECN? And do you consider that to be the same as a prime broker?

turbo
  • #27
  • Sep 19, 2006 2:58pm Sep 19, 2006 2:58pm
Quoting philmcgrew
FX MarketSpace is an institutional only platform that has an anticipated launch date of early 2007. It will not be open to the retail trader (retail = anyone reading this )

Will it revolutionize forex? Probably not, it will most likely just piss off people who find that their broker doesn't track well with Reuters.

Phil
What a buzzkill Phil !

You don't think they will have some kind of smaller access like Currenex and FXall does?
Profit is where readiness meets Opportunity
  • #28
  • Sep 19, 2006 3:04pm Sep 19, 2006 3:04pm
Quoting turbokaos
FxOpportunist,

Mate your post is very well written but what is your definition of an ECN? And do you consider that to be the same as a prime broker?

turbo
Hello Turbo,

ECN: Electronic Communications Network, frequently used for creating electronic stock or futures markets.

The above definition is from the CFTC website. In summary it is just a group of Banks, Hedge Funds, Brokers etc. that join or form a liquidity network. Your prime broker is likely a member or has access via one of its members usually a bank.
Profit is where readiness meets Opportunity
  • #29
  • Sep 19, 2006 3:09pm Sep 19, 2006 3:09pm
You can contact them at [email protected] They were very prompt in answering my questions, even if I didn't like the answers themselves.

I don't know what incentive they would have to open up their platform to little fish like us. The thing most people overlook is that banks don't want to take the other side of our trades because it's just not worth their time. Maybe some brokers will use fxmarketspace and you'll have some pricing information. I doubt that the spreads would be better but you might sleep better thinking you knew where the true market price is.
  • #30
  • Sep 19, 2006 3:14pm Sep 19, 2006 3:14pm
Quoting FXopportunist
Hello Turbo,

ECN: Electronic Communications Network, frequently used for creating electronic stock or futures markets.

The above definition is from the CFTC website. In summary it is just a group of Banks, Hedge Funds, Brokers etc. that join or form a liquidity network. Your prime broker is likely a member or has access via one of its members usually a bank.
I guess the point I’m getting at is basically it seem like any body that is now offering variable spreads has been classified as an ECN.

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

ieropfx, fxcmpro, or even hotspotfx

but at the end of the day even these are all still your basic retail firm even if they are using currenex or hotspotfxi technology

turbo
  • #31
  • Sep 19, 2006 3:18pm Sep 19, 2006 3:18pm
Quoting turbokaos
I guess the point I’m getting at is basically it seem like any body that is now offering variable spreads has been classified as an ECN.

<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" /><o></o>

ieropfx, fxcmpro, or even hotspotfx

but at the end of the day even these are all still your basic retail firm even if they are using currenex or hotspotfxi technology

turbo
BINGO

Thats why alot of the more serious guys are looking to transition to Currenex or FXall. And it is why I am so interested in the progress of Fxmarketspace.
Profit is where readiness meets Opportunity
  • #32
  • Sep 19, 2006 3:23pm Sep 19, 2006 3:23pm
Quoting ycomp
would anyone care to comment if they think retail brokers in general are more likely to go under than ECNs?

I guess there is no definite answer, but any observations could be helpful.
I think those who insist on ECN style brokers are fooled by the promise of transparency. There's is no real transparency in FX because there is no single exchange to report ALL transactions. ECN style brokers are only providing transparency within their customer base.
  • #33
  • Sep 19, 2006 3:31pm Sep 19, 2006 3:31pm
Quoting FXopportunist
BINGO

Thats why alot of the more serious guys are looking to transition to Currenex or FXall. And it is why I am so interested in the progress of Fxmarketspace.
I just wanted to make sure all the guys out there didn't get confused bewteen the retail shop setting up using Currenex technology and nothing more than that. I have yet to find a Prime Brokerege or Second tier prime broker allowing any one to open an account less than 50k. Also if they tell there is 6 majors banks clearing threw their platfomr but can't tell which ones their full of shit. Also when dealing threw a prime brokerage and using currenex or hotspotfxi the amounts are done in millions not 100,000 or less and their looking for a min of about 25mil in daily volume. It is what it is.

I do think we will see a change to come in the futre like w/ saw back in the day w/ stocks. but like FXopportunist is trying to say in a nice way get over it learn to trade or get off the pot

turbo
  • #34
  • Sep 22, 2006 7:42am Sep 22, 2006 7:42am
When it comes to ECNs, who has the best liquidity? I would love to hear these opinions.
Profit is where readiness meets Opportunity
  • #35
  • Sep 22, 2006 2:25pm Sep 22, 2006 2:25pm
Quoting FXopportunist
When it comes to ECNs, who has the best liquidity? I would love to hear these opinions.
It not the ECN they are just software... It all depends on what banks the prime broker is using.

turbo
  • #36
  • Edited 9:24am Sep 23, 2006 9:23am | Edited 9:24am
Quoting turbokaos
It not the ECN they are just software... It all depends on what banks the prime broker is using.

turbo
Hello Turbo,

That is a good point. Just because your broker belongs to an ECN does not mean that broker has access to all of the financial insitution that belong the the said ECN. This makes it even harder to evaluate ECN "style" retail brokers. This is why I opened the question. I am inviting people to share what they know or even speculate based on thier brokers performance. Industry insiders are also welcome to share
Profit is where readiness meets Opportunity
  • #37
  • Sep 23, 2006 11:41am Sep 23, 2006 11:41am
Any style of FX broker can tell you anything they want as long as this market is unregulated. So FXO posed the most useful question on this topic: How do we know what a broker says it true? It's made me rethink everything. I have been searching for folks who want to debate this issue to come up with the best solution.
  • #38
  • Sep 23, 2006 12:01pm Sep 23, 2006 12:01pm
Quoting raizor
Any style of FX broker can tell you anything they want as long as this market is unregulated. So FXO posed the most useful question on this topic: How do we know what a broker says it true? It's made me rethink everything. I have been searching for folks who want to debate this issue to come up with the best solution.
From others real life experiences and not rumors of what they think.


turbo
  • #39
  • Sep 29, 2006 4:04pm Sep 29, 2006 4:04pm
Thank you Merlin
Profit is where readiness meets Opportunity
  • #40
  • Sep 29, 2006 4:26pm Sep 29, 2006 4:26pm
Quoting FXopportunist
When it comes to ECNs, who has the best liquidity? I would love to hear these opinions.
Why not trade Futures FX with CME?



-Alex
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