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commission vs. non-commission broker

  • #1
  • First Post: Apr 22, 2006 12:04am Apr 22, 2006 12:04am
A friend of mine said he thinks if you trade with a commission
broker that has high margin requirements, you will have a greater
chance of your account being wiped out faster than trading with
a non-commission broker that has lower margin requirements.
Anyone have any input on this?
  • #2
  • Apr 22, 2006 12:32am Apr 22, 2006 12:32am
Quoting eagle4x
A friend of mine said he thinks if you trade with a commission
broker that has high margin requirements, you will have a greater
chance of your account being wiped out faster than trading with
a non-commission broker that has lower margin requirements.
Anyone have any input on this?
I have had 2 brokerage accounts for months, one with a typical broker, the other with a commission broker. The only downside to the commission broker is the fact that the leverage only allows me to make fewer trades.

The advantages are many. I never have problems placing an order when there is high volatility and trades actually cost me less. Since the spread is almost always much lower than conventional brokers, even with the commission (which amounts to about 1 pip per turnaround, but depends on the value of the currencies) I almost always end up paying less with the commission broker. Since my commission broker does not have a dealing desk, there is no incentive for my trades to be delayed at certain times the way I suspect with other brokers. In fact the broker claims to lack the ability to do so, since they just pass the trades on directly to the bank.

If I had more money the leverage differential would not bother me. In fact they only have one type of account--only minis. but with leverage for all similar to what some brokers require for standard accounts.

Talking about leverge, the commission broker does not demand decreased leverage for carry trades, and to receive interest.

I certainly have not experienced a faster rate of account loss, on the contrary, I would have said the opposite.
  • #3
  • Apr 22, 2006 12:48am Apr 22, 2006 12:48am
Quoting moonchild
I have had 2 brokerage accounts for months, one with a typical broker, the other with a commission broker. The only downside to the commission broker is the fact that the leverage only allows me to make fewer trades.

The advantages are many. I never have problems placing an order when there is high volatility and trades actually cost me less. Since the spread is almost always much lower than conventional brokers, even with the commission (which amounts to about 1 pip per turnaround, but depends on the value of the currencies) I almost always end up paying less with the commission broker. Since my commission broker does not have a dealing desk, there is no incentive for my trades to be delayed at certain times the way I suspect with other brokers. In fact the broker claims to lack the ability to do so, since they just pass the trades on directly to the bank.

If I had more money the leverage differential would not bother me. In fact they only have one type of account--only minis. but with leverage for all similar to what some brokers require for standard accounts.

Talking about leverge, the commission broker does not demand decreased leverage for carry trades, and to receive interest.

I certainly have not experienced a faster rate of account loss, on the contrary, I would have said the opposite.
I actually have the same situation...one commission broker with really tight spreads and one non-commission with standard spreads. I'm not a big fan of the system provided by my commission broker, so I tend to trade more with the commission broker. However, I agree, with my ECN broker, I don't experience requotes (although sometimes there are some VAST spreads, so it's a little odd).

However, I find that I can "predict" the market direction on the non-commission broker as the fixed spreads prevent them from sliding up/down as fast...so for a few seconds, I have broker arbitrage, and I can make a solid / easy trade with my commissioned broker.

Believe me, your success will depend more on how well you can maneuver your platform and perform your strategy (assuming you have a profitable one) than how much leverage a broker will give you or how tight your spreads are. For example, if you can capture a quick move because your platform allows for quick entry...that will do wonders as opposed to lumbering through an order with a tighter spread. I am a big proponent of platform performance...if your platform allows you to perform well, spreads will mean a lot less. Sure tight spreads are nice, but I'd take my sub 1-second entry/close and 3-pip spread over a 5-second+ order entry sequence and a 1-pip spread.

Of course, that's because of the WAY I trade...I'm here to capture quicker movements which happens to be my cup of tea...may not suit very many people...

But, if you want to place a trade, stop, take profit, hedge, then close or even better a close and reverse, not too many platforms out there fit the bill (that I'm aware of)...that's why I'm quite happy with having multiple brokers for different types of trades.
  • #4
  • Apr 22, 2006 7:27am Apr 22, 2006 7:27am
When you say commission broker, do you mean that the broker doesn't pay/charge a swap, but only charges a commission for every trade?
If yes, could you name some commision-free brokers (forex-brokers).
I know that you can get a swap-free account at most forex-brokerages, but only if you are muslim. Is it that type of account that you are reffering to ?
  • #5
  • Apr 22, 2006 7:37am Apr 22, 2006 7:37am
Hi Mrmikal,

Which type of broker do you prefer to watch the action with, using Hagadol's
Price list from yesterday? Which one did you work with yesterday? thanks Scott


Quoting mrmikal
I actually have the same situation...one commission broker with really tight spreads and one non-commission with standard spreads. I'm not a big fan of the system provided by my commission broker, so I tend to trade more with the commission broker. However, I agree, with my ECN broker, I don't experience requotes (although sometimes there are some VAST spreads, so it's a little odd).

However, I find that I can "predict" the market direction on the non-commission broker as the fixed spreads prevent them from sliding up/down as fast...so for a few seconds, I have broker arbitrage, and I can make a solid / easy trade with my commissioned broker.

Believe me, your success will depend more on how well you can maneuver your platform and perform your strategy (assuming you have a profitable one) than how much leverage a broker will give you or how tight your spreads are. For example, if you can capture a quick move because your platform allows for quick entry...that will do wonders as opposed to lumbering through an order with a tighter spread. I am a big proponent of platform performance...if your platform allows you to perform well, spreads will mean a lot less. Sure tight spreads are nice, but I'd take my sub 1-second entry/close and 3-pip spread over a 5-second+ order entry sequence and a 1-pip spread.

Of course, that's because of the WAY I trade...I'm here to capture quicker movements which happens to be my cup of tea...may not suit very many people...

But, if you want to place a trade, stop, take profit, hedge, then close or even better a close and reverse, not too many platforms out there fit the bill (that I'm aware of)...that's why I'm quite happy with having multiple brokers for different types of trades.
  • #6
  • Apr 22, 2006 10:21am Apr 22, 2006 10:21am
Quoting smjones
Hi Mrmikal,

Which type of broker do you prefer to watch the action with, using Hagadol's
Price list from yesterday? Which one did you work with yesterday? thanks Scott
Well, I could only work with FX Sol yesterday because I was at work when this was all happening...and my work doesn't allow me to access GTS from my station.

I just had the lady go short for me and when I saw the price on dailyfx drop to a certain level, I told her to close it for me. That's one of the reasons I stick with FX Sol, the fact that I can go onto chat and tell them to do this and they're pretty quick about it.

For me, I just opened up the netdania charts and understood that my broker would be within a few pips of the price.

Wasn't that some sh** though? I sincerely hope Hagadol continues with that, because I tried to find all of that info, and honestly, I couldn't come close to that detail. With that said, the short call he made was pretty easy to spot...the exit, I wasn't so sure of without his information. Extremely key.
  • #7
  • Last Post: Apr 22, 2006 10:40am Apr 22, 2006 10:40am
Yes it was amazing. I am sure with a little practice one could develop that kind of detail. He must have been doing this for some time... I think it would be a huge inconvenience for him to continue in that kind of detail. But it would be nice if he laid out what his criteria is... Hint hint

Hope you have a great weekend. It's sunny in my area so I am going to go and enjoy it... Scott


Quoting mrmikal
Well, I could only work with FX Sol yesterday because I was at work when this was all happening...and my work doesn't allow me to access GTS from my station.

I just had the lady go short for me and when I saw the price on dailyfx drop to a certain level, I told her to close it for me. That's one of the reasons I stick with FX Sol, the fact that I can go onto chat and tell them to do this and they're pretty quick about it.

For me, I just opened up the netdania charts and understood that my broker would be within a few pips of the price.

Wasn't that some sh** though? I sincerely hope Hagadol continues with that, because I tried to find all of that info, and honestly, I couldn't come close to that detail. With that said, the short call he made was pretty easy to spot...the exit, I wasn't so sure of without his information. Extremely key.
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