I am done with Futures... going back to Forex

[bone]

Be careful especially when you use CQG feed. Charts can look different broker by broker or data feeder by feeder. More details: https://www.elitetrader.com/et/threads/cqg-vs-thinkorswim-data-feed-accuracy.319914/
In this week, I was trading with CQG feeded Tradingview chart (via AMP Futures). As far as I remember correctly, previous lower low in 4H EURUSD chart was nearly breached in CQG chart while others don't. It can lead to a serious result when you put stop loss. Also, because some indicators/tools are available only in certain platforms, I have to manage several platforms (for example, volume profile in TDA's TOS is crap, VWAP in IB's TWS is crap, manually drawing Harmonic patterns is easier in Tradingview...etc.) As a result, I found myself opening multiple charts from multiple brokers/data feeders/platforms to trade Futures. I just want to focus on trading itself!

The three platforms I can personally vouch for are: CTS T4, CQG Integrated Client, and Trading Technologies with a very important caveat: you have your trading account with a major direct clearing FCM like RJ O'Brien, Advantage, Rosenthal-Collins... (a few others also) and you set up your trading platform using the FCM's support desk. The FCM support desk will set up your platform gateway and fix adapter quite nicely with their own proprietary settings - and that is critical. Also, if you're running a strategy like AutoSpreader, Synthetics, or Algo the FCM support desk will be most valuable. Those IT guys do it for Hedge Funds, Proprietary Trading Groups, Banks, and all types on independent traders. The big Chicago FCM's pay their key IT support people very, very well. They can make or break a big FCM.

About nine years ago, I had a few very sophisticated clients who were clearing NewEdge and they were running a fairly complex multi-legged inter market spread strategy (multiple exchanges, cash and futures) using CQG IC and they had some problems. Those issues eventually got resolved. The current CQG Spreader Core can leg synthetic spread orders in about a millisecond and it's quite good.

 

[REDP1800]

I'm not going to comment publicly about discount brokers with IB exchange status but you can very well guess. And yes, before they come to me on occasion clients shopped around for commission rates and used discount Introducing Brokers. We dispense with that quickly. Is it worth it to save $150 per month when your platform freezes up while trading Eurex at 4:00 am ? Is it worth it to enter an order to hit a bid or lift an offer and miss them ? Is it worth it to try to cancel all your working orders one minute before Civilian Unemployment and you get a delay on confirmation ? All good questions.

But same here - I've never personally used one for my own trading as well. I stick with the big FCM's. But to answer your question - from what my clients told me your order entry has to go through the Introducing Broker first before it gets routed to the FCM then the exchange. So, let's say that you have an office in Toronto and you have your futures account with Acme Discount Introducing Broker in Minneapolis, Minnesota who clears RJ O'Brien - your order gets routed first to Minneapolis, then to RJ O'Brien in Chicago and finally to the CME. RJ O'Brien isn't bad at all because they're going to have co-located servers and a very good ECN infrastructure and support network. The IB's network latency and reliability can be an issue from my experience working with clients.

But Sig, here's the kicker. That order you are sending from Toronto to Minneapolis it is checked by the IB for:

• The account on the order is active
• The account is authorized to trade the product
• The broker or trader is authorized to use the account
• The order is within the order size and price deviation limits placed on the user by the clearing firm or trading firm.

Then, when it gets routed to RJ O'Brien in Chicago - guess what; those same checks I listed above get done all over again by the FCM that the IB is using from what I understand. So not only do you have this additional ECN geographical routing, but you've got duplicated order checks. When the order does get routed to the exchange from the FCM, the CME will in turn check for SPAN margin and published product-specific position limits but that happens very quickly.

Very good answers indeed, but what is the FCM charging you in margin and commission?
I now it is a sliding scale
as far as routing- yes there are too many checks n balances for retail
MOST IMPORTANTLY you left out- counter party crossing your trades and seriouls execution conflicts of interest. It is actually possible for an FCM to use another fcm with a prop desk to take the other side of your order and they know everything. so when your stops get hit.. they really do know where you put them ,.

 

[CrytpoTrading]

I have never traded futures, happy with forex and crypto

 

[Sig]

I'm not going to comment publicly about discount brokers with IB exchange status but you can very well guess. And yes, before they come to me on occasion clients shopped around for commission rates and used discount Introducing Brokers. We dispense with that quickly. Is it worth it to save $150 per month when your platform freezes up while trading Eurex at 4:00 am ? Is it worth it to enter an order to hit a bid or lift an offer and miss them ? Is it worth it to try to cancel all your working orders one minute before Civilian Unemployment and you get a delay on confirmation ? All good questions.

But same here - I've never personally used one for my own trading as well. I stick with the big FCM's. But to answer your question - from what my clients told me your order entry has to go through the Introducing Broker first before it gets routed to the FCM then the exchange. So, let's say that you have an office in Toronto and you have your futures account with Acme Discount Introducing Broker in Minneapolis, Minnesota who clears RJ O'Brien - your order gets routed first to Minneapolis, then to RJ O'Brien in Chicago and finally to the CME. RJ O'Brien isn't bad at all because they're going to have co-located servers and a very good ECN infrastructure and support network. The IB's network latency and reliability can be an issue from my experience working with clients.

But Sig, here's the kicker. That order you are sending from Toronto to Minneapolis it is checked by the IB for:

• The account on the order is active
• The account is authorized to trade the product
• The broker or trader is authorized to use the account
• The order is within the order size and price deviation limits placed on the user by the clearing firm or trading firm.

Then, when it gets routed to RJ O'Brien in Chicago - guess what; those same checks I listed above get done all over again by the FCM that the IB is using from what I understand. So not only do you have this additional ECN geographical routing, but you've got duplicated order checks. When the order does get routed to the exchange from the FCM, the CME will in turn check for SPAN margin and published product-specific position limits but that happens very quickly.

It makes sense that the IB would need to check that you're order is within their risk parameters since they're on the hook for it. I always assumed they integrated that functionality with the FCM's checks. If not it's definitely a business opportunity for an FCM that offers that functionality to their IBs!
One other advantage I can see is if you do deal with discount brokers like Interactive Brokers (just to confuse the term IB!). If you're retail with a couple million dollars you're crap to them and good luck getting an intelligent human to answer the phone let alone pay attention to your issue. If you're working through an IB then they are a several hundred million customer to Interactive Brokers and more likely to get results. However I know you'll say the solution to that is just avoid Interactive Brokers and I couldn't agree more on that!

 

[bone]

Very good answers indeed, but what is the FCM charging you in margin and commission?
I now it is a sliding scale
as far as routing- yes there are too many checks n balances for retail
MOST IMPORTANTLY you left out- counter party crossing your trades and seriouls execution conflicts of interest. It is actually possible for an FCM to use another fcm with a prop desk to take the other side of your order and they know everything. so when your stops get hit.. they really do know where you put them ,.

By design EVERY futures exchange order is one FCM order matched with another FCM’s order. Your statement about prop desks KNOWING where stop orders are located is a bald-faced lie btw. I’ve worked at prop desks for several years (including two FCM’s) and they are completely separate operations - physically located elsewhere and there is no exchange of order information. In fact, last time I checked only one Chicago FCM had a prop desk.

An FCM can only cross its own order flow IF it is the best customer price AND there is a delay in the order entry to allow other FCM orders to improve their price. That is a built in exchange order matching algorithm - it’s a literal firewall.

But what IS known is a very long history of unsavory practices in the Forex cash markets.

 

[bone]

It makes sense that the IB would need to check that you're order is within their risk parameters since they're on the hook for it. I always assumed they integrated that functionality with the FCM's checks. If not it's definitely a business opportunity for an FCM that offers that functionality to their IBs!
One other advantage I can see is if you do deal with discount brokers like Interactive Brokers (just to confuse the term IB!). If you're retail with a couple million dollars you're crap to them and good luck getting an intelligent human to answer the phone let alone pay attention to your issue. If you're working through an IB then they are a several hundred million customer to Interactive Brokers and more likely to get results. However I know you'll say the solution to that is just avoid Interactive Brokers and I couldn't agree more on that!

Honestly, SIG, I’ve had at least a hundred clients open direct clearing FCM accounts with quite nominal amounts of money. Introducing Brokers are around because they market and they advertise.

 

[schweiz]

Introducing Brokers are around because they market and they advertise.

They give at least all the needed information. Account size, commission, intrady margins...

On the websites from FCM's you find nothing. You need to give your email adress and a lot of other information and then they start to call you to see how far they should go to have you as client. No transparancy and no general public information (Account size, commission, intrady margins...). Gives me the impression that you cannot trust them.

On the websites from RJ O'Brien, Advantage, Rosenthal-Collins... I could not find account size, commissions, intradaymargins, prices for using platforms...

 

[REDP1800]

By design EVERY futures exchange order is one FCM order matched with another FCM’s order. Your statement about prop desks KNOWING where stop orders are located is a bald-faced lie btw. I’ve worked at prop desks for several years (including two FCM’s) and they are completely separate operations - physically located elsewhere and there is no exchange of order information. In fact, last time I checked only one Chicago FCM had a prop desk.

An FCM can only cross its own order flow IF it is the best customer price AND there is a delay in the order entry to allow other FCM orders to improve their price. That is a built in exchange order matching algorithm - it’s a literal firewall.

But what IS known is a very long history of unsavory practices in the Forex cash markets.

You are a pretty rude and it is hilarious when you are extremely vague.. you say.. there is only one fcm but you didn't name it and you say that you worked a prop desk (and u quit cuz u sucked at it) and you didn't name it either. One it was nto a bald faced lie and 2 it is in your FCM paperowrk if you actually read it. Wedbush among many other CLEARING FCM's work or take the opposite side of the orders of most discount brokers.. so yes they do know your orders and a lot more info and also in your paperwork you agree to off exchange matched trades as well if you really dig down deep.
CME disclosure paymet fo rorder flow = CME DISCLOSURE ON PAYMENT FOR ORDER FLOW When firms provide execution services to customers, either in conjunction with clearing services or in an execution only capacity, they may, in some circumstances, direct orders to unaffiliated market makers, other executing firms, individual floor brokers or floor brokerage groups for execution. When such unaffiliated parties are used, they may, where permitted, agree to price concessions, volume discounts or refunds, rebates or similar payments in return for receiving such business. Likewise, on occasion, in connection with exchanges that permit pre-execution discussions and “off-floor” transactions such as block trading, exchanges of physicals, swaps or options for futures or equivalent transactions, a counterparty solicited to trade opposite customers of an executing firm may make payments described above and/or pay a commission to the executing firm in connection with that transaction. This could be viewed as an apparent conflict of interest. In order to determine whether transactions executed for your account are subject to the above circumstances, please contact your executing firm account representative

 

[REDP1800]

YOu do a trade and it is matched.. so long as the opposite party ahs a good relationship with the celaring firm or if they clear for themselces then thjey have acccess to all teh information about that trade becasue they are teh counter party. The imessages attached to your order are tehn intantly cleared and analyzed by the opposing coutner party. So .. it is not ilegal because the trade that just happened is now historical even though it happened a half second ago.. You can experiment with stop and stop limtis at yuor fcm by using a demo accoutn versus a real account and at the same tiem palce the orders in teh same market and you will see that the mkt indeed moves down to get your stop..obviously it needs to be 4 to 6 levels out. but to say it is abald faced lie.. is laughable. because you think you are teh grand wizard huh.. omnipotent . that kind of attitude will make you go broke with the mkt.. if it hasn't happened already

 

[REDP1800]

You are a pretty rude and it is hilarious when you are extremely vague.. you say.. there is only one fcm but you didn't name it and you say that you worked a prop desk (and u quit cuz u sucked at it) and you didn't name it either. One it was nto a bald faced lie and 2 it is in your FCM paperowrk if you actually read it. Wedbush among many other CLEARING FCM's work or take the opposite side of the orders of most discount brokers.. so yes they do know your orders and a lot more info and also in your paperwork you agree to off exchange matched trades as well if you really dig down deep.
CME disclosure paymet fo rorder flow = CME DISCLOSURE ON PAYMENT FOR ORDER FLOW When firms provide execution services to customers, either in conjunction with clearing services or in an execution only capacity, they may, in some circumstances, direct orders to unaffiliated market makers, other executing firms, individual floor brokers or floor brokerage groups for execution. When such unaffiliated parties are used, they may, where permitted, agree to price concessions, volume discounts or refunds, rebates or similar payments in return for receiving such business. Likewise, on occasion, in connection with exchanges that permit pre-execution discussions and “off-floor” transactions such as block trading, exchanges of physicals, swaps or options for futures or equivalent transactions, a counterparty solicited to trade opposite customers of an executing firm may make payments described above and/or pay a commission to the executing firm in connection with that transaction. This could be viewed as an apparent conflict of interest. In order to determine whether transactions executed for your account are subject to the above circumstances, please contact your executing firm account representative

PRE EXECUTION DISCUSSION do you know what that means on the CLOB at the cme?