How many pips does the broker make? | Forex Factory

Options

Permalinks
Print Thread

Similar Threads

How many pips does a "successful" trader collect weekly? 141 replies

If you make money, does Oanda make money? 35 replies

How many parameters are too many? 0 replies

Virtual Dealer Plugin - How many seconds does your broker take to execute your trade? 20 replies

How many pairs is considered too many? 8 replies

How many pips does the broker make?

  • #1
  • First Post: May 1, 2008 9:10pm May 1, 2008 9:10pm
Hi,

I know this will sound REAL dumb, but when I buy $US 1,000,000 and the spread is 3 pips, dose that mean that the broker is taking 3$ form you or 3 HUNDRED dollars???

If the second answer is correct, isn't that HUGE !!! I mean the people who routinely buy and sell 10 million units at a time are paying 3000$ for each trade???

Another related question, dose the broker take the 3 pip spread commision on the SALE of that previosly opened contract as well? so for example I buy $US 1,000,000 now and my stop loss kicks in 2 hours later automatically. Did the broker take 300$ from me or $600?

Sorry again for the silly question
  • #2
  • May 1, 2008 10:25pm May 1, 2008 10:25pm
Quoting fatboy1234
Hi,

I know this will sound REAL dumb, but when I buy $US 1,000,000 and the spread is 3 pips, dose that mean that the broker is taking 3$ form you or 3 HUNDRED dollars???
The latter.

Quote
If the second answer is correct, isn't that HUGE !!!
Relatively yes. The same trader could execute on an ECN at half the "cost" (1 pip spread vs 3 pip spread, plus $18-50 commission).

Quote
I mean the people who routinely buy and sell 10 million units at a time are paying 3000$ for each trade???
I don't think anyone trading in 10M clips is crazy enough to use a dealing desk.. They're hopefully on ECNs with a 0 - 2 pip spread for the majors + a commission.

Quote
Another related question, dose the broker take the 3 pip spread commision on the SALE of that previosly opened contract as well? so for example I buy $US 1,000,000 now and my stop loss kicks in 2 hours later automatically. Did the broker take 300$ from me or $600?
If they're a dealing desk, they took $600 from you. Dealing desks run a very profitable business, why do they think there are literally hundreds of them? Don't be a victim, go with ECNs.
  • #3
  • Edited 10:04pm May 2, 2008 9:33pm | Edited 10:04pm
Trader KGB, thank you very much for your informative answer, it is very clear for me now.

Since I am just starting and want to open an account and STAY with a SINGLE broker whick one of these would you recommend (I'm living aboroad)...


1- Interactive Brokers
2- IBFX
3- Avail Trading Corp.
4- TradeView Forex
5- OANDA
6- FX Solutions

if you can just tell me which one, I think people are recommending I choose one with a MT4 platform, but it dose not really matter,

Mohammad Reza.
  • #4
  • May 2, 2008 9:59pm May 2, 2008 9:59pm
1- Interactive Brokers - I use them, but they're for intermediate traders & up, difficult platform for new traders
2- IBFX - dealing desk, avoid
3- Avail Trading Corp. - ATC is an introducing broker, not necessary for your needs
4- TradeView Forex - dealing desk, avoid
5- OANDA - dealing desk, avoid (although they have the best spreads & swaps of any dealing desk)
 6- FX Solutions - dealing desk, avoid

I would recommend HotSpot FXr or MBT. Both are ECNs. HotSpot has lower commissions ($3 per 100k notional at HotSpot, $5 per $100k USD at MBT).

You can use an MT4 demo for charting, they don't expire.
  • #5
  • May 3, 2008 12:57am May 3, 2008 12:57am
Quoting Trader KGB
5- OANDA - dealing desk, avoid
That's not true.

Regards - Xaron
  • #6
  • May 3, 2008 2:31am May 3, 2008 2:31am
Both Oanda and IBFX claim no dealing desk. How much truth there is in that... I leave up to you. Just pointing out that there's 2 sides to every story.

There are numerous other brokers to list. If you're new... using an ECN is not a good idea. The commission costs will be harder to handle with smaller lot sizes, assuming they can even do anything smaller than standard lots in the first place. It's a bit like skeet shooting with a howitzer.

IMO: be honest about your needs and your money management and go from there.
  • #7
  • May 5, 2008 12:59pm May 5, 2008 12:59pm
Quoting Xaron
That's not true.

Regards - Xaron
Oanda does have a dealing desk, but they operate in the reverse of other brokers.
Oanda goes out on the electronic market and takes the same side of the trade that you take.

If you are long, Oanda goes long also on the open market.

If your trade is successful, Oanda pays you. Oanda covers the loss of paying you from it's success on the market with the same trade.

The opposite if you lose. Oanda collects from you to compensates it's loss from having taken the same trade.
  • #8
  • May 5, 2008 1:08pm May 5, 2008 1:08pm
Quoting Xaron
That's not true.
And do you have any facts to support this claim?

Quoting Rabid
Both Oanda and IBFX claim no dealing desk. How much truth there is in that... I leave up to you.
There is no difference. Either a broker is an ECN or a dealing desk. There is no in-between, "STP", "no dealing desk" etc are just marketing shams. If the commission is built into the spread, it's a dealing desk. If they are taking a bank spread & just adding a pip, but passing orders thru ("STP"), it's still a dealing desk.

Quote
If you're new... using an ECN is not a good idea. The commission costs will be harder to handle with smaller lot sizes, assuming they can even do anything smaller than standard lots in the first place.
IB supports order sizes as low as 25k, MBT all the way down to 1k. IB's minimum commission is $2.50. MBT's commission scales down with the lot size (no minimum commission). I don't see how this in any way hinders the small/new trader..
  • #9
  • May 5, 2008 6:02pm May 5, 2008 6:02pm
Quoting fatboy1234
Hi,

I know this will sound REAL dumb, but when I buy $US 1,000,000 and the spread is 3 pips, dose that mean that the broker is taking 3$ form you or 3 HUNDRED dollars???

If the second answer is correct, isn't that HUGE !!! I mean the people who routinely buy and sell 10 million units at a time are paying 3000$ for each trade???

Another related question, dose the broker take the 3 pip spread commision on the SALE of that previosly opened contract as well? so for example I buy $US 1,000,000 now and my stop loss kicks in 2 hours later automatically. Did the broker take 300$ from me or $600?

Sorry again for the silly question
A 3 pip spread on 1,000,000 of underlying currency = $300.

It is a misconception to think that the broker takes it from you on each trade. It doesn't work that way.

On winning trades, the broker takes nothing from you. He pays you money.
On losing trades, the broker takes the amount you lost.

If you enter a trade and set the TP at 100 pips and win, you pocket 100 pips- period.

If you enter a trade and set the SL at 100 pips and lose, you lose 100 pips- period.

What the spread does, is to make it more likely that you lose and less likely that you win.

In the above example, if the spread is 3 pips, it is 3 pips harder to hit profit and 3 pips easier to hit the SL.

Price has to move 103 pips to hit your 100 pip TP.
It has to move 97 pips to hit the 100 pip SL.

It's like a coin toss, with the coin weighted a certain % in favor of your opponent.
  • #10
  • Last Post: May 6, 2008 10:04pm May 6, 2008 10:04pm
Gentelman, thank you again for your posts.

After much thought I have narrowed my chooses to the following:

I will be trading in lots larger then 5 lots and my deposit will be probably around the 20,000$ mark.


1-Bahraini Saudi Bank http://www.bsb.com.bh/en/default.asp
2-Interactive Brokers
3-MBtrading
4-HotSpot

My first choice is because they are a broker near my home town, supported by a big bank here and haveing access to my money is pretty easy. They charge 3 pip spreads with live rates and no requeting.

The only problem with them is that thier trading platform is just absoulutly awfull, I talked with thier customer support and they said that many of thier cliants use MT4 and just place the trades on thier system. is this possible? would'nt it be cumbersome?

I actually prefer to use MT4 as many people here recommend it, but I also really like trading from the charts in FXCM.

So what do you guys think? shall I go with choice 1 and use them and a seperat MT4 program? is it easy haveing to use MT4 and then placing orders in another broker?

Thanking you again.

Mohammad.
0 traders viewing now