Does NDD really matter for everyone?

[hybrid]

Hi,

i've been looking around at spreadbet brokers.

Oanda, Alpari, and FXCM all provide reputable and 'Non Dealing Desk' services, but the client pays more in the spread.

If one is not a scalper, and is trading on daily charts - say 8-15 trades a month, is it so important to have a NDD provider?

I guess it is, because if using a DD low spread provider, if one starts getting profitable then one will get eaten up by the dealer the others side of the screen?

 

[x4x]

What exactly do you think the dealer will do to 'eat' you up?

 

[hybrid]

spikes / chart rigging to eat stops...

 

[x4x]

So you think they would create spikes and rig charts just for your position? In other words give each individual client personalized prices - hoping no one compares their chart with their other clients or with the many provided by their competitors and or other third party data providers.

I didn't know Oanda or Alpari offered spreadbetting - but I can vouch for IG that their prices always match a third party data feed. Over the years I've had numerous occasions of being within 0.00001 of being stopped out, only to survive and go on to win.

FXCM will always give prices that are a couple of points higher and lower than anyone else - this means that you have to widen your stops accordingly, so not only do you have to pay a wider spread, you also have to have a larger stop loss.

 

[Purple Brain]

I'm not sure OANDA class themselves as an SB, but their spreads are normally competitive.

They do have a downside as do most from significant widening at times of volatility, but as x4x suggests, you factor that into your trading execution.

It is so completely unlikely any SB could provide you with such personal attention as to individualise your feed just to grab your stops and spike your price. Technologically it would be (virtually) impossible and commercially it would be suicide.

As a side issue: What is the difference between an SB and a broker?

 

[DAX30DayTrader]

Hi,

i've been looking around at spreadbet brokers.

Oanda, Alpari, and FXCM all provide reputable and 'Non Dealing Desk' services, but the client pays more in the spread.

If one is not a scalper, and is trading on daily charts - say 8-15 trades a month, is it so important to have a NDD provider?

I guess it is, because if using a DD low spread provider, if one starts getting profitable then one will get eaten up by the dealer the others side of the screen?

I didn't know Oanda or Alpari offered spreadbetting - but I can vouch for IG that their prices always match a third party data feed. Over the years I've had numerous occasions of being within 0.00001 of being stopped out, only to survive and go on to win.

If you are serious about spread betting, then IG is the only place for you, the rest are below IG standards, that includes FXCM which is a **** hole.

Simple as that mate!

IG offer the best spreads, best customer care, best products, the most markets, and I have never, ever, experienced any major issue with IG, and you can regard me as a scalper or at least a very short term day trader. They are also a UK listed company based in the UK.

Of course, you will have a faction of IG haters, but those peeps will be playing the blame game for their own **** trading habits.

 

[Jason Rogers]

If one is not a scalper, and is trading on daily charts - say 8-15 trades a month, is it so important to have a NDD provider?

I guess it is, because if using a DD low spread provider, if one starts getting profitable then one will get eaten up by the dealer the others side of the screen?

FXCM will always give prices that are a couple of points higher and lower than anyone else - this means that you have to widen your stops accordingly, so not only do you have to pay a wider spread, you also have to have a larger stop loss.

Hi guys,

In addition to our NDD forex execution, FXCM offers a DD option for traders whose primary concern is low spreads. You'll find our DD spreads to be competitive with those of other brokers on the same execution model.

What exactly do you think the dealer will do to 'eat' you up?

spikes / chart rigging to eat stops...

Certain strategies expose dealing desks to more risk such as high frequency trading. To better manage their market risk, some DD brokers actively intervene in their clients' trading by re-quoting orders, delaying execution, skewing prices, etc.

However, if you're trading on our DD execution and your trading style exposes us to more risk than we're comfortable with, FXCM may at our discretion change your execution type to NDD. This is how we can comfortably offer both execution options without having to resort to some of the common "dealer intervention" practices listed above.

Jason

 

[x4x]

Hi guys,

Certain strategies expose dealing desks to more risk such as high frequency trading. To better manage their market risk, some DD brokers actively intervene in their clients' trading by re-quoting orders, delaying execution, skewing prices, etc.

Jason

Isn't that exactly what you (FXCM) got fined $2 million for?

 

[Jason Rogers]

No, there are no re-quotes or dealer intervention when trading with FXCM. Your orders are filled dependent on liquidity and can experience positive or negative slippage. Unfortunately for traders that do get re-quotes, their broker is more than happy to fill them at the price they request when the market is moving against them, but re-quotes them with a worse price when the market moves in their favor.

How many times have you ever experienced a re-quote in your favor for a better price or received positive slippage on a limit when spread betting? With FXCM, our traders get no re-quotes and benefit from positive slippage. In addition, our Trading Station platform has a feature called Market Range to help you limit negative slippage.

 

[x4x]

No

So what were you (FXCM) fined $2 million for - I thought it was something to do with unfair slippage created by using the Virtual Dealer Plugin.

 

[Jason Rogers]

FXCM has never used the Virtual Dealer Plugin. In 2010, FXCM completed upgrades to our platform allowing traders to benefit from positive slippage (AKA Price Improvements) as required by our regulators. That means FXCM clients can get filled at a better price than they requested if it's available. Suppose you had a limit order to sell EUR/USD at 1.3700 going into close of trading on Friday. If the market gapped up over the weekend and was trading at 1.3800 when the market reopened, the positive slippage slippage on our platform would mean that you could have your limit order filled at that higher sell price.

Do all spread bet brokers give positive slippage? That's easy to check. Simply record your limit order price and check to see if you get filled at a better price. Do you ever get re-quoted for a better price if the market moves against you? There would probably be a better chance of a unicorn flying by my window today than that happening

I think it's great that you expect brokers to offer the best execution possible. Do you think brokers should be required to re-quote clients a better price if it's available instead of only re-quoting them a worse price?

 

[x4x]

This thread isn't about FXCM, but for the record it would be useful to explain what exactly FXCM was fined for - you've denied it was for slippage malpractices via the Virtual Dealer Plugin, so what exactly was it for?

 

[Jason Rogers]

For a thread not being about FXCM, you sure have taken quite an interest If you would like to read about the topic from 3 years ago, I discussed it in detail here. FXCM clients have received positive slippage since 2010 even while other spread bet brokers do not offer this till today, and instead use practices such as re-quotes to the disadvantage of their traders.

Hybrid asked in his original post if NDD really matters for everyone? For those traders who have experienced re-quotes it makes a world of difference because brokers selectively use re-quotes in their own best interest instead of treating all trades the same. Here's an example which will make it very clear how re-quotes work in the interest of brokers that use them.

Suppose there's a major news event that has the ability to move the market substantially within a matter of seconds, and you're trading GBP/USD. The current price is 1.6160, but the market gaps to 1.6180 and continues moving higher immediately when the news is released. If you buy and happen to get 1.6160 then the broker is stuck holding a short position at 1.6160 for a 20 pip loss and growing!

If it happens only a few times, then no big deal, but if the broker continues to get picked off like this you're hurting their bottom line. This is when you are most likely to be hit with a re-quote for the "correct market price" of 1.6180. What happens if you decide to sell instead? In that case, you sell at 1.6160 and the market immediately moves to 1.6180 resulting in an immediate profit of 20 pips for your broker. The dealer looks like a trading genius. Why re-quote the better price of 1.6180, you got exactly the price you wanted. So you can see how re-quote practices are often one-sided in the market makers favor and yet you find this acceptable?

 

[yellowfloyd]

Hi,

i've been looking around at spreadbet brokers.

Oanda, Alpari, and FXCM all provide reputable and 'Non Dealing Desk' services, but the client pays more in the spread.

If one is not a scalper, and is trading on daily charts - say 8-15 trades a month, is it so important to have a NDD provider?

I guess it is, because if using a DD low spread provider, if one starts getting profitable then one will get eaten up by the dealer the others side of the screen?

I think most of these Spread Bet providers offer similar spreads and service. The platform for me is the main thing, some are quite ‘busy and confusing’ to use. I think personally I’d pay a slightly wider spread for a better dealing platform.

If you shop around enough, especially amongst the big players in the market you see that they are all very similar in spread and service.

 

[Vasco da Banana]

For a thread not being about FXCM, you sure have taken quite an interest If you would like to read about the topic from 3 years ago, I discussed it in detail here. FXCM clients have received positive slippage since 2010 even while other spread bet brokers do not offer this till today, and instead use practices such as re-quotes to the disadvantage of their traders.

Hybrid asked in his original post if NDD really matters for everyone? For those traders who have experienced re-quotes it makes a world of difference because brokers selectively use re-quotes in their own best interest instead of treating all trades the same. Here's an example which will make it very clear how re-quotes work in the interest of brokers that use them.

Suppose there's a major news event that has the ability to move the market substantially within a matter of seconds, and you're trading GBP/USD. The current price is 1.6160, but the market gaps to 1.6180 and continues moving higher immediately when the news is released. If you buy and happen to get 1.6160 then the broker is stuck holding a short position at 1.6160 for a 20 pip loss and growing!

If it happens only a few times, then no big deal, but if the broker continues to get picked off like this you're hurting their bottom line. This is when you are most likely to be hit with a re-quote for the "correct market price" of 1.6180. What happens if you decide to sell instead? In that case, you sell at 1.6160 and the market immediately moves to 1.6180 resulting in an immediate profit of 20 pips for your broker. The dealer looks like a trading genius. Why re-quote the better price of 1.6180, you got exactly the price you wanted. So you can see how re-quote practices are often one-sided in the market makers favor and yet you find this acceptable?

What are FXCM's spreads on the main indices and FX? Just spent five minutes trying to find SB market info on your site, and I'm beginning to wonder if it's a secret. I know from a while ago it was 4pt on US30, which pretty well made the NDD idea irrelevant if you can get 1pt spread or less everywhere. Have they been reduced?

 

[Jason Rogers]

What are FXCM's spreads on the main indices and FX? Just spent five minutes trying to find SB market info on your site, and I'm beginning to wonder if it's a secret.

Hi Vasco,

Sorry you had trouble finding the spread betting section of the website. I'll share your feedback with our website designers. The spreads on spread betting accounts are the same as for non-spread betting accounts.

It's worth noting, that with FXCM there are no re-quotes. With brokers that re-quote their clients, a small advertised spread can quickly add up to a larger transaction cost, when you can't get the original price you requested.

Spreads are important, but they are just one factor out of many to consider when choosing a broker along with trade execution, 24 hour customer support, trading platforms offered, education, resources, etc. At FXCM, we seek to provide competitive spreads while also delivering great execution and a safe place for you to hold your funds.

It's no secret that the brokerage industry has been in the midst of a price war for the past couple of years. That combined with lower trading volumes last year have caused many brokers to struggle. There was even a spread betting broker in Ireland that went bankrupt after trying to entice clients with 0 pip spreads. Last year also saw the failure of a US broker that had previously touted their razor thin spreads. We've had other brokers have to pull out of the US after being unable to meet regulatory capital requirements.

If recent events have taught us anything, it's that the financial stability of the broker you choose can have far greater implications than we previously thought. Unfortunately, the vast majority of brokers are privately held companies, so it's hard to know the state of their finances. Are they profitable, or are they barely staying afloat? How can you know whether they are safe place to keep your money?

FXCM is a publicly-traded company (NYSE ticker: FXCM), so information regarding our financial data is readily available. This is one of the reasons why traders have entrusted us with $1.171 billion in client funds.

 

[adilfx]

tradenext has got decent offering, got a few ea's running