Structure and composition of FOREX market participants - page 9
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So, we compare the market (real-time) values of quotes with the values in the broker's terminal:
Maybe this will enlighten you, also found on the internet.
WHO IS THE QUOTE PROVIDER?
One of the most important questions for the novice trader is where does the DC get its quotes from. In the stock market, it is always clear that there is a single financial institution that forms the price of securities or other commodities with itself. The Forex market does not have a specific location; there are tens of thousands of financial institutions providing possibilities for trading on this market. In traders' environment such organizations are called brokers. It is worth knowing that all real operations with currencies take place through banks, while the Forex market is usually called the international interbank market. When you buy currency through a broker, you cannot ask for its physical delivery; you can only sell it within that broker. The price of the currency you buy changes almost every second, but there is always a difference between the price you buy and the price you sell. So where does this difference come from and how does the broker form the price? The answer is simple, because the liquidity providers are banks and it is the banks that provide the dealing desk with the price at which they are willing to buy the currency. Further, the quotes may be influenced by data from other information systems, competing companies, and external counterparty partners for hedging positions.
It comes to the point that the broker can use the features of the software to manipulate the current prices. Such practices are more common in the so-called "kitchens" which have nothing to do with the esn or stp brokers. The kitchens manipulating the market quotes in most cases do not have licenses from regulatory organizations and attract attention only from beginning traders. Generally, due to the high liquidity of the forex market all quotations at different brokers in most cases differ by 1-2 pips maximum. Such difference taking into account existing spread makes arbitrage tactics of deals impossible. Arbitrage trade is a trader's strategy based on the difference in quotations at different brokers. You can find a lot of arbitrage Expert Advisors on the Internet, but the possibility of earning by using these robots is very doubtful. Now we are moving on to the details of the price formation at the interbank foreign exchange market (Forex).
Why is there a difference between the price at which a currency pair is bought and sold?
Having investigated the matter the broker applies some filters to the traders before they send the quotes which makes them profit. One such filter is the spread, which is the difference between the buy and sell price. Conscientious brokers earn only on this difference, but most DCs also earn from lost deposits of attracted clients. Spread differs at different brokers and depends not only on the speed of receiving and processing of quotes but also on the broker's desire to earn. Some brokerage companies initially set a fixed spread for traders, which indicates a kitchen work method.
Solid brokers providing the possibility to trade on the ECN accounts always have floating spreads and depend on the level of volatility. The ECN (electronic communication network) system includes several leading liquidity providers and is used by many international brokers with a good regulation. Quotes for ECN accounts at different brokers are always the same, but spreads can significantly increase during the release of important news. The lowest commission per trade is on the currency pairs with high liquidity. First of all, it is the currency pair Euro and 5 other major currency pairs where the US dollar appears.
Sooner or later any beginning trader wonders how to minimize the spread. This is where rebate services that refund a part of the spread paid to the broker can help. Besides, if you have a considerable amount of capital, you can ask the broker for special terms of cooperation. It should be understood that the Forex market is not a charity organization, and there are many intermediaries between the trader and such major financial institutions as Deutsche Bank or J.P. Morgan. It is the mentioned biggest banks, which are the initial link in the formation of quotations. All other financial institutions are just an intermediate link, receiving data from these financial institutions.
Conclusions
From all of the foregoing it can be concluded that the broker must have at least a contract with Currenex. This organization collects the quotes from the seventy largest banks in the world in its own API, but it forms them into one whole. It should be noted that the number of banks, the broker will have an agreement with, may be different. The more liquidity providers will upload their data into this program for a certain broker, the better it will be for the trader. If your broker has an agreement with only two or three liquidity providers, this will be reflected in an extremely high spread. The exception is when the spread at the broker is fixed, but there are a lot of questions to such brokers regarding the transfer of trades to the interbank market. The manipulation of quotes for your own profit in most cases takes place at unlicensed brokers who make money on so-called "sinking accounts". The major international brokers regulated by the FCA or the NFA will never artificially interfere with the stream of quotes as it may have consequences. Once you have understood the process of forming the quotes you may choose the broker that offers the most profitable spreads and does not interfere in the process of forming the quotes. Only in the kitchens it is possible to form the so called spikes that knock out the stops of simple traders. If the broker has an official licence from an international regulator and provides you with non-market quotes, then you have the right to write a complaint about it.
The complaint should be written directly to the regulator who issued the license. If you find any cases of artificial interference in the formation of quotes, the broker will be given a hefty fine or the license will be revoked. Do not be lazy to check your broker's quotes against other international brokers, compare the spread on the news and the accuracy of opening a deal at the stated price. In the case of market execution, your order to buy or sell a currency pair may not be executed at the price you see on your monitor. If your broker offers the so-called instant execution method, then you will not be able to open a trade at all for some time during the news. The price changes and it takes time to open a position, as you work through intermediaries. Study the broker's trading conditions carefully before opening a real account with the broker. Do not be lazy to ask customer support what their liquidity providers are, where you can view the average spread and what their license is. Read the offer agreement before opening a trading account with your chosen broker.
But why do they want to convince me that the broker determines the quote by the last performed trade with the price from the broker's market?
That's your explanation I'm fine with,
I just want to know how I can control my broker to make sure I get the right ECN quotes in the terminal and not falsify them? Is there an access channel to the system? It is exactly what is necessary for traders who do not want to be fooled. Simply put - where to look?))
Isn't there a test in the link that I gave? Maybe you are not satisfied with the same text :) Why did you put the link in the first post? What do you want to foist on us ??????, everything is clear with Moex......
https://www.mql5.com/ru/forum/12342#comment_511651
Wasn't there a test in the link that I gave, you probably did not get the same text :) Why did you put the link in the first post? What do you want to impose ?????? on us, it's all clear with Moex......
https://www.mql5.com/ru/forum/12342#comment_511651
I get it, but it's a truncated article in the lib, so I didn't get it right away.
Sergey, I shake your hand. The topic is closed)))
I'll post the communication with the broker on this topic here as more information becomes available.
I get it, but it's a truncated article, so I didn't get it right away.
That's it, I won't bother you again, honestly :) I know you didn't read it. You have other goals.
I sincerely apologise - all the best.
I will not bother you again, honestly :) I understand that you have not read anything, you have other goals.
Sincerely apologies - all the best
I'm worried about traders so they won't get dumped by fakes and will be able to control quotes.
I don't want you to worry about my work 500$ (minimum deposit to open ECN-account with my broker), so I took care about this topic with quotes control in the trading platform.
It's not a big deal, I'm just worried about traders so that they don't lose out on fakes and know how to control quotes.
You have to know how to fight for your hard-earned $500, so I was concerned about controlling quotes in the terminal.
It's not a big deal, I'm just worried about traders so that they don't lose out on fakes and know how to control quotes.
You have to know how to fight for your hard-earned $500, so I was concerned about controlling quotes in the terminal.
You may go through all kinds of contracts, with any broker, brokerage company or legal entity and you'll see that your fight is useless, unfortunately))).
How forex quotes are generated
Dealing centres are also clients of information systems and provide the total flow of quotes to their clients, including their own quotes, as well as quotes, on which their own clients' transactions have been performed.I am convinced that your fight is useless, unfortunately.)
You don't say, there are courts and it is possible to recognize some clauses that worsen the conditions for one of the parties. That's why all the kitchen brokers are sitting in the shadows, they are not licensed. And since the broker is open, it is in his interest not to create problems for himself and his clients. Although the quality of courts is not better than that of brokers, I agree. Another topic already.
The broker declares that on an ECN account orders are executed according to the market - so please execute according to the market and not your own quotes.
My letter to Currenex I also sent - I tried a certain Chris, the director, about partners at whom the quotes of informational system are visually available to traders for the purpose of verification with quotes in the broker's terminal for ECN accounts. If I understand they provide the connection of market participants to their information system for a fee, but I do not need to connect, but only to peep somewhere))) ) He probably stunned by such a simple statement of the question, eh?) I'll wait for an answer.