I've spent months posting reams of explanations addressing this question. Suggest you use the ET search function to look at my past posts, and the posts of others participating in the same discussion threads.
Retail Forex: A dirty little secret?
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I've spent months posting reams of explanations addressing this question. Suggest you use the ET search function to look at my past posts, and the posts of others participating in the same discussion threads.
Yes you can read the posts of jimrockford ("fighter" against bucketshop-fraud).
Also this post of Steve-IB gives a good explanation:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=60032&perpage=6&pagenumber=4
1. Steve works for Interactive Brokers, which is the only broker offering this particular type of ecn model.
2. Hoi is the owner of buttontrader, a third party add-on for Interactivebrokers.
....there is the possibilty that their comments may be biased towards this product. (Roberk - client of IB and subscriber to Buttontrader. And client of Oanda, FXCM and GCI).
As I understand it Jim has never traded forex, even with Interactivebrokers. Whether this is relevant is up to readers to evaluate.
The IB ECN seems to offer a fair market and quite good liquidity.
However, for anyone wanting to run a position over night it looks like the interest rate treatment is not very attractive.
Big spreads on interest credited/debited and different tiers of interest rates. There is no example calculations on the website for FX but it looked like this would add up to a significant extra cost for position traders / trend followers.
Maybe SteveIB would like to comment?
However, for anyone wanting to run a position over night it looks like the interest rate treatment is not very attractive.
Big spreads on interest credited/debited and different tiers of interest rates. There is no example calculations on the website for FX but it looked like this would add up to a significant extra cost for position traders / trend followers.
Maybe SteveIB would like to comment?
The ECN just provides a trading mechanism where you can add or remove liquidity.
The quality of the ECN for trading depends on the number and quality of the liquidity providers that are using it. If there is only one market maker on an ECN then it is only a little better than trading directly with that market maker.
