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what is difference between trading fx with big bank and broker?

  • #1
  • First Post: Jul 15, 2008 1:30pm Jul 15, 2008 1:30pm
Dear fellow member

i am confused to choose broker between trading with a fianancial institute like a Barclay Bank ,Saxo Bank or varengold in Germany and trade directly with Banks or trade with brokers like interbank fx,fxcm or somewhere else that is not a Bank. what is the difference between these. which one will benefit me as private trader.

i like trading platform from meta4 cuz it's easy to draw a graph and can switch currency pair quickly but opening order is bad when the market moving.it is always requote...pleae advice me to choose which one i should trade with...Bank or Broker?

Thank you all
  • #2
  • Jul 15, 2008 5:05pm Jul 15, 2008 5:05pm
It really depends on what each broker/bank offers. The big "banks" (i.e. Goldman-Sachs, UBS, RBC Carlin, etc.) are more designed for institutional clients with millions of dollars that trade Forex as a Futures contract(most, in fact, won't even allow you to open an account without a large dollar amount).

FOREX "brokers" mostly play to the retail trader and offer more streamlined solutions. Depending on the level of security you are looking for, a well-known retail "broker" should do you just find.

However, in my opinion, the best option is to have an account with a broker that is backed by a big bank (i.e. dbFX, CitiFX Pro, etc.). These brokers generally have less retail-friendly charts and platforms and more stringent regulations, but, as proved by the FXLQ collapse, security of having a large institution behind your broker is essential.

If that doesn't fit your needs, one of the larger retail brokers (i.e. FOREX.com, FXCM, CMS, Oanda) should do just fine. Sufficient security, options, and features.
  • #3
  • Last Post: Jul 15, 2008 9:26pm Jul 15, 2008 9:26pm
Quoting JRowaboat
It really depends on what each broker/bank offers. The big "banks" (i.e. Goldman-Sachs, UBS, RBC Carlin, etc.) are more designed for institutional clients with millions of dollars that trade Forex as a Futures contract(most, in fact, won't even allow you to open an account without a large dollar amount). Actually, the big banks support large institutional clients for, spot fx, forwards, swaps, and other fx derivatives like options. These are all OTC products which futures are not.

FOREX "brokers" mostly play to the retail trader and offer more streamlined solutions. Depending on the level of security you are looking for, a well-known retail "broker" should do you just find.

However, in my opinion, the best option is to have an account with a broker that is backed by a big bank (i.e. dbFX, CitiFX Pro, etc.). These brokers generally have less retail-friendly charts and platforms and more stringent regulations, but, as proved by the FXLQ collapse, security of having a large institution behind your broker is essential. DBFX, CitiFX Pro, and ABN Amro's marketindex are all white labels of other retail brokers. DBFX whitelabels FXCM, CitiFX Pro whitelabels Saxo and ABN whitelabels Oanda. All of them are divisions or subsidiaries of the actual banks. Meaning all of them are more secure then any retail broker. Also, these are their retail platforms and all of them have institutional platforms for institutional clients just like the banks you mentioned earlier.

If that doesn't fit your needs, one of the larger retail brokers (i.e. FOREX.com, FXCM, CMS, Oanda) should do just fine. Sufficient security, options, and features.
Security of funds will be the one thing you have to worry about with any broker much more so then any bank. I mean no one at REFCO including myself would have ever thought that they would collapse.

Hotspot, Oanda, and dbfx are all good choices IMO. Hotspot and Oanda would be the top two I would look at.
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