Which FX broker? An illustrated answer.

[Lon Eagle]

Inter bank means inter bank ie between banks so by definition a non bank can't join in. It is no big deal and people should not get worked up that the world is against them - think like that and you have no chance. As a non-bank you have access to all sorts of advantages that a bank would love to have (eg tight spreads in extremely volatile markets, not having to quote others etc)

As a local, trade with a decent "bucket" shop or via an ECN. I trade through both and it works for me. I could trade directly with a bank but prefer it this way. Currency futures are a waste of time except perhaps in euro dollar, certainly not cable.

Some of the firms mentioned on here though I would not go anywhere near.

As to the question of size then there is no real answer. When dealing for a bank I might have traded in as small as 100k to cover a position at the end of the day but again a smaller bank might trade in amounts of between 250k and 5m throughout the day whereas the largest shops wouldnt bother calling out for say less than 5m. Just as there are many different types and sizes of locals/retail traders so there are many different types of bank.

Finally no fx chart package will have identical prices as there is no single inter-bank platform. For highs and lows the usual standard though is that trade on the EBS.

 

[eagerbeaver]

Quote from Lon Eagle:

Inter bank means inter bank ie between banks so by definition a non bank can't join in. It is no big deal and people should not get worked up that the world is against them - think like that and you have no chance. As a non-bank you have access to all sorts of advantages that a bank would love to have (eg tight spreads in extremely volatile markets, not having to quote others etc)

As a local, trade with a decent "bucket" shop or via an ECN. I trade through both and it works for me. I could trade directly with a bank but prefer it this way. Currency futures are a waste of time except perhaps in euro dollar, certainly not cable.

Some of the firms mentioned on here though I would not go anywhere near.

As to the question of size then there is no real answer. When dealing for a bank I might have traded in as small as 100k to cover a position at the end of the day but again a smaller bank might trade in amounts of between 250k and 5m throughout the day whereas the largest shops wouldnt bother calling out for say less than 5m. Just as there are many different types and sizes of locals/retail traders so there are many different types of bank.

Finally no fx chart package will have identical prices as there is no single inter-bank platform. For highs and lows the usual standard though is that trade on the EBS.

This is really interesting, Lon -- Thanks. A couple of follow-up questions, if I may...

1) Why would one trade with a "bucket shop" if one could trade through an ECN. The fact that you use both suggests some advantage to the "bucket shops". What could that be?

2) Why are currency futures a waste of time?

3) Which brokers discussed here would you avoid? Which ones do you like?

Thanks!

 

[Chood]

Quote from eagerbeaver:

This is really interesting, Lon -- Thanks. A couple of follow-up questions, if I may...

1) Why would one trade with a "bucket shop" if one could trade through an ECN. The fact that you use both suggests some advantage to the "bucket shops". What could that be?

2) Why are currency futures a waste of time?

3) Which brokers discussed here would you avoid? Which ones do you like?

Thanks!

Sorry fellas but this is starting to smack of an infomercial. The query supposes that someone is hunting a place to trade. The person asking, if he's confident of his own judgment in the matter, has already foreclosed that, as follows:

"On the basis of this discussion, as well my own experience with RefcoFX's sludgy, suspect price action, I will not be trading Forex."

The quote is from the other, related thread he started.

 

[eagerbeaver]

Quote from Chood:

Sorry fellas but this is starting to smack of an infomercial. The query supposes that someone is hunting a place to trade. The person asking, if he's confident of his own judgment in the matter, has already foreclosed that, as follows:

"On the basis of this discussion, as well my own experience with RefcoFX's sludgy, suspect price action, I will not be trading Forex."

The quote is from the other, related thread he started.

Um...What?

 

[myforex]

I use Oanda and so far there have been times when I've been stopped out, only for the market to continue in my anticipated direction, and sometimes just keep on going. I've stopped banging my head on the table, because:

1) Sometimes, it does go over and above my stoploss, and wasn't just a temporary spike.

2) Sometimes, those spikes have worked in my favour, just hitting a stop order and making me a nice profit.

3) All the charts I look at are very close to Oandas price (remember to set your Oanda chart price to max/min, otherwise you will only see closing price and chart could show your stops not being hit).

4) I'm not naive enough to think they don't hunt your stops, they probably do, and so does the rest of the market. In a way part of the way I like to trade is looking for a placement where stops either support, collapse, or cause rallies. Its part and parcel of the business, sometimes you get lucky sometimes you dont. IMO the pros outweigh the cons.

I will next try an account with IB, but have already spoken to my corporate bank manager who handles my property development funding, and he has agreed that when I am ready, the bank will be happy to open an account for me to trade forex via them. They normally want bigger amounts than what I will be putting up with them, but due to previous business we have done they can be more "accommodating". What they have agreed to is a L/C to the tune of $200,000, and gearing is massively low compared to the retail forex market. I am still waaaaaaayyyyyyyy, wwwaaayyyy off doing this, but its a definite avenue and one that gives me hope should I ever become a decent trader in forex. Time will tell.

 

[misha7]

Quote from eagerbeaver:

How does that work, exactly, "trading the interbank market". Are you automatically "trading the interbank market" when your order size exceeds 110k? And, once you are "trading the interbank market," what does that mean, as a practical matter? Do the posted prices suddenly match the prices you see on your independent chart services?

to trade the interbank you need at least to be a bank yourself...

with regards to the idea that many people seem to have that dealing directly with a bank market-maker instead of a retail one they would somehow get better treatment... well, this is just a total illusion. FX is a decentralised market and always has been, but will anyone here claim that UBS, Deutche etc, are 'bucket shops' ? Yet their modus operandi is not much different from retail dealers.

 

[myforex]

Quote from misha7:

to trade the interbank you need at least to be a bank yourself...

with regards to the idea that many people seem to have that dealing directly with a bank market-maker instead of a retail one they would somehow get better treatment... well, this is just a total illusion. FX is a decentralised market and always has been, but will anyone here claim that UBS, Deutche etc, are 'bucket shops' ? Yet their modus operandi is not much different from retail dealers.

I think in fairness you might be right. My understanding of it from the RBS is that they will act as your market maker. On the other hand, they claim you can make anonymous transactions... lol. Would you believe them?

My father lost a lot of money with his bank on forex (was back in the day, he still refers the foreign exchange with a slight amount of contempt). According to him, he lost about £600,000 or so before he gave up and decided not to try to get it back. He thinks they are all con merchants. He's probably not far off. Note wasn't trading, it managed account.

 

[Lon Eagle]

I think you are muddling up dealing with RBS when they act as a market maker to you and using RBS as your prime broker so that you can trade on an ECN like Lava or Hotspot.

 

[myforex]

Quote from Lon Eagle:

I think you are muddling up dealing with RBS when they act as a market maker to you and using RBS as your prime broker so that you can trade on an ECN like Lava or Hotspot.

You might be right! I've got so much literature from them I might have confused myself, but I must say he didn't mention two services. From my understanding (and this may be Chinese whispers syndrome, since he's a real estate development manager, not forex) RBS will give me access to their system, which apparently deals with other banks and gives blah blah blah liquidity etc, but then within some more paperwork I read, it said RBS will act as your market maker.

Eitherway, its not a concern right now, since I'm no way going down that route... if I ever get good enough and wish to invest enough capital then I'll look with more interest. Its just a hobby for now, a more interesting way to invest, if you will.

 

[Spread_Monkey]

I have an account at refco and now feel very vulnerable.. looking around at the alternatives Oranda is good tech but It took a mate of mine 3 weeks to get his money back and if the system went down there was no reply from the help number in Canada !! . best one I have found so far is the new GNI platform ..prices look good, free news, free charts, and 24 hour tech and trade support ... If anyone knows of anything else like this could you let me know.