FX broker And Market Makers?

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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video January 2014

newdigital, 2014.01.13 13:03

Difference between ECN brokers, Market Maker brokers and STP brokers

In this Forex broker video we discuss the main differences between ECN, STP and Market Maker brokers. This is especially useful if you are a new Forex trader so watch the full video for a detailed explanation.


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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video January 2014

newdigital, 2014.01.17 10:21

3. Market maker brokers pretending to be ECN brokers

If you desire true market conditions to trade in then you need to use an ECN broker for your trading. However, there are a lot of market maker Forex brokers that pretend to be ECN brokers so watch the video to see how they can fool new traders.



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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Broker's ; Are they with "zero-sum game" or "try their best" going to turn the market towards ?

newdigital, 2013.06.03 12:42

I did not understand sorry :) Are you talking about dealing desk brokers (DD) and non-dealing desk (NDD) broker?

  • DD brokers are mediating between us (traders) and the banks (liquidity providers), and because of that - DD brokers are making the market for us (for traders) controlling the market we are trading with (them).
  • NDD brokers are not mediating, that the traders are placing the orders directly to real market.

But people say that there are no so much differences between them concerning the traders' opinion ... "brokers are not our friends" - this is usual slogan which you can meet everywhere :)

My opinion: if you place stop loss and/or take profit so brokers can do nothing (not "sum zero game"; and not "try their best") ... nothing ... because tp or sl are executed by data, and datafeed is provided by broker, and this datafeed are slightly6 dofferent from one broker to an other one ... so, some traders are making EA or signal for some particular broker.

Example with some talking between traders:

  • one trader: "I created good EA and it is performing veru good with trading"
  • second trader: "performing in good way? that's fine. which broker?"

So, it is usual questions ... 

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As I said - hidden sl/tp is used with complex systems which are based on many indicators and one EA is trading for many pairs taking onto considerationmany timeframes on the same time (MTF EAs). Those kind of EAs are using hidden tp/sl and/or tp/sl which were coded inside the code of the EA. But irrespective off - those EAs are using hard tp/sl just in case of electricity will be switched off and so on (because hidden/coded tp/sl is not executed on the brokers' server; but hard tp/sl is directly executed on the brokers' server even if you will close your Metatrader for example).


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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video August 2013

newdigital, 2013.08.25 15:16

81. The Role of the Retail Forex Broker

Before the internet, very few individuals traded foreign exchange as they could not get access to a level of pricing that would allow them a reasonable chance to profit after transaction costs. Shortly after the internet became mainstream however several firms built online trading platforms which gave the individual trader a much higher level access to the market. The internet introduced two main features into the equation which were not present before:

1. Streaming Quotes: The Internet allowed these firms to stream quotes directly to traders and then have them execute on those quotes from their computer instead of having to deal over the phone. This automated trade processing, and therefore made it easier for firms to offer the ability to trade fx to the individuals and still be profitable.

2. Automatic Margin Calls: What is not so obvious but what was perhaps even more key is that the internet allowed an automated margin call feature to be built into the platform. This allowed firms to accept cash deposits from clients instead of having to put them through the process of signing up to trade via a credit line. As we discussed in our last lesson it is very difficult to get a credit line to trade FX and for those who do it is a lot of paperwork and hoops to jump through before they can begin trading. This would have made it impossible to offer FX trading to smaller individual traders as the cost involved in getting them set up to trade would not be worth it.

As the electronic platform allowed clients to deposit funds and then automatically cut them out of positions if they got to low on funds, this negated the need for credit lines and made the work to get an individual account open well worth it to the forex broker from a profit standpoint.

If you don't understand all the ins and outs of margin at this point don't worry as this is something that we are going to go into much more detail on in a later lesson.

For now it is simply important to understand that what these firms did was take all the traders who were not big enough by themselves to get access to good pricing and routed their order flow through one entity that was. This allowed these firms access to much tighter pricing than would otherwise have been possible which was then passed along plus a little for the brokers to the end client.

So now you can see why although the forex market has been around for a relatively long period of time, individuals have only started to trade the market over the last few years.

Anther key thing that it is important to understand here is that the larger a firm gets in terms of trading volume, the greater access that firm has to tighter prices and liquidity and the more likely that firm is to be able to pass on better pricing and execution to their clients.



Executing Trades - Trading Basic Principles - Trading Flexible MetaTrader 5 trading
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video October 2013

newdigital, 2013.10.10 14:44

147. An Introduction to ECNs

This video provides an introduction to electronic communications networks (ECNs), systems that allow buyers and sellers of stocks to trade directly without an intermediary.

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Most forex traders participate in the forex market with forex brokers. There are mainly two types of forex brokers: market makers and electronic communications networks (ECNs). In this article we want to introduce the latter type of brokers, the ecn forex broker.

What is an ECN forex broker?

ECN forex broker is a financial expert that provides the clients with direct access to other forex participants in the currency market by using electronic communications networks (ECNs). Unlike market makers, which always trade against their clients to make profit, an ECN forex broker only creates opportunities of trading between forex traders.

How does an ECN forex broker work?

The ECN forex brokers provide a medium by passing on the prices for different market participants such as banks, market makers and other traders in the market. Then the best bid/ask quotes will be displayed on the trading platforms based on these prices. ECN forex brokers also serve as counterparties to forex transactions, but it is a settlement that they operate on instead of pricing basis. While fixed spreads are offered by some market makers, spreads of currency pairs can be very different, determined by the trading activities of the currency pair. In active trading periods, sometimes you cannot get ECN spread at all, especially in those very liquid currency pairs such as the majors (EUR/USD, GBP/USD, USD/JPY, USD/CHF) and some currency crosses.

Pros and cons of the ECN forex broker

The ECN forex broker has both advantages and disadvantages. The pros and cons of the ECN forex broker are as follows.
The pros of the ECN forex broker can be presented in following aspects.
Traders can usually get better bid/ask prices for they are derived from multiple sources.
At certain time traders may trade on prices with no spread or with only very little spread.
Genuine ECN forex broker will pass on the orders to a bank or other trading participants on the opposite side of the transaction instead of trading against the traders.
It is very likely that the prices on the ECN forex broker are more volatile.
Traders can take on the role of market traders to other traders on the ECNs since they can offer a price between bid and ask.
The cons of the ECN forex broker can be presented in following aspects.
Many ECN forex brokers do not provide integrated charting or new feeds.
Some trading platforms are not so easy for traders to use or operate.
Since there are variable spreads between the bid and the ask prices, it may be difficult to calculate stop-loss and breakeven points in pips in advance.
Forex traders are obligated to pay commissions for each transaction.

It is obvious that there are both pros and cons of an ECN forex broker. Traders have to take many factors into consideration when choosing a forex broker.





Price Data - For Close By - Trade Close By - Trade
Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video September 2013

newdigital, 2013.09.30 11:06

134. Choosing a Forex Broker Part III: Transaction Costs

A look at the transaction costs involved in forex trading (the bid ask spread, commissions, and how trades are executed) so that FX traders can properly understand how much their currency broker is charging them.



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Sergey Golubev  

Forum on trading, automated trading systems and testing trading strategies

Something Interesting in Financial Video September 2013

newdigital, 2013.09.30 11:07

135. Choosing a Forex Broker, Part IV: Technology & Add-ons


A look at the technical and value-added features (like news, charts, ability to trade from the web, etc) that currency traders should consider when choosing what forex broker they select.




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