After all this talk on ET about lower spreads on ET about MB trading and their wonderfull model compared to Oanda I opened up a demo account there and tried to do the comparison ...
a typical example (I know there no such thing in forex, but bear with me and I think you will get the idea ...) for scalpers would be that they would be buying and selling over 95% of their orders at market (I know this is debatable but it's true at least for all those people I am in chat with, in fact the number would be closer to 99%)
nowadays oanda has a spread most of the time of 0.9 to 1.2 DURING MOST CIRCUMSTANCES (they used to be slightly better but let's face it this hasn't improved with last years volatility). for my examples I'll take the 1.2 which is on the bad side
so their market is 1.48335 at 1.48347 as I write.
MB trading has smaller spreads most of the time ranging from 0.4 (really exceptional) to 0.9 (most of the time), for my example I'll take an average of 0.7 which is generous.
so their market would be 1.48338 at 1.48345.
now I'd want to buy 100K at both sides and sell that a fraction of a nanosecond later without the markets having moved.
with oanda I would have bought at 1.48347 and sold at 1.48335 and would have lost 12 USD through the spread.
with MB trading I would have bought at 1.48345 and sold at 1.48338, this would have only cost me 7 USD through the spread. HOWEVER you have to add commission costs: 2.95 USD when you buy + 2.95 USD when you sell. you add this up and you would have lost 12.90 USD.
So I have been generous here in the above example for MB trading and think reality is for market orders is worse with an average spread of 0.8 while Oanda has a better spread most of the time of around 1.0.
The picture does get different however if a lot of your orders are limit orders ... but I think untill at least 25% are limit orders Oanda is the cheaper option.
On a additional note (I could be wrong here as I am still exploring MB's platform): with Oanda it's possible to put a market order in with a fixed pip stop attached to it (no matter where you got executed your stop will be at 6 pips for example of your entry price: if you sell at market at 1.4840, your stop will automatically reside at 1.4846 with one click) this is essential to my trading: fast scalping with tight stops. So far (?) I haven't found a way to replicate this with MB.
If MB would manage to lower their commissions to the 2USD range for 100K and it would turn out they do have this second feature then and only then would I be interested in switching to them.
I do have to admit that chartwise MB beats Oanda hands down. But we are not in this game for the good looks but for the money
a typical example (I know there no such thing in forex, but bear with me and I think you will get the idea ...) for scalpers would be that they would be buying and selling over 95% of their orders at market (I know this is debatable but it's true at least for all those people I am in chat with, in fact the number would be closer to 99%)
nowadays oanda has a spread most of the time of 0.9 to 1.2 DURING MOST CIRCUMSTANCES (they used to be slightly better but let's face it this hasn't improved with last years volatility). for my examples I'll take the 1.2 which is on the bad side
so their market is 1.48335 at 1.48347 as I write.
MB trading has smaller spreads most of the time ranging from 0.4 (really exceptional) to 0.9 (most of the time), for my example I'll take an average of 0.7 which is generous.
so their market would be 1.48338 at 1.48345.
now I'd want to buy 100K at both sides and sell that a fraction of a nanosecond later without the markets having moved.
with oanda I would have bought at 1.48347 and sold at 1.48335 and would have lost 12 USD through the spread.
with MB trading I would have bought at 1.48345 and sold at 1.48338, this would have only cost me 7 USD through the spread. HOWEVER you have to add commission costs: 2.95 USD when you buy + 2.95 USD when you sell. you add this up and you would have lost 12.90 USD.
So I have been generous here in the above example for MB trading and think reality is for market orders is worse with an average spread of 0.8 while Oanda has a better spread most of the time of around 1.0.
The picture does get different however if a lot of your orders are limit orders ... but I think untill at least 25% are limit orders Oanda is the cheaper option.
On a additional note (I could be wrong here as I am still exploring MB's platform): with Oanda it's possible to put a market order in with a fixed pip stop attached to it (no matter where you got executed your stop will be at 6 pips for example of your entry price: if you sell at market at 1.4840, your stop will automatically reside at 1.4846 with one click) this is essential to my trading: fast scalping with tight stops. So far (?) I haven't found a way to replicate this with MB.
If MB would manage to lower their commissions to the 2USD range for 100K and it would turn out they do have this second feature then and only then would I be interested in switching to them.
I do have to admit that chartwise MB beats Oanda hands down. But we are not in this game for the good looks but for the money