trade the E-micro EUR/USD M6E ?

[Jack_Larkin]

Quote from Wallace:

I wasn't looking to daytrade the M6E, strictly DtDs trades so I wouldn't be too concerned
about the fill price. Oanda's the largest fx broker and yes the volume of trades they
process is higher especially in the quiet times, however I thought I could more easily
open a second account with AMP for what I wanted to do rather than go to all the
trouble of funding an Oanda account

wanted to add AMP's minimum account size is $500 for the free NinjaTrader with the
CQG feed; see also margins, contract specs etc: http://www.ampfutures.com/

attached are the 6E and M6E 1min charts side by side and you can see the much lower
volume of the M6E, and, a much lower quantity of price bars later in the session -
140 v 116 , and similar price formation but not exact price matching

The worse slippage and fills are going to add up over time, even with a long term time horizon. Why make it harder on yourself?

Oanda is a great choice.. don't think it's too much trouble to deal with a 2nd broker, as you should always be using the best tool for the job, especially when the difference can impact your bottom line.

Oanda does have one disadvantage; they widen spreads a lot during non-liquid market hours and during news. It makes news trading nearly impossible with them. (I love them to bits otherwise..great broker.)

So, you're not a US citizen, I'd also suggest Pepperstone's razor account:
https://pepperstone.com/trading-accounts/accounts-types.php
Since their total cost is slightly cheaper than Oanda plus they keep interbank spreads during news (no artificial widening like Oanda.)

If you are a US citizen, your alternatives are a little more limited. MB Trading's EXN account isn't bad, but I'd almost suggest you stick with Oanda in the US.

 

[Wallace]

Oanda:
noted for disconnecting the feed especially during the NFP release

do Not have a Trading Desk ???
sometimes refuse to close a trade !!!
which requires going thru the process of the security question being answered correctly
- remember yours ? - then the rep loading FXTrade entering your account # and closing
your trade
oh yes, and how long did you have to wait when you phoned to hear a live voice ?

what I - in theory - lose in M6E fills, I gain in lower margin and fixed commissions
@ 1.20 - Oanda's minimum, it's $1.50 http://fxtrade.oanda.com/why/spreads/recent
there's no slippage with a Limit Order, entry or exit

NinjaTrader:
the Chart Trader is the pop out/in Basic Entry order entry utility
personally I prefer having one that floats. among other problems with NT is the overly
large menus including the CT/BE. I have 2 NT charts loaded plus MT4 and one BE so on
one 17" crt screen it all takes up a lot of realestate, tho it's usually only the NT charts
I'm looking at when I've got a trade on, and the BE
the BE can be placed anywhere on the screen I want it whereas the paid CT version
it's on the right end of the chart and imo, inconvenient, although a user can still load
a Menu/File/New/Basic Entry instead of using the CT

 

[ddouglas]

If you already have a futures account, the M6E is clearly the better option than opening a forex account just to downsize your leverage.

Not to mention that forex brokers have a well-deserved reputation for corruption, data-feed manipulation, bid-rigging, stop-running, & many, many more nefarious practices.

If you think these practices are limited to a few off-brand, fly-by-night brokers, just search Google for CFTC's 2011 forex dealer lawsuits and reprimands. Virtually every major forex broker admitted to wrongdoing, several paid huge fines for corruption, and much litigation is still pending.

Why bother with it? Just trade Micro-futures, and be done with it. At least you'll be on a regulated exchange, where your orders are actually filled in a real market - not just bucket-shopped in a private transaction by someone whose business model is to screw you.

If you'd rather save that $1.50/RT to trade in a bucket-shop, go ahead. If you want to trade in the real market on a real exchange, then trade futures . .

 

[Jack_Larkin]

Quote from Wallace:

Oanda:
noted for disconnecting the feed especially during the NFP release

do Not have a Trading Desk ???
sometimes refuse to close a trade !!!
which requires going thru the process of the security question being answered correctly
- remember yours ? - then the rep loading FXTrade entering your account # and closing
your trade
oh yes, and how long did you have to wait when you phoned to hear a live voice ?

what I - in theory - lose in M6E fills, I gain in lower margin and fixed commissions
@ 1.20 - Oanda's minimum, it's $1.50 http://fxtrade.oanda.com/why/spreads/recent
there's no slippage with a Limit Order, entry or exit

Err... ok, let's back up a bit.

I personally haven't experienced the issues you just described, nor has many other traders I personally know who use Oanda. I've seen a few people say such things, but more often than not they are just trying to spread fear about the broker. But I don't care to argue about this point, as it's all pointless to banter about... besides, if it was actually an issue that affected people consistently, they wouldn't be in business nor would they be one of the largest FX brokers in the world.




As for the commissions... this is where I think you're missing something.



In futures, commissions are charged on both legs of the trade, while Oanda doesn't do commissions at all and instead just quotes you a spread.

Lets assume the total spread on the micro futures is 1 tick (which we both know is not the case all the time, and often goes to 2 ticks even during liquid times of the day.) You're then paying your futures commission upon entering and exiting the market.

Now think about that.. your commission rate x2 plus the spread is your total cost. One contract's total cost at the best of times = ($1.50 x 2) + $1.25 in spread.... $4.25 for 10k euro exposure.

With Oanda, it's just the spread, they average 1.2 pips to 1.4 pips during liquid times, putting them at $1.3 for 10k euro exposure.

Always look at the total cost of trading... the difference here is huge, and that comes directly out of your pocket.

Margin being 50:1 with Oanda, that makes the amount required to hold a 10k euro/usd position ~$250 USD (it varies slightly on the exchange rate given the position is counted in Euro.)

You're not saving anything in commissions by going with AMP.

You're not getting better leverage by going with AMP.

M6E still has the issue with liquidity which will cost you more over time.

 

[Jack_Larkin]

Quote from ddouglas:

If you already have a futures account, the M6E is clearly the better option than opening a forex account just to downsize your leverage.

Not to mention that forex brokers have a well-deserved reputation for corruption, data-feed manipulation, bid-rigging, stop-running, & many, many more nefarious practices.

If you think these practices are limited to a few off-brand, fly-by-night brokers, just search Google for CFTC's 2011 forex dealer lawsuits and reprimands. Virtually every major forex broker admitted to wrongdoing, several paid huge fines for corruption, and much litigation is still pending.

Great point, do consider the CFTC and NFA's action against brokers:

http://www.nfa.futures.org/basicnet/


Oh wait, notice something?

Oanda doesn't have a single action against them by the CFTC or NFA...

Go ahead, search them...

There are always bad apple brokers, same as in Futures and Equities... heck, there are a bunch of rotten prop firms as well.. but don't put down good brokers because of this. You're needlessly spreading fear.


PS. when you do this for a living, paying nearly less than 1/3rd of the cost to trade each time, over many trades a month, adds up and makes a great point as to why going with an inefficient market center isn't "clearly" the way to go.

 

[jo0477]

Quote from Jack_Larkin:



As for the commissions... this is where I think you're missing something.



In futures, commissions are charged on both legs of the trade, while Oanda doesn't do commissions at all and instead just quotes you a spread.

Lets assume the total spread on the micro futures is 1 tick (which we both know is not the case all the time, and often goes to 2 ticks even during liquid times of the day.) You're then paying your futures commission upon entering and exiting the market.

Now think about that.. your commission rate x2 plus the spread is your total cost. One contract's total cost at the best of times = ($1.50 x 2) + $1.25 in spread.... $4.25 for 10k euro exposure.

With Oanda, it's just the spread, they average 1.2 pips to 1.4 pips during liquid times, putting them at $1.3 for 10k euro exposure.

Always look at the total cost of trading... the difference here is huge, and that comes directly out of your pocket.

Margin being 50:1 with Oanda, that makes the amount required to hold a 10k euro/usd position ~$250 USD (it varies slightly on the exchange rate given the position is counted in Euro.)

You're not saving anything in commissions by going with AMP.

You're not getting better leverage by going with AMP.

M6E still has the issue with liquidity which will cost you more over time.

You are incorrect regarding commissions. $1.99 is the base rate/contract, RT - flat, all fees in. It is not charged x 2 as per your example. I believe this rate is fairly std for most brokers offering Micros.

 

[Jack_Larkin]

Quote from jo0477:

You are incorrect regarding commissions. $1.99 is the base rate/contract, RT - flat, all fees in. It is not charged x 2 as per your example. I believe this rate is fairly std for most brokers offering Micros.

Thank you. I don't trade micros myself so I was going by what seemed correct given my experience with eminis.

I tried looking it up on AMP's website before posting to double check but couldn't find a listed fee schedule (they just have a forum to request a fee quote when you click on commissions.)




That changes the equation a bit:

$1.25 (1 tick spread) + $1.20 (Wallace's claimed rate) = $2.45 total cost with M6E (or $3.24 total cost with the base rate.)

vs

1.3 average pip spread with Oanda = $1.3 total cost

(This is, of course, assuming we trade during liquid times... off hours can see ~1.8-2 pip spread with Oanda and 2-3 tick spreads with M6E. )


So instead of being 1/3rd the price, it's more like 1/2 the price. You're still saving quite a bit here over futures...

 

[ddouglas]

Quote from Jack_Larkin:You're needlessly spreading fear.

Have a look at this 2011 year-in-review. Keep in mind that it was entirely written by forex industry people from a pro-forex perspective:

http://forexmagnates.com/2011-forex-industry-summary-free-report/

Everything in that review is independently verifiable: the class-action racketeering & corruption lawsuits & all.

Notice the names. None are "bad apples," but most are major, well-recognized industry leaders.

I've nothing bad to say about OANDA - as I know nothing about them. But the forex industry is corrupt, and that fact has never been in question. Not even by the industry itself.

If you believe that OANDA is a reasonably safe place to entrust your trading operations, then go for it. Just recognize that it would be an exception to the rule.

As a general principle, a person wishing to trade at these sizes would be much better served to trade Micro-currency futures. Yes, it would probably cost approximatlely $1 more per-round-trip, but there are many other benefits. Plus, as you get larger, futures are definitely cheaper than forex when trading full-size.


As far as the liquidity goes, the M6E-E7-6E complex is one of the most liquid in the world. Key is: when you move beyond a handful of contracts, move up to the next size. If you want to buy 125,000 Euros without slippage, the 6E is the appropriate size, not the M6E. The M6E is there to allow you to control your position-size according to your needs, purposes, & risk-management plan. You shouldn't experience slippage in any of these contracts if you are trading the appropriate size & using limit orders.

 

[ddouglas]

Also, I've never seen a 1.3pip spread. I would NOT say that that's the industry standard - even for larger sizes. I opened a couple of small forex accounts a couple years ago - just to look into the whole situation, & 3-4pips would be a more typical average once you get past the ad-promises, & get to a live-platform feed. Granted, it's been a couple of years, but I doubt the industry has changed that much.

Besides, does a small spread matter if your broker can just re-quote you after the deal is done?

 

[Pippi436]

I have actually read the court filing on this racketeering bs case. It has zero substance.

Losing clients sue all the time. Futures brokers too, not only FX firms, you know. This is not specific to FX. Plenty of regulatory action against fcms too.