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Broker says I trade too much

  • #1
  • First Post: Jun 15, 2011 12:04pm Jun 15, 2011 12:04pm
Hi,

I'm trying out an EA on a live account using nanolots (I don't trust demo trials, they often give too different results than on a live account). However, my EA makes lots of trades (as I'm trying it on a lot of pairs at the same time), around 500 opens and closes per hour.
Now, I get a message from my broker saying that I'm doing too many trades and I'm overloading their servers. I can understand this, obviously 500 trades per hour is a lot :-).

However, I'm paying the spread per trade, so I wonder why they have a problem with it. If I do 1 trade per hour, they get one spread per hour; if i do 500 trades per hours, they get the spread 500 times.

My only guess is that their running cost (i.e. the cost of their servers) is higher than what my nanolot trades bring in on spread. If this is the case, I guess they wouldn't complain if I trades 500 standard lots per hour, but this is 'a bit' out of my reach at the moment ;-).

Anybody have some insight on this? Why do brokers object that I trade a lot, if each trades brings in some spread?

Thanks!
  • #2
  • Jun 15, 2011 8:41pm Jun 15, 2011 8:41pm
I am sure if you were winning while trading 500 standard lots then you would be overloading their servers. If you were losing then they would purchase a new server with your spread and losses to compensate

I am curious which broker you are trading with, I personally can only find 400 reasons an hour to trade myself I kid, I kid, obviously I don't trade with EA's. I do trade however, and often have problems with the one or two trades I place a day. I placed a trade this morning and had to close and reopen my platform multiple times to connect with my brokers server. I would expect lots of problems trading that much IMO.

Best of luck

Jacob
  • #3
  • Jun 16, 2011 12:31am Jun 16, 2011 12:31am
Quoting azertyken
Hi,

I'm trying out an EA on a live account using nanolots (I don't trust demo trials, they often give too different results than on a live account). However, my EA makes lots of trades (as I'm trying it on a lot of pairs at the same time), around 500 opens and closes per hour.
Now, I get a message from my broker saying that I'm doing too many trades and I'm overloading their servers. I can understand this, obviously 500 trades per hour is a lot :-).

However, I'm paying the spread per trade, so I wonder why they have a problem with it. If...
What is your broker?
I think that their server is slow due to a lot of EAs.That's why that happens...
  • #4
  • Jun 16, 2011 1:29am Jun 16, 2011 1:29am
I wonder if this query is pertinent, I am yet to set-up auto-trading for myself: (1a) Is manual trading synonymously referred to as mechanical ?
(1b) How to model the Optimization problem of the "Quantity per trade" (number of contracts) to trade and the trading frequency (in terms of +ve/-ve pips) adjusted for the Trading cycle(=brokerage) costs to arrive at a optimal solution given an amount of capital (assuming the mini- or micro- contracts available for trading).Any literature references welcome, -thanks.
  • #5
  • Jun 19, 2011 8:24am Jun 19, 2011 8:24am
you're doing 500 trades an hour but they can't handle it?

so say they have 500 customers who want to make a trade each hour, they can't handle this?

what are they using as their server? Windows 95?
  • #6
  • Jun 19, 2011 8:36am Jun 19, 2011 8:36am
Quoting scottyfromau
you're doing 500 trades an hour but they can't handle it?

so say they have 500 customers who want to make a trade each hour, they can't handle this?

what are they using as their server? Windows 95?
think of it from the other direction. what if they have 500 customers who trade 1 to a few times per hour, and then they have 1 customer who virtually doubles this traffic all on his/her own. if their server is a laptop sitting in a toilet cubicle at the back of a truck stop then it's possible he is in fact overloading their servers and messing with their zen.

gotta give props to anyone who gets a cranky letter from their broker.

years ago a certain cable internet provider used to base what they considered to be customer 'overuse' of the providers bandwidth as an average calculation of all customer usage per month (or something along those lines). i knew someone who at that time made it his purpose in life to be one of the people who would download so much it would raise the calculated average usage for all customers thereby raising the bar of what was considered 'overuse' for all other customers.
Congratulations ScalaFX for coming out of the closet!
  • #7
  • Jun 19, 2011 8:41am Jun 19, 2011 8:41am
Quoting nubcake
think of it from the other direction. what if they have 500 customers who trade 1 to a few times per hour, and then they have 1 customer who virtually doubles this traffic all on his/her own. if their server is a laptop sitting in a toilet cubicle at the back of a truck stop then it's possible he is in fact overloading their servers and messing with their zen.

gotta give props to anyone who gets a cranky letter from their broker.

years ago a certain cable internet provider used to base what they considered to be customer 'overuse' of the providers...
Surely the costs of his trading would be enough compensation for their server.

Even if he was only trading 1 minilot of eurusd, he's paying 1-2 spread. Maybe half of that goes to the broker.

Say broker gets 1 pip per trade, $1. that'll be $500 an hour. $12,000 a day. $60,000 a week.

I'm sure they could accomodate his unique style for this figure ^.^
  • #8
  • Jun 19, 2011 1:22pm Jun 19, 2011 1:22pm
500 trades/hour ? it is madness....
  • #9
  • Jun 19, 2011 5:23pm Jun 19, 2011 5:23pm
What does that come out to, about 8 trades a minute? Every minute, every hour, every day. Man that is some serious shit.
  • #10
  • Jun 19, 2011 5:32pm Jun 19, 2011 5:32pm
Quoting azertyken
Hi,

Anybody have some insight on this? Why do brokers object that I trade a lot, if each trades brings in some spread?

Thanks!
My guess is that is either :
1 if the broker is STP they have a poorly performante bridge to the liquidity provider . I read recently that a new benchmak for a MT4 bridge is the ability of handling 100 trader per minute if i am not mistaken. This is already a real low number . So if you are trading above some 20 minute and the bridge (+ other clients order ) cannot handle it.
2 If the broker is market maker , then their deal desk is not skilled enough to handle this ammount of fast trade and most probably they are at loss.
  • #11
  • Jun 19, 2011 6:58pm Jun 19, 2011 6:58pm
Quoting scottyfromau
Surely the costs of his trading would be enough compensation for their server.

Even if he was only trading 1 minilot of eurusd, he's paying 1-2 spread. Maybe half of that goes to the broker.

Say broker gets 1 pip per trade, $1. that'll be $500 an hour. $12,000 a day. $60,000 a week.

I'm sure they could accomodate his unique style for this figure ^.^
The OP mentioned that his EA is trading nanolots. That's 0.001 lot = 100 units, or 1 cent a pip.

So, we need to divide your figures by 100... that's not nearly enough for the poor broker. ; ) Especially if the EA is break-even or better.
  • #12
  • Last Post: Jun 20, 2011 12:26am Jun 20, 2011 12:26am
Quoting hoodibaba
500 trades/hour ? it is madness....
Yes, it is ridiculous.

Or may be EAs trade almost every 5 sec?
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