Would you trade more if broker fees were lower? | Forex Factory

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Would you trade more if broker fees were lower?

  • #1
  • First Post: Jul 18, 2008 6:45am Jul 18, 2008 6:45am
If broker fees were half of what they are I would probably trade 3 times as much as I do. Once the top discount brokers get in the Forex game fees will significantly drop and we will look back in disbelief that we were paying 2 pip spreads and more.

What are your thoughts? What do you think brokers should charge to trade Forex? Would you trade more with lower fees?
  • #2
  • Jul 18, 2008 7:25am Jul 18, 2008 7:25am
Thats not the way it works, you trade more to get lower fees.
  • #3
  • Jul 18, 2008 7:37am Jul 18, 2008 7:37am
Quoting Thunderj
If broker fees were half of what they are I would probably trade 3 times as much as I do. Once the top discount brokers get in the Forex game fees will significantly drop and we will look back in disbelief that we were paying 2 pip spreads and more.

What are your thoughts? What do you think brokers should charge to trade Forex? Would you trade more with lower fees?
fees is not the same as spread,..i trade more at oanda, which has 0 fees,...and i trade less with saxo witch charges me 10x2 for each in and out of position,...thats 20 buks...ok. its 12 euros,..anyway,..it is still too high,...so i like oanda more...
its just money
  • #4
  • Jul 18, 2008 7:37am Jul 18, 2008 7:37am
I would actually prefer a broker with higher fees is they:

 

  1. Didn't hunt my stops
  2. Filled me instantly
  3. Let me run my scalping EA
  4. Let me straddle news
  5. etc.

  • #5
  • Jul 18, 2008 8:29am Jul 18, 2008 8:29am
Laff, yea. Better fills, better service, more reputable, overall better performance... I'd be quite happy to pay for all that. I trade when my method tells me to trade, no more no less.

Lower fees or spreads... not my first concern. Will they take my money and run? That's my first concern. Will they screw w/ my trades? That's my 2nd... etc, etc.
  • #6
  • Jul 20, 2008 9:52pm Jul 20, 2008 9:52pm
Yep, same here. I don't think lower fee's would affect my trading frequency that much.
  • #7
  • Jul 21, 2008 8:14am Jul 21, 2008 8:14am
Since i'm with Hotspot the more I scalped.

Lower fees have a big effect.
ForexFactory SUCKS.
  • #8
  • Jul 21, 2008 8:23am Jul 21, 2008 8:23am
I trade off of a 1sec chart and can tell you that even if my brokers fees were less it would not change a thing except the amount of money I make per trade. Their fee's have nothing to do with a nice setup, or the market moving in your favor.
  • #9
  • Jul 21, 2008 12:22pm Jul 21, 2008 12:22pm
If you're just talking about spreads then I guess a serious scalper going after 5 pips or so would trade more wouldn't he, or rather he'd trade more pairs. What's the scalper's favorite, Eur/Usd because the spread is so tight?

Imagine 1 or 2 pip spreads across the board, more trade set-ups, therefore more trades?
  • #10
  • Jul 21, 2008 12:48pm Jul 21, 2008 12:48pm
Quoting lostinspace
If you're just talking about spreads then I guess a serious scalper going after 5 pips or so would trade more wouldn't he, or rather he'd trade more pairs. What's the scalper's favorite, Eur/Usd because the spread is so tight?

Imagine 1 or 2 pip spreads across the board, more trade set-ups, therefore more trades?

thats pretty much impossible though. brokers dont make the spreads, the banks they use do. spreads are all based on the number of orders at different prices in the market. these arent the regular retail orders, theyre the big bank orders. banks do trade forex like we do. they actually have bid prices and ask prices. like, ill buy 10,000,000,000 at 1.2345 or i'll sell 1,000,000,000 at 1.2349. these different prices are what account for the spreads. these spreads then trickle down to us. so spreads technically cant be 1-2 pips on each pair. if you find a broker that does this, it means that they are paying the real spreads and only giving you 1-2 pip spreads which means theyre probably chrging you somewhere else really bad. never trust a broker that gives low spreads. it's just a bait and switch style tactic.
  • #11
  • Jul 21, 2008 1:39pm Jul 21, 2008 1:39pm
Quoting blacksun1
thats pretty much impossible though. brokers dont make the spreads, the banks they use do. spreads are all based on the number of orders at different prices in the market. these arent the regular retail orders, theyre the big bank orders. banks do trade forex like we do. they actually have bid prices and ask prices. like, ill buy 10,000,000,000 at 1.2345 or i'll sell 1,000,000,000 at 1.2349. these different prices are what account for the spreads. these spreads then trickle down to us. so spreads technically cant be 1-2 pips on each pair. if you find a broker that does this, it means that they are paying the real spreads and only giving you 1-2 pip spreads which means theyre probably chrging you somewhere else really bad. never trust a broker that gives low spreads. it's just a bait and switch style tactic.
I think we're talking about bucketshops here aren't we, they pretty much do what they want and make up quotes and spreads to suit themselves and to pull in the punters. What they do to them once they're inside is another matter!
  • #12
  • Jul 21, 2008 2:18pm Jul 21, 2008 2:18pm
Quoting blacksun1
thats pretty much impossible though. brokers dont make the spreads, the banks they use do. spreads are all based on the number of orders at different prices in the market. these arent the regular retail orders, theyre the big bank orders. banks do trade forex like we do. they actually have bid prices and ask prices. like, ill buy 10,000,000,000 at 1.2345 or i'll sell 1,000,000,000 at 1.2349. these different prices are what account for the spreads. these spreads then trickle down to us. so spreads technically cant be 1-2 pips on each pair. if you find a broker that does this, it means that they are paying the real spreads and only giving you 1-2 pip spreads which means theyre probably chrging you somewhere else really bad. never trust a broker that gives low spreads. it's just a bait and switch style tactic.
What do you mean do not trust a broker that gives low spreads? First of all, banks deal currencies in many different ways, using many different derivatives other than spot. For spot, banks use an aggregate of different feeds to get liquidity and then offer there own liquidity via an API or through their own platform. With that being said, spreads vary depending on the client relationship, the amount, and the market it self. As retail trading has grown vastly through the years, more banks are now offering pricing for retail traders, either to the retail trader directly, or to retail Market Makers to offer to a retail client (most of the time that price is marked up to the client) and to ECN's. ECN's take many different banks' feeds and aggregate them to give a better price to the end client. In general, Market Makers do the same thing, so they get a better price to deal off of and what price they want to show to the client is up to them. They are doing the same thing banks are except on a much smaller scale and only with spot. With all of that being said, the more banks a broker uses the better spread they will be able to offer the end client. An aggregate feed like Currenex or Hotspot will often show less than a pip on most of the majors during New York and London. Now depending on the broker or the Market Maker you might never see how low prices can get, which depends on whether they mark up the spread or not. I dont know why you think you cant trust a broker offering low spreads? It is pretty easy these days to figure out how a broker makes their money which should tell you how trust worthy they are. The only other hint you will get is how fast the execution is after trading with a particular broker. For example, a broker offering a 0 pip spread on pairs and not charging for losing trades but charging 6 pips for winning trades is not a trust worthy broker. However, a broker showing variable spreads, that are often showing less than a pip on majors depending on the market and charging a reasonable clearing fee are more times then not are trustworthy.
  • #13
  • Jul 21, 2008 2:34pm Jul 21, 2008 2:34pm
Quoting fxtrader42
What do you mean do not trust a broker that gives low spreads?
i meant 0-3 pips on all pairs

Quoting fxtrader42
With that being said, spreads vary depending on the client relationship, the amount, and the market it self.
if they are liquidity providers like a bank or something, then yes. if they arent liquidity providers they have no control over spread. if they give you smaller spreads, that means they are paying higher spreads themselves. in this case, you would probably have to have millions of dollars in an account for them to even consider it.

Quoting fxtrader42
ECN's take many different banks' feeds and aggregate them to give a better price to the end client. In general, Market Makers do the same thing, so they get a better price to deal off of and what price they want to show to the client is up to them.
i agree, but they still have to pay spreads to the bank. again, they arent going to pay six pips and charge you only one. thats retarded. if they are doing this, then they are charging you somewhere else or they arent totally legal somewhere.

Quoting fxtrader42
They are doing the same thing banks are except on a much smaller scale and only with spot. With all of that being said, the more banks a broker uses the better spread they will be able to offer the end client.
not neccesarily. they might be using a ton of banks for their prices, but not for liquidity. there isnt an unlimited supply of leverage in the world. in order for you to be able to trade, there has to be someone who supplies that money. the people who supply that money (banks) are the ones who charge spread.

Quoting fxtrader42
I dont know why you think you cant trust a broker offering low spreads?
it's not low spreads in general, it is almost non existent spreads. again, the brokers have to pay spreads and they have to get their money somewhere.

Quoting fxtrader42
For example, a broker offering a 0 pip spread on pairs and not charging for losing trades but charging 6 pips for winning trades is not a trust worthy broker.
see, this is what i was talking about as being shady. the more im reading your post the more i think i couldve written my response more clearly. this kind of thing is a scam to lure newbies in and take their money somewhere else.

Quoting fxtrader42
However, a broker showing variable spreads, that are often showing less than a pip on majors depending on the market and charging a reasonable clearing fee are more times then not are trustworthy.
im not talking about brokers who charge fees though. in the example you stated, i agree. they charge small spreads but they make up for it in other charges. im talking about brokers who have insanly small spreads and dont mention any other fees.
  • #14
  • Jul 21, 2008 2:59pm Jul 21, 2008 2:59pm
fxtrader42 and blacksun1

I think you guys are missing one important point here, the majority of MM's at this level are bucketshops. Why would spreads and liquidity in the underlying market (in normal market conditions) bother them?
  • #15
  • Jul 21, 2008 10:04pm Jul 21, 2008 10:04pm
Quote
I think you guys are missing one important point here, the majority of MM's at this level are bucketshops. Why would spreads and liquidity in the underlying market (in normal market conditions) bother them?

Trends and larger profitable traders. If they don't offset their net risk they can go bankrupt. It's happened before.
  • #16
  • Jul 22, 2008 12:46am Jul 22, 2008 12:46am
Quoting Rabid
Trends and larger profitable traders. If they don't offset their net risk they can go bankrupt. It's happened before.
If/How/When bucketshops hedge exposure is a different subject I think and doesn't affect the spreads they're quoting (like I say, in normal market conditions).
  • #17
  • Jul 22, 2008 10:08am Jul 22, 2008 10:08am
the reason it affects them is that they still have to pay spread. if they didnt have to pay spread, neither would we, but if they are a forex broker, they have to pay spread. so if they pay spread, but they arent charging you spread, where are they getting the money to cover the spread? thats what im asking. if they dont come out and say that they are getting their money from another source like higher commissions or account fees, then they are ripping you off secretively.
  • #18
  • Jul 22, 2008 11:00am Jul 22, 2008 11:00am
Quoting blacksun1
the reason it affects them is that they still have to pay spread. if they didnt have to pay spread, neither would we, but if they are a forex broker, they have to pay spread. so if they pay spread, but they arent charging you spread, where are they getting the money to cover the spread? thats what im asking. if they dont come out and say that they are getting their money from another source like higher commissions or account fees, then they are ripping you off secretively.
Ummm, they're bucketshops? They hedge aggregate not individual, they can show you whatever they want to show you, -1 pip spreads, 100 pip spreads, any price (within reason most of them).....it's a virtual forex world and has very little to do with the underlying market except for very loose pricing.

What, you think Oanda can show .9 pip spread on Eur/Usd and not charge commission because of their excellent liquidity providers? You think they widen spread to 30 pips on Gbp/Usd for 15 minutes because that's what their liquidity providers spread is? Oh come on.....
  • #19
  • Last Post: Jul 22, 2008 2:04pm Jul 22, 2008 2:04pm
Bottom line... you get what you pay for.
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