Is it possible to profitably trade with MT4 brokers?

Thanks for pointing that out.

Just goes to show how important adhering to a maximum leverage rule is. Point in fact, the most successful traders in the study are actually using less than 10% leverage (if I am reading that correctly).

That's right. The data show that the average effective leverage of traders with account balances in the 5 to 10k range is about 5 to 1.

Trade with an ECN. Some MT4 brokers offer fixed spreads. You mentioned you trade 12 currencies, so the cross or less liquid pairs will widen during off-hours or high volatility. I was trading GBPNZD and the spread gaped 27 from it's somewhat consistent 7 pips during the day. But this was around 4 PM on a Friday.

I have tested many brokers, many small MT4 offerings and I have never seen just a random spread gap during liquid hours. I have seen EURUSD go from 1 pip during US trading to 2.3 or 3 during Asian session. Maybe it depends

Is there any data on what, for example, the Top 100 most profitable traders are using for leverage? I am assuming that is something akin to that 5-10% range, but we also see various Trade Explorers on this web site with astronomical returns with the use of ungodly leverage to get there. Here is an example:



All of the open trades are at 5:1 or greater, and exposure for all open positions is at 30:1. Returns of 483% this year; 52.4% this month. I guess my question is whether traders like this are statistical outliers?

I don't have any data on this, so this is just purely my opinion. I think these are statistical outliers. In my experience, the average trader would benefit from using more moderate leverage.

As an analogy, on average, college graduates have a higher income than people who don't have a degree. However, "The average net worth of billionaires who dropped out of college, $9.4 billion, is approximately triple that of billionaires with Ph.D.s, $3.2 billion." source: http://en.wikipedia.org/wiki/List_of...t_billionaires

Another example is that people with engineering degrees tend to earn more than people with fine arts and liberal arts degrees, but Hollywood movies stars earn many times more than the average engineer.

I prefer fixed spreads, but the only U.S. broker using MT4 that has fixed spreads is Citi FX. However, the problem is they require a $10,000 deposit. I only have $5000. So I guess I am out of luck trading with fixed spreads here in the United States.

I am seriously leaning towards opening an account with ATC Brokers. I've heard very good things about them in various forex review sites. Of course there are always people that will write negative reviews about almost any company (for whatever reason), but ATC Brokers overall has received high ratings. They have variable spreads instead of fixed spreads, but they do seem to be a very good company from what I've read about them.

In regards to brokers that are more profitable than other brokers, there is one point you guys forget to mention. It seems - to me at least - that the brokers that require a larger fund deposit (such as Interactive Brokers, Citi FX, etc) are more likely to have experienced traders that know how to trade well. Therefore, obviously those type of traders are more likely to make a profit.

On the other hand, brokers that require only a small deposit to trade with (such as Oanda, FXCM, etc) are more likely to have inexperienced traders - traders just starting out or traders still struggling to be a good trader. These traders of course are more likely to start with only a very small amount of money as they work to improve their skills to become a good trader. After all, the obvious smart thing to do is to start with a small account while you are learning to become a good trader. Therefore, that is why you will not generally see these type of traders open an account with Interactive Brokers or Citi FX or some other broker that requires a large fund deposit.

I think this is the main reason why the brokers that require a large deposit (such as $10,000) tend to have a higher percentage of profitable traders. And it is also why those brokers that require only a small deposit (such as $50 or $250) tend to have a lower percentage of profitable traders. To me it is just common sense.

Yes it's possible to be profitable, both in day trading, swing trading and position trading.


However, I would be careful about trying to day trade if all you have is 3-4 hours per day. You may need more time to research the market and wait for set ups. I am sure there are exceptional talents out there who can do it with just 3 hours, but if you are asking this question chances are you (and I) don't belong to that group. So we have to work harder.


If you however have less than 3 hours per day, you may want to consider position trading. It's more manageable. Not necessarily easier, but I think it's more doable than day trading.

Without any question whatsoever, yes. LCG Fx Prime Services, if you can get on (starting account size, country of origin, new regulatory issued, etc.) would be an excellent choice. LCG will give you really good platform flexibility. Do your homework.

I cannot recommend IB at all.

Any landing you can walk away from is a good one (they say). But, I prefer to make as routine as and Drama-less as possible. Thanks!

I've traded on the FXCM platform before and I've noticed hanging platforms during high volatility periods. I've sat there and waiting (just like everyone else) for NFP announcements (just to name one of many) and had my finger on a HotKey that did not matter because I got an "ORA" error message from the platform (because FXCM was using an Oracle Database at that time) that simply decided it was time to log me out of my account and would not allow me to log back in into the primary move in the market was over. You can't make up an "ORA" error message. Either that kind of things happens to a trader or it does not. I happen to now a little something about Oracle Databases, having been in New York, installing, configuring, building and consulting around Oracle technology for years before becoming a full time trader.

I most certainly have been "re-quoted" on the FXCM platform during times of higher volatility - typically associated with news or economic reports. I used to routinely get Slipped by the FXCM platform as well, always seeming to get filled at the worst possible price when I went back and analyzed the tick data. I've had price spikes near my stop levels back when I used to be novice enough to trade with stops. Oddly enough, I don't recall getting my Exit Limit Orders spiked, just my Stops. I recall running FXCM side-by-side wither other platforms that were real "NDD" and genuine "DMA," yet seeing spread widening on the FXCM platform that was not mirrored on the other platforms.

I can think of a number of good reasons why someone might start out a novice account with FXCM, but I can't think of one solid reason whatsoever, why an experienced trader with any capital of size would. That goes for all the Retail Bucket Shops out there - not just FXCM. I believe that if you are new to FX, then you have to cut your teeth somewhere and you should be doing that with any capital of sufficient size. Therefore, opening with FXCM using about as much as you might spend on a great steak dinner for 2-4 at The Hurricane Club, might be ok. But, not much more than that.

Bottom line, traders. If you are new to FX, then you need to cut your teeth. There is no need to deposit tons of money into a Bucket Shop to accomplish the task of cutting your teeth. You can cut teeth with no more than $1000 in a micro lot account somewhere. Learn to double your account.

For the new FX trader: Low leverage equals lower risk, slower growth and higher account survival rates. You can't get around that math. High leverage equals higher risk, faster growth and lower account survival rates. Retail Bucket shops are counting on your use of higher leverage. Pure and simple. They take positions that are disadvantageous to your own. They offer you price feeds that are disadvantageous to your profit potential. These two things alone, place you at a distinct disadvantage when trading through a Retail Bucket Shop, but that is not the point.

The objective is to learn how to grow capital consistently. There is nothing more important to a trader than growing capital on a regular basis. You can learn that with no ore than $1k trading .01 lots. If you are not able to double your $1k with a Retail Bucket Shop, then your chances of being a trader who can grow capital on a consistent basis to any level of aggressiveness in a $300k account is negligible at best.

Therefore, the focus should be on Time to Double. How much time does it take you to double your account balance - that really is the only question that matters at the end of the day. Get good at reducing Time to Double to a level that you are comfortable with and THEN thinking about starting a business (LLC, LLP, Corp.,Trust, whatever works for you), opening up on a real STP DMA platform with streamline order routing and launching your own Trading Firm and growing your own capital privately.

Time to Double is the key. You need a way to accomplish that goal. As your capital grows and you migrate out of Retail Bucket Shop venues, you will need a platform that enables maximum flexibility in order entry. Iceberg Orders and other various advanced order types are things that you will need to learn about and use effectively to carry out your trade plans. Variable TWAP Orders for example will enable you to step into the market with specific cost basis levels at specific time intervals. To control the net/net effect of widening spreads (essentially), you will want to deploy Pegged Order Types with Discretion as well. This will give you the ability to get filled at levels that help to minimize and in some cases mitigate the spread. You will need a real institutional trading platform to accomplish these things when your cost basis per trade reaches a certain size, but you don't have to open a $20 million account with Deutsche Bank to do it. Retail Bucket Shop accounts are simply not going to give you this degree of flexibility and control built directly into their trading platform. Do you really want to have to code an API just to be able to execute a pegged order? Of course, not.

There are no re-quotes with FXCM. What you most likely encountered was an "off quotes" message. That is part of the Maximum Deviation feature of MT4 designed to help you minimize negative slippage. During news events you can decrease the likelihood of receiving that message by increasing your Maximum Deviation range. Here's a detailed post with more info about this: http://www.forexfactory.com/showthre...40#post7243540

Note that on MT4 platforms of some brokers, the Max Dev feature is unavailable, or if it is available, then it will limit both your negative slippage and your positive slippage equally. By contrast, FXCM has enhanced how Max Dev works on our MT4 platform allowing you to limit your negative slippage while still enjoying the full benefits of any positive slippage.

Here are stats on the over 43 million trades executed through FXCM from August 2013 and January 2014:

1. 73% of all orders had no slippage.
2. 15% of all orders received positive slippage.
3. 12% of all orders received negative slippage.
4. Over 60% of all limit and limit entry orders received positive slippage.
5. 53.32% of all stop and stop entry orders received negative slippage.

The complete report can be found here: http://www.fxcm.com/uk/advantages/fo...-improvements/


Some important highlights include the following:

1. Limit and limit entry orders are the most likely to receive positive slippage
2. Stop and stop entry orders are the most likely to receive negative slippage
3. The Maximum Deviation feature on our MT4 platform and the Market Range feature on Trading Station allow traders to minimize negative slippage while still enjoying the full benefits of positive slippage: http://www.fxcm.com/uk/platforms/tra...b/order-types/

DoubleStoch,

Thanks for all the helpful advice you have given on this thread. It is very useful for those that are venturing into forex trading. Advice from an experienced trader is always welcomed.

Jason Rogers,

You have also given a lot of useful info on this thread - including all the facts and figures you have given. Thanks for contributing.

I have a question though. You mentioned that some MT4 brokers have a Maximum Deviation Feature. Thus my question is: does that mean a trader can set the feature for a certain number of pips and the feature will not enter the trade if there is slippage past that maximum number of pips? For example, if I had a Maximum Deviation Feature for 3 pips, and the market ends up with a slippage of 4 pips or more after my trade is supposed to have entered, does that mean the trade will not execute?

I ask this so I will know in my case whether to use the Maximum Deviation Feature or if I should avoid it (especially if I use an EA that takes 20+ trades per week). I will avoid the Maximum Deviation Feature if in the end it causes my EA to miss 30% or 40% of my EA trades (that is IF there is slippage more than 3 pips for a fairly high percentage of the time).

I will appreciate it if you can confirm what I wrote above is how the Maximum Deviation works.

Yes, that is exactly how the Maximum Deviation feature works to prevent slippage. However, FXCM has customized the Max Dev feature on our MT4 platform so that it only limits negative slippage, not positive slippage. That means, even if you set your Max Dev to 3 pips, you can still receive more than 3 pips of positive slippage. However, your negative slippage would be capped at 3.