MB Trading is offering to pay traders $1.95 for $100,00 of base currency to enter with limit orders. They say it is to increase liquidity, but it sounds like they just want their dealer desk to have more visibility to where it can get a bunch of orders filled and then turn the market around against the weak hands. Am I being too cynical?
But if you were going to trade spot forex anyway ... and you were on range bars so you could use limit orders anyway ... and you were going to trade with a dealer who might very well be screwing you and you had no way of knowing anyway... why not get paid ...
I'm just a simple man trading a simple plan.
My daddy always said, "Every day above ground is a good day!"
Quoting Shodson: MB Trading is offering to pay traders $1.95 for $100,00 of base currency to enter with limit orders. They say it is to increase liquidity, but it sounds like they just want their dealer desk to have more visibility to where it can get a bunch of orders filled and then turn the market around against the weak hands. Am I being too cynical?
Yes, I think that you are being too cynical. From my experience MB Trading is a true ECN and they do not take a position of any sort.
MBT's new rebate program is legit and it only makes sense that it will certainly tighten their spreads. I'm on board.
Perhaps in today's retail forex environment, you're not being too cynical. You are incorrect in your assumptions though.
MBT is not "offering" to pay for limits. They do, every time. They have paid me every day I have traded since they started this commission structure.
MBT does not have the power to "turn the market" at will. And if they did, as a trader, you need to be ready for it, just like everybody else out there that is making the market. Since when does the market respect weak hands anyway? Be sure of your trade or don't take it!
They are still making plenty cash on market orders(although not from me!), so this seems to me to be just a reduction in aggregate commissions to attract more customers(and liquidity). Perfectly valid(and thoroughly enjoyed) business decision.
These are the typical spreads I see on a daily basis with MBT. Much of the time, spreads get better than this or go negative.
Many times when I place a limit at the previous high, spread will reverse at that point and go negative, so I get an execution that puts me .5 to 5 pips in profit instantly, plus a $1.95 commission credit. This pricing structure, combined with the Pegged order type has made a real and significant difference to my bottom line. I have had days when getting paid for limits was 5-10% of my profit.
MBT would go broke if everybody traded like this. Most don't, they use market orders, which costs them 2.5 times the payout MBT are giving for limits. Trading with limits takes more skill & patience, IMO. That's why most don't do it! I do still trade with market orders occasionally(usually for exits) and so then MBT makes their scratch from me then.
This might be off the topic but please shed light. I am trying to figure out which has better trading cost (spread+commission) for EUR/USD pair. IB charges less commission (IB: $20/10 lot vs. MBT: $29.5/10 lot, before currency convergence ), however it seems like MBT has tighter spread (0.8 pip for last a couple of weeks, MBT claims vs 1.0 pip for IB). After considering tighter spread plus this limit order credit, MBT might be winner. Any opinions to be greatly appreciated. Thanks!
Last edited by wangwang; March 13th, 2011 at 03:34 PM.