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comparing eurjpy broker spreads

  • #1
  • First Post: Jan 5, 2011 6:59am Jan 5, 2011 6:59am
Hi,

I am trading mainly the eurjpy and do so using Interactive Brokers as my main broker. I also opened a small account with MBTrading and DBFX to compare and use as back up. I am open to use any broker as my main broker as long as they are reliable and the spread is competitive.

DBFX stated on the website and also in the demo a 2 pip spread on average for the eurjpy, in reality low 2 pip numbers are rare, the average willl be somewhere between 3-4 pips and +4 pip spreads are pretty normal during european market hours.

MBTrading is trading between 2.2 and 3 pips most of the time.

Interactive Brokers is trading between 1 and 1.5 pip most of the time.

You probably see now why I stick to IB as my main broker. I asume that DB is also one of the liquidity providers for the other brokers and can't see why there has to be such a huge difference between dbfx and IB. Furthermore I can't see why dbfx uses all kind of excuses to keep there spread this big. The spreads at dbfx widened when North and South Korea began their latest disput, but never got back to the more or less low spread for the eurjpy that they had before. MBTrading is a fine company and is competitive in lots of ways to Interactive Brokers, why is it that they can't get enough liquidity (providers) to the eurjpy to offer a spread that comes close to the Interactive Brokers spread? The MBT spread is on average about twice the IB spread....

I hope some active eurjpy traders can comment on this and maybe add some reliable eurjpy brokers with competitive spreads (european session). Besides that I would highly appreciate any comment from DBFX and MBTrading as I didn't open an account with them for fun, but because I trusted them with my funds and for trading, and now somehow am slightly dissapointed.

Thanks,

pbb
  • #2
  • Jan 5, 2011 11:02am Jan 5, 2011 11:02am
This has been answered and explained 50000 times already. You have to understand how the system works and once you do, you will understand that you cannot have 1 broker that ALWAYS has the best spreads/commissions/rollover for EVERY single pair/instrument at ALL times.
  • #3
  • Jan 5, 2011 11:53am Jan 5, 2011 11:53am
Quoting fiberangel
This has been answered and explained 50000 times already. You have to understand how the system works and once you do, you will understand that you cannot have 1 broker that ALWAYS has the best spreads/commissions/rollover for EVERY single pair/instrument at ALL times.
I guess I know pretty well how the system works and I don't say that all brokers have to be alike. What I say is that it's odd that two ecn-like brokers that can be compared in forex and futures trading have such a different spread and not just for a short period. Besides that, DBFX claims to have a 2pip spread for eurjpy under normal market conditions, what so ab-normal the last two months for DBFX to double the spread?

Hope you can EXPLAIN this to me.

Thanks,

pbb
  • #4
  • Jan 5, 2011 6:34pm Jan 5, 2011 6:34pm
Quoting pbb
I guess I know pretty well how the system works and I don't say that all brokers have to be alike. What I say is that it's odd that two ecn-like brokers that can be compared in forex and futures trading have such a different spread and not just for a short period. Besides that, DBFX claims to have a 2pip spread for eurjpy under normal market conditions, what so ab-normal the last two months for DBFX to double the spread?

Hope you can EXPLAIN this to me.

Thanks,

pbb
Taking a guess at DBFX, as I am an MBT client so I don't have first hand knowledge of DBFX. I do know however that DBFX is a white label implementation of FXCM. Rather than have all the overhead of developing and maintaining their own platform DBFX in essence subs out all that to FXCM.... and that has to incur some additional expense to DBFX, as they have to pay FXCM, and like everything else in life... they pass that added expense on to you the customer in the form of higher fees.

MBT and IB are targeting different market segments. IB is, by its own statements, designed for high frequency/high volume traders.... like everything else in life, you get a discount when you buy in volume... MBT on the other hand is trying to bring quality ECN execution to the masses, and offers low account opening minimums, and allows small traders to trade in 1000 unit lots.... which IB does not.

Because MBT is serviceing all those little account and those little lots, their expenses are greater, and they can't negotiate as good a deal with their liquidity providers... hence the difference in IB vs. MBT.

I think this industry as a whole owes MB Trading a great deal in that they have led the way in offering true ECN to people who want to test, and train themselves in this market without betting big amounts.

Just my thoughts on why you see the pricing differences. They are three different brokers, with three different setups, and target markets. It isn't as though you are comparing apples to apples.
  • #5
  • Jan 6, 2011 2:46pm Jan 6, 2011 2:46pm
Bingo, it's all about the agreements with liquidity providers. I'm not saying one has better/more providers than the other, just different.
  • #6
  • Jan 6, 2011 3:32pm Jan 6, 2011 3:32pm
DBFX are offering wide spreads because they can. People obviously are willing to pay these spreads in order to enjoy a supposedly greater financial security.

Apart from legally belongig to the Deutsche Bank Group though, DBFX is essentially FXCM.

Here are some fx brokers to compare:

http://www.fxintel.com/live/
  • #7
  • Jan 6, 2011 5:41pm Jan 6, 2011 5:41pm
Quoting Crassius
I do know however that DBFX is a white label implementation of FXCM.
Quoting Traderlarry
Apart from legally belongig to the Deutsche Bank Group though, DBFX is essentially FXCM.

That's wrong.
DB only licensed the platform from FXCM, but the liquidity is his own.
It would be completely crazy if the world biggest forex market player (DB) didn't use his own liquidity.

DBFX spreads can be, and should be, largest than ECN spreads, simply because DB is a single market maker, while an ECN consolidates prices from many market makers and institutional players.

I had a live account with DBFX and I noticed several times that, apart from the main pairs and crosses, liquidity was low at times, causing spikes to appear on charts, where other brokers didn't have them.
  • #8
  • Jan 6, 2011 6:11pm Jan 6, 2011 6:11pm
Quoting jagui
That's wrong.
DB only licensed the platform from FXCM, but the liquidity is his own.
It would be completely crazy if the world biggest forex market player (DB) didn't use his own liquidity

Sounds logical to me.
  • #9
  • Jan 7, 2011 4:11am Jan 7, 2011 4:11am
Quoting jagui
That's wrong.
DB only licensed the platform from FXCM, but the liquidity is his own.
It would be completely crazy if the world biggest forex market player (DB) didn't use his own liquidity.

DBFX spreads can be, and should be, largest than ECN spreads, simply because DB is a single market maker, while an ECN consolidates prices from many market makers and institutional players.

I had a live account with DBFX and I noticed several times that, apart from the main pairs and crosses, liquidity was low at times, causing spikes to appear on charts,...
Doesn't make much sense to me. As one of the biggest players in FX, why should they have low liquidity and wider spreads ? Does that mean that Interactive Brokers, MB and the Cyprus based brokers etc. have more liquidity than DB since their spreads are tighter ? I really don't think so. Just a question of competition.


If you want to make sure you are really dealing through DB, go to
Autobahn FX http://www.autobahnfx.db.com/

Not for the small retail trader, though.
  • #10
  • Jan 7, 2011 6:54am Jan 7, 2011 6:54am
Quoting Traderlarry
Doesn't make much sense to me. As one of the biggest players in FX, why should they have low liquidity and wider spreads ? Does that mean that Interactive Brokers, MB and the Cyprus based brokers etc. have more liquidity than DB since their spreads are tighter ?

Yes. It is. But it's not that straightforward.
IB and MB don't necessarily have more liquidity, but surely they have more than one contributors, and therefore they have tighter spreads because they aggregate them into their ecn.

When it comes to liquidity, probably you get more liquidity from autobahn, but on DBFX there isn't so much of it. DBFX is just the retail feed of DB, this is a single market-maker feed and they play with it.

DBFX justifies his spikes by claiming that they "don't control the market" but indeed they do (at least on the spikes) because they are the market maker so they are making prices. Since these spikes are not on the ECNs this means that they provide low liquidity on dbfx OR that they intentionally create the spikes.

See this thread for more details:

http://www.forexfactory.com/showthread.php?t=259313
  • #11
  • Jan 7, 2011 7:34am Jan 7, 2011 7:34am
If the whole fx world trades with DB, shouldn't they be able to pass on enough liquidity to their platforms ?

Oh well...
  • #12
  • Jan 7, 2011 7:48am Jan 7, 2011 7:48am
Quoting Traderlarry
If the whole fx world trades with DB, shouldn't they be able to pass on enough liquidity to their platforms ?

Yes, they are, but they choose not to do so... at least on the retail platform
  • #13
  • Last Post: Jan 7, 2011 6:07pm Jan 7, 2011 6:07pm
Quoting Traderlarry
If the whole fx world trades with DB, shouldn't they be able to pass on enough liquidity to their platforms ?

Oh well...
The point is since they are providing all the liquidity the spread is whatever the hell they want to make it, and they make it as large as customers are willing to pay.
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