Bucketshops Vs Real Trading
- Thread starter andrey_tech
- Start date
Good to see FXCM didn't make the list. They are my broker, plus I also have a frozen account with RefcoFX.
Try one of the ECN-Forex-models:
1) IB
2) Hotspot
3) CoesFX
4) MBtrading
5) Lava
6) Currenex.
{If you need more info about the differences between the two models, and/or want to know when it might be better to select FX-Futures instead of FX-cash, then download and read the document: ForexTrading_V01.zip at:
http://www.buttontrader.com/content.asp?lang=en&page=8}
But these models only support 1 lot (100 K contract) as minimum. Right ? If so, this explains why small traders choice bucketshops for their trading activities. Because bucketshops so attractive about mini-lots 0.1 lot (10 K contract size every pip means $1) even offer micro-mini lots 0.01 lot (1 K contract size every pip means $0.1). It is unpractical and sometimes impossible for ECN models. Even 1 lot (100 K contract size equal to $10 per pip) is small for this models. Am I right ?
Not completely correct (although I agree that this is why bucketshops are popular)...For instance the IB minimum size is 25K Dollar or 20K Euro (and then 1 unit increases from these levels)...
A $25K trade is equal to a Margin-need of about $500 Dollar...so quite possible to trade with a small account-size....
{I would not advise real-trading when you don't have at least "some breath" of $5,000...then it's better to paper-trade as long as possible and in the meantime save up}.
It is really great if IB allows minimum contract size as (25K) equal to $2.5 per pip on EUR/USD for example. If so, bucketshops are real in trouble now. Of course counterparty is also important for ECN models. If ECN model brokers also become a counterparty, I think same danger is intact for traders. If we hate bucketshops in the fx industry, why we choice another one with different name (like ECN model) ? The point is, brokers and market makers must be separated in transactions (I know in ECN model IB shouts they are seperated from MMs. But what if MM is a sister company of ECN model broker). Our brokers must be win while we are winning. Otherwise bucketshops or new ECN model are the same mostly about the reason of OTC market conditions. But I do not exactly know how IB's fairness. If they really reject counterparty of the trades, and if they really supply enough liquidity on the small sizes and volatile market conditions, they must become a number 1 on forex industry. Because their commission structure is aggressive and their reputution is excellent. I heard on some bad things about "Market makers choose not to fill orders as with IB" on http://www.elitetrader.com/vb/showthread.php?s=&threadid=61974&perpage=6&pagenumber=9 02-18-06 10:56 PM.
Another important point is, order cancellation penalties is foolish on IB. They are charging huge fees on order cancellation on stocks and options. If it is same on fx orders, it is not so good.
Anyway, I think forex will become better place as long as traders more knowledgable about forex transactions and components and most importantly OTC conditions.
Another important point is, order cancellation penalties is foolish on IB. They are charging huge fees on order cancellation on stocks and options. If it is same on fx orders, it is not so good.
Anyway, I think forex will become better place as long as traders more knowledgable about forex transactions and components and most importantly OTC conditions.
Well, then you have not yet downloaded and read the document I pointed a few post back >> Please read chapter 2 and 3 and you know how fair IB is. (and maybe you learn something more).
????
Please be critical with "hearsay"....
Understand that any routing-system is a "transport in time and place"...meaning that the very moment that you push an Order-transmit button on your PC, the order travels in time and place to the counterparty to be executed...if it is a Market-Order, you will ALWAYS have a fill (no MM will reject),...but when you send a Limit-Order..then DURING the transmission, prices and markets CHANGE in such a way that the moment the Limit-Order arrives (can be 100ms, or longer) your previously send marketable-limit-order, is not marketable anymore...it will not be rejected !!..it will simply not execute until the market changes back again....THAT is the reality for ANY electronic-trading platform...so also with the IB-Forex-ECN.
???? again ???
Where do you have this information from?
There are no penalties for IB-Forex, and also not for stocks and options. Please keep to the facts.
There are some exchanges which have modification-fees (like EUREX for Futures), but if you trade in a normal way you will have NO penalty what so ever, because you get reductions for every execution (which are higher than a cancel or modification).
Hope it helps
Hoi