Quoting WTBDislikedNaysayerTrader,
From what point (account size wise) would you consider commercial brokers (InterbankFX, Oanda, FXCM and the like) to be unsuitable for a regular trader, meaning you gotta start doing your "research homework" as you put it?
Thanks.Ignored
So, I think FXCM is only going to allow you to enter a maximum of 500 lots per trade. That’s about a $25,000.00 cash-on-cash trade from what they call a Mini Account using 200:1 leverage, or about $50,000.00 cash at 100:1 (if, my rough numbers are correct – fact check them yourself). So, you end up being able to control about $5,000,000.00 currency units maximum per trade with FXCM at these leverage levels – which is the leverage that I like to use in my own personal trading. Drop the leverage to 50:1 (which still makes some traders very squeamish) and you still control about $5 million currency units, but now it makes your cash-on-cash entry closer to $100k+ per trade. So, with a decrease in effective leverage, you have risk more “literal cash” to control the same number of currency units. Of course, your per pip net value remains the same at about $500.00 each time the price moves one pip. That represents a 2% max p/l per pip for the $25,000.00 cash-on-cash trade, and a 0.5% max p/l per trade on the $100k cc trade. (always fact check my numbers, or anyone else’s for that matter).
On the other hand, some “retail brokers” will only allow a maximum of 50 lots per trade max along with telling you that there is no limit on the number of trades you can make, yet they won’t offer a smooth transactional platform for accomplishing more. Rather, you have to flip through hoops just to get it done. They will also tell you that in many cases, you will have to call their dealing desk for approval for each trade above their max per trade. If I have to pick-up the phone to place a trade just so somebody can blow my entry times and trade against me on the back-end before deciding that they’d rather send me to interbank, then I need to be dealing with another firm. They say that they are taking a “risk” by allowing you to trade high lots with high leverage and to an extend this is true. However, what risk is there when most of these brokers/mm’s already have bots that auto-margin your account when you hit their margin limits to protect themselves from being blown out of the market. So, I don’t always buy the “we’re taking the risk” quote often given by brokers in the business – that’s what auto-margin stops are for – they are built into the system to prevent runaway negative trades.
So, to a large degree the concern about how many lots before making the switch to a true “commercial” player will depend on the broker you use. Anything above 500 per trade will just about take care of all of them in the retail space.
Hope this helps.