lol, good one Ivan, well spotted!
I guess there's no point in replying to his post really, he's been caught in the act!
I guess there's no point in replying to his post really, he's been caught in the act!
mgforex new trading platform?
- Thread starter Aboushi
- Start date
The spreads seem really high. To me, execution is also important but you don't know this until your live.
If you want to go waste your money, then be my guest...
Cable was trying to help, and he knows his shit. Period.
The features listed are pretty much standard in all platforms these days.
EDIT:
Bwaaahahaha
I just saw Ivan's post. Good eye man.
LMFAO. Perfect!
Good idea to leave it up BTW.
Regarding the spreads - I understand cabletrader that you think these are high, but if you look at some of the new rules proposed by the NFA, especially limiting FDMs from making any post-trade-trade-adjustments, it leads me to beleive we may be at the beginning of an upward trend in terms of retail spreads. Market makers for a long time have had 2 revenue streams: the spread and the opposite side of losing clients trades. In most cases from the people I have talked to, some of whom are former employees of some pretty well known FDMs trading deks, the second revenue stream (losing trades) is much greater than what they make from the spread. So my somewhat longwinded point here is that we may be at an all time low of retail spreads. IF the major players, FXCM, GAIN, FXSolutions, etc. need to start relying only on the spread to make money, they are going to have to start increasing that spread, and maybe MG is just leading the way (it would be the first time MG leads anything)
We can break down the math even further. In the real market, bank to bank, we all know the spread varies, buts lets say on avg. its 0.5 pip on the Euro/Usd. FDMs will often need to pay that (if the trade is not bucketed) plus lets say a 1 pip rebate to the worthless IB thats bringing in the business. That makes it mighty hard in my opinion for that FDM to then turn around and offer a 1.5 - 2 pip spread on the EURO to small retail account holders. Add on the proliferation of expensive banner ads and web browser advertisments these guys run month after month - and the whole thing just stops adding up.
So i guess I'm curious to know if anyone agrees that we might start to see spreads rise, and dare i even say, the quality of execution as well as FDMs are forced to change their way of doing business all together.
We can break down the math even further. In the real market, bank to bank, we all know the spread varies, buts lets say on avg. its 0.5 pip on the Euro/Usd. FDMs will often need to pay that (if the trade is not bucketed) plus lets say a 1 pip rebate to the worthless IB thats bringing in the business. That makes it mighty hard in my opinion for that FDM to then turn around and offer a 1.5 - 2 pip spread on the EURO to small retail account holders. Add on the proliferation of expensive banner ads and web browser advertisments these guys run month after month - and the whole thing just stops adding up.
So i guess I'm curious to know if anyone agrees that we might start to see spreads rise, and dare i even say, the quality of execution as well as FDMs are forced to change their way of doing business all together.
Interesting post and opinion, but will the proposed NFA regulations (as far as I know they're undecided and ambiguous) really make any difference? As far as I know they're not proposing MM's are forced to hedge or be prevented from being counterparty to their customer's trades so client's losses will still remain their main source of revenue.
As you know the vast majority of bucketshop trades are kept in-house and it's only nett exposure which is hedged in the market, so do spreads in the interbank market really matter in this virtual retail world? As it is quotes are only loosely based on the underlying market, they're shaded, and take into account the MM's book. If they were hedging each individual trade then it would be a different story, not only would spreads widen but they would also have to introduce a minimum trade size. I can't see that happening, why would it?
Then bear in mind that a reported ~90% lose money and 5% break even, the revenue for these shops must be phenominal.
Personally I can't see spreads widening significantly because marketmaking is a competitive business and most punter's primary concern is spread, they flock to the cheapest regardless of other factors.
That's me, the ever helpful cableguy
(I'm stealing viper's moniker!)
I'd agree that very few retail trades are actually heged out. I guess the point I was trying to make was that if the NFA cracks down on the FDMs ability to tamper with trades - manipulating prices, forced slippage, hunting stops, etc. - then the FDMs are going to have to hedge out more trades because it will become more risky to take on so much of the action.
I think you'd agree that an important reason that 90% lose is that the broker is manipulating the pricing. There will always be more losers than winners as long as the leverage available is so high, the account minimums so low that undercapitalization become s a risk, and the quality of available education so poor, but if the NFA is able to push through some of these rule changes - i think there will be a drastic decrease from 90%.
Check out this link to see some of the rules changes that are already in the works: http://www.nfa.futures.org/member/newsLetter2.asp#Summit
If it becomes more difficult to blindly take the opposite side of trades because the FDMs hands become a bit tied in terms of "robbing" their clients- I have to imagine that FDMs will have no choice other than raising spreads if they want to maintin their earnings.
An analogy I sometimes think about... If a casino was able to choose which number the ball lands on in roulette, they could offer a 360:1 payout instead of 36:1 and attract all the players to their casino, because they know they will never lose. But since the gaming commission ensures that the ball lands on a random number they have to payout odds that more or less allign with the fair odds of the game. Similarly, an FCM can offer a .5 spread because they know they'll always win the trading game and thus they attract all the customers - if they werent so confident they always win, they'll have to come up with a new way to attarct the gamblers, i mean traders, maybe by offering superior platforms, customer service, accounting procodures, execution, you name it....
I think you'd agree that an important reason that 90% lose is that the broker is manipulating the pricing. There will always be more losers than winners as long as the leverage available is so high, the account minimums so low that undercapitalization become s a risk, and the quality of available education so poor, but if the NFA is able to push through some of these rule changes - i think there will be a drastic decrease from 90%.
Check out this link to see some of the rules changes that are already in the works: http://www.nfa.futures.org/member/newsLetter2.asp#Summit
If it becomes more difficult to blindly take the opposite side of trades because the FDMs hands become a bit tied in terms of "robbing" their clients- I have to imagine that FDMs will have no choice other than raising spreads if they want to maintin their earnings.
An analogy I sometimes think about... If a casino was able to choose which number the ball lands on in roulette, they could offer a 360:1 payout instead of 36:1 and attract all the players to their casino, because they know they will never lose. But since the gaming commission ensures that the ball lands on a random number they have to payout odds that more or less allign with the fair odds of the game. Similarly, an FCM can offer a .5 spread because they know they'll always win the trading game and thus they attract all the customers - if they werent so confident they always win, they'll have to come up with a new way to attarct the gamblers, i mean traders, maybe by offering superior platforms, customer service, accounting procodures, execution, you name it....
I can't argue with any of that....if the NFA ever decide to write some unambiguous rules and enforce them!
I doubt the NFA will ever (or could ever) force FDM's to completely change their business model though (because that's what it would amount to), and do they have a mandate which allows them to dictate how businesses control risk? Brokers would argue that they're not manipulating quotes in order to have an unfair advantage, they're simply making a market based on quotes provided by their liquidity providers, matching trades, and that it would be impractical for them to hedge each individual trade or mirror their liquidity providers quotes. In order to achieve that goal they have to have the freedom and flexibility to quote according to their book and their exposure. It sounds like a reasonable argument to me.
Are brokers really the problem though? Depite all their tricks and games it's still possible to make a healthy profit if the trader knows what he's doing. That's the problem I think, 90% simply don't have a clue, the outcome is inevitable for these people. They're entering the lions den without even a chair and a whip, what do they deserve/expect but to get eaten alive!