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A market maker is a dealer and takes the other side to hedge their risk . By definition a bucketshop would ignore your order and throw the order slip in a trash bucket . What does make Oanda a bucketshop is the instability inherent to their platform that denies you access to making orders online . Frequently FXtrade freezes up or drops off completely during news events but if you trade news with them youll be rewarded with a spread of possibly 10 or more pips anyway .
An ECN is a broker that puts your order on the open market exposed to many banks and you pay them a commission for their troubles . They therefore dont take the other side of your trade because they dont have a vested interest .
I trade every day with MB trading , an ECN , and get treated real well as far as execution and service is concerned . I swing trade , use limit orders to enter and market to exit and receive positive slippage frequently (on entries). I pay about $1.25 RT for a $10,000 lot and MB also kicks a little back if you use a marketable limit order .
Thanks for the information on MB Trading. I'm going to be opening my live Forex account soon and I was leaning toward them since they are an ECN.
I understand that even with ECN there is a spread (I don't think there is a market that doesn't have a difference between the bid / ask). So you need to look at total cost of spread plus commission. I've not seen any numbers better than MB Trading for total cost, assuming their spread is factual.
One more thing. Due to fluctuations, my indicators look nothing like the same when I use them on a forex data feed. Just FYI. Different monkey entirely with indi's, but price action is also slightly different.
Yes, but which broker would you recommend for a very small account ? The advantage with Oanda is that you can trade as small size as you like & they are/were well-capitalised (haven't checked them out carefully for some years).
Anyway, once you can afford an account with Interactive Brokers or similar (not many at their level as far as I can see), you are trading in a far preferable environment (IB tip : if you need customer service, call during the European morning when you will be routed to the Swiss desk : excellent, friendly service & and noticeably better than the US desk).
The only negative I can think of for IB is that they bank with Citigroup, less than ideal when the US economy finally joins Atlantis at the bottom of the deep blue sea... (a discussion for another thread maybe..) !
As far as what you pay , as a fee to trade , the spread doesnt factor into the equation and without a spread theres no market since everyone would be in agreement . The commission you pay to MB is $2.95 each side per $100k you trade , no additional fees and they pay you for using limit orders as an incentive . The spread is not a variable to your commissions but it is in regards to your order being picked up in the market . MB is an intermediary between you and the banks that provide liquidity for them .
The only real problem I have w / Oanda is their pos java platform. Going on this many years w / constant freezes / lockups is inexcusable.
I only have personal experience w / two other brokers, and only one of them offers micro accounts: IBFX. I have nothing bad to say about them... wouldn't hesitate to refund my account if my current broker became uncompetitive.
I've heard good things about IB. They are definitely on short list if I ever learn how to trade properly.
Agree. My point was that the spread is a cost of doing business so it does come into play for overall profitability. Assuming the cost structure for commissions is the same you want the tightest spread because you are in profit sooner with your trade.
