ECN, order execution, aggregators, liquidity. - page 12

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Rann:

For example, one counterparty gives a spread of 0.3 and a commission of $18, another counterparty gives a spread of 0.4 and a commission of $10. If we do nothing, the main turnover will go to where the spread is lower and we will pay $18 instead of $10 more often. Why do we need this? We add 0.1 to the spread to the first one and it already takes less, and if it does, we do not lose the extra $8 but compensate for it with a markup.

Almost all companies do this (including the big ones). And this forces vendors to compete with each other for turnovers and give good spreads and commissions, otherwise they drop out of the top buk and get nothing.

In order to understand this situation you need only to be able to convert spread and commission to one unit, either to pips or dollars per volume, because you still pay suppliers a total amount, not one summand, for example only spread in pips, as you claim. By converting the total charge to one unit, you can see that you pay the first counterparty 0.48 pips and the second 0.50 pips, or $48 to the first and $50 to the second. Obviously, it is always more profitable for you to direct the turnover to the first cheaper counterparty than to the second one, all other things being equal. In fact, your claim boils down to the fact that your company, like other companies, is unable to make a similar calculation of its total allocations to suppliers in order to choose the best one and only take into account one summand. If you have no objection to this point, your other claims can also be dealt with.
 
Andrei01:
your company as well as other companies are not able to do a similar calculation of their total deductions to suppliers in order to choose the best one and only consider one summand. If you have no objection to this point, then your other statements can also be dealt with.
Yes, and get them to hire you right away. You'll teach them arithmetic. Don't forget the arithmetic meter at home.
 
Rann:

You're not suing M-video, which sells a television a thousand times more expensive than Media Markt, are you? There are low-cost companies which can afford to operate with a minimum mark-up, but are slow to develop, or don't develop at all, have few services, etc. There are companies with more serious costs, they are forced to raise the price of goods. Many companies offer affiliate services and are forced to raise spreads even more to pay their partners. All this is legal. But the client also has the right to choose a company with lower costs.

Legally, a client trades with the company, not with suppliers, and the company provides them with its prices, which the client either accepts and trades with, or does not accept and does not trade with.

Doing business honestly does not mean allowing clients to pick their own pockets and find out how much and on what the company earns. To do business honestly means not to steal pips from the client in the form of artificial delays or slippage.

And the option to set high commission and earn only on it has a marketing problem. Large commission scares away clients and they do not pay much attention to the spread. In addition, as I wrote above, markups have another important function: regulating the commission of suppliers.

For example, one counterparty gives a 0.3 spread and an $18 commission, while another gives a 0.4 spread and a $10 commission. If we do nothing, the main turnover will go to where the spread is lower and we will pay $18 instead of $10. Why do we need this? We add 0.1 to the spread to the first one and it already takes less, and if it does, we do not lose the extra $8 but compensate for it with a markup.

Almost all companies do this (including the big ones). And this forces vendors to compete with each other for turnover and give good spreads and commissions, otherwise they drop out of the top buk and get nothing.

However, it should be noted that even among large vendors there is a thing that they give good spreads and commissions, but over time they worsen performance and often slip. You must have a tool to quickly detect and stop them. As soon as you give them a warning, everything comes back to a good level (as they say, it did not work). We have such a toolkit. So, there is turbidity in the higher echelons of forex as well.

That's why the most transparent scheme is ala the stock market, where almost everything is on an equal footing. Are you planning to go to cme?
 

Rann:

Conducting business honestly does not mean allowing clients to pick their own pockets and find out how much and on what the company earns. Doing business honestly means not stealing pips from the client in the form of artificial delays or slippages.

And the option to set a big commission and make money on it alone has a marketing problem. High commission scares away clients and they don't pay much attention to spread. In addition, markups, as I wrote above, have another important function: regulating vendor commissions.

Markup paid by the company is a way to steal pips from the client under the guise of non-existent commission to the vendors. The client does not care how the theft of pips occurs, in the form of artificial delays or artificial markups for the result and purpose they have the same.

The claim that clients are unable to add up the two sums that make up their total payment seems a bit odd.

As discussed above, the traders do not care about the commission of suppliers, it should be the task of a brokerage company to get good terms from the supplier, which it could offer to traders, because they only care about the total payment.

Also, many brokerages often fail to understand a simple thing - too much and inadequate commission negates the profitability of the scalper strategies for which they try to advertise themselves.

 
Andrei01:
In order to understand this situation, you only need to be able to convert the spread and commission into one unit, either into pips or dollars per volume, because you are still paying suppliers a total amount, rather than one summand, for example only the spread in pips, as you claim. By converting the total charge to one unit, you can see that you pay the first counterparty 0.48 pips and the second 0.50 pips, or $48 to the first and $50 to the second. Obviously, it is always more profitable for you to direct the turnover to the first cheaper counterparty than to the second one, all other things being equal. In fact, your claim boils down to the fact that your company, like other companies, is unable to make a similar calculation of its total allocations to suppliers in order to choose the best one and only consider one summand. If you have no objection to this point, you can parse your other assertions.
Of course there are objections. We don't deduct anything from the supplier, and we can count as well as you can, believe me. We are an aggregator. We merge suppliers into one cup and our clients' turnover goes to the supplier who is at the top of the beech. To remove a more expensive supplier from the top of the beech, you need to markup their prices. You do not seem to have understood what was said there.
 
Avals:
That's why the most transparent scheme is ala stock exchange, where almost everything is on an equal footing. Are you not planning to enter the cme?
No. I do not understand the stockbroking business, which means that I cannot build a good company. There are enough people and companies there without me, everyone has to do his own business.
 
Andrei01:

The company's markup is a way to steal pips from the client, under the guise of a non-existent commission to suppliers. The client does not care how the theft of pips occurs, in the form of artificial delays or artificial markups, because the result and the goal is the same.

The claim that clients are incapable of adding up the two sums that make up their total payment seems a bit odd.

As discussed above, the traders do not care about the commission of suppliers, it should be the task of a brokerage company to get good terms from the supplier, which it could offer to traders because they only care about the total payment.

Also many brokerage companies often fail to understand a simple thing - too much and inadequate commission negates the profitability of the scalper strategies they try to advertise themselves for.

Yes, I think it would be difficult to explain anything to you.

Let's get back to TVs.

You go to M-video, the TV there costs 10 000 and they give you an additional guarantee (similar to some services, like PAMMs).

Then you go to Media Markt and the TV there costs 9000, but there's no extra guarantee.

Why do you think that M-video is trying to steal a thousand from you? They offered you a price, you can agree or disagree.

Here they had written 10 000, you gave the card to pay it off, and the card was charged 10 500 (slippage), here the question arises as to what this is. A processing fee or theft? You are equating a surcharge with theft.

 
Rann:

Yes, I think it would be difficult to explain anything to you.

Let's go back to TVs.

You go to M-video, where the TV costs 10,000 and they give you an additional guarantee (similar to some kind of service, like PAMMs).

Then you go to Media Markt and the TV there costs 9000, but there's no extra guarantee.

Why do you think that M-video is trying to steal a thousand from you? They offered you a price, you can agree or disagree.

Here they had written 10 000, you gave the card to pay it off, and the card was charged 10 500 (slippage), here the question arises as to what this is. A processing fee or theft? You are equating a surcharge with theft.

M Video has cheaper prices) And if you go there and the prices are more expensive, you'll think it's a rip-off - it's always been cheaper).
 
Andrei01:

Also, many brokerage companies often fail to understand a simple thing - too much and inadequate commission negates the profitability of the scalper strategies they try to advertise themselves for.

Believe me, brokers understand it all. And advertising doesn't always have to be believed.

Most companies which work according to kitchen scheme do not benefit from scalpers at all, that is why some companies have clauses in their regulations about possibility of cancellation of deals less than 5 minutes and less than certain profit. At the same time they can easily write in their advertisements that scalpers are welcome.

Some companies may charge low commissions and give narrow spreads but if you start scalping you lose your account so fast that you get dizzy because you close a profitable trade after the 10th requote or with slippage which makes it unprofitable.

Markups are a fair approach. They increase the spread slightly, but that spread is stated and measured. Any trader can analyse the spreads and see if their strategy will work here or not. But artificial slippage is stealing pips. Or when stops only slide into minus and profits do not slide at all, that is theft.

 
zfs:
At M Video the prices are cheaper) And if you go there and the prices are more expensive, you'll think it's a rip-off - it's always been cheaper).
You just don't buy there if you're not happy with the price. But with artificial slippages you cannot back out of a deal, you think you buy at one price, but you get it at another. The fact that slippages can be market-based and not artificial will be omitted in this example.
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