Interesting Post on Forex

Originally posted by TRADERguy
"Currenex w/clearing through Refco requires a $250,000 account minimum. This is very small in terms of interbank trading. For smaller accounts if you want an ECN you have to go with HotspotFX. Otherwise you have the choices of retail forex or currency futures."

I have had a look at HotspotFX. Minimum account opening of $7500 and minimum order size of $100,000. On EUR/USD they tell me that the spread fluctuates between 1-3 pips. They also charge $3 commission per 100,000 lot. Margin is 2% for accounts up to $100,000,and 3% for above.

Is anyone trading with this company or a similar one with an ECN?

If so, how does the trading experience compare to using a retail spot forex broker like FXC,. ACM, CMC etc?

Is it anymore/much more complicated to use an ECN trading platform as opposed to a retail forex companies trading platform?

I would imagine that it is possible to be more successful given the better value spreads and the inability of the broker/marketmaker to create spikes?

All feedback gratefully appreciated.

Thanks

jtrader.
 
This is what made me rule out Hotspot:

http://www.elitetrader.com/vb/showthread.php?s=&threadid=34599&perpage=6&highlight=hotspot&pagenumber=7

Canceling an Active Order I was thinking of trying out hotspot until I saw this:


Canceling an Active Order

* If an active order is more then 10 points from the market, you will be permitted to cancel it.
* If an active order is within 10 points of the market, the order cannot be canceled.
* Attempting to cancel an active order without following these guidelines may result in your cancellation being rejected. The active order will remain active.

http://www.hotspotfx.com/trading/orders/

How can they operate without letting you change/cancel your orders?



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ElectricSavant
Elite Member


Registered: Jan 2003
Posts: 3604

07-03-04 11:37 PM
Re: Canceling an Active Order Ok, that was enough for me.....

Michael B.

P.S. And read this...

Input of a New Order
New orders may only be input if the order is more then 10 points from the market.
New orders will not be accepted if they are within 10 points of the market.
Attempting to input a new order without following these guidelines may result in your new order being rejected.

YOU CANT EVEN MODIFY IT



Quote from futures_shark:

I was thinking of trying out hotspot until I saw this:


Canceling an Active Order

* If an active order is more then 10 points from the market, you will be permitted to cancel it.
* If an active order is within 10 points of the market, the order cannot be canceled.
* Attempting to cancel an active order without following these guidelines may result in your cancellation being rejected. The active order will remain active.

http://www.hotspotfx.com/trading/orders/

How can they operate without letting you change/cancel your orders? ​
 
I hadn't realised that IB charge a commission on Ideal Pro - besides the spread. So, on EUR/USD - there is a 3 pip spread most of the time. You also pay a % commission that is $5 minimum per transaction = $10 per round trip.

Why would anyone do this?

granted, a trader may get a better service through IB - in that IB have nothing to gain through manipulating the prices they offer (as the bucket shops may do). However, is this really worth an added $10 minimum per trade?

In any case the additional commission - in my opinion - means that IB's Ideal Pro is not very competitive.
 
I have read this with some interest - in reality I think that if for any of you the taxation on futures and forex cash is equivalent, for smaller amounts the market of choice is globex. It is so not only for the narrow spreads that compensate the commission, but also for the opportunity to get in and out at your price, which further reduces costs, and above all creates more time-price opportunities for short term traders. Moreover, if you like to sit on your position overnight, there is no headache about how your broker will roll over your position - i mean how much will it cost you over what it should in the interbank market. You cannot count on guaranteed stops or fills, but this is precisely how it works in reality, and the faster you start measuring yourself against the reality, the better...

Next in the ladder is Hotspot - their problem is that they do not have all that much turnover, so at times the price is 3 pips wide on eur - which these days is a lot, given the low volatility, and even though you could attempt to put your price in, most of the time you will not see a fill until the banks' spread doesn't catch you... The fact they do not permit you to change the order when closer than 10 pips tp the market, is a normal practise on platforms, and it should not scandalise anybody...

Now hold yourself tight - I've had a look at cantor's eSpeed today, and even on a lousy day like labour day, it made a certain impression on me to have a quote in 2 pips on EURUSD for up to... 110.000.000 EUR... Most of the time the price is there in 1 pip for up to ten... They apparently can let you in from 100.000 EUR on, on 50 times leverage, with commissions that I have to check on, but for reasonable sizes it should be acceptable... This is in reality a leap in the dark, I think, because although the prices are driven by EBS, the liquidity is actually greater... This Ideal Pro platform can become promising, but only if the effective cost of trading and number of time-price opportunities can match Globex. To start with, they should be a 24 hours a day business, otherwise they are confusing the forex market with a coffee shop...
 
Thanks blueingreen

I shall have a look at cantor's eSpeed.
Ideal Pro commissions are 0.00002% of the trade size. This is $20 on a $1000,000 position - $40 per round trip.

Given that the EUR/USD spread is 3 pip on Ideal Pro - the same as the retail forex bucket shops - I cannot see the fact that Ideal Pro orders are placed onto the interbank market and IB do not manipulate the orders (as they are only acting as a broker) - as meaning that Ideal Pro is any better for a trader to use than the likes of FXCM. To me it seems like six of one and half a dozen of the other. It is better not to be at the mercy of the market-making broker - who can manipulate the market prices - however, it it really worth paying 0.00002% commissions for this benefit?

Do any other traders have an opinion on this?

Thanks

jtrader.
 
IdealPro is aimed at serious traders trading large position sizes and not mini account type traders.

IdealPro also allows you to 'be the market' and place liquidity between the spread.

JonnyT
 
"IdealPro also allows you to 'be the market' and place liquidity between the spread.

JonnyT"

Thanks JonnyT

your opinion as always is highly regarded.

I was told by IB customer service that Ideal Pro involves buying on the offer and selling on the bid. For EUR/USD this would involve a 3 pip spread and the 0.00002% commission ($5 minimum per side).

What do you mean precisely in the above statement that I've quoted?

Cheers

jtrader.
 
You can place an order between the spread.

i.e. Bid 1.8000 Offer 1.8003 You could place a limit sell @ 1.8001 or 1.8002 for your order size thus adding liquidity.

JonnyT
 
"You can place an order between the spread.

i.e. Bid 1.8000 Offer 1.8003 You could place a limit sell @ 1.8001 or 1.8002 for your order size thus adding liquidity.

JonnyT"

Thanks JonnyT

is this facility any different to what is possible with any retail forex broker - i.e. placing a limit order in the hope that the market may move in your favour?

Or with the likes of FXCM would they insist on a limit order being so many pips away from where the market was currently trading?

Thanks

jtrader.
 
With FXCM et-al your trade wouldn't add to liquidity as there is no market. You are trading against FXCM.

JonnyT
 
Ahh right,

so with Ideal Pro (which trades on the interbank market - the Bear Stearns Exchange), are orders placed directly into a queue on an electronic order book (like SETS) that matches corresponding bid and offer prices? therefore an individual traders order placed within the spread may or not be filled depending upon the market?

Thanks again

jtrader.
 
IB have informed me that -

"IdealPro is an order matching system that provides a more liquid market than is available through many other venues. Market depth is available........When an opposing order meets the current bid/ask, then the order is executed."

jtrader.
 
I also spoke to espeed th other day.

It seems that this service is aimed more towards institutional clients who have big pots of money to play with. The minimum order size is 1 million.

It seems similar to hotspotfx and Ideal Pro in that espeed act as a broker and do not make their own market. Commissions are $40-60 per round trip on a 1 million position. EUR/USD spreads are 1-3 pips (typically 2 pips).

With hotspotfx minimum order size is 100,000. I read that hotspotfx do not allow you to cancel orders which are within 10 pips of the market price, espeed allow you to cancel orders within any range of the current market spread.

It sounds like a good platform. I am not sure if it involves trading through an ECN as does hotspot fx, perhaps someone else knows? Also, do you know if Ideal Pro is traded through one of these "ECN" thingy my jigs?

Unfortunately, espeed isn't suitable for me, because within my current (5 year) trading plan, a 1 million position would be the absolute upper limit of my stake sizes - but, never say never!
 
The T2W glossary gives the following definitions -

"ECN = Electronic Communications Networks. Alternative trading systems that bring buyers and sellers together for electronic execution of trades.
ECNs = Electronic Computer Networks that link buy and sell stock orders."

IB informed me that -

"IdealPro is an order matching system that provides a more liquid market than is available through many other venues. Market depth is available........When an opposing order meets the current bid/ask, then the order is executed."

Therefore, to me it seems that Ideal Pro, by definition is an example of an ECN. Would you agree?

Also, by definition, is SETS level 2 a further example of an ECN?

Thanks

jtrader.
 
I can't figure out why IdealPRO doesn't trade 24 hours a day. I mean if they are trading right through to interbank, why the break in the trading day?

HG
 
s-a -
I can't figure out why IdealPRO doesn't trade 24 hours a day. I mean if they are trading right through to interbank, why the break in the trading day?

HG
Click to expand...

Hi s-a
I'm not sure either. Yopu're probably best off asking IB why they have a break.

[email protected] .

Cheers

jtrader.
 
And they say....

"Our IdealPRO currency network is a fairly new offering, we limited the hours to ensure that trading is efficient and working properly. Once we feel totally confident in the system, we will increase the trading hours."

As a software developer, this seems strange to me. If they are confident enough to go live with what they have then I don't see how reducing the hours traded would have much impact on their FX system. It should be performing the same logic no matter how many hours it runs for! I feel Stan isn't giving me the full story. I'll press on...

HG
 
s-a said:
And they say....

"Our IdealPRO currency network is a fairly new offering, we limited the hours to ensure that trading is efficient and working properly. Once we feel totally confident in the system, we will increase the trading hours."

As a software developer, this seems strange to me. If they are confident enough to go live with what they have then I don't see how reducing the hours traded would have much impact on their FX system. It should be performing the same logic no matter how many hours it runs for! I feel Stan isn't giving me the full story. I'll press on...

HG
Click to expand...
It looks like the few banks they deal with don't want to be required to make the market for IB during thinly traded hours.

Cheers,

TRADERguy
 
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