Advice on DMA

[malaguti]

It's not really a matter of recommendation. All I mean is that the shorter your average trade lasts and the more trades you make per day, the more futures rather than SB makes sense.

more trades you make more commission you pay..SB no commission. Just the spread
The dependency is not on the frequency but the relative amount taken on each trade. You would need to make sure that all your high frequency (=high cost) DMA trades are actually being covered.

 

[barjon]

more trades you make more commission you pay..SB no commission. Just the spread
The dependency is not on the frequency but the relative amount taken on each trade. You would need to make sure that all your high frequency (=high cost) DMA trades are actually being covered.

Forgetting other factors about DMA (real, not proxy offerings) vs SB it really depends on the size you trade and the difference in spread you can get from DMA or SB. If you are trading small size and facing minimum commission via DMA you'd probably find that SB is much the cheaper option. Conversely, if you are trading large size the reverse applies. So do your sums and work out the "tip over" point of trade size - below that size you'd be better with SB, above it with DMA.

For me, trading UK equities, that's a variable feast since £x per point buys you the same number of shares but at very different cost (for DMA commission) depending on the price of the share.

 

[malaguti]

Forgetting other factors about DMA (real, not proxy offerings) vs SB it really depends on the size you trade and the difference in spread you can get from DMA or SB. If you are trading small size and facing minimum commission via DMA you'd probably find that SB is much the cheaper option. Conversely, if you are trading large size the reverse applies. So do your sums and work out the "tip over" point of trade size - below that size you'd be better with SB, above it with DMA.

For me, trading UK equities, that's a variable feast since £x per point buys you the same number of shares but at very different cost (for DMA commission) depending on the price of the share.

agreed, Barjon. I invariably trade uk stocks, 10% rise in value will give you nothing after commission from 100 shares. And like you say, DMA vs SB is all about the size of your trade. quantity will murder you otherwise

 

[Vasco da Banana]

more trades you make more commission you pay..SB no commission. Just the spread
The dependency is not on the frequency but the relative amount taken on each trade. You would need to make sure that all your high frequency (=high cost) DMA trades are actually being covered.

I was really talking about index futs, where in some cases (YM) SB can actually offer a narrower spread than the underlying market with zero added commission. Shares are a different kettle of fish.

 

[new_trader]

Hmmmm, No real pro's to changing then.
Thanks for your advice

Depends on how important transparency is to you. I think it is the most important factor and that is why I have a DMA account. You won't get transparency with any S/B company, even ones that purport to be DMA.

NB: Don't waste your time getting a DMA account if you need to ask what 'transparency' means.

 

[ashg85]

I agree there is a very grey area with SB accounts and there prices.
That was part of the reason for considering DMA

 

[Liquid validity]

I agree there is a very grey area with SB accounts and there prices.
That was part of the reason for considering DMA

Its only a grey area if you trade intraday with small targets and stops.
For swing trading SB is fine, both of these posters use SB perfectly OK:

http://www.trade2win.com/boards/tra...ee-shepherds-trading-diary-5.html#post2108144

http://www.trade2win.com/boards/search.php?searchid=12641540

Simply a case of using the tool for the job.
You have 6-7 months under your belt and swing trade.
I doubt the extra complexity of DMA will do you any favours at this point in time.
Positions sizing is easier with SB for starters.

 

[new_trader]

Its only a grey area if you trade intraday with small targets and stops.

No, that is incorrect. You don't get accurate (any?) volume data with SB.

 

[Liquid validity]

No, that is incorrect. You don't get accurate (any?) volume data with SB.

True about volume.
It is not true to say that volume is essential, certainly not for swing trading.
That is not to say that volume and even the tape have no use in swing trading,
far from it.

The main reason I suggest he carries on with SB is simple.
Its working for him - don't fix what ain't broke.

 

[chris0212]

Actually, Do all of you think which is the best and honest dma cfd firm, IG market, Interactive broker or FP market?

 

[Davidee]

With DMA you broker is simply putting you trade directly into the market place. A market maker however takes the other side of your trade and may try to hedge their exposer to your position.

If you are trading large liquid markets then a DMA broker is probably best. However if you're looking to trade CFDs on penny stocks you might find the liquidity isn't there to trade these things with the DMA model and need a market maker to take the otherside of those positions -this is why they're sometimes called liquidity providers.

 

[SlowlyButSurely]

FYI there are even large institutions which advertise as large institutional liquidity providers (offering 'DMA' services) but in actual fact offer liquidity from just one bank. They arrange a deal with said bank and so you don't get proper market liquidity and even placing a 1 lot trade on EUR USD at 12pm GMT can take an age to get filled.

Of course it has not been proven but quite a few people suspect this sort of activity and have questioned the company about it. When in the world of finance its best not to trust anyones word basically