Discussion in 'Forex Brokers' started by eagerbeaver, Sep 26, 2005.
I'm trying to decide where to open an account. I'm a small fish. 20k account size. Help!
I'm with RefcoFX with a real account, and have traded a demo with Oanda.
I use the charts at www.dailyfx.com, which has the same quotes as my real refcofx account.
I think it might be a toss up between to two.
Refcofx spreads are relatively larger than Oanda
For example, now, EURUSD, Refcofx spread is 3 pip, Oanda is 1.5 pip.
Small fish better start small, Oanda size can start from $1
I've used Refco for about 2 years. To be honest, I think I've been ripped off a few times -- bad ticks, stops magically taken out by one pip, canceled orders being filled. But I suspect that's just how it is in Forex. In Forex, the broker is on the other side of the trade and they know everything about your position. I don't know if another broker would be any better, which is why I never moved my account.
I think if I were to move my account I would probably go with Gain (Forex.com). Basically, I want an account with someone who I don't will run off with my money. If I had a bigger account, I would trader currency futures instead of Forex.
I'm trying to finalize this one myself. I don't like Oanda's margin rates though, In practice testing I took on a 5 lot position and my margin used was 25K, when raised the trade level to 10 lots the margin used went up to 60k vs 5k / 10k @ Refco. Something to think about if you ever trade larger sizes.
Something to think about:
* Open up a RefcoFX account and deposit $500.00.
* Set the leverage at 200:1
* Trade 1 10k lot ($50.00)
* Each pip move = + or - $1.00 (EUR/USD)
* Be sure to set a stop or max loss will be $450.00 on a 450 pip move against you.
If I were to trade cash forex I would want to make sure that my broker was using a ECN model instead of a "bucket shop" model.
I just can't help but think that futures are a better way to trade forex because of the smaller spreads, lower commission and access to "real" options
What do you mean?
Could you give an example?
An ECN (electronic communication network) is a place were rival liquidity providers compete to have the best bid or ask. You can take part in these market by splitting the spread and stepping ahead of the big players.
A "bucket shop" is were you trade against the broker. They force you to give up the spread every time(the difference between the bid and the ask). They do not offset you position but rather hope that you blow up your account so they can keep your money. To make sure this happens they execute "trades" that trigger your stops.
I know that interactivebrokers has an ECN model. I am pretty sure that hotspotfx has an ECN model as well. Most of the ads that you see(deposit with credit cards, trade a market that moves!etc) are for bucket shops
I trade with RefcoFX, which I assume you would put in the "bucket shop" group. But their quotes are within a few pips of Yahoo quotes, and almost identical to the morning news.
I usually trade on a 1 day time frame and find that a 100 pip stop might get taken out, but I don't think Refco is behind it. The big moves usually happen when news comes out.