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What is the Best FX Broker?
- Thread starter catie
- Start date
Quote from MountainTrader:
I'm sorry that I said that incorrectly. Here is a better way to explain it. Correct me if I'm wrong. In the 100:1 account with a hypothetical 10,000 capital at 5% risk with a 25 PIP stop loss you would be able to trade 20 lots. With 20 lots X $1.00 per pip X 25 PIPS your risk would be $500 or 5% of your capital. With a 1:2 risk to reward if you win 50 PIPs your profit would be $1000 or 10% of your account on one trade. That's not bad for one day.
In the 200:1 account the risk would be the same. 25 PIPS X $1.00 per PIP X 20 lots still = $500. The only difference is your deposit in the trade is half as much. I think this is where some of the income calculators that I have seen are flawed. The 50 PIPS profit would also be the same. I need to think about this again when my brain is more oxygenated. Maybe I have been in the habit of equating risk with the amount of the deposit which is incorrect.
That's exactly right. Spot on. One minor thing -- what you call a "lot" is usually called a "mini-lot", or 10,000 units.
For those, presumably very few, already proven profitable traders who work with multiple, positive expectancy, weakly correlated pairs, strategies or time frames, 200:1 account could be argued to offer potentially greater portfolio growth over time vs. 100:1 account. If you are reading this and are in that category, kudos to you. (I employ 3 such separate methods and find 100:1 more than adequate.)
For everyone else (again, outside the realm of scalping), it's hard to see how any extra account-level leverage, beyond 100:1, would be useful. Either in terms of absolute return or risk-adjusted return. If anyone has an illustration to the contrary, that would be great.
Oddtrader,
This is why ;
first PM ;
Nick,
We can allow more than $5m per order. However, we need to see who the client is, how they are trading, what they are trading, etc. Then we can make sure the client knows what they are doing, and understands how the market works.
Unfortunately, the FX market seems to attract the least ethical traders and often the least knowledgeable traders.
We've had some amazing attempts by clients trying to exploit "free money" opportunities without realising what they are actually doing. Even things as basic as buying the spot, and selling the futures, thinking they're making the difference in price... then programming an auto-trading API to do it...
Steve "
second PM ;
Steve_IB
Interactive Brokers
Registered: Feb 2003
Posts: 601
response
What do you care , how or what they are trading ?
What is supposed to be non-ethical ?!
And why you answer a public question in a private way ?
Nick,
It has to do with know your client rules, etc, etc
I didn't want to post it on the public forum because it would illicit the type of questions that you have asked and more than likely cause the thread to degenerate in a non-constructive way.
However, I responded to your question via private mail because I wanted to give you the courtesy of ensuring that you received an answer to your question.
I will also extend you the courtesy of not publishing any of your private messages on the public forums.
regards
Steve
__________________
Best Regards
Steve Kelsey, CFA, CMT
Interactive Brokers Group
Steve,
Since when does IB care how a client,what a client is trading ?
What do you care about clients to exploit "free money" oppor-
tunities.
Why in heaven do you care about all this IF and only IF you are just the
broker collecting the commissions ???????????!!!!!!!!!!!!!!!!
How can one be trading "unethical" ???????!!!!!!!!!!!
Please give an example !
As far as I know, a maximum trade size only exists in your
forex products .
The rumour goes that you have a dealing desk and the above
observations just confirms this or the banks you work with
asked you to put this limits in place.............
Why limit the trade size to 5 million when forex is the biggest
market in the world and there is always between 5 and 30 million at the best bid/ask with IB ?!
Acoording to Forexcranium even Oanda seems to have problem with big size profitable traders, you too ?
This is why ;
first PM ;
Nick,
We can allow more than $5m per order. However, we need to see who the client is, how they are trading, what they are trading, etc. Then we can make sure the client knows what they are doing, and understands how the market works.
Unfortunately, the FX market seems to attract the least ethical traders and often the least knowledgeable traders.
We've had some amazing attempts by clients trying to exploit "free money" opportunities without realising what they are actually doing. Even things as basic as buying the spot, and selling the futures, thinking they're making the difference in price... then programming an auto-trading API to do it...
Steve "
second PM ;
Steve_IB
Interactive Brokers
Registered: Feb 2003
Posts: 601
response
What do you care , how or what they are trading ?
What is supposed to be non-ethical ?!
And why you answer a public question in a private way ?
Nick,
It has to do with know your client rules, etc, etc
I didn't want to post it on the public forum because it would illicit the type of questions that you have asked and more than likely cause the thread to degenerate in a non-constructive way.
However, I responded to your question via private mail because I wanted to give you the courtesy of ensuring that you received an answer to your question.
I will also extend you the courtesy of not publishing any of your private messages on the public forums.
regards
Steve
__________________
Best Regards
Steve Kelsey, CFA, CMT
Interactive Brokers Group
Steve,
Since when does IB care how a client,what a client is trading ?
What do you care about clients to exploit "free money" oppor-
tunities.
Why in heaven do you care about all this IF and only IF you are just the
broker collecting the commissions ???????????!!!!!!!!!!!!!!!!
How can one be trading "unethical" ???????!!!!!!!!!!!
Please give an example !
As far as I know, a maximum trade size only exists in your
forex products .
The rumour goes that you have a dealing desk and the above
observations just confirms this or the banks you work with
asked you to put this limits in place.............
Why limit the trade size to 5 million when forex is the biggest
market in the world and there is always between 5 and 30 million at the best bid/ask with IB ?!
Acoording to Forexcranium even Oanda seems to have problem with big size profitable traders, you too ?
Read what Forexcranium has to say about Oanda on this thread
and
http://www.elitetrader.com/vb/showthread.php?s=&threadid=62377&perpage=6&pagenumber=3
and
http://www.elitetrader.com/vb/showthread.php?s=&threadid=62377&perpage=6&pagenumber=3
why is exploiting free money opportunities considered unethical in forex? if i see that i can buy AAPL on NYSE for 93. and sell on BRUT for 93.5. if i make those trades? is it considered unethical because its 'free money'? someone is going to have to eat that liquidity before it corrects, or those offers would have to get pulled, which means those traders didn't get the prices they were asking for.
im confused about the term 'ethics' when it comes to two people who agreed to trade something and some price.
im confused about the term 'ethics' when it comes to two people who agreed to trade something and some price.
We are still waiting for Steve from IB to explain what is "unethical"
Quote from NickBarings:
Since when does IB care how a client,what a client is trading ?
What do you care about clients to exploit "free money" oppor-
tunities.
Why in heaven do you care about all this IF and only IF you are just the
broker collecting the commissions ???????????!!!!!!!!!!!!!!!!
How can one be trading "unethical" ???????!!!!!!!!!!!
Please give an example !
As far as I know, a maximum trade size only exists in your
forex products .
The rumour goes that you have a dealing desk and the above
observations just confirms this or the banks you work with
asked you to put this limits in place.............
Why limit the trade size to 5 million when forex is the biggest
market in the world and there is always between 5 and 30 million at the best bid/ask with IB ?!
Acoording to Forexcranium even Oanda seems to have problem with big size profitable traders, you too ?
Nick,
What you must understand is that in Forex, there is no centralized clearing. While IB does act in the capacity of an ECN, they can be held liable for "negligent matching." Meaning, they guarantee that client being matched has sufficent funds to transact with the liquidity provider (bank) accepting the order. In the event that the client doesn't due to the market going against him, IB will have to liquidate at the market. A case could occur that while doing that, the market continues to move against the position(s) creating a situation of negative equity in the client's account thereby exposing IB to financial liability.
That's why IB needs to know or at least have an idea about how the client trades. They are protecting themselves against liability to the liquidity provider that the trade(s) are to be settled with.
It's not the same as a market maker. A market maker can prevent an account from going into negative equity. As is the claim of most bucket shops.
When most of the FX brokers sat down to write their business plan they didn't include profitable traders as part of it... That's why it's "unethical". You guys are hurting their bottom line. Why don't you just do like the rest of the traders out there and lose more.
Edit: Of course I'm not talking about the true ECN's out there.
Edit: Of course I'm not talking about the true ECN's out there.
That's what we have margin requirements for
Correct Mccormac , just replace "unethical" with "profitable"
Correct Mccormac , just replace "unethical" with "profitable"