ECN, order execution, aggregators, liquidity. - page 22

[Dmitry Rannev]

Andrei01:
Do the counterparties take a different spread for each transaction once for opening and closing? What happens when a trade is opened and closed with different counterparties, is there a double payment here?

The spread, as such, is not important. There is an opening or closing price that one party offers to the other and a network fee that one party takes from the other.

[Dmitry Rannev]

Andrei01:
Let's look at a simple example to be clear. For example, take EURUSD, quality counteragents charge about 0.2 minus. The rest is the company's profit; slippage is covered by the trader and it may go either way. The question is whether the company takes this payment as a fixed amount or depending on profitability of the transaction the company will be profitable in any case.

To start with, there are plenty of low-quality companies that offer zero spreads. The spread is not an indicator. Of course, if it's more than 3 points (in the 4th digit), that's cool, but anything below a point is normal.

And it's better to look at examples on potatoes.

The bank sells potatoes for 10, for example, the counterparty buys them from the bank and sells them to us at 11, and we sell them to the customer at 12.

Then we bought the potatoes back from the customers for 7, for example, and sold them to the counterparty for 8, and he sold them to the bank for 9.

As a result, the client lost 5 roubles, the bank earned a rouble, and we and the counterparty earned 2 roubles each.

If the client had earned on the potatoes, the bank would have lost and we and the counterparty would have earned 2 roubles each anyway.

[Andrei01]

Rann:

If the client had made money on the potatoes, the bank would have lost, and we and the counterparty would have made 2 roubles each anyway.

How can the bank lose if it is also an intermediary?

[Avals]

Andrei01:
How can the bank lose if it is also the intermediary?

the bank is not the intermediary but the other party to the transaction. Like the DC.

[Andrei01]

Avals:
the bank is not an intermediary, but a second party to the transaction. Like a DC.

The second party to the transaction cannot be the intermediary?

[Avals]

Andrei01:
Can't the other party to the transaction be an intermediary?

can, but not in this case) In general, Client--Intermediaries--Bank

[Andrei01]

Avals:
may, but not in this case) In general, the client--Intermediaries--Bank

It is unlikely that the bank is trading its own money and taking a risk, most likely with customers' money or being overlapped with another bank.

[Dmitry Rannev]

Andrei01:
How can a bank lose if it is also an intermediary?

An intermediary between whom and whom?

[Dmitry Rannev]

Andrei01:
It is unlikely that the bank is trading its own money and taking a risk, most likely with customers' money or being overlapped with another bank.

And that other bank is overlapped where? At a third bank? And where is the last one overlapped?

[TheXpert]

Rann:
And where does the latter overlap?

And nowhere, bankrupt )