You are right. IB has tight spread, but its commission structure makes it unsuitable for small players. Do u have a suggestion of a forex broker with tight spread and do not charge commission?
Maybe Oanda? I have never used them but I know some people who like their services and you can trade the mini/micro lots with them.
After testing IB, I would rather trade their Micro Currency futures (M6E, M6B, etc) than their spot forex. Commission for Micro Currency futures is USD $1.02 per side per contract. EUR/USD is $2.50 per side independent of lot size. SO Micro futures is better for currency newbies.
hippie, I'd agree that you are better off with the futures if you plan on trading FX w/ small size. If you do want to trade the physical currency though, I would argue you are still better off paying the commission at IB w/ a spread as tight as 1/2 pip vs a "commission free" broker with their commission embedded in wider spreads,
because you dont have the money it takes to enter the market in a PROPER way means you now want to get associated with a broker who rapes you and cheats you? I dont understand you people...I mean if you dont have the capital then start paper trading but going with a bucket shop assures you with 98% probability that you fail (95% traders fail anyway, 3% "bonus" for going with the worst execution partners and liquidity providers). But go ahead if you must. Maybe I should just stop warning beginners.
That would be your best choice. Also you should know that at IB you must obtain minimum 2000$ (which should be plenty to trade mini micro lots) balance to continue with margin trading and i think 10000$ is still required to open an account.
which is the right approach for IB to ensure clients possess enough cushion. What you suggest is to go to shops that underwrite sub prime mortgages. Everyone knows what happened. You always get what you pay for. Its like you have 10k and want to enter the airline business. I am sure you find some crook who promises to support you with the only motivation to separate you from your 10k. Are people really so blind to understand what is going on in this retail business???
micro currency futures have relatively low to no volume, which some people theorize is the reason behind the CME's push to change the leverage for spot forex trading to 10:1, which would in essence make trading the futures more desirable than trading spot cash which trades at roughly 40:1 margin. And as you know, you will pay for that low liquidity with price slippage. Currently (7:55) on micro EURUSD, 913 contracts traded with 2 pip spread (+ your commission) vs. 95,600 on big contract with 1 pip spread (+ commission). If you have limited funds or don't wish to risk much while learning to trade fx, then your 2 best choices are Oanda (already been discussed) or MB Trading, which you can open an account with as little as $400.
As a followup, here it is 930 and prime time for currencies, and the micro EURO is trading with a 3 pip spread and less than 1250 contracts vs the big contract 1 pip spread and 135k contracts. The liquidity for these micro contracts is just not there and you have to consider the spread plus the commish when trading these micros. Even the mini contract (1/2 the size of the big contract) has less than 2.5k traded and a 2 pip spread. I'm just saying.