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  • #41
  • Mar 10, 2009 5:26am Mar 10, 2009 5:26am
ecn will also suggest you use limit order, real market have more slippage.

most slippage happen when you use market order to run 'after' a trend... that's a cost you have to pay.

Quoting aquaart
Good idea, I hadn't thought of that as a way of beating so called "slippage".

Because if they slip you the same way as BUY or SELL STOP pending orders it'll work in your favour.
  • #42
  • Mar 13, 2009 10:21am Mar 13, 2009 10:21am
I have a dream that I will be a successful trader.

Billye's idea of limit orders can work well with my trading system. Thanks a lot.

For those interested I have posted two images below that give you screen shots of the market data of ECNs and Market Maker Buckshops.

LEFT BELOW: The three Bucketshops are IBFX (GMT), ODLSecurities (GMT) and GoMarkets (GMT+2).

Although GoMarkets are changing to ECN feed from over 70 banks / institutions around the world. So i hope to see their feed soon, so hopefully they will be a bucketshop no longer.

RIGHT BELOW: The two ECNS are ATC and MBTrading. (American EST), also note as all true ECNs they are 3 and 5 decimal point feeds instead 2/4.
Especially look at the yyyJPY based pairs.
GBPJPY is 1.7 pip and 2.9 pip on the two ECN feeds. USDJPY is 0.8 and 1.0 pip.


Note that you would expect prices to be different if different banks are quoting different prices to each of these brokers.

See for yourself the spreads on the bucketshops are rubbish. MIG's Investtech spreads are better priced Market Makers.
Attached Image(s) (click to enlarge)
Click to Enlarge Name: MarketMaker_RetailBrokers_Are_BucketShops.jpg Size: 125 KB
Click to Enlarge Name: True ECN Broker Spreads.jpg Size: 117 KB
  • #43
  • Mar 13, 2009 12:50pm Mar 13, 2009 12:50pm
What you might notice above is, to getting similar spreads to an ECN feed (shown on right), you would need to have all 3 platforms on the left to have comparable spreads.
  • #44
  • Mar 13, 2009 1:01pm Mar 13, 2009 1:01pm
hi, aquaart:
I'm glad that limit order works for you, for me it saves me 2-3pips round trip than market order slippage,
and I was instantly turned to a little profitable after that... when scalping 5pips movements.

yes, ecn show smaller spreads and even sometimes 0, but, ecn collect a commission fee and you don't see it in price here.

for me to play with a small position size (1k$) for gaining experience, mbt-f is to start with.
they have 1pip commission for a round trip. so total E/U is 1.7pip or so.
interactive brokers have 0.4pip round fee but they need larger start capital. (larger to put at risk, yes, not because they take your money, but I may lose it myself )

but for some other pairs other than E/U and U/J,
ecn may have much better spreads at liquid market time, m-m can be as high as 5pips that is unbearable for scalping.

and for news trading, or if you scalp too successful like some claim 100pips a day? ...
I guess you also have to move to ecn, m-m prevents you doing short-term / very profitable trades.
but I don't think I will be that good within this year. even never this life.
  • #45
  • Mar 13, 2009 1:35pm Mar 13, 2009 1:35pm
Quoting billye
hi, aquaart:
yes, ecn show smaller spreads and even sometimes 0, but, ecn collect a commission fee and you don't see it in price here.
It's a case of six in one hand, a half dozen in another. Spreads mess around with your price levels, commissions do not. The whole "commission free" angle that they use for marketing Forex really is a farce. They do charge commission, it's just done in a sneaky way.
  • #46
  • Mar 13, 2009 2:10pm Mar 13, 2009 2:10pm
well, possible.

I hang limit orders base on mt4+ecn back-end displayed price, and place order in m-m.

I can see if I want it to hit, the system is always reluctant to hit it, haha

but if ecn price cross my price, m-m price have to cross it.
so I just watch till price drop to 1pip below my price.

you're probably correct that in cases that ecn just hit,
m-m with small spread and no commission could miss it... anyway.

Quoting thegunslinger
It's a case of six in one hand, a half dozen in another. Spreads mess around with your price levels, commissions do not. The whole "commission free" angle that they use for marketing Forex really is a farce. They do charge commission, it's just done in a sneaky way.
  • #47
  • Edited 8:30am Mar 14, 2009 12:41am | Edited 8:30am
Quoting thegunslinger
It's a case of six in one hand, a half dozen in another.
No its not...

MBTrading charge $5 USD per lot traded (where a lot is the standard lot $100 000)
OR
They charge $0.50 USD per 0.1 lot traded (where a 0.1 lot is the standard 0.1 lot of $10 000)

This equates to less than 1 pip for any of the top traded currencies. The top 7 traded currencies in order are USD, EUR, JPY, GBP, CHF, AUD and CAD.

If USD is your trading currency (deposit currency) and the pair being traded is:

  1. xxxGBP, that equates to about 0.36 pip. (e.g EURGBP)
  2. xxxJPY, that equates to about 0.48 pip. (e.g GBPJPY)
  3. xxxUSD, that equates to half or 0.50 of a pip. (e.g AUDUSD)
  4. xxxCHF, that equates to about 0.59 pip. (e.g USDCHF)
  5. xxxCAD, that equates to about 0.68 pip. (e.g EURCAD)
  6. xxxAUD, that equates to about 0.76 pip (e.g GBPAUD)
  7. xxxNZD, that equates to about 0.95 pip. (e.g AUDNZD)

Its less than a pip in every single case above. So it you trade anything to do with the xxxUSD, xxxJPY or EURGBP your fee/commission equates to less than half of a pip. And even the others are good.

But it also means they make more money per pip on lesser valued currencies like NZD and AUD.

However, if you trade currencies like xxxNOK, xxxSEK the $5 per lot traded does equate to more than 1 pip. Then maybe the $5 USD commission is to much. But those currencies tend to move many more pips as well.

  • #48
  • Mar 14, 2009 1:17am Mar 14, 2009 1:17am
Also the idea that spreads for ECN feeds are huge during the Asian session is slowly going out the window.

The only reason ECN feeds were like that, was because the feeds were not originally connected to banks / institutions that were trading high volumes during those sessions.

As a result ECN providers are now streaming more and more feeds from JPY and AUD and other Asian session trading banks, into the data feeds and spreads are now significantly lower.

It was crazy, not to include AUD based banks. Australia may only have 20 million people, but has 5 of the worlds top 100 banks and 9 of the world top 100 diversified financials businesses. Japan also has 5 banks, Japan has 6 diversified financials in the top 100.

So by including AUD and JPY based financial companies in the ECN feeds, ECN brokerages have included about 10% of the total tradable forex market, reducing spreads in what was traditionally known as the high spread session.

Yes the spreads, still are not quite as good, because of the sheer size of banks like HSBC, Deutchbank, Bank of America, CitiGroup etc... but they are a lot better than what they ever use to be.
  • #49
  • Mar 14, 2009 8:29am Mar 14, 2009 8:29am
Quoting Quickdraw
ragnakore, thanks for the answer.

Then isn't there a huge conflict of interest with the broker trading against us? That doesn't seem right that they can trade against us. Shouldn't that be ethically wrong for a broker to do that?

Admittedly I'm no expert in regards to brokers, and I don't completely understand how they conduct their business with us, but I think there should be some laws passed to keep them from trading against their own clients. Otherwise, they can do whatever they want to affect our trading platforms and our trading accounts...
Yes, if you read the customer contract of retail market makers, they state in that contract that you understand that there is in built conflict of interest in your trading and their trading. This can be the same for forex dealers that hedge against your position. All retail market makers do this, however, only some of the ECNs do this. This is why it is often better to go with ECNs.
  • #50
  • Edited 9:46am Mar 14, 2009 9:35am | Edited 9:46am
hi aquaart:

I think by some extent they were misleading you by words.
1. 0.5 pip per 1 deal, that is 1pip commision per round trip, not 0.5
2. although they and esp their ib boast that their market depth can show 0 or even negative spreads.
in reality you always have to wait if buy price is lower than sell price,
or if you're in a hurry, you have to submit a buy price equal to sell-1 price, that's common in stock market.
and it is said their system bans you making money by scripts (buy1 low, sell1 high) when system show a negative spread.

well reality does not sound too bad, but I don't like their ib keep repeating that they have <0 spread very often and don't emphasize that you actually pay a 1pip spread commision.

ps: roll over fee is high and free balance is not paid interest.

you can read some user feedbacks here, though mostly positive... at least you can find some others complaint so you'd not be surprised when you meet.
http://www.forexpeacearmy.com/public....mbtrading.com

ps: I never believe that they do not hedge inside their customers before submitting orders to banks.
if there is a buy and a sell EUR at same price, it's very evil attraction to just hedge them between 2 internal customers
and don't submit 2 transactions to bank... and collect 1 pip commission for free...
in the so called choppy market, this strategy basically let's you submit nothing to bank and collect commissions by doing nothing.
by sending a market order, 2 internal customer can have 1pip price difference and still got hedged against each other.

I guess it takes very high business ethics to not hedge it. stocks run on exchange so it's required by law, forex are not required... though I do not know the reality.


Quoting aquaart
No its not...

MBTrading charge $5 USD per lot traded (where a lot is the standard lot $100 000)
OR
They charge $0.50 USD per 0.1 lot traded (where a 0.1 lot is the standard 0.1 lot of $10 000)

This equates to less than 1 pip for any of the top traded currencies. The top 7 traded currencies in order are USD, EUR, JPY, GBP, CHF, AUD and CAD.

If USD is your trading currency (deposit currency) and the pair being traded is:[list][*]xxxGBP, that equates to about 0.36 pip. (e.g EURGBP)[*]xxxJPY, that equates to about 0.48 pip. (e.g...
  • #51
  • Mar 14, 2009 10:08am Mar 14, 2009 10:08am
Quoting billye
hi aquaart:

I think by some extent they were misleading you by words.
1. 0.5 pip per 1 deal, that is 1pip commision per round trip, not 0.5
2. although they and esp their ib boast that their market depth can show...
Sorry, you are correct....

It is in fact closer to 0.72 to 1.9 pip commission per trade for mbTrading. Hmmmmmm

Thank you for pointing that out, and a very good point about customers being hedged against each other, however, each customer would also have to have an opposing customer closing a trade in alternative postions as well for customer hedging to consistently work.

This would also mean that they would have to be willing to be hedging party themselves cause obviously this would not happen 100% of the time that they would like it to. So, I think that if they claim that they don't hedge, they probably do not also hedge customers against each other.

However, all in all ECN prices still work out to be considerably cheaper especially in volatile conditions.
  • #52
  • Mar 14, 2009 10:23am Mar 14, 2009 10:23am
thanx to open this thresd..

actually i am still dont get the idea .. how Broker trade uginest me??

What i know is Forex Market has two direction UP or down ( flat i will not consider it as a direction )

once I go in a right direction ( Direction of Market ) no one can trade uginest me an be winner becase they r trading not just uginest me they r uginets big MARKET .. so if i am in a right direction they will be in wrong direction ... they will be big losser.
Never sell @ lower upward channel unless breacked and vise versa .
  • #53
  • Edited 10:56am Mar 14, 2009 10:24am | Edited 10:56am
thanks, aquaart:

well I think after NFA specifically request forex deal makers claim that "they take opposite positions with customers".

some of self-claimed ECN also add claim that they do take an opposite position with you,
they buy when you sell and they sell when you buy...
(when asked directly if you're ECN, some even directly answer: "no, we are not ecn, we are forex deal makers using ecn technology")

but they add claim that they will submit the reverse order to banks in order to hedge this risk.
This means when you lose money they don't gain, and when you gain they don't lose. this means most of the time they are not in conflict of interest with you.

however, I don't see claim that they will submit one order for matching every single customer order blindly.
it does not make sense if for this 0.1 second duration,
there're 50 customer buy EUR and 51 customer sell EUR, 20 buy/sell at same price,
(ps: this maybe is why m-m set a spread there and only .4 digitals price, sell low order & buy high order are sure to hedge)
and ECN still submit to banks 50 buy and 51 sell orders including those 20 buy/ 20 sell orders at same price.

it sounds stupid, adds tons of communications traffic, and adds operation fee for themselvs...
and not doing so points out a clear profit model that have conflict of interest with no one. (if hedge exact same price only)

I do not know the truth though.

but if I move to ecn after 1 yr, I definitely will not use market order,
because if they hedge between buy/sell orders within +-1pip range market orders...
then market order sell/buy people are 1st lines to be hurt. that's kind of conflict of 1pip interest.
  • #54
  • Mar 14, 2009 10:28am Mar 14, 2009 10:28am
Quoting WedWed
thanx to open this thresd..

actually i am still dont get the idea .. how Broker trade uginest me??

What i know is Forex Market has two direction UP or down ( flat i will not consider it as a direction )

once I go in a right direction ( Direction of Market ) no one can trade uginest me an be winner becase they r truding not just uginest me they r ugents big MARKET .. so if i am in a right direction they will be in wrong direction ... they will be big losser.
They don't. It's just an ECN promotion. How did we live without it before... Brainwash.
  • #55
  • Mar 14, 2009 10:39am Mar 14, 2009 10:39am
if i open position i open it in FOREX MARKET i can see my trading effect either nigative or positive only by the direction of the market .. not by direction of the broker ... direction of the market effects by soo many factors .

once i open my trade means i put my money in FOREX MARKET
so my quastion is Forex Market only brokers??
Never sell @ lower upward channel unless breacked and vise versa .
  • #56
  • Edited 11:55am Mar 14, 2009 11:05am | Edited 11:55am
hi, wedwed, when you deal with a bucket shop. (definition of bucket shop: http://en.wikipedia.org/wiki/Bucket_shop_(stock_market) )
you basically are playing a virtual internet game as if dealing in the forex market as the stocks.

but in stocks when you place an order, everyone else in the world see it,
and when you hold a position for several years and want to change broker in between, you can do it... because there is an exchange and it's regulated.

in forex, in reality you did not enjoy that. non of your orders was submitted to the banks.

for 90% of people who is lured to this market by free demo account or by deposit money get money or by high claimed return, hundred pips straight every day...
they come, deposit small money, trade, win, then be in red, deposit more, then lose all money, and they leave. the bucket shop did nothing, and get the money you lose...
this is how it works. bucket shop even don't like very highly profitable traders. so they have a house of losers and sits there collect money.

in extreme cases, bucket shops agents work as if a spy with a conflict of interest with you in order to make sure you don't make big money, or if you make money and want to withdraw... they even guide you to lose.

you can read NFA-futures statement on this but you've got to learn through real cases...
http://www.nfa.futures.org/complianc...ert_020107.asp
however if you deal with a good broker or you not making or losing big money, you may not have to worry about this all along.
(what is good brokers... ?usually I read 3* and 4* clients feedbacks here (not ads), read all >2yr client feedbacks
http://www.forexpeacearmy.com/public...broker_reviews even if it's tagged as bucket shop,
if you know all their tricks at least you avoid what they hate, or collect evidence in case same trick played to you... )

you can simply test your broker agent by asking them "do you make money when I lose, and do you lose money when I win?"
if they claim that they don't, this broker is not honest then... coz NFA futures request them to say that clearly.
in addition you can test them say, can I consistantly make 10% return every day? is it normal to open a position size that is 50 times acc size?
if they encourage you on that and never warn you against risk, they are more likely to be able to benefit on your loss.

bucket shops also shares a % of their money from clients lost to individual&introducing brokers either from new client numbers base or from a trade volume base,
ib will collect more new clients so bucket shops can continue get money from client loss.
90% of people is not born to be able to make money from trends, and for 10% who have the talent, 90% don't want to pay the effort and yrs of practice to final win...
so eventually only 1% of people win, (I'm not refering to 95/5% rule, I mean all population)
even 95% of people who learned master, PHD on quantity finance engineering cannot win from trade... they earn a living by going to work.
then why they promote so hard to get everyone in forex market? because they win when you lose...
in stocks if you don't highly believe a company, will you borrow money to buy stocks?
will bank lent you 10 times of your own money without you having high confidence justification? in forex they encourage you to borrow money to trade on uncertainty... to lose.

I go to some forums and everyone is claiming that easymoney easymoney and information on how client got robbed by bucket shops is forbidden...
I know they are actually ib disguised as traders and they can never prove their boasts of high consistant profit...
that's the risk you need to be informed when you play in this world... I'm surprised you did not touch the dark side in past few month, maybe you live in a better regulated market though.

for all that sake, I wouldn't deny that trading with a ecn is a better choice because they don't have a conflict of interest with you,
they win comission when you consistantly win, if you do one deal and dead they don't win a lot... they want your success...
but ecn start with a higher position size, I will move to ecn till I'm proven by m-m to be able to profit in 1 yr. (lack of confidence still)

Quoting WedWed
if i open position i open it in FOREX MARKET i can see my trading effect either nigative or positive only by the direction of the market .. not by direction of the broker ... direction of the market effects by soo many factors .

once i open my trade means i put my money in FOREX MARKET
so my quastion is Forex Market only brokers??
  • #57
  • Mar 14, 2009 11:44am Mar 14, 2009 11:44am
Quoting billye
hi, wedwed, when you deal with a bucket shop........
you can simply test your broker agent by asking them "do you make money when I lose, and do you lose money when I win?"
if they claim that they don't, this broker is not honest then... coz NFA futures request them to say that clearly.
in addition you can test them say, can I consistantly make 10% return every day? is it normal to open a position size that is 50 times acc size?
if they encourage you on that and never warn you against risk, they are more likely to be able to benefit on your loss....

Hi my friend billye .. thanx for what u write. i am agree with u

i can see my broker how he guide me to go wrong direction .. some time he encuarge me to open positon with high lot (2000,000) and even more ..

and one day also i asked them if i loss are they won the answer me NO ..

i fell they not say the truth ..


what i understand is they try in many way get your money ..


But the thing which is still not understand is TRADING UGINEST ME

as i said if i am in right direction they will broke thier head if they open uginest me.


i did not trust Brokers but in same time i cant understand this part "TRADING UGINEST ME "
Never sell @ lower upward channel unless breacked and vise versa .
  • #58
  • Mar 14, 2009 11:53am Mar 14, 2009 11:53am
Quoting Quickdraw
I have heard before that forex brokers don't won't us to win, because when that happens then they lose money. If the forex market is a $2 trillion a day market, then how does a retail broker lose money? How does someone having a winning trade cost a broker money? Aren't we trading against other traders?

http://www.forexfactory.com/showthread.php?t=20253
  • #59
  • Edited 12:37pm Mar 14, 2009 12:11pm | Edited 12:37pm
Quoting WedWed
Hi my friend billye .. thanx for what u write. i am agree with u

But the thing which is still not understand is TRADING AGAINST ME

as i said if i am in right direction they will broke thier head...
a true ecn submit every order to banks. they don't worry.
a not so true ecn hedge customer order and submit the remaining to banks... but it's ok, they do not make money when you lose. they don't worry too.

normally market maker hedge customer orders and submit the remaining to banks also. this means when you win another customer lose, when you lose another customer win. they also don't worry.

a bucket shop may not submit anything at all... you place an order to buy, they open a position to sell you, you buy they sell, you cannot find an another customer that they picked to hedge your order.

why? they know 90% of their clients cannot walk away with more money than initial deposit, so they sit there watch you eventually lose money after a few months... some bucketshop stops you on withdraw at a profit, some bucketshop ask you to go away if you consistant make money and withdraw, some bucketshop play tricks with winning trader's platform.

some legitimate market maker hedge every order diligently, and they only profit on spreads. you can learn about each broker via client feedbacks.

about your question do they worry if you win and they lose? legit m-m will submit orders that they cannot hedge to banks, say you buy usd and win, they sell and lose, and at same time they buy same amount from banks... they win from that order to pay you. so they will not be worrried.

A real bucket shop will be worried if you make >30% profit of initial deposit and continue do that. so I always suggest people move away from a broker if made quick profit >30% of initial deposit ... they will be crazy if you made too much in too short time, 30% maybe is a trigger point; unless you have high confidence with that broker proven by years.

what is the good side for m-m to trade against you?
if you compare a demo mt4 vs a real mt4, demo mt4 usually have no delay at open orders,
while real ones will have to send price to server, know price changed, requote, send price to server, know price changed. requote again.... that slows down the deal open.
if m-m open every deal as your counter part, you basically don't suffer that delay going to mt4 server or going to banks, deals open instantly...
so regardless of all m-m evils, I still trade with them happily.
  • #60
  • Mar 14, 2009 6:24pm Mar 14, 2009 6:24pm
Quoting billye
...
in stocks if you don't highly believe a company, will you borrow money to buy stocks?
will bank lent you 10 times of your own money without you having high confidence justification?
This evil has arrived. It is called CFD (Contract For Difference). This is a leveraged product based on the stock market and they are now starting to push this in the UK. CFDs are mostly traded on blue-chip stocks and it is a convenient method of shorting stocks if you are an ordinary player. Last time I asked my regular broker if I could short something the answer was an emphatic 'NO'.

HOWEVER if you roll over a position you pay an interest charge, and if you have taken out a stop against anything that has global trading, which is most of the blue-chip stocks, then you can be waaaay in the red when local trading re-opens.
Minesweeper target: 284
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