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Commission shopping w/brokerages

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  #1 (permalink)
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For those that commission shop brokerages, see below. BTW, I would advise against commission shopping brokerages because it's akin to asking to be launched into space by the cheapest bidder. Perhaps for something so important you might consider something more than price alone. But generally those shopping for the cheapest are the new inexperienced traders, there is not much anyone can say to stop them.

Anyway, when price shopping, be sure to ask for the "all-in" price. An example might be where most brokers quote a commission price that includes exchange fees, where another broker charges a "clearing" fee on top of the commission and exchange fees. It's just an example, you need to be very careful. One would assume it's legal, I don't know. What I do know is I've seen users on futures.io (formerly BMT) that think they have a good commission price, but in truth they are paying above average after including a "clearing" fee.

Anyway, be certain that you get the quote in writing and be certain the broker spells out in writing that it includes all fees and commissions.

Be certain you also ask, in writing, if the price is round turn or per side. I've seen some sneaky brokers quote prices on a per side basis. That's like asking a bank what their interest rate is, and they say 4% -- so you deposit the money. But then later you try to withdraw the money and they tell you there is a 4% fee to withdraw money. In other words, assuming you are going to eventually sell the futures contract that you bought, you want to know the round turn cost....

Also ask about any platform fees, inactivity fees, minimum trade requirements, account balance fees, etc. Basically I would start by asking for the fee schedule and examining it closely.

If the broker tells you any price different from what is in writing, get him to put it in writing.

Unfortunately, you aren't done yet. I have personally experienced, as have others, brokers that quote you one price but then charge you another price. You need to very carefully examine your trading statements.

I highly encourage any user who is charged a price different than what they were quoted to report it to the CFTC and NFA, as well as post about it on futures.io (formerly BMT).

At the end of the day, if you are wanting the cheapest just keep in mind you get what you pay for. The only way the "cheapest" brokers can survive is by extremely high turnover of customers (customers that blow out or stop trading replaced by new blood or newbies).

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At Optimus we have always quotes and all in rate which includes everything and is the full round turn. At times it was rather puzzling to me when customers came back with "can you match..." which was below the exchange rate. It took us time to realize what is looked at and help customers to come up with the full figure they are paying.

However, the commissions entry is a manual process and errors can occur, so the best thing is to check the statement following the first day of trading. If there is an error, it could be rectified by calling the broker. I made such mistakes and rebated if such thing has occurred. I prefer as a broker that a customer try and resolve with their broker.

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Great advice @Big Mike in that you need to consider the all in fees, and that if your just looking for the cheapest out there you probably get what your paying for.


Big Mike View Post
Be certain you also ask, in writing, if the price is round turn or per side. I've seen some sneaky brokers quote prices on a per side basis. That's like asking a bank what their interest rate is, and they say 4% -- so you deposit the money. But then later you try to withdraw the money and they tell you there is a 4% fee to withdraw money.


mattz View Post
At Optimus we have always quotes and all in rate which includes everything and is the full round turn.

While I understand your point here, the reality is exchange's quote exchange fees 'per side' and not per round turn, hence I think Mike's analogy is a bad one, and it's actually understandable that many brokers use the same convention. It doesn't make them bad, you just need to understand what you are and aren't paying/being quoted.


mattz View Post
At times it was rather puzzling to me when customers came back with "can you match..." which was below the exchange rate.

I know this isn't what you meant Matt, but with exchange rebates* it is very possible to pay less than the quoted exchange fee. But then again somebody who is getting that rebate probably isn't shopping rates like that.


*Some of these exchange rebates are a lot easier to obtain than you might think!

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Let's say broker A quotes 4.00 RT commission including exchange fees.

Broker B quotes 3.80 RT commission including exchange fees.

You would think broker B is cheaper.

But actually, broker A in this example does not charge a "clearing" fee. While broker B charges 1.00 "clearing" fee.

At end of day, broker A is cheaper in this example.

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SMCJB View Post

It doesn't make them bad, you just need to understand what you are and aren't paying/being quoted.
I know this isn't what you meant Matt, but with exchange rebates* it is very possible to pay less than the quoted exchange fee. But then again somebody who is getting that rebate probably isn't shopping rates like that.
*Some of these exchange rebates are a lot easier to obtain than you might think!

No, it does not make them bad, but retail does not use the same convention as the exchange.
I have been working retail for a long time to know when I communicate with them it must contain buy and sell with all in included as oppose to quoting a price to a person with an exchange membership. We do have guys with exchange membership and I did help them in process of becoming one.

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Big Mike View Post
Let's say broker A quotes 4.00 RT commission including exchange fees.
Broker B quotes 3.80 RT commission including exchange fees.
You would think broker B is cheaper.
But actually, broker A in this example does not charge a "clearing" fee. While broker B charges 1.00 "clearing" fee.
At end of day, broker A is cheaper in this example.
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Mike I'm not sure what your point is. I already agreed that you need to understand what you are and are not payiing for. I was just making the point that talking about side's vs RTs isn't wrong. In your example broker B is in my opinion committing fraud. How can you have an "RT commission including exchange fees" that doesn't include commissions? Anybody who tried to get away with practices like that is a 'bucket shop' and not a broker.

mattz View Post
No, it does not make them bad, but retail does not use the same convention as the exchange.
I have been working retail for a long time to know when I communicate with them it must contain buy and sell with all in included as oppose to quoting a price to a person with an exchange membership. We do have guys with exchange membership and I did help them in process of becoming one.

Arguing semantics here I know, and getting off topic, but I guess it comes down to what you define as retail? Do you view somebody who has an exchange membership as retail?

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SMCJB View Post
Arguing semantics here I know, and getting off topic

Agreed, we both have good intentions to help. Let me stop here.

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@SMCJB My post was not directed at you.

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@SMCJB Apparently "clearing" fees aren't exchange fees. I dunno about legality. I am just making people aware of tactics used in the industry.

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Big Mike View Post
I would advise against commission shopping brokerages because it's akin to asking to be launched into space by the cheapest bidder. Perhaps for something so important you might consider something more than price alone. But generally those shopping for the cheapest are the new inexperienced traders, there is not much anyone can say to stop them.

Mike,

Timely post for me, as I'm an inexperienced trader and looking for a broker.

Another fee is money transfer in/out and the methods they use. Wire fees add up if that's your only option.

Anyway, the point of my post - what factors should the inexperienced consider. I'm looking into the following:-
- Fees
- Customer Service
- Clearing Agents
- Funds Segregation
- Available Products / Markets
- Supports Trading Platform
- Server locations

Anything else?
Thanks

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sixtyseven View Post
Mike,

Timely post for me, as I'm an inexperienced trader and looking for a broker.

Another fee is money transfer in/out and the methods they use. Wire fees add up if that's your only option.

Anyway, the point of my post - what factors should the inexperienced consider. I'm looking into the following:-
- Fees
- Customer Service
- Clearing Agents
- Funds Segregation
- Available Products / Markets
- Supports Trading Platform
- Server locations

Anything else?
Thanks

All good and valid checkpoints, you could add minimum required deposits and intraday margins if relevant to your trading style. More importantly i would do a background check on the company. First thing i do is check the website, is it professional? Is all the relevant information clearly available, or is it just snakeoil-"come to us and become a winner!" marketing fluff. I take it as an ill omen when i have to dig too hard to find stuff like wire fees, account inactivity fees etc, gives me a feeling they are trying to hide important information. Hit the "About" button: Who's the holding company? Are they listed anywhere? How are their quarterlies looking- is it in a stable financial state? Who are the owners/CEO's? Google them. Is it a serious Broker, or just a Prop Shop looking to add to its liquidity? Is it an "Introducing Broker" ? If so, who's the FCM/Futures Commission Merchant clearing your trades.

I'd also advise looking up the companies at:

NFA - National Futures Association
BrokerCheck: Research Brokers & Investment Advisers - FINRA

EDIT: great threads:



To reveal any prior disciplinary actions. Note that it can be tricky finding the "right" broker, as you have to nail the search term, and check any/all parent/daughter companies in my experience.

The age of the company can weigh in as well- you'd probably not want to park your money at some newly founded bucketshop with 2 employees. Then there's more importantly the "streetcred". Listen closely to what the trustworthy people on this forum recommend.

With that in mind, note how one of the most recommended choices up until December was Mirus/ZF, and the disaster that occured.

You also mentioned segregated funds, so with that in mind make sure you are familiar with the disaster-stories behind:

MF Global - Wikipedia, the free encyclopedia
Peregrine Financial Group - Wikipedia, the free encyclopedia

Segregated funds is not the safety-net many thought it to be, especially for us foreign Scandinavians

You should of course do your own homework and make your own reasoning behind your choice(s). I re-did that excersize myself few days ago, and ended yet again on choosing the seemingly safest, currently IB. But as history has proven, nothing is "safe enough" in this business. Dont keep millions in your account, just what you need for trading. Consider spreading your risk to multiple brokers, they are also a huge help(a must) for your disaster planning (when you suddenly need to hedge an open position that you cant close etc). Always have a plan for the worst imaginable situation.

Hope this helps!

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Make AMP an offer .... Look at their commission sheet and negotiate for the best rate.... They are flexible


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tderrick View Post
Make AMP an offer .... Look at their commission sheet and negotiate for the best rate.... They are flexible

If all you care about are rates, why not give Deep Discount Futures Trading Commodity Brokers Best Low Rates Cheap Commissions High Frequency Systems Exchange Members a try? ....

At least they wont sue you for having an opinion about them.

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danielk View Post
If all you care about are rates, why not give Deep Discount Futures Trading Commodity Brokers Best Low Rates Cheap Commissions High Frequency Systems Exchange Members a try? ....

At least they wont sue you for having an opinion about them.



Wow....


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I am not a fan of brokerages that give different people different rates. And I don't mean person A trades 10 turns a month and person B trades 500 turns a month. I mean two more or less equivalent traders receiving different rates.

It reminds me too much of car sales.

I also am not a fan of brokerages that don't advertise their rates on their website. I try to understand their position, but at the end of the day I think it is a bad business decision. Either you make a compelling case via your website why you are the superior and or logical choice, including your commissions -- or you don't.

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Brokerage rates involve more than just how many round turns you trade, how much margin you use is just important. Somebody who only day trades, should have lower rates than somebody who trades excatly the same volume but holds positions overnight.

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tderrick View Post
Make AMP an offer .... Look at their commission sheet and negotiate for the best rate.... They are flexible

Who runs/owns AMP and what about their financial strength? There is no "About US" information on their website...
Cheapest is not the answer. Reasonable may be the answer. Because I don't want my segregated funds not to be available when I wake up to trade :-(

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joe11 View Post
Who runs/owns AMP and what about their financial strength? There is no "About US" information on their website...
Cheapest is not the answer. Reasonable may be the answer. Because I don't want my segregated funds not to be available when I wake up to trade :-(

I just posted this

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danielk View Post
If all you care about are rates, why not give Deep Discount Futures Trading Commodity Brokers Best Low Rates Cheap Commissions High Frequency Systems Exchange Members a try? ....

At least they wont sue you for having an opinion about them.

... is an IB to Crossland LLC which seems to be one of the handful offering CTS T4.

Why the - seems okay to me.

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What is the Futures Broker thinking? Maybe it's goot to try to get an idea what we're really doing since we are on the other side of the negotiation with them. So I'll take a few guesses.

The broker wants to get some idea of my trades per month. They will be making a profit from my volume.

If it's true that most fail, then they must be figuring I won't last too long either, so they will want to lock in early profits before my trading demise.

If I've traded before and I have had at least one account, then I look a little better since another broker, their competition, has already profited from my trading. Or is my demise sooner?

The larger my initial deposit, then the longer I can trade for them, before my demise, and I'll likely have a larger volume of trades, so that's gotta be a big one. What trader is going to pull the plug on their trading before they've really killed the account? If I'm trading impulsively, then I'm not about to suddenly be disciplined and know when to quit....

What are their thoughts and motivations so we can be prepared, rather than how unprepared I was and I'm thinking perhaps many of us are currently, Ray mentioned during the webinar that there may be 10,000 traders affected.

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jaytrades View Post
What is the Futures Broker thinking? Maybe it's goot to try to get an idea what we're really doing since we are on the other side of the negotiation with them. So I'll take a few guesses.

The broker wants to get some idea of my trades per month. They will be making a profit from my volume.

If it's true that most fail, then they must be figuring I won't last too long either, so they will want to lock in early profits before my trading demise.

If I've traded before and I have had at least one account, then I look a little better since another broker, their competition, has already profited from my trading. Or is my demise sooner?

The larger my initial deposit, then the longer I can trade for them, before my demise, and I'll likely have a larger volume of trades, so that's gotta be a big one. What trader is going to pull the plug on their trading before they've really killed the account? If I'm trading impulsively, then I'm not about to suddenly be disciplined and know when to quit....

What are their thoughts and motivations so we can be prepared, rather than how unprepared I was and I'm thinking perhaps many of us are currently, Ray mentioned during the webinar that there may be 10,000 traders affected.

For me this process of selecting a broker is the same logic as buying a car. During this selection process the relationship between me and a broker representative is the same as between me and a car salesman. My goal as a consumer is to get the best quality personal service, fastest stable data feed, and lowest cost. For the broker/rep the goal is to sign me up with the least time spent at the highest rate I am willing to commit to without hanging up the phone and going to the next broker. So whatever it takes to get me to sign up with the broker firm. Just like car dealerships, they don't like price shopping, and it's natural to keep prices 'slippery' for as long as possible as they try to fish out the highest rate you will live with. One broker rep. I spoke with this week gave me 3 different quotes for the ES in 15 minutes, and a 4th quote in a follow-up email the next day. The brokers rep. understands the commission rate is the bottom line from their perspective, that's where the real money is for them, everything else is viewed as an enticement to lock me into their product at the highest rate they can.

Unfortunately, on my side of the equation, I will never get a perfect 10 on all 3 requirements (service, feed, cost), I will have to compromise on at least one of those and hopefully not more than one. There are some wonderful small IIB's what I think of as boutique shops. They provide excellent personalized customer service, and typically a very good quality client experience overall. But that personalized service always comes at a cost. If I am trading 10 or 20 contracts a week, paying an extra $1 or $2 a Round Turn in order to have a better overall day to day customer experience is probably worth it in terms of piece of mind. But, the more round turns I do a month, the more important cost becomes. Once I cross above 50 or 100 contracts a week cost quickly becomes the most important factor. At that level of trading, I can overcome any feed quality / stability issue easily enough with a high quality and low fixed cost data provider such as Rithmic or IQ Feed, so I can remove feed quality from my consideration easily enough. It is a lot harder to overcome a $2 per contract 'feel good' overhead at that level of trading activity.

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For many beginner traders the concept of commissions and leverage (margin) stands out as the obstacle to success. Naturally, the more you pay the less profit you would make. However, down the road many realize that the real obstacle is really the development of a good method that works, where a quarter in commissions would not make the difference. Further, some charge inactivity, some charge liquidation fees, phone tech support, so there are other fees that could impact your trading. We try our best to give reasonable prices depending on frequency and deposit without some of the extras.

As you progress as a trader you realize that the broker could be a serious element in your success. We are not on the “other side”. We are on the same side! Those of us, who have been doing this for a long time, want our customers to succeed and invest a little more time into our customers so we don’t always have to chase new ones with marketing efforts. When we started our online trading efforts many discouraged me from getting into it, yet I saw a void. Most have become salespeople (brokers) of price. But, what I saw are a bunch of desperate guys trying to sell what their boss tells them to in order to meet a sales quota. We want to stay away from such efforts like a plague. The familiarity with the product and the support for it should be the key for this business.

When Successful traders switch brokers, it is not for the price but for many other reasons. From tech support (familiarity of software), speed of execution, risk management and the ability for the broker to come up with creative solutions to improve trading when this is discussed. The focus of an amateur and the professional from what I have seen is a world apart when seeking brokers. Pros don’t feel like they were taken if they pay a quarter more and try to sharpen their negation skills for the same round.

When you seek a broker my advice is find reasonable prices, someone who knows the software, could help you make smart decision when needed, offer solutions and someone you have chemistry wide and have an attitude of “Where everybody knows your name….”

Some will see this as the ultimate sales pitch, some will take this valuable advice to heart, as we all differ. Whatever it is, I wish you the best in trading.

Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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  #24 (permalink)
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sixtyseven View Post
Mike,

Timely post for me, as I'm an inexperienced trader and looking for a broker.

Another fee is money transfer in/out and the methods they use. Wire fees add up if that's your only option.

Anyway, the point of my post - what factors should the inexperienced consider. I'm looking into the following:-
- Fees
- Customer Service
- Clearing Agents
- Funds Segregation
- Available Products / Markets
- Supports Trading Platform
- Server locations

Anything else?
Thanks


@sixtyseven

the key is NOT the commission, but the intra-day margin rates...

at some time during your logical development and progression down the road to experienced emini futures trader, you will mature to the point of aggressive money management and protective yet aggressive risk management

here's the Holy Grail in simple terms...

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  #25 (permalink)
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kronie View Post
@sixtyseven

the key is NOT the commission, but the intra-day margin rates...

at some time during your logical development and progression down the road to experienced emini futures trader, you will mature to the point of aggressive money management and protective yet aggressive risk management

here's the Holy Grail in simple terms...

I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

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sixtyseven View Post
I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

yes, that (margin) is a big factor that isn't often stressed. And also, the minimum account size, which at first glance, seems to not be so important, UNTIL, you realize (from this current situation) that I am going to need to have more than one broker, and, having more than one broker, also focuses on the aspects of *inactivity fees and *monthly fees since one of my current brokers may have a combination of broker/fcm/platform/data feed that I either like better or is working better over time than one of the other broker combinations that I have.

So I might actually approach those minimums on one of my broker combos and adding a few $20's a month, while not a big deal if I am profitable, makes me feel worse when I'm breaking even or struggling thru a down draft.

This current situation has opened up the eyes of traders and we are now compelled to be more active and proactive and empowered in our broker / fcm / platform / feed shopping. This is why they are not so happy since it makes the entire industry that they are a part of, look bad, once again, and that requires traders to require better deals and better service and a little deeper look into these deals.

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sixtyseven View Post
I haven't really given margins rates much consideration, other than it means I need to hold less of my total account with the broker.
Surely you'll risk those 4 contracts, rather than 1 if it's within your risk tolerance? The difference in margin is neither here-nor-there in terms of total account size is the conclusion I've come to.

@sixtyseven,

it is completely logical, your response, as I already stated that what I shared was an advanced lesson, that takes quite some real-world experience to comprehend, respect, appreciate or utilize. One would never expect a grade school student to comprehend self seeding or self supervision as graduate students have, even in the initial years of college, it takes time to appreciate all the freedoms that age and responsibility confer. As to trading, leverage is everything (and we are not talking the TV series)! From the notion that one can earn $85,000 on a $200 long term risk on Wheat, Sugar, Cocoa, Corn, Soybeans or similar to the notion that for $300 / $400 / $500 one could trade one contract electronic mini-future instead of using $1,000 / $2,500 / $5,000.

Hey, its your money, until the grubby little hands of the broker gets a wiff that: "here comes another one!"

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jaytrades View Post
yes, that (margin) is a big factor that isn't often stressed. And also, the minimum account size, which at first glance, seems to not be so important, UNTIL, you realize (from this current situation) that I am going to need to have more than one broker, and, having more than one broker, also focuses on the aspects of *inactivity fees and *monthly fees since one of my current brokers may have a combination of broker/fcm/platform/data feed that I either like better or is working better over time than one of the other broker combinations that I have.

So I might actually approach those minimums on one of my broker combos and adding a few $20's a month, while not a big deal if I am profitable, makes me feel worse when I'm breaking even or struggling thru a down draft.

This current situation has opened up the eyes of traders and we are now compelled to be more active and proactive and empowered in our broker / fcm / platform / feed shopping. This is why they are not so happy since it makes the entire industry that they are a part of, look bad, once again, and that requires traders to require better deals and better service and a little deeper look into these deals.

@jaytrades

its good to see you took this to the next logical level...

very good analysis

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kronie View Post
@sixtyseven,

it is completely logical, your response, as I already stated that what I shared was an advanced lesson, that takes quite some real-world experience to comprehend, respect, appreciate or utilize. One would never expect a grade school student to comprehend self seeding or self supervision as graduate students have, even in the initial years of college, it takes time to appreciate all the freedoms that age and responsibility confer. As to with trading. Leverage is everything! From the notion that one can earn $85,000 on a $200 long term risk on Wheat, Sugar, Cocoa, Corn, Soybeans or similar to the notion that for $300 / $400 / $500 one could trade one contract electronic mini-future instead of using $1,000 / $2,500 / $5,000.

Hey, its your money, until the grubby little hands of the broker gets a wiff that: "here comes another one!"

This grade school student needs more help to understand.

Assume a $50,000 total trading pot, with 1% risk ($500) on NQ with a 5 point SL. That requires $2,500 total margin @$500 per contract (minimum account balance of $2,500), and requires $10,000 @$2,000 per contract (minimum account balance of $10,000). Ok, I need to hold more funds in each broker account, and I could probably only fund 3 separate broker accounts, rather than say 15. But with $50k, that's probably ok.

With a $10k account balance I could get 5 contracts @$2,000 margin. With a $10k account balance I could get 20 contracts @$500 margin. But my total risk has gone from 1% ($500 per trade total risk) to 4% ($2,000 per trade total risk). This is what you are saying? Isn't that just poor risk mgmt?

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Yes, broker and trader are on the same side, except for that moment when they are on the opposite sides at the negotiating table before the partnership has started.

I got a heads-up moment after realizing some things about the shopping experience, which is why I'm posting here in the shopping thread.

It's only very recently that I've graduated from, "nearly dead, crummy, undisciplined losing trader struggling with the beginner psychology issues hump," to "ok, let's get on with the business of trading." The first guy wants cheap, the 2nd guy wants a solid business agreement that will last and therefore, is willing to take a lot of time and effort to shop for it.

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  #31 (permalink)
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sixtyseven View Post
This grade school student needs more help to understand.

Assume a $50,000 total trading pot, with 1% risk ($500) on NQ with a 5 point SL. That requires $2,500 total margin @$500 per contract (minimum account balance of $2,500), and requires $10,000 @$2,000 per contract (minimum account balance of $10,000). Ok, I need to hold more funds in each broker account, and I could probably only fund 3 separate broker accounts, rather than say 15. But with $50k, that's probably ok.

With a $10k account balance I could get 5 contracts @$2,000 margin. With a $10k account balance I could get 20 contracts @$500 margin. But my total risk has gone from 1% ($500 per trade total risk) to 4% ($2,000 per trade total risk). This is what you are saying? Isn't that just poor risk mgmt?

perhaps someone closer to where you're at can properly explain what I shared,
what conclusions you drew were never suggested, nor implied,

do you have a trading group near you?, perhaps they can help, I certainly will not.

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  #32 (permalink)
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what made and makes Mirus unique, is their use of technology to help manage system risk (read broker responsibility and obligations to the licensing authorities and their clearing agent)

what makes Mirus unique is their ability to offer competitive, technology driven risk management within their risk tolerances, hence the overall value that they offered in comparison to the other high margin (high expense / commission) brokers.

while I am not a representative of them, I have noticed that the interview process with the other firms mentioned on this and other threads, after this stupid Zenfire fiasco, were either way behind the curve and offered unattractive combinations (of rates and margins) or steep opening balances. When a firm requires steep balances, high margins and high commissions they are no longer competitive and seek a certain client / customer that is both low maintenance, low reward, low yielding and highly likely to being "porked" (stick a fork in them, they're done).

the broker / customer relationship is at odds with risk management. a little too much and you have excessive firm risk. a little too little and you have high margins, expenses and balances. a little too right and you have a competitive mix that allows for high yield (heavily traded) customer accounts with reasonable risk oversight (from the firm's management perspective).

being on the side of the business, a brokerage has to decide where on the scale their offering will place relative to their financial backing and ability to manage risk, lawsuits, failed customer accounts (and the necessary restitution process) and corporate obligations (financial statements of net worth and risk assets required by the exchange to be in business).

choose wisely.....because you too have to decide where on that scale you fit in...

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Kronie - i get what your saying, but your still looking at this from the perspective of what you want from a broker. Your ideal broker will do XYZ, and it sounds like the way Mirus managed client risk best fit what you need from what is available in the marketplace.

Mirus day margin in ES was $500 or 12% of the overnight full margin rate ($4100)

AMP day margin for ES is $400 or 9.7% of full margin.

Several brokers spoke with last week were quoting 20% day margin rates, or around $1,000 for the ES

So is this the core issue, the 20% rate being imposed by many brokers ?

If you think about it, if your going to impose a 20% rate to dampen down client risk on your side (as a broker), then your going to have to ramp up the account balance to compensate in order to enable the client to trade more than 1 contract. So there is a mathematical relationship there between the three components (margin rate, account balance and contracts per trade). So from the brokers perspective its a min/max problem, they want to minimize their exposure to client risk (by imposing higher margin requirements) and at the same time want to maximize contracts traded by that client. On the other side of the table, the average retail client has a limited amount of working capital available to fund an account, so the broker must then balance their need / desire to minimize their risk against driving customers away and into the waiting arms of a more accommodative competitor.

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Clearing Brokers have to show capital reserves equal to an NFA mandated 8% of margin posted. So the greater the margin you have open, the greater the capital the broker needs to support your account. This is definitely calculated on an overnight basis but I don't know about an intra-day basis. This is why I have said before that a trader that carries no overnight risk should have lower commissions than a trader that trades the exact same volume but does have open positions overnight.

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I read somewhere on this forum that you are able to cut out the broker and go straight to the FCM to lower your commissions. I think someone posted that he was getting $1.00 RT all in cost with Dorman FCM?

Is this possible for a retail trader?

Thanks.

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;385582
I read somewhere on this forum that you are able to cut out the broker and go straight to the FCM to lower your commissions. I think someone posted that he was getting $1.00 RT all in cost with Dorman FCM?

Is this possible for a retail trader?

Thanks.

just off the cuff @nourozi, in general, not everything offered domestic US, is available non-domestic US (i.e. overseas) accounts

in specific, you would have to be a corporation (again, speaking from the perspective of a US domestic entity), first, and then registered as a professional of some kind, in order for such direct access to a clearing merchant. the terms and conditions and legal staff required, both compliance officers of the corporation and other designated persons in an official capacity would have to be declared, licensed and provided to the FCM, upon application.

clearly, we are describing a business, not retail, relationship.

an alternative is to look into the CME non-floor access, Electronic (limited) member enrollment process. Upon achieving that status, (again, as a corporate US entity), you can present that / those credentials to your IB / FCM and receive all the benefits to which they're entitled (such as significant reduction in clearance costs).

tread carefully, there are significant costs involved in both, and they have nothing to do with per trade commissions.

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Hi Guys

In the UK most pro traders clear via 2 routes Marex or Kyte. You normally need around £25k deposit. Round trips start at 1 euro all in Eurex or $1.50ish CME. They typically charge a £250pm remote connection fee. >5000 RTs per month gets you lower rates.

Hope that helps someone.

Londonkid

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londonkid View Post
Hi Guys

In the UK most pro traders clear via 2 routes Marex or Kyte. You normally need around £25k deposit. Round trips start at 1 euro all in Eurex or $1.50ish CME. They typically charge a £250pm remote connection fee. >5000 RTs per month gets you lower rates.

Hope that helps someone.

Londonkid

@londonkid

I buddy described the rates, terms and account types he had access to overseas, when he was stationed there. We both surmised that such favorable terms and account types were made as inducements to trade and increase of participation and broadening the base of potential and realized customers of these exchange products. So, yes, you will have access to things we in the states could only dream of....

hope you over trade your account!!!!!

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Hi @nourozi,

This couldn't be possible because the exchange fees for each market is usually well over $1.00. You can find how much exchange fees actually costs on the CME website. For example I found that the mini S&P exchange fees alone are around $2.32. It would be impossible to be quoted $1.00 RT all in unless he's getting some kind of CME discount, which I doubt would even be reduced to $1.00RT. I'm sure if you call Dorman to ask and I wouldn't because I'd probably like to save face and not get laughed at, is if they offer commissions $1.00 ALL In including all fees. Please let me know if they do!


nourozi View Post
I read somewhere on this forum that you are able to cut out the broker and go straight to the FCM to lower your commissions. I think someone posted that he was getting $1.00 RT all in cost with Dorman FCM?

Is this possible for a retail trader?

Thanks.


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some articles for 2014

futures:
Top 10 Best Futures Brokers for Online Traders | 2014 Reviews, Ranking | MarketConsensus


options:
Best Options Trading Platform | 2014 Top 10 Options Brokers | MarketConsensus


forex:
Forex Brokers Review 2014 | Best Foreign Exchange Brokers | Currency Trading Brokers - TopTenREVIEWS

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The article is dated March 13th, 2014 and the #1 forex broker is Alpari but the Alpari website says that "Following a strategic review, Alpari has decided to exit the US retail foreign exchange market as a Retail Foreign Exchange Dealer (“RFED”) and focus on developing its successful institutional division, QuantumFX. As of the close of business on Friday, September 27, 2013, Alpari will no longer be the counter-party to your trades." Sort of calls into question all of their reviews.

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SMCJB View Post
The article is dated March 13th, 2014 and the #1 forex broker is Alpari but the Alpari website says that "Following a strategic review, Alpari has decided to exit the US retail foreign exchange market as a Retail Foreign Exchange Dealer (“RFED”) and focus on developing its successful institutional division, QuantumFX. As of the close of business on Friday, September 27, 2013, Alpari will no longer be the counter-party to your trades." Sort of calls into question all of their reviews.

These sites are typically written for search engines while they provide inaccurate data and don't get updated often. The source of income for these sites is typically ads driven by Google that compensates them for clicks.

Matt

Trading futures and options involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results. You may lose more than your initial investment. All posts are opinions and do not claim to be facts. Please conduct your own due diligence. Use only Risk capital when trading Futures.
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mattz View Post
These sites are typically written for search engines while they provide inaccurate data and don't get updated often. The source of income for these sites is typically ads driven by Google that compensates them for clicks.

Matt

Ain't that the truth. Here's a particularly bad one from that list.

Top 10 Best Futures Brokers for Online Traders | 2014 Reviews, Ranking | MarketConsensus

I doubt very much they did any research beyond glancing at websites and stealing snippets from other reviews. And in the case of Trading Block, they didn't even do that much. Trading Block is not a futures broker. Also, Schwab and Options Xpress are listed separately when the parent is the same. (Did Scwhab even offer futures before the purchase of OX?)

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SMCJB View Post
The article is dated March 13th, 2014 and the #1 forex broker is Alpari but the Alpari website says that "Following a strategic review, Alpari has decided to exit the US retail foreign exchange market as a Retail Foreign Exchange Dealer (“RFED”) and focus on developing its successful institutional division, QuantumFX. As of the close of business on Friday, September 27, 2013, Alpari will no longer be the counter-party to your trades." Sort of calls into question all of their reviews.

Thanks for the info. I wasn't aware of that. Alpari UK seems to still be up. Alpari used to be popular among FX retail aspirants more than a few years ago.


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These sites are typically written for search engines while they provide inaccurate data and don't get updated often. The source of income for these sites is typically ads driven by Google that compensates them for clicks.

Matt

I would agree there is entirely too much interference by Google these days with their ads and their search links and tracking cookies.
It's hard to find a good list. I recall lists made of FX brokers five years ago also never seemed to be able to decide
which were stable FX brokers. There were always massive complaints about slippage and "stop running", and FX brokers in general especially those with MT4 as a primary platform. To be fair, I had heard of and trialed a few years ago, Dukascopy, Oanda, Alpari UK, and MB of course, and these seemed legit and established and I posted that link because I had actually tried a bunch of those listed in that top 10 some before I had joined futures.io (formerly BMT) (I used to be an MT4 junkie before even hearing of NT on futures.io (formerly BMT)) and not just grabbing a link.

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Cloudy View Post
Thanks for the info. I wasn't aware of that. Alpari UK seems to still be up. Alpari used to be popular among FX retail aspirants more than a few years ago.



I would agree there is entirely too much interference by Google these days with their ads and their search links and tracking cookies.
It's hard to find a good list. I recall lists made of FX brokers five years ago also never seemed to be able to decide
which were stable FX brokers. There were always massive complaints about slippage and "stop running", and FX brokers in general especially those with MT4 as a primary platform. To be fair, I had heard of and trialed a few years ago, Dukascopy, Oanda, Alpari UK, and MB of course, and these seemed legit and established and I posted that link because I had actually tried a bunch of those listed in that top 10 some before I had joined futures.io (formerly BMT) (I used to be an MT4 junkie before even hearing of NT on futures.io (formerly BMT)) and not just grabbing a link.

Google is a search engine, and sadly not always links to quality and/or the right information. Second, I totally get the frustration that you want a list that you can compare apples to apples, and make an informative decision.
But, there are different connectivity data feeds, platforms, and frequency of trading for the different individuals.
This will all result in different commissions structures.
The best is to narrow your choices on the platform and other requirements because broader searches sadly lead to the site you found.

Matt

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^ It also takes a tremendous amount of time to do a 'real' review which should include setting up trial accounts, testing the software, making paper trades, comparing trade confirmations and position management windows (or documents), etc. I don't know if anyone does that because for a top 10 list you have to start with a company count > 10.

Another time consuming category would be testing APIs. Some are simple, some are a pain in the arse, some are available to all customers, some are available only to customers with x amount of funds and x amount of trading activity. I had one from company A (a trial) that disabled the one from company B (real account).

I think the annual review from Barrons is a good guide for stock and stock option trading and a few of the same firms offer futures and futures options. It comes from a reputable publication and they note improvements in features and rankings compared to previous years. If anyone comes across a similar report for futures/FOPs platforms and brokers, please share it.

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