Is it possible to profitably trade with MT4 brokers?

First of all, below I will go into the facts of my trading system and how I trade it. This info will help others here answer my question at the end of this message.

I have been trading on an Oanda demo account using an EA and it has been doing fairly well (in a demo account – not a live account).

I trade 12 currencies on my EA. It is a “set and forget” EA. I use a 2:1 ratio as my risk/reward. Therefore, I have a 15 SL & 30 TP for some of my currency pairs and a 20 SL & 40 TP on the other pairs. Due to the Daily pip totals shrinking in the Forex market lately, I’m actually considering lowering the SL & TP on all my pairs by 5 pips each. But for the moment I have it as I have wrote above. The trades often lasts for about 24 hrs (sometimes a little more, sometimes less). I generally average about 20 – 25 trades per week.

The problem is that I’ve read some bad things here at FF about the huge widening spreads of Oanda on their live account during certain times. So now I am having second thoughts if it is even possible for my trading system to be successful on a live Oanda account. In fact, I am wondering if all MT4 brokers are the same and it might be impossible to have success with my trading system on any MT4 broker.

I need to know if it is possible to trade with an MT4 broker using a 2:1 ratio of 15 SL & 30 TP and 20 SL & 40 TP and not have Oanda consistently stop out my trades due solely with their widening spreads and other tactics. I don’t want to waste my money & time if a MT4 forex broker is going to rob me the majority of the time with widening spreads or whatever tactic. I can handle it if it’s a once in a while thing. But not if it’s the majority of the time.

Has anyone been able to trade consistently with Oanda, using 10 – 20 pip stop losses? Is it a waste of time and money to try to trade with 10 – 20 pip SL’s with MT4 brokers such as Oanda and FXCM?

I am not expecting a “perfect” broker. But what good does it do to have a good trading system if it becomes basically useless if the broker is causing 20 pip spikes (or more) in the spread and then you are automatically stopped out? If that is the case, then anyone using 10 – 20 pip stop losses (such as I do) have no chance to be successful in forex trading.

My fear is that no matter how great an EA might be - using SL’s of 10 to 20 pips – in the end it could be impossible to be successful if the broker is consistently causing huge widening spreads. Again, I don’t know for sure if this is a really big problem with MT4 brokers such as Oanda, but I am just going by what I’ve read at a few places here at Forex Factory.

So again, the question is: If an EA using 10 – 20 pips SL’s is successful on a Oanda demo account (with Take Profit at 2:1 ratio), can it also be successful on a live Oanda broker account? Or, are there too many times the spread widens in which it will stop out too many of my trades? If such a situation will not be successful with Oanda, then what MT4 broker should I use? (I am in the United States, therefore I assume I will need a U.S. Broker). Does anyone have experience of using a live MT4 account using around 10 – 20 pip stop losses? If so, have the sudden wide spreads and spikes caused you to get stopped out the majority of the time?

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hey quick...... no, absolutely without a doubt, all brokers are not the same..... i'd really be surprised if any broker falling under nfa's control would today widen spreads or spike prices unless the market circumstances demanded it......

course there is no way for anyone to say anything about your system....... but it's easy to run a spread watchdog ea on all the pairs in a live account and count the number of times the spread hits each width.....

and it's a simple matter to attach a hour to each occurrence.... you could even write an indicator to plot in histogram fashion the results by hour so you could better see what goes on when...... if say, 7 am cst had a larger than normal set of occurrences, perhaps you could avoid it or widen your targets during that time and restore them to normal thereafter......h

Uh.. not I am not even sure you can even set 5 pip sl...

It think they force you to set 10 pip sl minimum..

And if you were able to set 5 pip sl..well I can guarantee you during "news release time" ALL broker Jack the spread up by 5 pip increase.

So if you "need to set sl 5 pip to win then, you will not make any profit because of spread widen"

If you set sl 15 pip maybe.... you can win. But like you say market average daily pip range is shrinking so ... you are out of luck here.

Keep the demo running and clone the trades with copier.

HERE

There is both a lot of truth and a lot of myths as to how brokers can muck with your trades...hunting stops, widening spreads, basically all things to screw you over on your magic market bullet...

If the demo accounts work and you are only using a clone program to follow, there really is nothing that is visible to your broker as none of the orders on stops and profits will be present.

In doing this, you will also be able to compare the speeds of your demo account processing to the live and really compare the quality of the product that your broker puts out overall.

Personally...I am not a fan of the spreads of Oanda, but if you are happy and the results work out...keep on, keeping on...

I think you may have misunderstood what I wrote. I didn't mean I am considering trading with a 5 pip stop loss. What I meant was that I am thinking about reducing my stop loss by 5 pips. Therefore, I am thinking about reducing the 15 SL & 30 TP of some of the pairs I am currently trading - to that of 10 SL & 20 TP (thus I would be reducing the SL by 5 pips as I spoke of in my original post of this thread - that is IF I decide to reduce it).

Whether it is a 10 pip stop loss ... 15 stop ... or 20 stop loss (I'm also currently trading some pairs with a 20 SL), my PRIMARY question remains: Is it possible for an EA to be successful on a live Oanda account using 10 - 20 pip stop losses, without Oanda causing a high number of trades to be stopped out due to suddenly huge widening spreads? I haven't traded on a Oanda live account yet (I've only traded demo so far) and thus I don't for sure if the widening spreads are a big problem or not. That is why I'd like to know of the experience of others here that have traded on a live Oanda account with similar stop losses that I have spoken of in this thread. Even if you don't use an EA, I'd still like to see you post your experiences with Oanda using similar stop losses.

Or, if someone has had success with a different MT4 broker, I'd very much like to hear that also.

Ok.

I have give you the "standard" spread widen.. "ALL broker" increase their spread by 5 pip minimum during the news...

So if eurusd is average 2 pip during NON news time. Then during news hour it will be 7 pip.

It is the same for ALL broker...

Also Oanda let you trade cent amount on live account, so you can run your ea on low risk just to test out if it can win pip.
If it win pip then you can jack up your lot size...

Really, only 2 steps to checking out your broker...

Run a live to demo comparison...

Use the copy trade software as I previously suggested.

Why start looking for another broker, if you are already finding success with your current?

Everybody will have tales of success and woes with their broker, this is something that you need to see as it applies to you specifically.

Magix, I appreciate the advice (and of course I appreciate the advice of everyone else here). However, I know next to nothing about the trade copier and therefore I prefer not to use it. But thank you anyway for the advice.

I was just calling it a week until I saw your post. Here are several things you need to understand.

1) All Retail Forex Intermediaries are by definition Bucket Shops. On of the worst offenders in the Retail Bucket Shop realm is FXCM. Now, does that mean you cannot be profitable with a Bucket Shop? No, you can be profitable but it depends heavily on the type of trading you do with respect to trade profile exposure, the size of your targets and total time in the market per trade.

2) Among most all Retail Bucket Shops you need to know that: Stop Hunting, Slippage, ReQuotes and Hanging Platforms are real and present dangers to your profitability. However, with the right trade and execution methods you can mitigate all but one of these problems. Hanging Platforms, where the Broker intentionally blocks you from executing a position in the market by causing the platform to appear to be unavailable for a short period of time (usually during critical market moving periods), is simply something that you have little to no control over at all.

3) Most Retail Brokers will be throwing the kitchen sink at you in terms of "problems with trade execution" once you start trading in the 20 million notional levels. At that point, your cost basis in each trade you make is somewhere around $250k, which at 50:1 make you a threat to their business model, if you are a consistently profitable trader. Why? Because, for a long time as you were growing your account they were actively taking positions against you and so were their liquidity pool providers by definition. Somebody has to win and somebody has to lose and when you consistently win, they are consistently losing. At many Retail Bucket Shop Brokers, this will happen long before you reach $250 cost basis per trade or 20 million notional at the highest leverage offered. Many will simply drop your leverage down to nearly nothing as a result of your continued success.

4) Between the $300k and certainly before you reach the $500k account balance level, you should really not be trading on a pure Retail Bucket Shop platform anyway. It will be difficult if not next to impossible to get on a pure Institutional Platform at those funding levels, but in my personal experience you really won't have to use a pure Institutional Account. There are several other options for you and one of them includes moving your capital and your trading to what I call a "Commercial Forex Trading Account" on a solid platform offering Currenex type liquidity and fast execution without all the Mama Drama found on Retail Bucket Shop Platforms. The other option for having a "Commercial Forex" type of experience would be CitiFx. They are the only Bank in the United States offering an FX platform to the general public, without requiring several million and the need to hire attorneys to help you setup a pure institutional account. The Intermediary called DivisaFX offers a lot of good reasons to trade with them as well, including DMA, Currenex Liquidity, Currenex Hub, Prime Broker Accounts, Tight Spreads and Blazing Fast Execution. I have never traded a non-institutional FX platform that was able to match the speed of the DivisaFX platform on Currenex. It is blazing quick (at least it was when I was on it).

5) Depending on your requirements, you can take CitiFX, DivisaFX, Barclays FX or FXall, ICAP, LIQUIDUS, Integral (basically vCap sources) platforms a very long way in terms of total account size and you can set-up a Prime Broker Account with far less hassle than it would take to go full Institutional with a bank such as Deutsche Bank, BNY Mellon or HSBC - and as I said earlier, you won't need a team of attorneys to handle the paperwork. You can take a Prime Broker Account into the tens or even hundreds of millions if you wanted to. There really is no reason for the typical solo successful trader in FX to get outside of a PB relationship, unless they just wanted to go Institutional for other reasons.

I trade through more than one PB Relationship on more than one Platform for philosophical reasons and my total current account balance today is about 250% what it was this time two years ago. I started at the Bucket Shop level and quickly realized the need to get out of Retail Hell. From there, I migrated to my first "Commercial" type FX account and sat there until my account balance reached $770k. After that, I opened up my first PB account and never looked back since. I am well into the high 8 figures now (looking to break 9 for the first time this year!) and I come back to forums like this to hopefully inspire other novice traders to do something extraordinary in their trading.

Retail Hell Bucket Shops first. You need to be able to cut your teeth on Bucket Shops. Commercial FX Account second. At some point you will need a platform where you can really begin to grow your capital without Broker Mama Dram problems. Prime Brokerage Account third. When you really want to turn up the heat on your trading and when spreads are critical important to you. Institutional Account fourth. I honestly know of only one (1) person who uses an Institutional Account, and he's not doing any better than I am right now and we both started trading many years ago at about the same time. He likes to log-on to his Autobahn Platform. He likes the sound of the word "Autobahn" so he tells me regularly. His trading style does not require a "Bot" and he's typically done trading by 11am each morning based on his methods. Still, I don't find myself yearning for an "Institutional" account. My PB Commercial set-ups works just fine and I can stay on those two (2) platforms until the cows come home (sorry - I do not discuss which PB relationship I have in public, or which platform I use anymore, obviously for security reasons).

All the best and I hope that at least some of your questions were properly answered.

thanks for great info ..
did you recommended ib or lcg fx or icmarkets to start with before reaching the right balance for pb ?.. thanks ...

Understandable, but it was a 2 part suggestion.

Run your live account, run your demo account, and see the comparison with your current broker.

If there is no difference, or only a marginal difference, there really is no reason to explore the trade copier software.

If there is any dramatic difference, ie, demo always wins, live always loses, it might be a worthwhile venture.

Trade Copy is a FREE, self installed EA. The auto install copies a Sender and Receiver EA, along with all other files needed into all accounts that it finds on your active VPS, PC or Laptop. From there, by default, all you need to do is set up a demo account with the EXACT size of your real account, fire up the SENDER on this demo and then open copies of all of your pairs with the trading EA that you are running.

The Receiver will obviously go on your live terminal and once you have it applied, will copy every trade at the exact moment of execution from your demo to live.

Again...this is only if you do not find comparable results from your current live to demo accounts with your broker.

I have absolutely nothing to gain from you trying or not, so personally cannot be offended if you decide to ignore my suggestions...

Providing the information is simply to allow you to make an informed decision...what you choose to do, is by the understanding you gain and in the best interests of your account and market growth.

I support your decisions on this, 100%...Golden rule applies...it's your gold, you set the rules.

@Quickdraw:

You are really focusing on the wrong thing. Being profitable isn't a question about which Broker or which platform you use. It just doesn't matter.

For example I have retail brokers and prime brokers. I don't see any specific advantages of using a prime broker, because nowadays retailes can get conditions that are very close to institutional Investors.

It isn't the Broker or the Platform that's the Problem; the real issue is your strategy. I strongly believe that there are no profitable EA's, Forget about them. Otherwise, everyone, especially people who are much smarter than forexfactory users would run an EA and become EA millionaires. It's just not how it works.

This is a very naive statement.

EAs are nothing more than automated trading systems with predefined rules.

Are there a lot of junk EAs available? YES
But...
Are there a lot of junk systems out there? YES

But that doesn't mean that they are all junk.

EAs are limited by a number of different factors. Broker, Spread, Margin, Capital and that doesn't take into account the risk to reward nor the wins to losses by any strategy.

Start off with a million on an EA and look to make another million...possible.

Start off with a couple hun and work towards a million, tough row to hoe...this is a long journey and requires a number of different stepping stones along the way.

But the idea that somebody cannot continue to be prosperous by use of automation, is ludicrous. If this is what you actually believe, there is no market edge, no market pattern, everything is random and a complete gamble. In this, surrender your trade account, clear out the funds and go buy some scratch tickets...the reward and end will come a lot quicker and you can move on with your life.

Well, believe it or not, but on the Internet there are Roulette Forums.

People there discuss Roulette strategies. As we all know, Roulette Strategies do not work. Why? Because Albert Einstein said it.

Now if you would open up a account in a Roulette Forum and would tell them that their strategies are all nonsense, they would either a) get angry or b) deny it.

Similar Thing is with Magix.

I'm not sayin that it's not possible to win Money in the Forex Market or that you should not do it. All I'm saying is this:

- Never invest Money that you can't afford to lose
- Be very careful with EA's
- Know who you are up against in the FX Market

I am neither angry, nor denying it...

I am also not supporting it.

It isn't anything I have coded that he is working with, and the decision he has come to about taking it live, is something he came to, all on his own. You are completely out of context here, t121. The discussion isn't about the strategy, isn't about the logic, isn't about how to code it or if it will work...it is about how to safely move forward on testing it in a live account.

After that...

I couldn't agree with you more:

I'm honestly not sure which I appreciate most. All the great information or your signature.
Seems following either, or both, will get you on the ground safety and intact.

I trade one of my accounts with MB Trading and they don't widen out their spreads unless there is lots of volatility or it's within 1 hour of the start and end of the week. You can always program your EA so it looks at spread width before stops are triggered. If spreads are more than x ticks wide but the price is <= my stop, then don't try to close out my position. This would increase the chance of slippage, but you can't have it both ways.

While I can't speak for other brokers, there no re-quotes with FXCM. Nor does FXCM participate in any of the other dealer intervention practices mentioned above. That's because FXCM offers traders the choice between two forex execution options: No Dealing Desk (NDD) and Dealing Desk.

On our NDD model, we offset each client order one-for-one with one of our 10+ liquidity providers. That means a loss for our client does not mean a profit for us, or vice versa. We make our money from the fixed pip markup we apply to the best bid and ask prices we receive from our competing liquidity providers and have no interest in seeing traders lose.

Even on our DD model, there are no re-quotes or other forms of dealer intervention. That's because we can transfer traders to our NDD model if their trading style exposes us to more risk than we're comfortable with. This is how FXCM can comfortably offer both execution options without having to resort to some of the common dealer intervention practices listed above which may take place at some forex brokers.

Furthermore, it's important to note that slippage can occur with any broker and is not necessarily a sign of dealer intervention. An order can only be filled at a price that's available in the market. If that price is different from the original order price requested then slippage can occur. However, with FXCM slippage can be positive or negative. With positive slippage your order is filled with a price improvement. This occurs most often with limit orders. In just a six month period from August 2013 through January 2014, FXCM clients benefited from over $15 million in price improvements.

FXCM allows clients to benefit from positive slippage on all order types whenever it's available including market and limit orders. By contrast, some brokers do not provide positive slippage on all order types including market orders and limit orders. Some brokers may only fill orders with negative slippage, while others may provide some positive slippage but only on some order types.Other brokers may re-quote their clients to prevent them from benefiting from positive slippage.

I'm an FXCM customer and have had no problems with them. That being said, I pay almost no attention to potential slippage, as I would have to manually compare my orders with the actual execution prices and have better things to do with my time than that.

However, there is something deeply troubling about the vast differences in profitability rates among brokers:

1. Interactive Brokers -- 45.3% profitable
2. CitiFx -- 42% profitable
3. Oanda -- 32.5% profitable
4. IBFX -- 30.2% profitable
5. FXDD -- 29.9% profitable
6. FXCM -- 28.0% profitable
7. Gain Capital -- 27% profitable
8. MB Trading -- 26.8% profitable
9. ILQ -- 23.1% profitable

http://site.currensee.com/articles/share/13759/

Unless I am totally missing something, there is no logical explanation for this great deviation in profitability between brokers beyond the fact that there is something intrinsic to the broker that contributes to lack of profitability. Naturally, I'd like to hear from broker reps as to why the deviation exists. I mean, it's astounding to me that Interactive Brokers has the same approximate number of retail traders as FXCM, but they have 17% more customers who are profitable ... . What's going on there?

Hi ZebraSquirl,

Studies have shown there is a strong positive correlation between account size and profitability. It's important to note that while the minimum to open an FXCM account is $50, the minimum to open an account at some other brokers including the one you mentioned is $10,000.

Below are data compiled by DailyFX from over 10,000 FXCM client accounts. Note the big difference in the performance of those who start with less than $1000 equity (20.91% profitable) and those who start with at least $5000 (37.37% profitable).

http://media.dailyfx.com/illustratio..._Picture_3.png

The researchers were able to conclude that "Traders with at least $5,000 of capital tend to use more conservative amounts of leverage. Traders should look to use an effective leverage of 10-to-1 or less."

http://media.dailyfx.com/illustratio..._Picture_4.png

The same study showed that FXCM client accounts with a balance of $10,000 or more had a profitability rate of 44.09% which is in line with the profitability rates of two brokers with a $10,000 account opening minimum in the list you posted.