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FX Futures vs Spot FX and Interactive Brokers
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FX Futures vs Spot FX and Interactive Brokers

  #1 (permalink)
Elite Member
Manassas, VA, USA
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Ninjatrader Brokerage/Continuum
Favorite Futures: ES
 
Posts: 36 since Nov 2010
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FX Futures vs Spot FX and Interactive Brokers

So this is really a 2 part question.

1st I am debating FX Futures vs Spot FX. I have been trading spot FX for a long while and I am profitable. I know there are differences in the trading vehicles but I am curious about others views on this topic and the advantages they have experienced with one vs the other.

2nd Brokers... finding a good broker for spot FX is difficult. I know for a fact that I want to trade through an ECN/STP broker with low commission. I am considering Interactive Brokers and would like to know others opinions on this as well.

Thanks in advance!

Jester

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  #2 (permalink)
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  #3 (permalink)
Elite Member
Bangkok, Thailand
 
Futures Experience: Intermediate
Platform: NinjaTrader
Broker/Data: Ninja Trader Brokerage/Continuum
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fido's Avatar
 
Posts: 44 since Nov 2010
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I'm also looking for a new FX broker ... I used to trade with PFG
Since I'm not a US citizen I have more choices but it is really not easy to find a decent broker - especially not if you want to use NT. At the moment I'm considering Interactive Brokers and London Capital Group (no Ninja Trader).

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  #4 (permalink)
Trading Apprentice
Singapore
 
Futures Experience: Beginner
Platform: MetaTrader
Favorite Futures: EUR/USD, ZN
 
Posts: 1 since Oct 2012
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Jester View Post
So this is really a 2 part question.

1st I am debating FX Futures vs Spot FX. I have been trading spot FX for a long while and I am profitable. I know there are differences in the trading vehicles but I am curious about others views on this topic and the advantages they have experienced with one vs the other.

2nd Brokers... finding a good broker for spot FX is difficult. I know for a fact that I want to trade through an ECN/STP broker with low commission. I am considering Interactive Brokers and would like to know others opinions on this as well.

Thanks in advance!

Jester

I am still a learning trader but I had been exploring spot FX since 2007. Broker's always a concern, I'm now with Oanda which I'm pretty comfortable, except for the spread widening during news. They are high on the list of CFTC's FCM in terms of capital. Google CFTC site and look for the FCM financial data report.

I think this is a list to check before putting money with any broker.

Good Trading!

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  #5 (permalink)
Elite Member
Dartmouth NS
 
Futures Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker/Data: IB / IQFeed / Kids
Favorite Futures: Forex, stocks
 
bnichols's Avatar
 
Posts: 638 since Feb 2010
Thanks: 64 given, 459 received

Answer
This post has been selected as an answer to the original posters question Answer

I've used IB for FX for a few years now, mostly because I have other accounts with IB and wanted to dabble in FX. I trade spot EUR/USD exclusively, don't trade 6e at the moment but keep a chart open to compare with spot--nice to have access to futures via IB. I have no experience with other FX brokers so can't compare, but 2 of my sons do (Gain and FXCM) and the differences seem to be a matter of personal preference.

My experience with IB has been positive, given that I don't know what I may be missing with other brokers and that there are a few issues that bother some people. For example,

- IB's FX data is sampled (5 or 10 per second) rather than raw ticks but this doesn't affect what I do. Probably as a consequence the feed does not drop due to excessive load during events when the market gets busy as I've heard it might with other brokers.
- IB resets/reboots its servers typically between 11 PM and midnight EST every day. The impact on your 3rd party trading platform will vary but the reboot typically causes the standalone IB platform (TWS) to lose the connection, whereupon it will try to reconnect repeatedly until successful (can take minutes to hours in rare cases). Not sure what goes on between TWS and 3rd party platforms attached via the API during this time but Multicharts may need to be restarted to restore connectivity and in my experience the event will result in NinjaTrader database corruption more often than not.
- They do not officially offer historical tick data but Multicharts request and apparently receives tick data and manages to backfill tick charts one way or another (whereas NT apparently cannot).
- IB paces fulfillment of historical data requests according to strict rules (which I have yet to fathom), meaning the bandwidth is throttled and backfilling can take forever sometimes
- Resolution (tick size) for EUR/USD is 0.5 pips and spread is typically the same during peak hours. Pairs that are less frequently traded tend to have wider spreads.
- Commission based ($0.00002 per unit traded per order), minimum $2.50, meaning round trip will cost a minimum of $5.00
- Instead of lots (e.g., 100,000 units / standard lot) IB uses order dollar amount. No maximum but minimum is $25,000 to $30,000 after leverage depending on your nationality (e.g., for EUR/USD right now minimum order about 30,000 / 1.2950 ~ 24000 units)
- Leverage is relatively low (< 30 x) compared to brokers who cater to smaller accounts (100 - 400 x) and who typically allow mini-lots (10,000 units)
- While there is a mostly undocumented kludge to get around it TWS wants to shut down every day. The shut down time is configurable and during the trading week I simply bump the time back and forth manually (e.g., between 11 AM and 11 PM) to force TWS to stay active with no apparent consequences. If you lose track of the time unfortunately you lose data and will need to backfill.

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  #6 (permalink)
Site Administrator
Manta, Ecuador
 
Futures Experience: Advanced
Platform: My own custom solution
Favorite Futures: E-mini ES S&P 500
 
Big Mike's Avatar
 
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You can use IB Gateway to get around the automatic shutdowns. No need for the full TWS.

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  #7 (permalink)
Elite Member
Dartmouth NS
 
Futures Experience: Intermediate
Platform: MC, MC.Net, NT, TWS
Broker/Data: IB / IQFeed / Kids
Favorite Futures: Forex, stocks
 
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Big Mike View Post
You can use IB Gateway to get around the automatic shutdowns. No need for the full TWS.

Mike

Forgot about that :-/ Definitely an option if you don't need TWS features.

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  #8 (permalink)
Elite Member
Australia
 
Futures Experience: Advanced
Platform: NinjaTrader, Multicharts
Favorite Futures: Spot Forex, Gold, Silver
 
Posts: 176 since Oct 2010
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Jester View Post

2nd Brokers... finding a good broker for spot FX is difficult. I know for a fact that I want to trade through an ECN/STP broker with low commission. I am considering Interactive Brokers and would like to know others opinions on this as well.

Thanks in advance!

Jester


I recommend LMAX. Rock solid platform. Tiny spreads. Low commissions which unlike Interactive Brokers are pro-rata based on the order size. Almost zero slippage. Great customer service.

I used to trade spot fx with Interactive Brokers but I couldn't wait to find an alternate broker because -

- Commissions do not adjust according to your order size, so you to have to pay $2.95 each way minimum regardless of your order size. I like to scale in and out of my positions. With Interactive Brokers I was paying huge commissions every week so I had to work that much harder. By the end of the year it had really added up to a significant amount.

- Interactive Brokers software - Their Java based client is such a piece of crap software. Slow and fat. Used to take up at least 1GB of RAM. Don't know if that was memory leak bug in Java itself or just the IB crapware.

- IB data was dodgy. They filter their feed and very aggressive throttling on data generally. If I started Ninjatrader with 5-6 charts open in the workspace, IB would crap out after just filling 2-3 charts and then no data requests allowed for 5mins.

- Interactive Broker daily disconnect for security - minor irritation but annoying nevertheless. especially with having to enter in password and then 2nd password from card.

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  #9 (permalink)
Elite Member
somewhere, brazil
 
Futures Experience: Intermediate
Platform: metatrader
Favorite Futures: forex
 
Posts: 60 since Jul 2011
Thanks: 0 given, 23 received

For those that aren't US Citizens, Dukascopy is good. Their feed is really good. You can get it down to 1 tick, like the futures. I personally don't really care about ticks, and don't think there's any "magic" timeframe, but at least they offer it. They have a java platform, but I've never seen it go down once, unlike most MT4 brokers. They have a bridge for MT4 and Ninja, but I just use their jForex platform.

It used to be a PITA to open an account with them, but I think they now make it easier for people to open up smaller accounts.

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  #10 (permalink)
Trading Apprentice
Budapest, Hungary
 
Futures Experience: Intermediate
Platform: MetaTrader
Favorite Futures: Forex
 
Posts: 1 since Oct 2012
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fido View Post
I'm also looking for a new FX broker ... I used to trade with PFG
Since I'm not a US citizen I have more choices but it is really not easy to find a decent broker - especially not if you want to use NT. At the moment I'm considering Interactive Brokers and London Capital Group (no Ninja Trader).

What is bad with Ninja Trader? I am looking for a broker, too, and NT seemed OK, I almost chose it. It si good I found your post. Please, share me with your experience! Thx!

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