Something question about brokers ,ECN/NND and MT4

[tyrian lannaster]

Hello everyone, i am new to trade2win but not new to trading.I have some questions especially to the experienced members of the group

First question about brokers

Since everyone prefers NND to dealing desks , i guess now every broker has a stamp in their head written NDD and use fancy words like ECN. So my question is this

Brokers like FXCM advertises they are ECN but i heard somewhere that Interbank do not accept transaction less than 5 millions USD. Chatted with FXCM representative and they said every transaction is NDD , so if i place 5000$ trade then what kind of bank will deal with such pennies.Also another Broker Interactivebrokers will only allow transaction to go interbank if it is more than 25000$.Can someone clarify on this?
Also with interactive brokers the game is changed , they don't use MT4 but look very professional. And the most weird thing is their bank closes (i mean within the weekdays)So no 24/5 trading . Which really makes sense if you think about it.

 

[Jason Rogers]

Brokers like FXCM advertises they are ECN but i heard somewhere that Interbank do not accept transaction less than 5 millions USD. Chatted with FXCM representative and they said every transaction is NDD , so if i place 5000$ trade then what kind of bank will deal with such pennies.

Hi Tyrian,

FXCM does not advertise that we are ECN.

The term ECN when applied to retail forex is a misnomer. While it has gained currency (pun intended) among retail traders of late, the term should be reserved for the electronic communication networks used by banks and other institutional level market participants to trade among each other, not with retail traders. That's why FXCM uses the term NDD for our No Dealing Desk forex execution where every retail client order is offset one-for-one with our 10+ liquidity providers.

"FX ECNs like Currenex, Bloomberg Tradebook (an affiliate of Bloomberg L.P.), 7Hedge FX ECN, Hotspot FX, 360T, FXall & BAXTER Financial Services Ltd with Currency Dealing provide access to an electronic trading network, supplied with streaming quotes from the top tier banks in the world."
source: Electronic communication network (Note: FXCM does offer institutional forex trading solutions through our FXCM Pro division.)​

On our NDD model, clients can execute orders as small as 1 micro lot (approximately 10 cents per pip). The reason our liquidity providers are willing to offset individual orders of this size is because they know the aggregate volume of our clients is substantial. In the first quarter of 2014, FXCM had over $936 billion in retail trading volume.

 

[Jason Rogers]

Your FXCM rep was correct - they largely use NDD. However, you're getting confused with the terminology, NDD doesn't mean your trade is passed through to the underlying market - it just means you avoid a human dealer. Your trade is still B booked either way.

Hi DJ,

While I know of at least a couple of brokerages that use the term NDD in the way you describe, FXCM is not one of them. On our NDD model, every client order is offset one-for-one with our liquidity providers. Trades are not "B booked". We make our money by adding a pip markup to the best bid/offer prices received from 10+ liquidity providers, and that markup acts as our commission. That means we make our money off client trading volume, not client losses.

 

[tyrian lannaster]

Thank you DJ and Jason for your reply, but my doubt remains the same, as DJ said

It's all rubbish. Virtually all retail client flow is B booked (this is way more profitable for your retail broker - which of course is why they do it). Those brokers can then choose to hedge excess risk in the real market.

and Jason said

On our NDD model, every client order is offset one-for-one with our liquidity providers. Trades are not "B booked"

I agree with DJ on this , a liquidity provider will not offset your transaction and why will they? or are you saying that all transaction goes to inter bank which might not be correct because inter bank requires very large volume(5 to 10 million to my knowledge).or To offset every transaction with another order FXCM has to receive same order of same quantity at the very same second(i doubt this happens).

So if i make too much money trading Forex then my broker loosed too much , what are the chances that they will give my money?one way or another retail investor looses their money.
The reason to start this thread was to know where the HNWI open their account

2. Choose an institutional level broker that doesn't require you to be a HNWI (so LMAX or IB as good examples).

IB requires minimum 25000$ to go to inter bank (it is still not enough)

Sorry to have so many doubt