good advice on choosing a broker
Any recommendations about the brokers are prohibited on the forum.
But you can read this thread/post about how to select the broker:
Broker selection: https://www.mql5.com/en/forum/446683
- 2023.05.02
- www.mql5.com
Do you have any good advice on choosing a broker? I suspect my broker might be manipulating my data when I'm making profits. Can anyone give me some advice?
• Execution stays consistent during volatility
If apocalypse is running through the streets and your EURUSD happily tics along with 1 point spread, you are not trading the real market, but the the internal ecosystem of the broker. In the real world liquqidity structure change when volatility increases.
• Regulated
Always investigate the lincenses of the broker. If they have a market maker license they are legaly allowed to take the other side of the transaction (B-book) which introduces a conflict of interrrest. There is a well documented case where a trader lost millions in profit because the popular and regulated broker demanded the closure of positions the broker was on the recieving end.
• They don't start acting strange once your account starts growing
This can and will happen with brokers with a market maker license. They are not transparant about which book you are trading your symbol still states .ECN/.STP etc. Typically you will start trading the B book because it is more profitable for the broker (70% lose statistically, is what brokers display on their website, in reality it is higher), so easy predictable profit. When it turns out keeping you on the B book is unprofitable, they will transfer you to the A book but they will not inform you about it. As a trader you will experience this as worse execution, slippage and less constant spread because your orders are now relayed outside the brokers eco system.
So the best broker is a single book broker without a market maker license.
If apocalypse is running through the streets and your EURUSD happily tics along with 1 point spread, you are not trading the real market, but the the internal ecosystem of the broker. In the real world liquqidity structure change when volatility increases.
Always investigate the lincenses of the broker. If they have a market maker license they are legaly allowed to take the other side of the transaction (B-book) which introduces a conflict of interrrest. There is a well documented case where a trader lost millions in profit because the popular and regulated broker demanded the closure of positions the broker was on the recieving end.
This can and will happen with brokers with a market maker license. They are not transparant about which book you are trading your symbol still states .ECN/.STP etc. Typically you will start trading the B book because it is more profitable for the broker (70% lose statistically, is what brokers display on their website, in reality it is higher), so easy predictable profit. When it turns out keeping you on the B book is unprofitable, they will transfer you to the A book but they will not inform you about it. As a trader you will experience this as worse execution, slippage and less constant spread because your orders are now relayed outside the brokers eco system.
So the best broker is a single book broker without a market maker license.
And most of these ECN/STP brokers are not true ECN/STP.
I agree. ECN and STP are basically misnomers. Almost every retail FX broker-dealer has to intervene via execution priority by lot size and/or aggregation of orders, so ECN/STP broker-dealers are "hybrid" broker-dealers at best.
Having said that, be careful what you wish for. A true DMA (direct market access) FX broker-dealer throws you in with actual institutional traders who trade an average of 50 to 100 standard lots per order. The odds of getting mini or micro lots executed timely, or whatsoever, are slim to none in that environment.
I agree. ECN and STP are basically misnomers. Almost every retail FX broker-dealer has to intervene via execution priority by lot size and/or aggregation of orders, so ECN/STP broker-dealers are "hybrid" broker-dealers at best.
Having said that, be careful what you wish for. A true DMA (direct market access) FX broker-dealer throws you in with actual institutional traders who trade an average of 50 to 100 standard lots per order. The odds of getting mini or micro lots executed timely, or whatsoever, are slim to none in that environment.
Nonsense!
In a DMA setup, the broker acts as the prime broker. They provide the credit line and the technical "pipe" to the interbank market. The Tier-1 banks (liquidity providers) don't see your 1 microlot, they see the Broker's total flow. The broker’s technology handles the micro-lot distribution internally before passing the net volume to the market.
The lot size is irrlevant. Study order matching algorithms which power (any) market. And with market i mean real market, not a market maker broker. Any market order is matched with a limit order. CME published how their order matching works, in OTC market it is similar albeit less transaprent.
To suggest sticking with bucket shops is also nonsense.
Hybrid brokers often use a B book model (taking the opposite side of your trade). While this is common, it is not "better" or "safer" than DMA; it simply means the broker profits when the trader loses, when in fact DMA is often more transparent because the broker has no conflict of interest in the trade's outcome.
In a DMA setup, the broker acts as the prime broker. They provide the credit line and the technical "pipe" to the interbank market. The Tier-1 banks (liquidity providers) don't see your 1 microlot, they see the Broker's total flow. The broker’s technology handles the micro-lot distribution internally before passing the net volume to the market.
Counter-nonsense, right back at you!🙄
True direct market access (DMA) is direct market access where you are trading at the institutional level with passthrough spreads and the broker-dealer charges trade volume tiered commissions. Such broker-dealers publicly disclose that execution of small lot sized trades will suffer. Your "example" of a DMA broker-dealer merely creates another misnomer. Well done.
Confidence is not synonymous with competence.Counter-nonsense, right back at you!🙄
True direct market access (DMA) is direct market access where you are trading at the institutional level with passthrough spreads and the broker-dealer charges trade volume tiered commissions. Your "example" of a DMA broker-dealer merely creates another misnomer. Well done.
Confidence is not synonymous with competence.When there is nothing left, argue over the dictionary definition. I am talking about how the actual business works in retail trader land. Perhaps what i describe is technically STP. In retail trading, pure non-aggregated DMA is almost impossible and trading microlots at institutional level is nonsensical.
Bottom line best thing is what Paul described wrongly as a market maker (did no hear you whine about that) is the strict A book broker who just charges commision, spread markup and swaps, and passes the trade to the (interbank) liqiuidity provider(s).
- Free trading apps
- Over 8,000 signals for copying
- Economic news for exploring financial markets
You agree to website policy and terms of use