Who can simply and clearly explain trading account types?

After I read differences among MM, STP and ECN on the internet, I am more confused now except knowing there are mainly 3 types of accounts that are MM, STP and ECN.
How to distinguish them simply and correctly? May I understand ECN>STP>MM ('>' here means 'better than')?
Moreover, how do I know my MT4 account is a MM, STP or ECN account? Thanks a lot if any help.

If you asking this, then you are a beginner.
If you are beginner, then need to read a lot, even on this simple question to understand why and what matters.
If you are beginner, then probably you will lose at least 50% of your money in the first 3 month.
If you gona loose, then is wise to lose less.
If you are using less money usually the ECN is not for you.

If you have under 1000 euro ( I would suggest to play with 100-200 only if you are bored with demo), then I would choose a MM.
MM makes internal matching as much as can. Hence it will fill your orders even on news releases with a minimal lag.
STP: http://www.investopedia.com/terms/s/...processing.asp MM usually are using this, plus they has a "control panel"
I see no difference between a broker claiming he is MM or STP. I cannot investigate they and anyhow don't care.
ECN: I believed this is the best, and it was restricted to me because I didn't had whatever amount of money. A couple of years ago they has asked 10k or even 50k usd. In this days it is different. Anyhow: they do internal matching to, but they claim your orders will be executed "out of the house" called liquidity providers or even at interbank channel. For this you have to make orders like 3-15 lots or your tiny orders of 0.01-0.1 needs to be collected to others and exposed to market. This will result a lag. It matter on news trading, like NFP.
The single advantage it is when you do some dirty work: use uber high leverage and close your trade very fast and earn money or loose maybe you will make a hole in your broker pocket. Some brokers are getting mad on you and you will be put in a "non desired execution queue" at MM / STP or just your winner trades gets deleted, - as how FXOpen did...

I would suggest to take a small amount of money: if you can make economy 500 usd / month, then take only 200 or 300.
Register to Oanda: I think they has claimed as MM, but they are old and very good brokers, they don't want to take all of new forex players money soon as possible, like others. Also they has max 1:50 leverage, which is fair, shouldn't be used more then 1:30. I am using 1:2 - 1:10. Regularly scalping the 5 min chart with 1:20-1:50 leverage is good for broker, not for you.

If you really want to ruin your financial life, then sell your house, take a loan for your house and start with 100k - 1 mill usd.
Register to FXDD or PXPro ( need to check my previous posts which one) there they has a 80 pip fake price spike. Those spikes doesn't exits at the real market, just at that company, it will fill your SL , but not the TP, for sure. or go to FXOpen AU and whatever else name has invents the same person, who deleted 40k winner trades
If you want to still play with an ECN, then try Dukascopy, but take sedatives, when you try to open your account, because they are crazy, after that no problem.

Oh I forgot to mention: at Oanda make an MT4 account type.
They are brokers and not programmers. They programmers aren't using the software. The head of the IT developer should be kicked also explained to CEO why is not good that IT solution what he provides, but with MT4 you can get out from those problems and you have a good broker.

There are bigger players and other platforms to, then the ECN. You didn't mention.
The Currenex has no graphical chart at all: 5 min , 4 h, daily and so on. It has just the asd/bid prices and number of lots.
Not sure, but some of they required 250k euro deposit, others "just" 100k.
I think they are close to intrabank channel.
Beside of real execution and speed has nothing in advantage. For sure not worth for a trader who keeps the trades 24-168 hours or more.

Good luck in your carrier.

[quote=matheszabi;8366549 The Currenex has no graphical chart at all: 5 min , 4 h, daily and so on. It has just the asd/bid prices and number of lots. Not sure, but some of they required 250k euro deposit, others "just" 100k. I think they are close to intrabank channel. Beside of real execution and speed has nothing in advantage. For sure not worth for a trader who keeps the trades 24-168 hours or more. Good luck in your carrier.[/quote]

Currenex is the best solution.
When you are trading volume worthy enough to get you direct market access speed means everything for short term entries.
Your point on longer term trading is correct and I would advise going with a broke whose capital requirements are less and negotiating a commission structure.
Axitrader would be my choice for retail but there are many many to choose from.

Thanks a lot for your comment and help. Let me ask a few questions further.

1. I thought fixed spreads are easier to track orders, make calculations for scalping. So wanted to find some brokers with low fixed spread, e.g. 2 pips for EurUsd. Now it sounds like that the fixed spread is made by MM and they re-quote the prices. Does it mean it's not good to select MM for scalping? Not good to open accounts with fixed spreads for scalping?

2. You know there is a same broker providing accounts in all types of MM, STP and ECN. How can we ourselves precisely tell if an account exactly is a MM, STP or ECN account?

Simple explanations here and here. A more comprehensive explanation of each type here.

More info on ECN and STP -- below the list of br0kers on each page. As to what type your br0ker is, you could check whether he appears on the different lists of br0kers on the website. I don't know how up-to-date the data is, however.

Install a demo platform where it claims to be ECN.
You should see second level of market. I do it for you. It's a demo account at Dukascopy EU:


From here you can see:
I can sell 1.5 million units at price : 1.09 92 2
but if I want to sell 2 million units ( 20 lots) then the next price it is:
1.09921 and I can have 2.25 million more
And so on.

The fixed spread it doesn't exists in a real marked ( ECN).
It is created artificially by MM / STP.
Because if nobody wants to buy, just at 1.05, then I will have 500 pip spread, do to market conditions.

Now many retail brokers offers worse case then the market:
In this case the spread it is 0.7 pip.
But opening and closing a position it needs to pay commission.
That commission can be converted to pip.
It will be around 0.7 pip more, so the spread, which you need to pay it is 1.4 pip now.

Now if you go to a fixed spread broker what happens?
It will sell the 1.4 pip to 2- or 3 or even 4 pip and there you go: you have fixed spread.
What if the conditions aren't favorable for your broker? -because the spread on the market it is 500 pip for example. Simply it will not fulfil your requests ort later you get a virtual spike, which hits your stop lose / margin call and he can do it, since he is a MM....

It is a know fact that Oanda widens the spread at news releases.
Around NFP it is 10 pip - instead of 0.9 -1.5 but for 5-10 minutes only.
At other news releases it is just 1 minute.
Oanda never did virtual spikes for me, but some other brokers gave a virtual spike of 170 pip once I caught a suck a spike with 80 pip.

Sooner or later you will see: it doesn't matter if the broker has 2 pip spread or 10 pip.
Your losses will not be just 8 pip and your gains if is under 20 pip, then you are doing something terrible and not for long term profit.
On short term can be good, it helps you motivating and learning, but it not the case how the money is made:


With Google Translate:
https://translate.google.com/transla...der&edit-text=

The original text it is in Romanian:
http://forexfactory.ro/povestea-reala-a-unui-trader/


BTW: all courses and learning materials are saying scalping is best is easy and is profitable at the broker site.
If not on broker site, then you will some rare aberrations like mine here.
Now what do you think what is the interests of a retail broker? - what he will write at his site?

White sheep follow 1 thousands of white sheep, because 1 thousands can be wrong.
One black sheep it says: "Hey fouls! - are you going in wrong directions! I am not going with you."

If you are bored, what this video: - it is just 13 minutes

For beginners it is very good.

For better result to have it then who teach it, it must combine it with other lessons, but the Market will teach you, just open your eyes.

Becoming a good trader it is not easy and doesn't come instantly.
http://www.dacharts.com/articles/_38steps.htm

I didn't understand at beginning the part of "me" why I need to change, what has everybody with me and why don't want to teach me trading.
I would suggest to make an online doc, like google docs, whatever and just save the links on teaching materials.

Later, when you have a question "Why can't trade" just re-read it.

If many are saying "you need to change" maybe is the time to ask "why do you say that, what's wrong with me, how should I be?"

There it was a thread here "How long did it take you to find your edge?" http://www.forexfactory.com/showthread.php?t=410286
For many of use it takes 4-6 years. Years, not weeks. Years trading, failing, burning accounts, making some profits then losing it.

In my opinion needs like 6-8 years to change the behaviour, mentality, environment. Not to good one, just to switch from a terrible.

WOW..I have been trading forex for over 12 years and I am amazed how much I DON'T know. It seems to me that many traders are looking for a fool proof way to trade. When I started I was reading everything I could find. I couldn't believe my trades were not producing. I increased my reading,charting,graphs and had clocks for all time zones. Then it hit me..I was making my trades on information that was supposed to predict what direction to go based on reading,charts and graphs. I deceided to limit my trades to 2 or maybe 3 currencies. Then I studied what resulted in the country from currency. In short for example..what was the result of dairy prices in New Zealand. Who bought the dairy and what could be spent. However, if say.Japan had an earthquake there wouldn't be alot of money to spend on dairy compared to rebuilding a house. So I had better know what buyers and spenders had to spend AND where. I also kept a journal of sorts so I could see if anything in the past influenced trades. Slowly I began to know what actions caused in forex. I describe my technique as the same road plan. If you drive down the same road over and over in all conditions you will know what a sudden rain will do and can avoid the pot holes. I trade only AUD/USD and KIWI/USD. Yes I did catch the weekend dives. I opened the Thursday before and sat on them until market opened after the weekend. I still had butterflies but kept my direction and caught 2 huge pip dives. Also learn to take a break. If you make a great profit say 30/40K enjoy the rest of the week. There will always be great trades..learn to let a few go as it will save you from an early death LOL. As for the answer to your question. Somehow I managed to trade for years and I didn't have a clue so I googled the letters. ECN MM STP. Why did I bother? I don't think I would have made any extra money with my trades so I can't see the reason. now why YOU want to trade a pair. If the reasons to sell outweigh the reasons to buy..YOUR reasons then trade. Forex is an 8 to 10 hour a day business. Narrow your time by limiting the pairs and you will see a profit. Lastly your trades may take a while and make very little. I sat on trade from Sunday till an hour ago. Like many I thought Greece would make a greater ripple. Traded with the crowd and when the pair actually went in my direction I made a HUGE 4 pip profit per lot. LOL. Yup I entered that trade in my journal hoping not to repeat.

Many types of trading accounts are available, we choose according to our needs and capital size. I like micro and standard accounts. Managed accounts are for making lum sum profits they support new traders. Micro accounts give us opportunity of live trading with our own money to gain experience how to manage real amount.

Dear Matheszabi,

Thanks a lot for your kind comment. It's a pity that the video can not be opened at my side.
To be honest, I currently don't want to take time to discuss about our growing way on the forex road.
Maybe you are successful already, but I am not. All what I want is just to concentrate on learning as more as possible.
Certainly agree with you that we most learn alone without mentor because it's really difficult for anyone to become a final winner.
It will be really appreciated if you can mentor me!!!

Dear Jollydragon,

There are a lot of better teachers than me and a lot of better traders than me.

A lot of learning and it is a lot longer process, which I could imagine.

Forex easy money attracted me too in this business a couple of years ago, but that is true only in casino style.
Use a high leverage and you must have luck. Then is easy. You will be on Leaderboard with 1600% -3200% monthly gain.

On longer term the luck will disappear and it comes the probability and the big number laws:
What is the probability to 10 times in the row win at casino bidding on red ?

Then it comes the money management, the position sizeing, the junting for Entry point and waiting to enter it ( I have problems with this)
When you are in the trade from time to time need to watch the news, the market evaluation, how is going the market to your TP or SL , is still the entry point valid.
Ofc course if you do this to often this babysitting you are consuming yourself and have a useless stress.
Sometimes I realize after entering to the trade and being there it is not valid the entry point. Market is not moving, the next movement is random, so better exit it to reduce the risk. After when I exit I see price is movin on my direction and so on.

I am on a demo now, because I want to test a strategy, which I think it can be an edge.

In most of the cases it is good to trade with trend.
Trading counter trend it is as lot more different, but is possible: The price is moving faster, and stops faster and doesn't have so long pullbacks, so less pip SL can be used.

The billionaire question: when is retracing and when is a trend change?
- from candles barely you can decide it, only with 3-4 candle lag, news based ( fundamental) maybe incorrect.
Sometime I saw a news and I would bet it would go up.
So I have entered in position, but the price went down.
I said very nice I get better price, so I did buy again (added to my position)
And the price went even more down. I Was excited what a nice possibility and the bought more .
And the price went down when I have huge size and -50% and the price still went down.
When I was out with huge loss the price went up, so much as I would double my money even with a regular position sizing.
Sometimes it is not like this: price is going up an no really pullback to buy there. It is a lot better to jump in @ Market.

Just a few case where I fail and I can't trade.

Anyhow it I would start again I would do the same: lose money in account to be feel the pain and pay the hard price of the lessons.
It must hurt you / me enough to learn use a SL, when you trade on trend, when you aren't at PC and in most of the time. There is 1 exception, when not recommended, but margin call is the risk on that case.
In this way you will know" I am not doing that, because I lost enough money on that".
Hence any Martingale system is fail and I never will do that again, but to learn this I must lose 3 account at least

With time ( over years) you will have your own success and bases on your successfully trades you will develop your system and exercising your system and believing on that will lead to desired results.

If I would start again from beginning and only 1 advice I would take it would be:
- make an economy insurance contract with bank or whoever for 5 year.
Monthly from now 60 month put there 50% of your monthly economy.
Eg. You earn 2000 usd, your bill, living expenses, distractions whatever is 1500. Hence you can have 500 usd economy monthly.
So make a contract to pay monthly 250 usd for 60 month ( while you learn)
After 5 years you will have 15k your own money.
Until that play with real money from the other 250 real or virtual 15k on demo accounts.

You will have stress enough and hard to overcome it, need to learn it, really don't need a stress from loan with deadline and when you have to calculate how much % you must make daily and must make monthly or yearly to have a living and payback.

To learn this gues what? I needed me too to take a load and loose it )
But I read on forums it is bad and I didn't took a load of house just a few month economy.

Somebody told me it isn't shortcut and didn't believed him.
A mentor it just help you to not make financial sinucide at beginning and it will try to open your eyes, if you let him, but doing what he says robotically it is not fun, even is profitable

So make an economy contract of 60 months, and don't take loan in this period, that is my best advice for you.


Ah yes:

Now I have 1064 equity from 1012.

That is 5% in I day.
Can be calculated, but is very big in 1 month if anytime I do like this and is irreally high if I do like this 365 day.
I don't even calculate it, I wrote an app for that but I am even lazy to get it an enter it, why?
Because I learnt it is not like this everytime.
Every time it works the big numbers and the probability.
​Every time I will have lose: no matter how good is my system, no matter how good Iam as trader, no matter how disciplined I am. Loses are part of the wins.

What I would like to do in this account to experiment a hypothesis and see if I can do it.
If I can at least 50 times maybe I will fill an account with this money and experiment 50 times with real money to, but keep it small, since it is a new edge, maybe. Maybe it isn't.

So no real sentiment for the + whatever % daily now.
It is just a sign maybe the edge is good maybe the entry and exit are taken correctly. I will decide later if the Exit is was really necessary, but I think in this case it was, according to original plan.

In this case I did a few counter trend trades in different pairs, rofl, but not oversized positions!


Another problem: if the weekly - monthly chart is ranging, the daily is fall but the 5 min is up, shows hard up what to do and what directions?
On demo account for fun is 1 thing
With real account, full money is another.

Regarding the reading the principle is simple: "buy low and sell high" That's what it told Kiyosaki too many years ago. It is simple like the chess rules, just hard to master it. Try to see where can you buy at low price and sell at high as entry point. Somewhere it was an article "the psychology of trend.." something.
Try to understand that one, search patters on charts, you will understand why is a myth the set SL and TP at beginning and forget it, the trade must hit one of those.
But if you constantly reevaluating you enter in another trap.

I don't have a holy grail , a 100% winner system.

A trading account, which I like: http://www.forexfactory.com/haitokt#20

I has 675 Trades in 50 Weeks.

So this in not a 1-2 lucky month account, not 1-2 lucky trade.

​The equity curve is climbing slowly, no major drawdowns.

What I don't like it is exactly the huge drawdowns:

from the same account: - the last few closed trades



As you can see he is using a fixed leverage. at least here.
He is not gambling with sometimes to few sometimes to small.

With this small leverage you can sleep overnight and keep it open 5 days.
It shouldn't affect your sentiments.

Try to analyze this trades and contact the trader to explain his system.
It seems to be a mature one and a good one.

The loser trades are small relative to winner ones.

Kiyosaki says: " cut your loses fast and let the profit ruuun"

I learnt the lesson to not copy other trade systems

But at beginning this is a lot better then a wrong ones.

How are you with the indicators learning?
Have you learnt already like 100?
Or are you after that phase and you know only 1-2 it matter according to YOUR system ?

He has another account


Typically that happens with this nearly ideally climbing accounts: huge DD

Improve his system, by:
- cutting loses a lot faster.
- use 1:2 leverage if you can to keep open a few weeks
- use 1:5 leverage if you want to open a few days
- use 1:10-1:30 leverage for a few hours. No reason to spend time on those trade anlys if you use 1:1 leverage here.

- go on demo account and use 1:500 leverage , just for fun and show you are king of the game and you can make 10k usd from 100 in 24h or less. There is thread like that already.
Just need to use the floating profit to open more position.

Leverage + luck easy money, like in casino, everything is possible on SHORT term.

Thanks a lot for your comment and understand that you must deeply feel the pains of growing on Forex.
If you have a strategy, why not to test it for saying 3 years to optimize and validate it before trading with real money.
I found the back test is probable to prove your strategy is not very good although you feel it's so good with looking through and checking on charts.

Because those system are based on indicators, prices, only technical.
Those system all are fail

The market moves:
- based on technical ignoring fundamentals, news, ignoring everything. Especially when new Higher highs or Lower lows, or yearly lows monthly lows are reached, pivot points
- based on news ignoring technicals. Sometimes it is working the "buy the rumour, sell the news". Greek in-out, Draghi lie, FOCM, FED and so on.
- based on participants. Sometimes I got trapped there, but August highlight this, Last working day day in the month. Halloween day, US bank off, UK bank off, German bank off due to holiday . Sometimes it is just more seller present then buyer at the market and it is not my or my system fault. Every trade what I execute according to news indicators shows UP and the price is going down-down. Not may fault, the big numbers are working. Sometimes I can double my money in those days in a demo account - just for fun.

Never risk all of your money in 1 trade. Make sure you can come back tomorrow even if the broker server fail too for 24h!



I think this is the best and most secret indicator what is working
http://www.forexfactory.com/showthre...65#post8371365

Even though your system based on indicator or price, we can back test.

I found MT5 has some kinds of execution types called request and exchange.
Anybody knows the pros and cons, or difference with instant and market execution types?

I am software developer.
I have lost 3 years from my life making software which will predict the price, back tested systems.
For what I have payed those high price? - to pay more for same mistakes?
Thanks no...
I am fine with my system.



Couple of years ago I made an iOS app ( which didn't published as I know):

http://www.forexfactory.com/attachme...3&d=1354282556

It is for leverage optimiser.

The result it was like this:

http://www.forexfactory.com/attachme...2&d=1383030513

If you have a system, tested then you know the probability.
A 80% probability trade to has a very high risk amount per trade ( for me) and everyone will disagree to use it.
Not using that risk / leverage your account will not grow fast as how his potential it is.

VERY, VERY, VERY important:
Any, but any trading system becomes a losing one, just by using a higher leverage for that. Check the diagram!
- and where it turns to be negative it is very close to his optimum! Just a bit less needed.


After you got the optimum risk, then need to do another calc:
- set the maximum allowed drawdown of your account. If you reach that, then you stop trading and need to found the account with your money or your investors money.
- set the maximum consecutive loses, which is allowed to reach that drawdown.
This will cut the risking amount to a "normal" one.
I made an Android app and it is published at Play Store. It isn't really user friendly but does the calculations.

In long term you need to calculate with 10 consecutive loses to.

Example:
1000 usd or eur account
Trade size is 10k untis ( used leverage it is 1:10)
In 40 pip you loose 40 usd, which is 4% of your account.
If is fine for you then is ok. If is to high, then lower it: 40 pip will lose 2% with 1:5 leverage, or 20 pip SL 1%.
1:30 leverage : 10 pip SL 3% of your account, 20 pip SL 6% of your account.

I gave SL : 40 pip
Spread :2.5 pip
Max DD : 20%
Mac cons loses: 10
Optimum leverage 4.71 ( this should be used) 1:4.7



Maybe the soft ha bugs and the DD it is reached at trade 11 ( consec loses) and not 10, but for sure I am lazy to fix it.
For me those are the numbers:

- use 1:2 leverage if you can to keep open a few weeks
- use 1:5 leverage if you want to open a few days
- use 1:10-1:30 leverage for a few hours. No reason to spend time on those trade anlys if you use 1:1 leverage here.

I also need an answer for this question, all well-known brokers claim they are true STP/ECN NDD broker, so if they REALLY are as they claimed, how are their trading environment to their traders? Detail are highly recommended.

Guys, you aren't focusing on the right things.
You are focusing on brokers execution, while it doesn't matter if he doesn't make virtual spikes for you and allow withdraw money correctly. Not even 10 pip spread at EUR/USD would matter a lot.
Plus: You can't go inside of they building and ask for the source code of they software, maybe they even don't have and the "magic control panel" is hidden by default.


Things to focus as trade are: Market, Method, Money, Me, not the broker:
- just try to not pull money from your broker pocket and choose a well known reliable one, I have suggested a few.

That demo account:


In less than 14 days: +22.5%

For sure couldn't make it only chart based, that is not a question.
This couldn't and can't be backtested. Not many times are circus with Greece In/Out, news are different.

day 1: +134 eur with 9.11 commission proof I had a good winner trade
day 2: -117 with just 1.75 commission. The commission is a lot less, so here I had left to run the loser trade ( to bad, need to cut sooner, a lot sooner)
This 2 days: + 13% and -12% volatility in equity curve, which I don't like it, not good on long term.

day 3 : +8 eur, 0.7 commission. The +8 from 1006 it it 1 day correctly traded, lol, could be more
day 4 : 23 euro , 24 euro commision. Omg what I did? - overtraded here, but almost break even
day 5: +53.5 euro, 1.68 commision. Nice, good day from 1012. +5% and not used to much leverage. Second well traded day
day 6 : 0/0 No trading in Jul 9, I was to busy in real life. Good, at least some discipline: I realize I am busy and can't concentrate and stay away. Clap claps. Third well traded: stay away it is a position.
day 7: -6 with 0.54 euro commission. That is -0.5% not to much volume, leverage. Perfectly accepted. Forth well traded day.
day 8: +173 with 6.14 commission. +17% Omg can't resist to good opportunities: using leverage, breaking money management rules maybe ( if I was at break even and added to my winner position it is good). This will hurt me!But it has less comission and more gain than the first day, so here are more green pips. Finally I let the profit run a bit.

The conclusion for me is:
I need to focus on myself:
- a lot more discipline at money management
- stay in winner trades enough to make more money
- cut the loses shorter, sooner.

-"sense of market" good, I am satisfied, overall result is fine. Not need more % gain from 2 weeks.

"In less than 14 days: +22.5%"
This could be just a lucky session, but it isn't. Several times I did , on live accounts too.
And several times those leverages, not cutting loser trades hurt me.

Not the broker and they spread, comission matter!

+225 euro after paying his 43.93 commissions, where I day I made 24 commision (big mistake from myself) all other days 19. So the 225 to 19 is less then 10%. Simple I could work with even double of this spread + commission system, just drink with a coffe less and skip 1 crazy day from 8.

I stop posting advices, since it is useless