dbfx - Market maker or ECN?

[oildaytrader]

New range of custom indicators at dbfx

http://fxcodebase.com/

 

[oildaytrader]

Well, my initial "rant" on this forum regarding dbFX, was intended to blow-off some steam given the lie they told about not using the FXCM back-end hardware. Well, the logical proof for the lie has always been there, but it was not until earlier this year that the physical proof became known to the public, when the FXCM servers went down all day long and just "coincidentally," the dbFX servers went down at precisely the same time. When the FXCM servers came back on-line, the dbFX servers came up with them.

I ran some plain Jane Vanilla network diagnostic tests that anyone can run from a Windows command line, or from a Unix box connected to the internet and found that network termination points for connectivity to the server side of the FXCM Retail solution, had the exact same series of IP addresses as the dbFX Retail solution. In other words, same Gateway, same router, same subnet, same machine name and the exact same approach path to the firewall. That's no coincidence - as far as I was concerned, that was physical proof.

At the same time, however, I do realize that Deutsche Bank is still the 800 lb Gorilla, especially when it comes to providing liquidity to the FX markets, globally. So, regardless of which trading platform you use, if it is a real FX trading platform providing a genuine level of depth and breadth and not a 100% pure Bucket solution, then there stands a very good chance that the dealing rates you see inside your Retail platform has at least some Deutsche Bank liquidity embedded. So, given their imposing size alone, I reluctantly placed them on my 2010 Retail List.

As far as Saxo is concerned, I gave my reasons for allowing them on the list as well: Options. There aren't many genuine, plain vanilla FX option pools out there anyway and when a person comes to realize the importance of options in their trading, it really does become a very hard sell, to get them to let go of their options needs. Saxo Bank, I admit, does have a shady history with its founding principles (do the homework to find out). However, it has since hired a new CEO and made many internal changes to the way they do business and they have made some interesting (right minded) acquisitions and/or created some good strategic business relationships.

But, most interestingly, they have integrated their FX Options Board directly into SBT II. Having an equity options background before coming to FX spot many years ago, I know the significance of being able to use options strategies in synergy with a good technical trading system. So, for those Retail FX traders out there that also have extensive equity options backgrounds, they can decide to use FX spot, without sacrificing their need for options to remove unwanted risk. This is why I allowed Saxo Bank on my 2010 List.

So, for both dbFX and Saxo Bank, there were very specific and very real justifications that forced my hand, such that I could not ignore them when talking about some of the best options in Retail FX. There are others, however, and I also include them in my personal (non-inclusive) list as well. In fact, I just added one more U.K. Broker to the list just recently as they provide really good access to an entire basket of solid Retail trading platforms and none of them will be subject to the CFTC's 10:1 ruling, if it should happen.

Did you use DBFX live or demo accounts?Is live account being handled through FXCM servers?

 

[oildaytrader]

Here's the bigger problem: Why? Why would such a mega successful BANK like Deutsche Bank, crawl in bed with the infestation known as FXCM? Sure, db had enough reserve capital for the development of its own trading platform.

http://www.elitetrader.com/vb/showthread.php?s=&threadid=188842&perpage=6&pagenumber=2

 

[oildaytrader]

I have finally opened the account with DBFX .

Firstly it hires the FXCM platform /software and other services.The liquidity is from Deutsche bank.

During U K and U S bank holiday period , spreads on Euro /usd went up to 4 to 6 pips.This increase in spreads is only natural for bank.During the same period , the bucket shops maintained their low spreads.

http://www.trade2win.com/boards/forex-brokers/94264-dukascopy-fxcm-2.html#post1140226

http://www.trade2win.com/boards/forex-brokers/94264-dukascopy-fxcm-2.html#post1140242

Will keep you guys posted on my experience.

 

[oildaytrader]

Today on the first day of live trading , I had almost 10 orders not executed instantly.Orders had to be re submitted for fills, price has moved.

 

[oildaytrader]

FXCM plonkers' servers are down.Both servers are down at same time.

 

[Creatore]

I've read through many of your posts here on T2W. First, I am not new to trading. Second, I am not new to trading forums. Third, I am an individual trader managing his own capital and not a paid shill for anyone, for anything nor for any reason.

Yours is not a problem of intellect, its a mere problem of slight narrow mindedness. I don't mean that personally - as many things can be taken out of context when reading one's writing on a forum such as this - I mean that in the context of having read many of your posts regarding (in specific) dbFX.

Did you actually read my post?

In my view (and I've re-read my own writing to be sure), it does not read like one who is being paid to write. It reads like one who has been lied to by yet another FX intermediary - is there anything new about that concept - I doubt it.

I worked at Oracle, when the Enterprise Software Industry was in fact, still, THE Enterprise Software Industry, before Silicone Valley turned into the virtual Software dust bowl that it is today. I worked in SV during the peak - at the boom of technology in this country. I was there, when things were really good - when Systems Engineers (pray tell) were making half a million per year, doing - well, Systems Engineering. I know Enterprise Technology. Many of the systemic systems running today throughout much of G100 and G1000 community are systems that one way or another, I had my hands on - in some fashion, either in part (mostly) or systemically. From financial institutions to hospitals, to the Federal government, to the U.S. Supreme Court, to DoD, to national retail chains, to aerospace, to higher education, to scientific institutions, etc., there are precious few mainstream industries and/or institutions whose IT department and/or Datacenter would be unfamiliar territory to me. Many sky miles still un-used.

What I can tell you about the systemic and simultaneous failures of both dbFX and FXCM at the Server/Gateway/Router/Network level on 1/23/10, would not be anything surprising to those that suffered through it - for they already know that what I've reported is true. What I find most interesting about the dual failure, is that it happened in the first place! No TRULY mission critical enterprise system should ever be exposed to a single fault interruption that cascades systemically - if it does, then it is not truly enterprise, nor is it truly mission critical and that bring up my next point.

If a business entity decides to enter the mainstream of a market that trades on average $3.4 Trillion per day (in the aggregate) where there is no central clearing (in the aggregate), that doing so absent a truly enterprise schema for hardware, software and network, is like playing Russian Roulette with the very deposits that make your business model work in the first place. But, that is a technical discussion for a different kind of forum, quite possibly.

My main point (jumping into the tail end of this thread at the last minute) is that dbFX should NOT ever LIE to me, or to any of its other customers. When I am told that my physical account sits on a physical server installed on the physical grounds of the physical building housing the physical business entity known as Deutsche Bank and that when I login to my physical account, that I do so through the physical Gateway (read: Firewall in most Corporate schemes) and to a physical Server owned, operated and maintained by Deutsche Bank, only LATER to find out (by way of a failuire) that my actual TCP/IP Network path is being routed through an FXCM Server (at any level of the logon sequence - regardless) - THEN - I realize that I have been LIED to.

Here's more proof:

I took a quick screen snapshot of the dialog box upon failure to login to the dbFX Trade Station. The first line reads: Cannot Connect to: http://dbFX.FXCMCORPORATE.com server.

Open a windows command line by typing "CMD" off the windows primary menu: Run > Start. Type cd C:\ to get to the root. Then, from the root, type the string: Ping http:\\dbfx.fxcmcorporate.com (then hit enter or return).

You will obtain ping stats from a server called: 208.87.149.250. Now, for those of you with dbFX accounts, go logon to your dbFX Trading Station and let the application run. Then go back to the command prompt (c:\>) and type the string: netstat (while logged into your dbFX Trading Station).

This will show you a list of all your active network connections. Notice that somewhere in that list you will find the Server called: dbdemo.fxcorporate.com.

Now, from the root (c:\>) type the string: Ping dbdemo.fxcorporate.com.

What you will get is the IP address of: 204.8.241.13.

Now, note the difference between 208.87.149.250 and 204.8.241.13.

Next, go back to the root (c:\>) and type the string: tracert 208.87.149.250, then run the same string for 204.8.241.13. You will find that 208.8.241.13 will resolve to itself but BEFORE it does, the very last hop it makes is a system called: fxcorporate-gw.ip4.tinet.net [77.67.69.26].

That "gw" stands for Gateway, folks. And, that is how the cookie crumbles. When you logged into your dbFX "Server" you had no idea that you were doing it through an FXCM Gateway.

Thus, dbFX has no physical differentiation in its software, hardware and network technology, from FXCM. So, how on earth can they claim to be otherwise?

I'll leave that question up to the technology experts on this forum to decide.

Very much appreciated post !
PS Didn't have time to read whole thread, but here we see the attempt to throw light on situation that was not very apparent form the day 1 you start to consider DBFX.
Whenever trader spent more time and money in FX trading with bucket shops (with accounts with bit more digits) the question becomes more and more important.
So, DBFX needs to put (IMHO) more efforts to improve QoS and its image among prospective traders.

 

[Black Swan]

Very much appreciated post !
PS Didn't have time to read whole thread, but here we see the attempt to throw light on situation that was not very apparent form the day 1 you start to consider DBFX.
Whenever trader spent more time and money in FX trading with bucket shops (with accounts with bit more digits) the question becomes more and more important.
So, DBFX needs to put (IMHO) more efforts to improve QoS and its image among prospective traders.

So stfu then and don't talk on subjects you havn't got a clue on...as you were..nob...

 

[Creatore]

stfu then and don't talk on subjects you havn't got a clue on...as you were..nob...

Is it an etiquette to meet new members on this forum in such way?
Well, thanks, worth to keep in mind.

 

[maxima]

so... whats the way to find out what broker sends your orders to the banks and who is operating his own 'ecn' ?

again - I never traded fx for living so I am talking here as a curious stranger... Say alapari pro or fxcm active traders - are they bucket shops too? despite of charging comms and having small spreads? or is it all smoke and mirrors?

I am not sarcastic. I am interested to know how far a human hypocrisy can go.. just for my personal development

 

[Als]

there was an info that retail division of db has been sold(done deal)to someone

so trading conditions can be changed soon

who is that new happy owner?

 

[TraderNumber7]

there was an info that retail division of db has been sold(done deal)to someone

so trading conditions can be changed soon

who is that new happy owner?

dbFX is gone. The stabbed their most loyal customers in the back and ditched the entire Retail FX community. And, to really show their customers what they thought of them, they attempted to dump all dbFX account balances over to FOREX.com, one of the worst bucket shops on earth.

Apparently, FOREX.scam, sorry - FOREX.com was the highest bidder for dbFX accounts and got the "right" to have dbFX make an "exclusive" offer to its clients, to roll their accounts over the FOREX.scam - sorry - FOREX.com.

I think what really happened here, is that Deutsche Bank in general helped to lower its level of integrity overall. They were supposed to be 'the bank' that helped to bring credibility to a credible-less Retail FX Intermediary space, along side CitiFx. Instead, Deutsche Bank revealed itself to be no more credible than the rest of the Retail FX Intermediary buck shops. I think ultimately, while Autobahn is still the Institutional Platform, Deutsche Bank has hurt its reputation as a reliable, credible, trustworthy business partner for any Trader, Retail or Institutional.

From what I understand, they way they handled the entire matter with their traders, was nothing short of a back stabbing session of epic proportions. No warnings. No clues. In fact, after the new Frank/Dodd legislation, dbFX came out and told the public that it intended to continue to offer 100:1 leverage because it was not a bank regulated in the United States and thus, not subject to Frank/Dodd (in so many words). It then led its customers down the primrose path of believing that they had an ally in the Retail FX space, when all of a sudden, out of nowhere, dbFX Traders get slammed with a knife in the back and essentially a death sentence offer to roll their accounts over to FOREX.scam - oooops - FOREX.com, by May 13th, 2011.

So, effective tomorrow (this Friday), if you were a dbFX Retail customer, you account will be closed out without your authorization (like it or not) and dbFX will charge you to send a bank wire for the remaining balance in your account, according to their statements. So, just like that, dbFX is gone in a flash with not so much as a care about their former customers.

When I was a Retail Trader, I held my breath and opened my account with dbFX. I knew then that it did not feel right, but they were a "bank" and I held that in my mind has having "credibility." That was back when I was a pure Retail Trader, and my gut told me that something approximating this magnitude could happen with dbFX, given their close relationship with FXCM, another well known Bucket Shop.

Essentially, dbFX does not want to go through the regulatory set-up requirements under Frank/Dodd, that's what this is all about, really. They just did not have the guts to come out and say that to their customers and that's what is so embarrassing about the entire affair from my perspective. They claimed they were making money in Retail FX, but yet they could not "afford" to cost of Frank/Dodd. That excuse never made any real sense at all.

If you can't trust Deutsche "Bank" to remain principled, then who can you trust. It seems like Retail FX is a magnet for sloppy business practices.

As soon as you can, get out of Retail FX Hell.

 

[Black Swan]

Agree with just about all of that post from trader No 7, I'm gutted that dbfx simply puked. And I agree with his implication that you either work to becoming commercial (accessing Autobahn etc) or you'll always be disrespected and badly treated.

 

[TraderNumber7]

so... whats the way to find out what broker sends your orders to the banks and who is operating his own 'ecn' ?

Simple. Does your platform display a live feed showing full DOM at all price levels for all sizes with a bid and ask? If so, then you are most likely on an STP platform, because you will have very detailed transaction data to use in any dispute after being slipped, re-quoted and/or filled at a disadvantaged price level. However, if all you see on your platform is the Bid and the Ask, with no depth of market whatsoever, to any extent, then you are most likely trading on a Bucket Shop platform - of which there are many in FX. Your broker is probably taking the other side of your position, while telling you that they are not, simply because they instantly off-set your trade against the pool. Well, I don't care what they call it, if they are the counter-party to my trade, then they are trading against me. Whether they aggregate my executed order with others after the fact and THEN off-set a larger block with the pool, is not my concern.

The truth is however, that most Retail Traders are not ready for FDOM trading platforms, or anything even close to that. The average Retail Trader does not yet have that level of skill and fluidity in their trade execution decisions. Having a trade signal is one thing, having the ability to synthesize an FDOM and physically execute in real time according to an optimal entry/exit methodology, is quite another for the average Retail Trader. But, that's really not the point. The real point is that if you are trading Retail FX, then you cannot possibly be trading in real Interbank position sizes. Retail Traders, are not executing position sizes in Yards.

So, the only way to give the Retail Trader access to FX, is to build a Middle Transaction Layer where the sizing concepts of Standard, Mini and Micro lots exist, and where the counter-party (your broker) aggregates and holds the credit risk up to a level where it can off-set trades with members of its own liquidity pool. Think about it. You are sitting in front of your trading station, looking to pull the trigger on a whopping $1k trade for a whopping 1 lot. Do you actually think that HSBC is sitting on the other side of that 1 lot transaction when you click on "Buy." Of course, not. Somebody has to "make that market" appealing to HSBC, so your order will get aggregated with other small orders, up to the agreed upon limit, so that your intermediary can "off-set the transaction" and get you into and out of the market.

However, in most cases, you transaction NEVER sees the light of day on the real Interbank market. HSBC, never takes the other side of your 1 lot trade directly, because that's not their business model. So, in order to give you a place to trade FX, your intermediary will most often be the "sole counter-party to your transaction" (go look it up in your Client Agreement). That's why it is called Retail Forex Trading. Thy are making a market - they have too, or else you could not trade at such low levels. So, the sooner they can take your deposit and drain your account with slippage, re-quotes (missed opportunities), software malfunctions, price feed freeze-outs, dealer plug-ins, disadvantageous fills, 800#'s that don't get answered for minutes at a time and arbitrary widening of the spread whenever your position is nearing a clustering of Stop levels, the sooner they can reduce their own credit risk and exposure - while booking profits for the current quarter.

So, what you have to do as a Retail Trader, is to learn HOW TO TRADE with ruthless efficiency, so that your account consistently grows, regardless of the tactics used by your intermediary to take you out. Keep this in mind. The more money you make as a Retail Trader, the larger their credit risk grows, because by definition if you are winning, they are losing (most of the time - not always, but most of the time).

However, if you can find a pure Commission Only Retail Intermediary (CORI) who is not making a dime off the spread (does that even exist anymore), then you have a better chance of trading with more efficiency, as long as that intermediary uses good technology and maintains a better than 98% systems availability ratio. Why? Because you won't be dealing with many of the roadblocks mentioned above.

So, learn HOW TO TRADE, first. The rest will take care of itself, almost literally. And, when you are ready for a Prime Brokerage Account, one will be waiting for you, along with a real trading platform and some real trading technology.

The objective is to get out of Retail Hell - it does not matter what market you trade. And, to do that, you are going to have to trade your way through it. Because, even if you start with $300k - $500k (many people can start there), you still don't know HOW TO TRADE and you can still lose everything by simply not knowing when to get into and out of the market, even without intermediary roadblocks.

- Learn how to trade, first.
- Trade your way through Retail Hell. This Earns you a Ph.D. in Trading Science.
- An Institutional Account through a Prime Broker awaits you on the other side.
- Decide how big you want to become from that point forward.
- Make sure you trade through an LLC, LLP, C-Type Corp (what's best for you).
- Use offshore deposit accounts.
- Retain a very good CPA and Tax Attorney
- Enjoy life and give back frequently. Make the world a better place.

It's a long road, but I'm living proof that it can be done.