Spreads at Spreadbetting firms vs DMA brokers

SlowlyButSurely

Well-known member
324 38
Hi,

I am currently trading with a spreadbetting (SB) firm and considered moving across to a DMA offering in the future when I have more funds and I have proven to myself that I can be consistently profitable for a long period of time. I'd considered making the move to take advantage of lower spreads and less aggro slippage when I trade size that is noticeable.

Just out of curiosity I started looking at some places such as LMAX, Advanced markets etc and started salivating at the low spreads, but when taking comms into account the costs can add up quite a bit and spreads widen larger than my current SB provider when tallied together (spread + comms).

My question is then, why do some people make the switch (perhaps yourselves included)? Is there a certain point where you are doing enough volume to make the comms low enough? Is it for safety of funds/avoiding unscrupulous practices? I always figured that DMA would be much better spreads but I currently get 0.8 on EURUSD and USDJPY and 1-2 on GBPUSD that it is better than what I could get on DMA when taking comms into it.
 

gle101

Veteren member
3,717 84
Hi,

I am currently trading with a spreadbetting (SB) firm and considered moving across to a DMA offering in the future when I have more funds and I have proven to myself that I can be consistently profitable for a long period of time. I'd considered making the move to take advantage of lower spreads and less aggro slippage when I trade size that is noticeable.

Just out of curiosity I started looking at some places such as LMAX, Advanced markets etc and started salivating at the low spreads, but when taking comms into account the costs can add up quite a bit and spreads widen larger than my current SB provider when tallied together (spread + comms).

My question is then, why do some people make the switch (perhaps yourselves included)? Is there a certain point where you are doing enough volume to make the comms low enough? Is it for safety of funds/avoiding unscrupulous practices? I always figured that DMA would be much better spreads but I currently get 0.8 on EURUSD and USDJPY and 1-2 on GBPUSD that it is better than what I could get on DMA when taking comms into it.
Yes at times trading DMA is not cheaper, but you are trading the real market so you will not encounter any interference from the broker such as freezing during news, excessive slippage and other games they might play against you. With DMA you know what you get and it is consistent, the rules will not change.

Trading the indices futures is in most cases cheaper to trade than with a SB market maker, and the movement of the instrument is not altered to restrict scalping. Trading Forex a lot of cheap ECN options is available. I do not trade DMA at the moment as I have got good SB and CFDs options for my instruments. Still I would have liked for some instrument to trade the DMA but the entry level is too high for me. I sometimes like to trade EUR/USD and trade with xCFD.com which is a market maker, better spread than that you cannot get, how they manage to give it I don't know as, it follows the interbank best spread.
 
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mike.

Senior member
2,099 706
I have been debating the exact same thing s.b.s. swapping to ether a ndd or dma broker, the fact is though, like you , I am getting small fixed spreads with my sb broker, I get instant fills and executions even when trading the news, I have had no slippage whatsoever, so why bother changing brokers. Lately I have been using a scalping strategy , which I thought would really p them off, but no, not had a problem. Maybe sb brokers have changed there ways on the understanding that most people lose without any help from them .
 

timsk

Legendary member
7,136 1,911
Someone (I forget who) on another thread posted a link recently to 'No Brainer Trades' which has some good content, IMO. This article caught my eye and might be of interest to subscribers to this thread: The Essentials of Retail Forex Broker Models | How They Work and Finding the Good Guys

For the record, I'm posting the link as an ordinary member and not with my T2W hat on. There's no affiliation of any kind between NBT and T2W (that I'm aware of)!
Tim.
 
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