ECN Vs Market Maker

[secondmouse 10]

I'm new to Forex and have a couple of quick questions. Would appreciate feedback.

 

I've heard that ECNs are preferable to work with, instead of market makers, because ECNs don't have dealing desks (and therefore no conflict of interest). But I've also been advised that you don't get good fills with ECNs. Any thoughts?

 

Also, does anyone have any experience with the newstrading system, StraddleTraderPro?

 

Lastly, anyone know about mirror trading and a platform called Tradency?

 

Thanks,

SM

[Mysticforex 13]

  secondmouse said:

I'm new to Forex and have a couple of quick questions. Would appreciate feedback.

 

I've heard that ECNs are preferable to work with, instead of market makers, because ECNs don't have dealing desks (and therefore no conflict of interest). But I've also been advised that you don't get good fills with ECNs. Any thoughts?

 

Also, does anyone have any experience with the newstrading system, StraddleTraderPro?

 

Lastly, anyone know about mirror trading and a platform called Tradency?

 

Thanks,

SM

 

 

When I was starting out, for the reason's you list, I opened an account with an ECN...

I found them to be no better or worse than the Market Makers I use now. ECNs do charge commission, which is why I stopped using them. I have never traded more than 5 standard lots at a time, so I never had a "Fill" problem with either.

You will experience "Re Quote" issues with just about any broker using MT4.

 

Sorry, no experience with Tradency.

[keymoo 10]

  secondmouse said:

I'm new to Forex and have a couple of quick questions. Would appreciate feedback.

 

I've heard that ECNs are preferable to work with, instead of market makers, because ECNs don't have dealing desks (and therefore no conflict of interest). But I've also been advised that you don't get good fills with ECNs. Any thoughts?

 

Also, does anyone have any experience with the newstrading system, StraddleTraderPro?

 

Lastly, anyone know about mirror trading and a platform called Tradency?

 

Thanks,

SM

 

Forget news trading with market makers, the spread will widen and/or they will requote. You can new trade with ECNs, but just like any real market liquidity will dry up just before the event with the effect of a large spread, but it won't be as bad as the market makers.

[Mysticforex 13]

Oh yes, Forgot that, Agree with Keymoo compleately!

[secondmouse 10]

Thanks for the feedback, Mysticforex and keymoo.

[peterfx 10]

  secondmouse said:

I'm new to Forex and have a couple of quick questions. Would appreciate feedback.

 

I've heard that ECNs are preferable to work with, instead of market makers, because ECNs don't have dealing desks (and therefore no conflict of interest). But I've also been advised that you don't get good fills with ECNs. Any thoughts?

 

Also, does anyone have any experience with the newstrading system, StraddleTraderPro?

 

Lastly, anyone know about mirror trading and a platform called Tradency?

 

Thanks,

SM

 

 

That is true, a real ECN broker does not have dealing desk and it sends the client's orders directly to the markets. This is a huge advantage comparing to market maker which sometimes trades against its own clients. I disagree with your second comment because with a real ECN you can enter the market any time (but not always in the price you ask- when spreads are widen) . Market maker on the other hand, is more often to send you requotes because it has fix prices and it cannot supply when the market is too volatile. As I said, there are many brokers that considered as ECNs but they are not really ECN brokers- just a gimmick. From my experience, I found out that, sunbird fx and Alpari are real ECN brokers, also I know that Sunbird has mirror trader, anyways, try a demo account first when you try any new broker. Good Luck..

[secondmouse 10]

peterfx -

Thanks for the advice and recommendations.

 

Cheers

[jdevron 10]

  secondmouse said:

peterfx -

Thanks for the advice and recommendations.

 

Cheers

 

 

 

The litmus test for good fills is if they are a direct market access broker.

If they fill out of their own inventory then you will be getting jerked around some

of the time. I noticed that if placed an order with a broker that fills out of his own

inventory they tend to delay, hold, and fondle your order if you go in the direction

of what they consider the trend to be. If you place an order against what they consider

the trend to be then you get quick fills. It sucks to have your own broker trade

against you. If your fills aren't instant then your broker either isn't DMA or is jerking you around. When you order does eventuall fil you can always check the time and sales

tape to verify they are giving you the best inside market.

 

The SEC allows a broker up to 3 minutes to fill a market order. 3 minutes can be a

lifetime in a fast moving market and can be plenty of time to jerk you around for a

nickel or dime per share in a slow moving market.

[secondmouse 10]

Thanks, jdevron. I really appreciate everyone's responses on this nerve-racking issue.

[henryduncan12 10]

Mirror trading: The mirror trading method allows traders in financial markets to select a trading strategy and to automatically “mirror” the trades executed by the selected strategies in the trader's brokerage account. Traders can select strategies that match their personal trading preferences, such as risk tolerance and past profits. Once a strategy has been selected, all the signals sent by the strategy will be automatically applied to the client’s brokerage account. No intervention is required by the client as all the account activity is controlled by the platform. Clients may trade one or more strategies concurrently. This flexibility enables the trader to diversify their risk while maintaining complete trading control of their account at all times.

[futurescalper 10]

  secondmouse said:

I'm new to Forex and have a couple of quick questions. Would appreciate feedback.

 

I've heard that ECNs are preferable to work with, instead of market makers, because ECNs don't have dealing desks (and therefore no conflict of interest). But I've also been advised that you don't get good fills with ECNs. Any thoughts?

 

Thanks,

SM

 

I trade with MB Trading's non-MetaTrader Forex in EUR/USD exclusively, using HyperScalper. MB Trading is a pure ECN with the following characteristics:

1) Interbank pricing

2) No penalty for small lot size

3) Pay for Limits which gives you a Credit when you add liquidity, which

4) Result in No Commission, when you place order carefully.

 

They pay a credit equal to 1.95 base currency per $100k forex lot, or any proportional lot size down to the micro lot. For example, in current EURO price, that is 1.95 times 1.3, which is about $2.53 per Forex standard lot ($100,000) PER SIDE.

 

So, a Forex standard lot, purchased wholesale, buy BID and sell ASK has a Gross profit of $10 for 1 tick, Plus the credit of $2.53 per side, so that's NET approx $15 profit, and the market didn't move at all... (theoretically, if you wait with resting limits to get your fills).

 

If you use a marketable order, and you "hit" a counterparty, then you pay only 2.95 in base currency per side fully proportional commission. The counterparty gets the liquidity credit in that case, so you want to use Limit orders carefully on their ECN.

 

Their fees and credits are here:

MB Trading - Pricing

 

No dealing desk, no restrictions on scalping, and no FIFO restrictions on hedging.

 

Fill times roughly 0.5 seconds round trip.

 

Anyway, this is Modern Transparent ECN Forex, and it's a great trading environment.

 

Just FYI...

[4EverMaAT 10]

Honestly, as long as the broker gets you in and out of your trades, you will not notice a significant difference between either models, other than spreads which are already fairly competitive these days. And a reputable broker will fill you as the market allows.

 

Don't get "spooked" solely on the strict terms ECN and Market Maker

[Mysticforex 13]

  futurescalper said:

I

 

 

 

No dealing desk, no restrictions on scalping, and no FIFO restrictions on hedging.

 

 

 

Just FYI...

 

 

Your statement on hedging is incorrect. this is copied directly from their site. I couldn't find any information that would lead me to believe one could circumvent FIFO either

( first in first out ).

 

 

MB Trading - Stocks Options Futures Forex Online Discount Trading

[futurescalper 10]

  Mysticforex said:

Your statement on hedging is incorrect. this is copied directly from their site. I couldn't find any information that would lead me to believe one could circumvent FIFO either

( first in first out ).

 

 

MB Trading - Stocks Options Futures Forex Online Discount Trading

 

Thanks for pointing that out. I really don't know about Hedging, and I should not have been making that statement, so I apologize.

 

However, the "FIFO" issue is an accounting issue, and is handled at their back office.

 

This is not an issue easily explained, but basically, using their MetaTrader (which I don't use), you are able to do LIFO trading "last in, first out". Normally, FIFO restrictions would force you to close the First In, as the First Out.

 

But all of this evaporates, because not only do they take care of that in the back office, when you are not talking about "deals" in MetaTrader, which are no longer "deals" because they are an ECN. You can buy or sell, at least within a single Forex symbol in any amount and in any order you wish.

 

I don't use the MetaTrader concept of "deals" but simply Buy and Sell EUR/USD Forex lots. By doing this, I am able to pull my Price Break Even point, or Cost Basis in my favor, and "Nibble" away at the market by taking Partial profits, so that when any "entry" comes into profit, I can close it out. This, incidentally would be considered "LIFO" last in, first out, from the perspective of "deals".

 

My trading style is strictly LIFO, so I do know that FIFO restrictions, at least within a single Forex pair, are eliminated at MB Trading. Basically, using their ECN (aka EXN) it's just like trading on a "real" exchange, like Globex. You just buy and sell, in an unrestricted fashion.

 

So, ultimately, trading is just Average Buy price vs Average Sell price minus commission, and even commission can be mitigated at MB Trading, or eliminated, by their "Pay for Limits" program.

 

Hope this helps !!

[futurescalper 10]

  Mysticforex said:

Your statement on hedging is incorrect. this is copied directly from their site.

 

As regards Hedging, I'm not an expert here, but having a long and short position in the same account makes no sense to me anyway. And that practice has been banned, I believe by NFA.

 

However, as a matter of fact, with 2 accounts, you could certainly have a long position in one, and a short position in another, on the same Forex pair symbol. I know of a guy who specifically had 2 accounts at MB Trading for just this purpose. I guess that would accomplish the purpose of hedging... ?

 

But when we trade Forex on a modern ECN, we are really getting outside of the whole "Dealing Desk" concept, so the "order" of the deals, in the sense of MetaTrader positions, becomes irrelevant. Anyway, my comments and experience with the "MetaTrader world" are limited. I've used MB Trading's MetaTrader briefly (but performance was terrible) and so I know that LIFO execution sequences are unrestricted. The last "deal" can be closed "first".

 

But "modern" trading on an ECN doesn't have the concept of "deals" anymore, and so Forex has finally come into the modern era with ECN's such as MB Trading's offering. My trading is called "Nibbling" and consists of hundreds of small transactions, mostly on a "LIFO" basis using Cost Basis Averaging over a wide price range in Euro.

 

HyperScalper

[Mysticforex 13]

  futurescalper said:

As regards Hedging, I'm not an expert here, but having a long and short position in the same account makes no sense to me anyway. And that practice has been banned, I believe by NFA.

 

However, as a matter of fact, with 2 accounts, you could certainly have a long position in one, and a short position in another, on the same Forex pair symbol. I know of a guy who specifically had 2 accounts at MB Trading for just this purpose. I guess that would accomplish the purpose of hedging... ?

 

But when we trade Forex on a modern ECN, we are really getting outside of the whole "Dealing Desk" concept, so the "order" of the deals, in the sense of MetaTrader positions, becomes irrelevant. Anyway, my comments and experience with the "MetaTrader world" are limited. I've used MB Trading's MetaTrader briefly (but performance was terrible) and so I know that LIFO execution sequences are unrestricted. The last "deal" can be closed "first".

 

But "modern" trading on an ECN doesn't have the concept of "deals" anymore, and so Forex has finally come into the modern era with ECN's such as MB Trading's offering. My trading is called "Nibbling" and consists of hundreds of small transactions, mostly on a "LIFO" basis using Cost Basis Averaging over a wide price range in Euro.

 

HyperScalper

 

I am not knocking MB, they have a solid reputation. Just didn't want mis information out there. Yes, one could "hedge" by having 2 accts at any broker. Like you, I have never been big on hedging.

 

I used to consider myself a decent mid term trader. By mid term I mean 3 days to 2 weeks. While the trade was open I would scalp ( in the direction of my analysis ) .

Now, with FIFO, I just scalp. I'll take another look at MB and see if they offer a demo.

See if the cost averaging would work to better advantage for me.

 

When the Rules change, we change. We adapt.

[futurescalper 10]

  Mysticforex said:

I am not knocking MB, they have a solid reputation. Just didn't want mis information out there. Yes, one could "hedge" by having 2 accts at any broker. Like you, I have never been big on hedging.

 

I used to consider myself a decent mid term trader. By mid term I mean 3 days to 2 weeks. While the trade was open I would scalp ( in the direction of my analysis ) .

Now, with FIFO, I just scalp. I'll take another look at MB and see if they offer a demo.

See if the cost averaging would work to better advantage for me.

 

When the Rules change, we change. We adapt.

 

Yes, I know a lot about MB Trading Forex, PM me and we can discuss. My own work is focused upon High Frequency "Nibbling" with continuous LIFO profit-taking and continuous cost averaging over a wide range of pricing. So, no stop outs (almost never). I make Net Credits most of the time, so mostly don't have to pay any net commish. But precision Order Entry is the key to that. Absolutely we learn something new every day, Good Trading ! HyperScalper

[4EverMaAT 10]

  Mysticforex said:

I am not knocking MB, they have a solid reputation. Just didn't want mis information out there. Yes, one could "hedge" by having 2 accts at any broker. Like you, I have never been big on hedging.

 

I used to consider myself a decent mid term trader. By mid term I mean 3 days to 2 weeks. While the trade was open I would scalp ( in the direction of my analysis ) .

Now, with FIFO, I just scalp. I'll take another look at MB and see if they offer a demo.

See if the cost averaging would work to better advantage for me.

 

When the Rules change, we change. We adapt.

 

  futurescalper said:

Yes, I know a lot about MB Trading Forex, PM me and we can discuss. My own work is focused upon High Frequency "Nibbling" with continuous LIFO profit-taking and continuous cost averaging over a wide range of pricing. So, no stop outs (almost never). I make Net Credits most of the time, so mostly don't have to pay any net commish. But precision Order Entry is the key to that. Absolutely we learn something new every day, Good Trading ! HyperScalper

 

If you trade in terms of net positions, it really doesn't matter mathematically whether it is LIFO, FIFO, or [whatever]IFO

 

Except hedging. If you hedge a position of the same currency pair, you essentially remove all the risk from the broker, and pay two commissions, two spreads, and possibly two swaps with no additional monetary benefit to the trader. When you offset an existing position, you are completely out of the market. I think the whole point of FIFO was to guarantee that the person could not hedge the same pair in the same account. But the NFA did several other things that made forex trading from a USA broker undesirable.

[Trader1 10]

Hi! first post,

I traded live with both ECN's and Market makers for a few years, with ECN's you have privileges to more transparent trading but you pay a price in the form of commission, what people seem to not be aware of or fail to mention is that ECN's are much more expensive than MM's , atleast the ECN's I tried have been, of the Market makers there is both good and rotten apples, they are not all trading against you, look for STP brokers, they will only charge you the spread. I think better for small acounts, ECN's only for trading big lots.

thats my experience

[futurescalper 10]

  Trader1 said:

Hi! first post,

I traded live with both ECN's and Market makers for a few years, with ECN's you have privileges to more transparent trading but you pay a price in the form of commission, what people seem to not be aware of or fail to mention is that ECN's are much more expensive than MM's , atleast the ECN's I tried have been, of the Market makers there is both good and rotten apples, they are not all trading against you, look for STP brokers, they will only charge you the spread. I think better for small acounts, ECN's only for trading big lots.

thats my experience

 

I have no particular relation to MB Trading, but this is what makes them unique:

 

1) Very low funding requirements $400 U.S.

2) No penalty for small lots whatsoever, down to micro lots.

3) All Credits, and commissions are proportionally calculated.

4) Marketable orders incur a routing fee (commission) which is reasonable.

5) Traders with advanced order precision earn Credit for placing limits on their ECN, which add liquidity. (Must be resting on the ECN, taken by a counterparty)

 

My trading style is Nibbling using HyperScalper and many hundreds of small lot trades can be done per day, with Credits (provided orders are placed precisely on their ECN). I trade only EUR/USD Forex.

 

Because there is no penalty for small lot sizes, positions can be built up and profits taken incrementally, which is why I call it Nibbling.

 

I am able to get credit for 90% of transactions, which means no commission, and a Net Credit but this requires software which is able to place limit orders with precision.

 

This is an ideal environment for Nibbling or scalping, provided you have software tools which enable you to trade precisely. This is a fair and transparent ECN. Your trades appear on the Depth of Market, along with all other market participants.