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Info on ECN brokers

  • #1
  • First Post: May 26, 2006 6:54am May 26, 2006 6:54am
Hi

Does anyone know any good ECN brokers, who are backed by large firms or institutions.

I recently checked out fxcm's ECN - Propfx - however their platform is a java enabled platform and is quite unreliable. The good thing about these guys is they dont charge commission, they rely on the rebate from their institutions.

Can anyone refer me to a good ECN broker, that is reliable and has a decent platform.

cheers

Rusty
  • #2
  • May 26, 2006 6:57am May 26, 2006 6:57am
Hi,

I am glad more and more people are moving into ECNs.

here is a short list.

Forex Brokers (ECN type models)

 

  2. CoesFx
  3. Hotspot FX
  4. Interactive Brokers
  5. MB Trading

Depends on how much capital you have. Try IB and MB


-ALex

  • #3
  • May 26, 2006 7:04am May 26, 2006 7:04am
This is my chat with MB


Alex: how much can the spread widen during news
Kenny Bauchman: actually the spread tightens during the news events because of the increased volatility
Kenny Bauchman: during those times I've seen the bid and ask lock
Kenny Bauchman: which means the price was the same on either side
  • #4
  • May 26, 2006 9:38am May 26, 2006 9:38am
Quoting avlasov
This is my chat with MB


Alex: how much can the spread widen during news
Kenny Bauchman: actually the spread tightens during the news events because of the increased volatility
Kenny Bauchman: during those times I've seen the bid and ask lock
Kenny Bauchman: which means the price was the same on either side
Actually, this isn't really true from experience (I actually have an account with MBT) depending on how fast the market is moving away from the bid...

Think about it...as the price drops drastically there are more sellers than buyers, new buyers won't be quick to jump in (counter trend trade) this means that bid will drop much more rapidly than the ask.

I've seen spreads as wide as 15 pips on the EUR/USD during NFP as the price moved so quickly away. The wide spreads didn't last that long (probably 30 seconds or so), but there are 2 factors that determine the spread...price acceleration and how many players there are...

With all that said, liquidity isn't the issue, especially since you can almost completely ignore the spread anyway (you can trade inside the spread)...
  • #5
  • May 26, 2006 10:10am May 26, 2006 10:10am
Does anyone know what's the smallest sum an ECN allows a trader to open an account with? I would like to move away from the market makers if possible, but I don't know if I have enough funds to open an account.
  • #6
  • May 26, 2006 10:20am May 26, 2006 10:20am
Quoting jessieblue
Does anyone know what's the smallest sum an ECN allows a trader to open an account with? I would like to move away from the market makers if possible, but I don't know if I have enough funds to open an account.
400$ @ MBT
I'm not insane; my mother had me tested.
  • #7
  • May 26, 2006 10:22am May 26, 2006 10:22am
wohoo. And is MB a reliable broker? How much does it take to open with IB? I heard good things about them.
  • #8
  • May 26, 2006 10:29am May 26, 2006 10:29am
Oanda works like an ECN in the sense that all net market exposure is traded on the market. Their value proposition is that despite this, they give you variable amount trading, no lots or mini lots but can trade any amount position. One single dollar or 10 million, it's all just a single trade, no dealing desk or manual execution to hinder your trading. And they have pioneered this approach. Full marks for execution speed, reliability and honesty.
  • #9
  • May 26, 2006 10:42am May 26, 2006 10:42am
Quoting jessieblue
wohoo. And is MB a reliable broker? How much does it take to open with IB? I heard good things about them.
MBT is reliable...they trade mainly securities, and their regulated, so they're good company.

IB requires $2000 to start.

Note, though...both these companies charge commissions per lot per side...so be aware that there is a cost of being able to make your own spread.
  • #10
  • May 26, 2006 11:08am May 26, 2006 11:08am
Quoting mrmikal
MBT is reliable...they trade mainly securities, and their regulated, so they're good company.

IB requires $2000 to start.

Note, though...both these companies charge commissions per lot per side...so be aware that there is a cost of being able to make your own spread.
Sorry, Not sure I got this. Say I place a trade for 100.000 lots, on eur\usd, that's 10$ worth a pip. What would the spread be for such a move? Is it variable? I usually trade news, would I have problems with IB on such times? Thanks for your feedback.
  • #11
  • May 26, 2006 11:18am May 26, 2006 11:18am
Quoting jessieblue
Sorry, Not sure I got this. Say I place a trade for 100.000 lots, on eur\usd, that's 10$ worth a pip. What would the spread be for such a move? Is it variable? I usually trade news, would I have problems with IB on such times? Thanks for your feedback.
The spread is variable (as all ECN models have variable spreads). The average spread on the EUR/USD is about 1 pip...however, often times, during 1-way movements, the spread widens (like I said, the spread widens to as much as 15 pips in very 1-sided markets) as there are more of one-sided trades. This doesn't mean you'll have a problem trading...it just means that you have to wait for the for the otherside to catch up...But technically, you can set a limit price at any price-level you feel like, they don't restrict you here...

So, if the bid/ask is 1.2900/1.2910 you can place a BUY order at 1.2901 if you wanted to....unlike all retail brokers, you can't do this...the LOWEST BUY price you can set a limit too is the CURRENT ASK price (and vice versa for a SHORT).

Furthermore, if you were to buy 100K Euro, you would have to pay commission of around $6 for the entry position and then another $6 for the exit...the commission is actually based on $100K USD...so if you enter 100K Euro at 1.2900 you have to pay ($129,000 * 0.00005) ~ $6.45 then, let's say you exit at 1.3000, you have to pay ($130,000 * 0.00005) ~ $6.50 in commission on the exit price.

Both IB and MBT follow this format.
  • #12
  • May 26, 2006 11:31am May 26, 2006 11:31am
I have my account with EFX Group which is the same thing as MB Trading. I have found the platform to be very stable thus far. You can trade any lot size from 1 on up (1 being $1 pip).

I was just told that they are adding USB?? to their service which should reduce the spread on the Pound to 1-2 pips, which is what the EUR is at.

Take a good look at this company, at least demo the platform as this the wave of the future as far as I'm concerner...screw dealing with a deal desk!!
  • #13
  • May 26, 2006 11:51am May 26, 2006 11:51am
Quoting bugscoe
I have my account with EFX Group which is the same thing as MB Trading. I have found the platform to be very stable thus far. You can trade any lot size from 1 on up (1 being $1 pip).

I was just told that they are adding USB?? to their service which should reduce the spread on the Pound to 1-2 pips, which is what the EUR is at.

Take a good look at this company, at least demo the platform as this the wave of the future as far as I'm concerner...screw dealing with a deal desk!!
I think you mean UBS (a swiss bank).
  • #14
  • Edited 1:04pm May 26, 2006 12:48pm | Edited 1:04pm
Who the hell deals with dealing desks, requotes and manual execution today when Oanda has offered full straight-through execution since 2001. I really don't get it.
  • #15
  • Edited 1:44pm May 26, 2006 1:37pm | Edited 1:44pm
Quoting mrmikal
The spread is variable (as all ECN models have variable spreads). The average spread on the EUR/USD is about 1 pip...however, often times, during 1-way movements, the spread widens (like I said, the spread widens to as much as 15 pips in very 1-sided markets) as there are more of one-sided trades. This doesn't mean you'll have a problem trading...it just means that you have to wait for the for the otherside to catch up...But technically, you can set a limit price at any price-level you feel like, they don't restrict you here...

So, if the bid/ask is 1.2900/1.2910 you can place a BUY order at 1.2901 if you wanted to....unlike all retail brokers, you can't do this...the LOWEST BUY price you can set a limit too is the CURRENT ASK price (and vice versa for a SHORT).

Furthermore, if you were to buy 100K Euro, you would have to pay commission of around $6 for the entry position and then another $6 for the exit...the commission is actually based on $100K USD...so if you enter 100K Euro at 1.2900 you have to pay ($129,000 * 0.00005) ~ $6.45 then, let's say you exit at 1.3000, you have to pay ($130,000 * 0.00005) ~ $6.50 in commission on the exit price.

Both IB and MBT follow this format.
Thanks for the explanations. So, that would be about 13$ for a 100K position(wich is 10 pip to one $) and that's when the spread widens to 10 pip? That sounds too good to be true, I think i'm missing something here.
And what do you mean by "that you have to wait for the for the otherside to catch up"? During a news release I have to wait to get filled? By the way, Say during a NFP, how much can the spread go up usually?
  • #16
  • May 26, 2006 1:59pm May 26, 2006 1:59pm
Quoting jessieblue
Thanks for the explanations. So, that would be about 13$ for a 100K position(wich is 10 pip to one $) and that's when the spread widens to 10 pip? That sounds too good to be true, I think i'm missing something here.
And what do you mean by "that you have to wait for the for the otherside to catch up"? During a news release I have to wait to get filled? By the way, Say during a NFP, how much can the spread go up usually?
well, you pay $13 in commissions, yes...that part you got...there is a spread, which you can choose NOT to pay...you can try to make your own spread at the risk of losing liquidity, however, most ECN models won't have that problem...but you do run the risk. Essentially, you become the market maker, which means you have to hope someone decides to take your price when you make it.

You can trade inside the spread all you want...so no worries.

If you trade NFPs you won't have a liquidity problem as long as you're on the side of the accelerating spread...with that said, when the spreads widen, that means that one side is moving faster than the other and that in order to GUARANTEE an exit price, you have to either take a really wide spread OR wait for the other side to come down/up to an reasonable spread.

think...if you shorted the euro at 1.2900 and the immediate guaranteed exit (ask) price is at 1.2910....that's a 10 pips spread...now, let's say the price goes down 10 pips, but the spread is still 10 pips (1.2890 to 1.2900), the guaranteed liquidity is at 1.2900 which is only break even....This probably means there aren't going to be a lot of buyers. However, if you wanted to, you could place your exit at 1.2895...this will then put a limit order that would show up in the market, thus reducing the current spread to 5 pips (1.2890 to 1.2895).
  • #17
  • May 26, 2006 2:17pm May 26, 2006 2:17pm
Quoting mrmikal
well, you pay $13 in commissions, yes...that part you got...there is a spread, which you can choose NOT to pay...you can try to make your own spread at the risk of losing liquidity, however, most ECN models won't have that problem...but you do run the risk. Essentially, you become the market maker, which means you have to hope someone decides to take your price when you make it.

You can trade inside the spread all you want...so no worries.

If you trade NFPs you won't have a liquidity problem as long as you're on the side of the accelerating spread...with that said, when the spreads widen, that means that one side is moving faster than the other and that in order to GUARANTEE an exit price, you have to either take a really wide spread OR wait for the other side to come down/up to an reasonable spread.

think...if you shorted the euro at 1.2900 and the immediate guaranteed exit (ask) price is at 1.2910....that's a 10 pips spread...now, let's say the price goes down 10 pips, but the spread is still 10 pips (1.2890 to 1.2900), the guaranteed liquidity is at 1.2900 which is only break even....This probably means there aren't going to be a lot of buyers. However, if you wanted to, you could place your exit at 1.2895...this will then put a limit order that would show up in the market, thus reducing the current spread to 5 pips (1.2890 to 1.2895).
All that said, I'd like to try a demo for IB, but that doesen't seem to be an option unless you have a live account too. How could I try all this stuff, because by the sound of it, I think it would be a bit different than I'm used to with the market maker I'm with at the moment.
  • #18
  • May 26, 2006 2:30pm May 26, 2006 2:30pm
Quoting jessieblue
All that said, I'd like to try a demo for IB, but that doesen't seem to be an option unless you have a live account too. How could I try all this stuff, because by the sound of it, I think it would be a bit different than I'm used to with the market maker I'm with at the moment.
MBT has a demo...and actually, I thought IB had a demo too.
  • #19
  • May 26, 2006 2:41pm May 26, 2006 2:41pm
Quoting mrmikal
MBT has a demo...and actually, I thought IB had a demo too.
Thank you man, I'll check the MBT demo right now.
  • #20
  • May 26, 2006 7:33pm May 26, 2006 7:33pm
Thanx for the reply guys - this has been great!
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