I don't understand the rational behind this commentary. I regularily trade 5 mini lots and more with FXCM. How is it that I could be considered "insane"? Thanks for any input. L
Well, I'm under the impression they make their money through the bid/ask spread. The idea that they trade against their customer accounts is novel, but does not make a lot of sense. The currency markets seem much to complex to simply base a trading position on/against the combined positions of their customers. From a broker business perspective, it would make more sense to stick to their bread and butter and offset the net postion of their clients in the market. And even if they did take the position opposite mine, I don't see how that qualifies me as being "insane" any more than another trader in the market taking a position against mine. Somebody has to take the other side. So, I suppose I would doubt that FXCM makes its money by trading against its customer accounts, but lacking insider proof of this, I would add that I really don't care if they are on the other side of my trade. L
Yes, they take the spread. Guess who gets the crappy end of that spread? Most forex firms, including FXCM, trade against customer funds for their income. They set the spreads however they choose. This is why their spreads are wider than ECN firms which charge a commission. No, it is not in their interest for you to fail, but it is not in their interest for you to get the best fill either, as that is money out of their pockets. I was not one of the guys that said you were nuts to use them. If you are good at what you do, FXCM is just fine. The problem is that you will pay a pip or two more than you need to usually, and occasionally get requoted, which is the worst part. You will not get requoted using an ECN, and you will get the best fill available, usually via several sources. There is no conflict of interest as its their job to get you the best fill (an ECN takes nno position). All income to them is via commish, which depending on the firm, is as low as a quarter pip or so. Trading with firms such as FXCM, Oanda, etc is fine when you are doing minis. When you do full size, it just doesn't make sense unless you are a position trader. Then it doesn't really matter. (except for security of funds).
you are correct! I believe FXCM offers Currenex through their Prop FX subsidy. How many brokers are offering Currenex outside the Prime Brokers? You clear through a Prime broker?? Correct??
for ecn brokers when you say you can recieve as low as a quater pip does commission change depending on the pair your trade
Incorrect, 5 million is just the standard max size you can get it expanded and they will let you swing as big as the system/market makers can handle. I know you could do 10 million maybe up to 20 pretty easily. Whatever you take out ---the market makers put it right back into the system. If you need a higher limit --just call IB. It is that simple.
The commission is as low as a quarter pip ($2 - 2.50 per 100k traded). The spread itself can get that low as well, but most don't go less than a half pip. The commission charged is not dependent on the pair (as far as I know); however, the spread most definitely is. Jay