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Difference between ECN and retail broker?

  • #21
  • Jul 17, 2006 11:01pm Jul 17, 2006 11:01pm
Quoting moonchild
I just received an email from FXCM promoting their new division. It is called PropFX and is supposed to be designed for professional traders. The minimum account is $10,000. They say that this new platform has no dealing desk and no fixed spreads, and no guaranteed stop loss (do not like that), best bid and ask from 10 banks, 2 to 3 pip spreads on majors most of the time, etc... It sounds suspiciously like an ecn (sort of).

Frankly, I just do not trust FXCM.

Makes you wonder whether they have noticed how much business they are losing to other brokers.
Uhmm, I would SERIOUSLY doubt their claim of getting quotes from ten banks... I know of GOOD brokers who are known to be awesome who get quotes from four... And two to three pip spreads on majors isn't that great. I see 1 point spreads on GBP during London open constantly.

I've even seen EUR/USD at 0 pip spread. And not just once either.
Mr. Trend
  • #22
  • Jul 17, 2006 11:13pm Jul 17, 2006 11:13pm
I am going to try to copy the email and attach it to this post. Hopefully it will work.

No, I do not believe it either.
Attached File(s)
File Type: doc Dear Trader.doc   26 KB | 1,570 downloads
  • #23
  • Jul 17, 2006 11:17pm Jul 17, 2006 11:17pm
Quoting Mr Trend
Uhmm, I would SERIOUSLY doubt their claim of getting quotes from ten banks... I know of GOOD brokers who are known to be awesome who get quotes from four... And two to three pip spreads on majors isn't that great. I see 1 point spreads on GBP during London open constantly.

I've even seen EUR/USD at 0 pip spread. And not just once either.
Normaly the EUR/USD spread on hotspotfxi is 1 to 1.5 some times zero. And there suppose to have over 10 major banks quoting.


turbo
  • #24
  • Jul 17, 2006 11:26pm Jul 17, 2006 11:26pm
Quoting turbokaos
Normaly the EUR/USD spread on hotspotfxi is 1 to 1.5 some times zero. And there suppose to have over 10 major banks quoting.


turbo
Pip spreads can be less than 0, more than once with MB Trading I have seen spreads actually be negative. It never lasts long, but it does happen. The first time I saw it I called in and it really was true. The bid was actuallly slightly more than the ask, and that was simply a reflection of their taking the best bid and ask from different banks. I think the difference was 1/2 pip one time and 1 pip another time.

Somehow, knowing FXCM, they will find some way to turn it to their advantage. I am particularly concerned about the no guaranteed stop loss. I can see major ways that they can use that.
  • #25
  • Jul 17, 2006 11:29pm Jul 17, 2006 11:29pm
Quoting moonchild
Pip spreads can be less than 0, more than once with MB Trading I have seen spreads actually be negative. It never lasts long, but it does happen. The first time I saw it I called in and it really was true. The bid was actuallly slightly more than the ask, and that was simply a reflection of their taking the best bid and ask from different banks. I think the difference was 1/2 pip one time and 1 pip another time.

Somehow, knowing FXCM, they will find some way to turn it to their advantage. I am particularly concerned about the no guaranteed stop loss. I can see major ways that they can use that.
LOL
  • #26
  • Jul 19, 2006 3:00pm Jul 19, 2006 3:00pm
Is there anyone with a decent size account, (preferably $5,000) or less that even profits consistently from retail trading? I've seen people do very well in demo account, some even automated. Then, after jumping into the real thing, from preschool, to the dealing desk, they lose all their money after afew trades at a time.

I assume that this is the work of a broker illumanating the prices, cause major spikes and other disaterous things like that? Back to the original question that i have. Is there anyone that has made any decent kind of money with reasonable leverage on a fairly decent size account, threw retail? I get the strongest feeling, no.

I've not heard one, not one success story about retail traders, i've done rather well on demo for about 4 months, i've only had 2 losing trades. Both were recently over the EUR/USD, i got spiked very badly. Stops triggered twice both times, other than that. I've done rather well, North Finance platform i was using, not anymore thou, they freeze far, far too long, if it were a real account. That small 8 seconds could have been the end of me, luckily, the stops were triggered. One time it literally "skipped" a stop, but somehow, i still won over that trade. Like i said, ECN seems like the smarter idea, their leverage is doable, but. Retail is what i am refering.

Is retail the casino, or are there any that are fair game that trade against everyone as a whole, not specifically targeted clients?
  • #27
  • Jul 19, 2006 10:55pm Jul 19, 2006 10:55pm
Quoting Klaka
Is there anyone with a decent size account, (preferably $5,000) or less that even profits consistently from retail trading?
Yes. About 5%.
Quoting Klaka
I've seen people do very well in demo account, some even automated. Then, after jumping into the real thing, from preschool, to the dealing desk, they lose all their money after afew trades at a time.
Yup. Because trading is 95% mental. I could walk into a pit and tell each trader what the open and close would be for the next day, and half of 'em would still lose money.
Quoting Klaka
I assume that this is the work of a broker illumanating the prices, cause major spikes and other disaterous things like that?
You will find that most people who make broker excuses are generally consistent losers. They won't admit it, but they are. Most ECNs are legit. A few non-ECNs are legit too. Some non-ECNs are crooks and deserve to be smacked around a few times.
Quoting Klaka
Is there anyone that has made any decent kind of money with reasonable leverage on a fairly decent size account, threw retail?
Yes. Quite a few people here actually. Once again, it's all about psychology.
Quoting Klaka
I've not heard one, not one success story about retail traders...
Of course not. I only know one successful trader in real life -- my mentor. You know why? Because changing your head is the hardest thing to do. Being wrong is a problem for most people.
Quoting Klaka
I've done rather well on demo for about 4 months, i've only had 2 losing trades...
Everyone does well on demo. That will change when start using your hard earned cash.
Mr. Trend
  • #28
  • Jul 19, 2006 11:18pm Jul 19, 2006 11:18pm
Quoting moonchild
I just received an email from FXCM promoting their new division. It is called PropFX and is supposed to be designed for professional traders. The minimum account is $10,000. They say that this new platform has no dealing desk and no fixed spreads, and no guaranteed stop loss (do not like that), best bid and ask from 10 banks, 2 to 3 pip spreads on majors most of the time, etc... It sounds suspiciously like an ecn (sort of).

Frankly, I just do not trust FXCM.

Makes you wonder whether they have noticed how much business they are losing to other brokers.
I know this is a bit late on this reply. I just received an email like this from a friend who uses FXCM.

First, they heavily advertise 10 banks throughout the site, then, on the "Why PropFX" page, they inexplicably state:
Quote
PropFX, a Division of FXCM, obtains the current market rates offered by five of the largest interbank market participants.

Also, their claim is that they present you with the best spreads from all these banks then anonymously forward orders to the bank with the best price at the time, right. Sounds like an ECN. Is anyone wondering how they make their money? There's no discussion of commissions, that I'm aware of. Clearly they're not making money on spreads, right?. Anyway, just some things to ask them about while you do your due diligence.

Regards,

stockwet
  • #29
  • Aug 22, 2006 2:29pm Aug 22, 2006 2:29pm
People, plz understand that the spread is the nearest Bid or Ask price available.

this price you see may not apply to a 50 lot trade as it does to a 500 lot trade. Why? because you MUST have a counterparty to Fill your order at that price, Or else, you will get filled at the nearest and best price available which could be 20 pips away.

During non-farm payroll, if the trigger is a long one those who get in early may place a Sell Limit 20 pips away from their entry....

what do you thing happens if no one is below that 20 pip mark? The price simply goes up to that 20+ pip mark and Fill those Limit Orders....hence the price and the candles keep getting higher and bigger.

remember, like any market it is always about supply and demand.

If u want to buy 100000 Lots of EURUSD and no one is selling that amount near the current ask price, then price will simply go up to match the one being offered probably 20 pips away.

it is simple. everyone wants to make a profit, hence you pay the spread.

and that is Forex 101....the class which many of us missed. Including me who only learned this until recently.

remember...SUPPLY/DEMAND

oh BTw, Oanda's spreads are increasing during News times. Wonder why?

this is to compensate requotes/Slippage on there behalf...

they dont want to qoute you at 1.2700 during non-farm only to get hedged at 1.2750!.

My final thoughts are:

the only way to profit from forex is

1. Foundamental Trading
2. Long term Technical Trading

what do you think about my post? plz let me know
  • #30
  • Aug 30, 2006 7:58pm Aug 30, 2006 7:58pm
Quoting don perry
.

My final thoughts are:

the only way to profit from forex is

1. Foundamental Trading
2. Long term Technical Trading

what do you think about my post? plz let me know
Um, no.

There are soooooo many ways to skin this cat. You probably just don't know many skinners........................
Profit is where readiness meets Opportunity
  • #31
  • Jan 20, 2007 7:03am Jan 20, 2007 7:03am
I enjoyed reading the discussion, but wondering why it stopped?
Is everybody winning now, or has everybody found the best trading counter party?
  • #32
  • Aug 21, 2007 12:37am Aug 21, 2007 12:37am
Quoting richx7
Here is an interesting pdf compiled from info by Forex Facts that gives the pros and cons of ECNs and retail brokers that brings out many unknown practices in Forex trading.
"interesting"? It's unbelievable how naive some people can be...

That pdf is full of rubbish!

here are a few incredible statements:

There is one golden rule in trading the Forex market, ‘DO NOT SET STOP-LOSSES’ on your trades unless unavoidable. Setting stops is very unwise practice for traders

When you read that the FX market is the largest in the world, and trades an average of $1.3 trillion per day, much of this is in game/demo accounts (or so I’ve read), and on its own, if we remove leverage (counting only real trader funds) we are left with a much smaller market that Futures or Equities.

Quoted everywhere in the online FX world as being the largest market in the world. This is simply untrue. The FX market is in fact smaller than most other well known markets like Futures or Equities. By removing Leverage value from FX trading statistics, thereby including only trader’s ‘real money’ (which is all they can lose), and keeping separate the inclusion of all Game/Demo trades in their statistics (Most Market Makers have free Trading Demos), the Forex market is considerably smaller then other more popular trading markets.

Forex market is much less popular, assumed risky and I have found deceptive and dishonest than any other market in my 15 year trading experience. Betting on either Horse racing or at a Casino is in fact a much smarter (but obviously still against-the-odds) investment as well as more entertaining.


The large government, corporate and institutional FX trades to my knowledge are not set at the current FX price, and cannot affect the market price directly. Otherwise a 3 Billion dollar corporate merger or acquisition as example, transferring 1 to 3 Billion dollars across international borders would in one hit, shift a currency price well over a thousand pips.

*********
lol 15 years trading experience? hmm... however, I wouldn't be too surprised, as came across other "experienced traders" with lots of stupid ideas...
but the author might as well be some very naive kid...

  • #33
  • Aug 26, 2007 5:35pm Aug 26, 2007 5:35pm
Quoting ycomp
are there any ECNs that have 100:1 leverage?
yes, here are some of them: MB Trading, Efx Group
  • #34
  • Aug 27, 2007 12:00am Aug 27, 2007 12:00am
thx for the differences between retail brokers and ecn
"Abandon all hope, you who enter here" La Divina Commedia, Dante Alighieri
  • #35
  • Aug 27, 2007 6:30am Aug 27, 2007 6:30am
I agree wholeheartedly, one of the pitfalls for any newbee is that there is a lot of misinformation and half-truths out there. I for one am glad to see someone call it to task, thumbs up dude


Quoting gtk
"interesting"? It's unbelievable how naive some people can be...

That pdf is full of rubbish!

here are a few incredible statements:

There is one golden rule in trading the Forex market, ‘DO NOT SET STOP-LOSSES’ on your trades unless unavoidable. Setting stops is very unwise practice for traders

When you read that the FX market is the largest in the world, and trades an average of $1.3 trillion per day, much of this is in game/demo accounts (or so I’ve read), and on its own, if we remove leverage (counting only real trader funds) we are left with a much smaller market that Futures or Equities.

Quoted everywhere in the online FX world as being the largest market in the world. This is simply untrue. The FX market is in fact smaller than most other well known markets like Futures or Equities. By removing Leverage value from FX trading statistics, thereby including only trader’s ‘real money’ (which is all they can lose), and keeping separate the inclusion of all Game/Demo trades in their statistics (Most Market Makers have free Trading Demos), the Forex market is considerably smaller then other more popular trading markets.

Forex market is much less popular, assumed risky and I have found deceptive and dishonest than any other market in my 15 year trading experience. Betting on either Horse racing or at a Casino is in fact a much smarter (but obviously still against-the-odds) investment as well as more entertaining.

The large government, corporate and institutional FX trades to my knowledge are not set at the current FX price, and cannot affect the market price directly. Otherwise a 3 Billion dollar corporate merger or acquisition as example, transferring 1 to 3 Billion dollars across international borders would in one hit, shift a currency price well over a thousand pips.

*********
lol 15 years trading experience? hmm... however, I wouldn't be too surprised, as came across other "experienced traders" with lots of stupid ideas...
but the author might as well be some very naive kid...

{Link removed }
  • #36
  • May 17, 2008 12:41pm May 17, 2008 12:41pm
You've pointed out who the crummy brokers are. I lost $ 2116.51 to FXCM, so I know they are dishonest. I tried EFX group and signed for a demo account and then when I click on the link to download the EFX Navigator, I was sent back to the demo account sign up page every time.
I am not sure if the tread is dead or not, but are there any brokers who leave me alone when I am trading?
Warren
  • #37
  • May 17, 2008 4:23pm May 17, 2008 4:23pm
Quoting wseyle
You've pointed out who the crummy brokers are. I lost $ 2116.51 to FXCM, so I know they are dishonest. Warren
Do you mind detailing precisely what happened? I have an account with them and would like to know!
  • #38
  • Aug 16, 2008 3:11pm Aug 16, 2008 3:11pm
Sorry I took so long to reply. I didn't think anybody even reads these things.
At any rate, I opened am FXCM Managed Account (Aggressive), falling for their claim of cumulative 15% return over 3 months. I opened a $4000 account and closed it when the balance got down to $ 1883.49. It made money but the losses were always greater than the wins. And they claimed to be experts.
Warren
  • #39
  • Sep 3, 2008 8:10am Sep 3, 2008 8:10am
Hi everyone.

I have a question re ECN brokers vs retail dealers that someone may be able to help me with...

I like to trade forex on news/economic announcements. I currently trade through IG Markets - a retail dealer/market maker.

Last week I had a punt on the US GDP figures - that they would come in better than expected (which they did). So at 08:29:59 ET (1 second before the figures were to be released, I shorted AUD/USD. I sold 'x' contracts 'at market', to ensure my order was filled.

However, an error message came up saying the following "Rejected: Price no longer Valid". I was quite confused, as my sell order was a market sell order, which I presumed sold my AUD/USD contracts at the current market price.

I then rang IG Markets to ask what happened and they said that by the time the order reached them (I assume there was some sort of internet traffic delay of around 1 second or so) the market had moved around 5 pips from when I pushed the 'sell' button on my IG Markets trading platform. THey said that when this happens (movement of a certain number of points, in either direction - i.e. for or against your position), then they do not fill your order.

Again, I was surprised at this, as I thought by using a market order, I would be filled regardless. Basically, I believe the dealer does not want to cover the difference (the 5 pips) that came about as a result of the delay between when I pushed 'sell' to when they received the order in their system.

So anyway, from this I have a few questions:

- Is this case a common story with all brokers, including both retail and ECN?
- Could I avoid this problem in future by using an ECN broker?
- Is it common for traders using other dealers/brokers to experience said delay? And does the 'straight through' nature of ECN brokers minimise such a delay?

Thanks in advance
  • #40
  • Jan 26, 2011 9:08am Jan 26, 2011 9:08am
Look, market makers are scamers (most of them) Imagine MM as a casino. Casino always wins, so do they. They always take an opposite side of your trade. They claim that they are connected to banks etc. and even if they are, you are not. That is, you do not trade in a real market condintions, your are trading in a simulator,which is completely editable. That is if a mm spots, that they will loose money, they will find a way to end your trade. Some of them are better, some are worse. In any case, it's the same as playing poker against casino (MM) and playing poker against other players (ECN). See the difference? At least with ECN you are always sure, that this is the real market and no on is there to get you. No scaming, no bullshit. Go ECN
May the Force be with You
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