Which broker to choose from metadrader

This is a discussion on Which broker to choose from metadrader within the Forex Brokers forums, part of the Commercial category; Originally Posted by gerryg Focus on spreads and speed of execution these two factors are essential to be profitable in ...

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Old Aug 27, 2015, 8:04pm   #9
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Originally Posted by gerryg View Post
Focus on spreads and speed of execution these two factors are essential to be profitable in trading (especially for scalpers where spreads may force traders to stay more in the market to go in profit which impose additional risk to them). I prefer STP execution brokers such I have on Нotforex, but you can consider ECN brokers too.
Try to gain more information about slippage on your broker especially in volatile times it indicates how substantial are your odds to benefit from trending market (state of the market when price keeps moving in one direction allowing you to enter and profit)

Good luck in your choice
What do you think the difference between STP and ECN brokers are?
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Old Aug 27, 2015, 8:25pm   #10
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Originally Posted by highbury fx View Post
What do you think the difference between STP and ECN brokers are?
Hi highbury fx,
I know your question isn't aimed at me, but I thought I'd have a stab at it anyway . . .
STP is an acronym for 'straight through processing' (I think!) and ECN is an acronym for 'electronic communications network' (I think). Ergo, I would have thought that they are one of the same, such that a broker that offers one is likely to offer the other, e.g. straight through processing to an electronic communications network? Usually, my understanding is that these brokers aren't counterparties to their clients' trades and don't profit if their clients lose. Rather, they make their profits primarily from the spread and commissions (if applicable), passing on (theoretically anyway) the advantages of direct market access whilst operating under the spread betting / CFD umbrella. Probably adding 2+2 and making 5 - so how did I do?!

Tim.
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Old Sep 2, 2015, 3:31pm   #11
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Originally Posted by timsk View Post
Hi highbury fx,
I know your question isn't aimed at me, but I thought I'd have a stab at it anyway . . .
STP is an acronym for 'straight through processing' (I think!) and ECN is an acronym for 'electronic communications network' (I think). Ergo, I would have thought that they are one of the same, such that a broker that offers one is likely to offer the other, e.g. straight through processing to an electronic communications network? Usually, my understanding is that these brokers aren't counterparties to their clients' trades and don't profit if their clients lose. Rather, they make their profits primarily from the spread and commissions (if applicable), passing on (theoretically anyway) the advantages of direct market access whilst operating under the spread betting / CFD umbrella. Probably adding 2+2 and making 5 - so how did I do?!

Tim.
Hi Tim

I was hoping Gerryg would reply and clarify the point he was making about using an STP broker or an ECN one instead. It didn't make much sense to me what he was saying.

I consider an ECN to be a price aggregator made up of multiple liquidity streams from anonymous and non-anonymous counterparties. A good example of an ECN would be Currenex. Most users of true ECN's would be institutional type clients such as brokerages and spread betting companies.

I consider an STP broker to be an outfit that targets a mass of retail clients. STP brokers will widen the spread they receive from an ECN and (perhaps) charge a commission for the trades that their clients execute through their brokerage. An STP broker will hedge their clients trades on an ECN and make money through the fractional pip mark-up on big volume. An example of an STP broker would be someone like FXCM and their No Dealing Desk.

Trading with both an STP broker and a ECN should in theory give you comfort that your business is not being overly analysed and that you have no 3rd party individual influencing your success. In reality any consistent winner is going to be analysed very closely and regardless of whether the broker is STP or NDD or ECN the winning client may find it more difficult to either continue to get trades done or get the same low spreads as clients that don't consistently win.

ECN's still widen the raw spread you see but they widen it in terms of ticket costs. Currenex for example will charge brokers that put >$100m daily through them about $2.50 per $M traded. This is equivalent to a mark up of 0.05 pips per $1m round turn deal in USD/CHF. It might not seem much but it adds up.

It's also possible for prime of prime to white label an ECN and mark up the spread even more to the end user. It's not correct to assume that an ECN will give you the raw market spread. its also not correct to assume that an STP broker will not care if you win or lose.

Best, HF.
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Old Sep 2, 2015, 4:42pm   #12
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Originally Posted by highbury fx View Post
. . . It's not correct to assume that an ECN will give you the raw market spread. its also not correct to assume that an STP broker will not care if you win or lose.
Hi highbury fx,
Thanks for the explanation.

I can't speak for others - obviously - but the 'raw market spread' isn't of great concern to me. I take the view that the spread is what it is: either one can work with it or one can't. However, the second sentence quoted concerns me much more because many brokers offering ECN / STP claim to be on the side of their clients by virtue of not being market makers that take the other side of their trades. Indeed, they say they actively want their clients to win - and to win big - so that they trade more and at larger size - thus enabling them ( the broker) to collect more commissions and profits from the mark up built into the spread. Are you saying that this is a load of ol' tosh that they want you to believe but, actually, it masks some unpalatable truth? I'm sure you won't want to discuss individual firms and their services, so I've deliberately not said where the info' below is sourced, but I have copied it verbatim from just such a broker offering ECN / STP. . .

100% hedging
We offset our full exposure on all positions you open with us, by trading in our liquidity pool, so our profit never depends on your loss.

Low-cost trading
Trade at the interbank market spread on forex, and at tight spreads on all other markets. The only charge is our dealing charge per trade (either incorporated in the spread or charged as commission).

Direct, transparent access
No Dealing Desk execution via automated ECN/STP processing. With no dealer intervention, no volume restrictions and no requotes. All via our MT4 platform.

High liquidity
Our exceptional liquidity pool means that you can trade tight spreads in large size, with no concerns about unreliable execution. Having a range of execution venues gives us the flexibility to meet your exact needs.


I'd be very interested in your comments and/or any pertinent questions you recommend I put to them, as I'm considering opening an account with them! Many thanks for your insights!
Tim.
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Old Sep 3, 2015, 9:14am   #13
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Hi highbury fx,
Thanks for the explanation.

I can't speak for others - obviously - but the 'raw market spread' isn't of great concern to me. I take the view that the spread is what it is: either one can work with it or one can't. However, the second sentence quoted concerns me much more because many brokers offering ECN / STP claim to be on the side of their clients by virtue of not being market makers that take the other side of their trades. Indeed, they say they actively want their clients to win - and to win big - so that they trade more and at larger size - thus enabling them ( the broker) to collect more commissions and profits from the mark up built into the spread. Are you saying that this is a load of ol' tosh that they want you to believe but, actually, it masks some unpalatable truth? I'm sure you won't want to discuss individual firms and their services, so I've deliberately not said where the info' below is sourced, but I have copied it verbatim from just such a broker offering ECN / STP. . .

100% hedging
We offset our full exposure on all positions you open with us, by trading in our liquidity pool, so our profit never depends on your loss.

Low-cost trading
Trade at the interbank market spread on forex, and at tight spreads on all other markets. The only charge is our dealing charge per trade (either incorporated in the spread or charged as commission).

Direct, transparent access
No Dealing Desk execution via automated ECN/STP processing. With no dealer intervention, no volume restrictions and no requotes. All via our MT4 platform.

High liquidity
Our exceptional liquidity pool means that you can trade tight spreads in large size, with no concerns about unreliable execution. Having a range of execution venues gives us the flexibility to meet your exact needs.


I'd be very interested in your comments and/or any pertinent questions you recommend I put to them, as I'm considering opening an account with them! Many thanks for your insights!
Tim.
Hi Tim

It's not all tosh, there is a part of the model that wants clients to win so their deal size increases which means bigger volumes and more revenue. This is mostly spin as the majority of clients wont win regularly and their bank roll will likely go down rather than go up. Any broker, whether that be STP or a Market Maker (MM) will want to have a good relationship with their liquidity providers. A broker will rarely deal with an anonymous counterparty. Whether they hedge using an ECN or multiple banks they will still need to have separate credit lines and dealing arrangements with each bank that they trade with. If the broker only sent winning clients down the lines to these banks their pricing would suffer as the bank would either protect themselves by quoting a wider spread to that broker or ultimately tell the broker to stop sending that clients business to them. Brokers will accept this as their model is to provide tight pricing to as many clients as they can rather than be overly protective of a winning client.

Your points:

100% hedging: Their trading profit may never depend on your loss but their commissions may suffer if they receive any from their liquidity provider in terms of volume discounts.

Low cost trading: is it really interbank prices? Are they really only making money from you in the dealing charge? factor in the dealing charge and see what the real spread is.

Direct, transparent access: No one, not even Deutsche, Morgan Stanley, UBS etc could offer interbank prices with no volume restrictions or dealer intervention. Even if you had the available margin on your account and hit every bid in town sooner or later a dealer will step in and take manual control.

High Liquidity : this part seems fine. If they have good liquidity you will be able to trade in large size on tight spreads. Whether or not you will have concerns about unreliable execution will only become apparent in time.

Try them out with a small amount of money and see how they treat you. The most important thing you need from a broker is good fair pricing and fast execution. You don't really need anything else, its all bells and whistles. If you find a broker that gives you good fair pricing, fast execution AND keeps out of your way and lets you get on with it then you're on to a winner and you should play your part in that relationship by acting with ethics and being professional. If you shout and scream when your stop is filled at the low or your limit has missed being filled by half a pip then you'll just draw attention to your self which is unnecessary and will not help you in the slightest. Play the game, if you want someone to treat you right then you have to reciprocate - after all both sides are trying to make money from the same prices.
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Old Sep 3, 2015, 9:52am   #14
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Hi highbury fx,
Very comprehensive reply - thank you! If I may, can I check that I've understood you correctly on one or two points . . .

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Originally Posted by highbury fx View Post
Low cost trading: is it really interbank prices? Are they really only making money from you in the dealing charge? factor in the dealing charge and see what the real spread is.
To be fair, I think this only applies to forex which I don't touch: I primarily trade the Dax and the only charge is built into the spread.

Quote:
Originally Posted by highbury fx View Post
Direct, transparent access: No one, not even Deutsche, Morgan Stanley, UBS etc could offer interbank prices with no volume restrictions or dealer intervention. Even if you had the available margin on your account and hit every bid in town sooner or later a dealer will step in and take manual control.
In practical terms, what does this mean? Reading between the lines, the implication is that a dealer will step in to make life hard by re-quoting prices, slowing down execution and/or increasing slippage etc. (The spread is fixed at 1pt during market hours.)

Quote:
Originally Posted by highbury fx View Post
High Liquidity : this part seems fine. If they have good liquidity you will be able to trade in large size on tight spreads. Whether or not you will have concerns about unreliable execution will only become apparent in time.
They're very bullish on this front and, needless to say, no problems on demo. But, as you point out, the proof will be what happens if/when I open a live account.

Quote:
Originally Posted by highbury fx View Post
. . . If you find a broker that gives you good fair pricing, fast execution AND keeps out of your way and lets you get on with it then you're on to a winner and you should play your part in that relationship by acting with ethics and being professional.
I expect a certain amount of slippage - especially in a fast moving market and as I rarely use limit orders. So, not withstanding the above, by 'fair pricing', do you mean that they execute trades within a tolerable margin of the price that I open or close at?

Thanks again,
Tim.
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Old Sep 3, 2015, 12:48pm   #15
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Originally Posted by timsk View Post
Hi highbury fx,
Very comprehensive reply - thank you! If I may, can I check that I've understood you correctly on one or two points . . .


To be fair, I think this only applies to forex which I don't touch: I primarily trade the Dax and the only charge is built into the spread.


In practical terms, what does this mean? Reading between the lines, the implication is that a dealer will step in to make life hard by re-quoting prices, slowing down execution and/or increasing slippage etc. (The spread is fixed at 1pt during market hours.)


They're very bullish on this front and, needless to say, no problems on demo. But, as you point out, the proof will be what happens if/when I open a live account.


I expect a certain amount of slippage - especially in a fast moving market and as I rarely use limit orders. So, not withstanding the above, by 'fair pricing', do you mean that they execute trades within a tolerable margin of the price that I open or close at?

Thanks again,
Tim.
Hi Tim

No prob, it was worth it to get my first 'like' from Pat

I haven't worked out how to copy and paste the boxes you have so i'll answer the questions in the order you asked them:

The point I was trying to make was they say they give you interbank prices but actually do they? I don't believe a trading company would give you the same spreads they get and only charge volume commission as their sole source of revenue. They contradict themselves immediately by saying they'll give you interbank spreads but then say they'll incorporate a dealing charge in the spread !

In practical terms it means what they say isn't correct. There will be a point that a dealer would intervene. You may never hit that point but it is possible someone may. Whether that be because the client is making 10% per day for 2 consecutive months or that hes taking lots of money off of BOA each FOMC meeting, at some point the broker and the bank will retake control and eyeball the client. The spread may be fixed for most of their clients at 1 pip during market hours but it may not be for the client that is unbeatable.

demo is no indication. it has no pnl implication to anyone. take £100,000 of real money off of them in the first week and see how they react.

I mean they give you the platform and the prices and leave you to it without making life difficult. i'm not referring to 'fair pricing' i'm referring to them being fair in general to you and you to them.

cheers
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Old Oct 13, 2015, 1:32am   #16
 
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Originally Posted by justdatguy View Post
There over a 1000 brokers to choose from metatrader 4

Which broker is the most reliable and how would i be able to search which one suits me best.

There are several factors to consider.
Is your broker STP or ECN?
Regulation
low spread
Speed of execution of trades
Also withdrawal process.

If a broker can satisfy all these points, then its worth considering

Last edited by rotexyo; Oct 13, 2015 at 5:28am.
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