good question...I await an answer?? I would think think that size doesn't matter.....as long as its not too big a lot size.
Ignored
I don't think it's as much of a size issue as the fact that interbank orders are all $100,000. Doing mini-lots requires the broker to "split" a standard sized lot into mini-lots and find buyers for the minis. This could possibly add some transaction time.
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Joined Mar 2006
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Status: Pip Samurai
|975 Posts
Quoting Loki
Disliked
I don't think it's as much of a size issue as the fact that interbank orders are all $100,000. Doing mini-lots requires the broker to "split" a standard sized lot into mini-lots and find buyers for the minis. This could possibly add some transaction time.
Ignored
Loki is on the money with this statement.
Interbank (and please don't get this confused with the brokers...we're talking the actual interbank exchange) transactions require transactions in lots of no less than 100K units.
Brokers who offer mini-lots to their clients usually pit clients against each others' trades, or combine orders to create liquidity. The fact that the transaction takes place at the same "speed" is merely an illusion. The broker temporarily "buys" your order and then keeps the transaction internal (by pitting traders directly against each other or by trading directly against the client themselves until an order can be combined).
Why do they do this? First and foremost, it creates volume. They still take the spread on the smaller transactions, but in some cases (when pitting traders against each other OR directly trading against them), they can save on the interbank spread completely. After all, it's all virtual money anyways...they don't have to carry the actual amount of leverage inhouse.
And in all honesty, I don't think this is necessarily a beginner question. I would refer to it as more intermediate. I'd be hard pressed to find many traders that actually know or care about how their trades are actually processed when it gets picked up by the broker. I don't see the harm in putting this question here since the underlying tone of the question had more to do with optimization of position placement than whether or not the actual physical speed of the execution would be affected. It is important to understand the dynamics of working with brokers who trade minis because it does actually have an effect on trading. The larger the size you trade, the easier your order is to deal with on the interbank.
Many brokerages actually trade against you also. They size up your trades and volumes and if you go long, they go short. I wished that there was one firm that everyone could use with unlimited limits. I trade 500-1,000 lots at a time and I have been fortunate enough not to have any problems so far. I would trade more if I knew I would not have any slippage. FXSOL said that they would not do me wrong if I traded more lots and may just test them one day. It is that fine print on the brokerage agreement that holds them not responsible for slippages that worries me. I should consider moving up to the big boys banks.
Makes more sense, who's trading minis? If you want to trade serious, you would trade at least a couple of lots.
Quoting mrmikal
Disliked
Loki is on the money with this statement.
Interbank (and please don't get this confused with the brokers...we're talking the actual interbank exchange) transactions require transactions in lots of no less than 100K units.
Brokers who offer mini-lots to their clients usually pit clients against each others' trades, or combine orders to create liquidity. The fact that the transaction takes place at the same "speed" is merely an illusion. The broker temporarily "buys" your order and then keeps the transaction internal (by pitting traders directly against each other or by trading directly against the client themselves until an order can be combined).
Why do they do this? First and foremost, it creates volume. They still take the spread on the smaller transactions, but in some cases (when pitting traders against each other OR directly trading against them), they can save on the interbank spread completely. After all, it's all virtual money anyways...they don't have to carry the actual amount of leverage inhouse.
And in all honesty, I don't think this is necessarily a beginner question. I would refer to it as more intermediate. I'd be hard pressed to find many traders that actually know or care about how their trades are actually processed when it gets picked up by the broker. I don't see the harm in putting this question here since the underlying tone of the question had more to do with optimization of position placement than whether or not the actual physical speed of the execution would be affected. It is important to understand the dynamics of working with brokers who trade minis because it does actually have an effect on trading. The larger the size you trade, the easier your order is to deal with on the interbank.
There are two brokerage firms that limit mini accounts and will upgrade you to a regular account when you start trading like a professional. FXSOL used to do this at one time. I forgot who the other brokerage firm is.
The reason why to keep a mini account is because if you did accumilate a large account and lost it, you would want to convert back to a mini account. Also, if you trade several currencies at a time, you would want to spread out your account to comfortible amounts.
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Joined Mar 2006
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Status: Pip Samurai
|975 Posts
Quoting CTForex
Disliked
Many brokerages actually trade against you also. They size up your trades and volumes and if you go long, they go short. I wished that there was one firm that everyone could use with unlimited limits. I trade 500-1,000 lots at a time and I have been fortunate enough not to have any problems so far. I would trade more if I knew I would not have any slippage. FXSOL said that they would not do me wrong if I traded more lots and may just test them one day. It is that fine print on the brokerage agreement that holds them not responsible for slippages that worries me. I should consider moving up to the big boys banks.
Ignored
I assume you're referring to trading 500-1000 10K lots, right? that's 5-10 million in equity. That's at the upper echelon of trading sizes, anything more than that would create market movements, and I can tell you right now, that absolutely no retail broker will allow you to trade sizes of 50-100 million units (with any kind of leverage).
As far as moving up to the big-boys...remember, they don't give you leverage...so you're on your own at that point. 1 lot of the GBPUSD would actually require you to spot almost $200K in equity. Obviously, it makes it easy to swallow a large movement as a 100 pip drop would only cost you $1K or 0.5% in equity...
Still, if you're max trade requires that you expend $100K, just know that your reward may not be worth the move.
Think of it this way, the more equity you have to trade, the less leverage you're going to be allowed to have. With FX Sol, depending on what currency pair you trade, your leverage will be dropped from 400:1 to 100:1 or even 50:1 depending on what currency pair you want to trade. That reduces your risk, but it also reduces your reward.
