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Real ECN/STP Brokers Wtih 0.01 Lot = Myth or Reality?

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  • First Post: Oct 26, 2015 5:05am Oct 26, 2015 5:05am
Hello, Folks.

Do you think it could be possible for real ECN/STP brokers to offer 0.01 lot size trading in the real intermarket environment?

I read somewhere on net that real interbank brokers can only work with lot sizes starting from 0.10...

Would anyone please clarify this question?

Thanks in advance,
MrJinks.
if their or their LPs client base is large enough to pool the lots, why not? Also, there is a misconception that LPs or Banks are not themselves MMs. Maybe the broker's LP's Bank or their LP has a structure in place to allow this.
For what I know Most ECNs do not accept below 0.10.

but For the traders the main concern is spread and swap.. And slippage/requote.

It is not your problem how the broker fill the 0.01.

So, I think it is not a real problem.


Most orders below 0.10 are filled with some hybrid technique..
Buy at the Low, Sell at the High You make money by waiting not by trading.
correct. My only point is, certain LPs might themselves be operating with a hybrid technique so they are able to offer below 0.10 so the LP's broker itself is capable of offering it as well. The common misconception is that LPs and on the higher level, big banks DONT operate as Market Makers or Hybrids. The easier to obtain LPs (thus the reason its more common) might only be able to offer 0.10 and no lower.
I don’t think it is possible, but I am slightly confused here. I mean usually brokers say start from just 0.01 lot size, but in actual it’s 0.10 only according to market which I believe is very much possible for real ECN. At the moment I am working with OctaFX where it’s similar thing, as they are ECN and they offer the lowest at 0.01, but market wise it’s 0.1 only.
My guess is that all orders, occurring at the same time /on the same pair, are merged into one.
So, assuming that the broker is active enough, the minimum volume will always be bigger than 0.1.
Quoting HeyYou
My guess is that all orders, occurring at the same time /on the same pair, are merged into one. So, assuming that the broker is active enough, the minimum volume will always be bigger than 0.1.
I think it is as you said.

The orders are pulled together and with some algorith they go to the market to hedge their exposition.


The model was explained on the site of exness where there was an explation of the hedging process but there isn't anymore.
Buy at the Low, Sell at the High You make money by waiting not by trading.
Quoting mrjinks
Hello, Folks. Do you think it could be possible for real ECN/STP brokers to offer 0.01 lot size trading in the real intermarket environment? I read somewhere on net that real interbank brokers can only work with lot sizes starting from 0.10... Would anyone please clarify this question? Thanks in advance, MrJinks.
As far as i understand it there are no real ecn fx brokers. At least not in the real sense of an ecn like futures and stocks??
Quoting Liquid01
{quote} As far as i understand it there are no real ecn fx brokers. At least not in the real sense of an ecn like futures and stocks??
there is lmax
Quoting shrike
{quote} there is lmax
But an ecn takes into account the whole market. There is no fx broker that has liquidity through the entire fx market. So again as the true definition of an ecn lmax is still not an ecn? They might route through their banks or partners but do not deal with all of them. Therefore liquidity could lack at times?Maybe im just comparing to futures and stocks too much and expecting that?
I think you are a little bit confused with the terminology. A ECN in the equities world doesnt have "the entire market" either. There are a bazillion different ecns there too.

Lmax is a central limit order book with price/time priority order matching - and thats as close as a retail fx trader will ever get to a "real ecn".
I dont see any issue in todays market, from what I understand the broker combines the 0.01 orders and submits them as one bigger order to the banks that require a minimum of 10,000
I also agree that real STP/ECN broker cannot offer micro lot, my broker's minimum trading lot is from 0.1 lot.
Quoting alvinbone
I also agree that real STP/ECN broker cannot offer micro lot, my broker's minimum trading lot is from 0.1 lot.
Hi,
Could i ask you a question?
Who is your broker?
have a good weekend.
Hi.
I also don't understand what the issue is... I've come across ECN/STP brokers that offer 0.01.
Quoting AmyM
Hi. I also don't understand what the issue is... I've come across ECN/STP brokers that offer 0.01.
Could you share the name of that broker? I think if you want to trade small lot you can trade with market maker, some MM are not that bad.
Quoting AmyM
Hi. I also don't understand what the issue is... I've come across ECN/STP brokers that offer 0.01.
STP .01 lot is highly unlikely.

If the broker is clearing through banks, they will have a prime broker.
The prime broker will charge a minimum ticket fee. Its not profitable and therefore your micro lot will be internalised or B-Booked.
Quoting entheos
{quote} Hi, Could i ask you a question? Who is your broker? have a good weekend.
My current broker is Vinson Financials, I have a Diamond account with them. You must trade at least 0.1 lot and it's worth trying than micro lots.
Quoting lasty
{quote} STP .01 lot is highly unlikely. If the broker is clearing through banks, they will have a prime broker. The prime broker will charge a minimum ticket fee. Its not profitable and therefore your micro lot will be internalised or B-Booked.
Lmax is doing it and they have most of the main FX banks on their system. As does IB - although minimum is 20K there, but does it really matter if its 1k or 20k, both is microscopic.

Ticket count is compressed by software like Traiana Harmony for post-trade purposes which reduces cost, but no risk is being internalized. Average ticket size is constantly going down even in the institutional sector since years and ticket count is going up. Its merely a software problem, 15 years ago it was different, but nowadays its not really.
Quoting shrike
{quote} Lmax is doing it and they have most of the main FX banks on their system. As does IB - although minimum is 20K there, but does it really matter if its 1k or 20k, both is microscopic. Ticket count is compressed by software like Traiana Harmony for post-trade purposes which reduces cost, but no risk is being internalized. Average ticket size is constantly going down even in the institutional sector since years and ticket count is going up. Its merely a software problem, 15 years ago it was different, but nowadays its not really.
LMAX and IB operate like exchanges.
In other words their clients are permitted to take the other side of the trade being a part of the exchange.
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