Registered: Jun 2011
07-05-12 06:46 PM
Quote from Chicago_CTA:
I'd start with FXCM, and talk your broker down to a 1.3-1.5 pip spread on EUR/USD.....see how you like it before committing your total funding amount. GL!
Good luck with that... they won't budge on spread on standard accounts.
If you ask them about it, even showing that you do volume, they'll suggest you go to their active trader platform, which will reduce the total cost a bit. The minimum deposit for AT is $50,000.. but they'll let you deposit as little as $5k so long as you turn at least $10MM a month is notional volume.
If you push enough volume on top of that, they'll give you a commission break: Do half a billion a month in notional volume, and they'll cut a dollar from the RTL commission ($7 to $6 RTL.)
Push a yard ($1billion) and they will cut it by another $2, down to $4 RTL.
With a "typical" spread of 0.7 (as their site says) you'd be effectively paying 1.4 pips total cost out of the gate on EUR/USD, or 1.1 pips total cost if you push a billion dollars of volume. Though, this is 'typical' during the most liquid periods of the day, I've seen it float higher and it 'averages' a bit higher than 0.7 during the London and NYC sessions last I observed.
So in perspective, you're paying for their API indirectly though the additional cost of trading and high volume requirement. Oanda might be $600 a month for the API (and I agree it's a little whacked) but their spread on EUR/USD during active sessions is 1-1.2 pips without any volume requirement.
Put another way, let's say you do 50 million a month in volume:
Assuming Oanda's average spread is 1.2 (it stays at 1pip flat during London NYC overlap session, but most other active sessions it's 1.2) your total P/L impact in spread costs is: $6,000
At FXCM, your standard account (2.3 pip average spread) would run you $11,500
And your Active Trader account (using example numbers above) would run you $7,000
So at that volume level, the $600 API fee you avoided would indirectly hit your P/L by a grand difference in cost.
Of course, this is given 50MM in volume, as the number goes higher the difference increases, but lower and Oanda's API becomes more expensive. You gotta fit this to what you expect to push... if you're only going to push 20MM in volume, then AT would be better.
This is why I suggested looking at FIX and being broker portable. If you ever consistently push 500MM a month, you're in a position of power to move your business.
In all honesty, the $10MM to get the active trader account isn't hard to do for a day trader... so this would be the way to go should you choose FXCM. Of course, I have no idea how they tie AT into their API, that's a question for them.