see http://www.investordictionary.com/definition/ECN.aspx ;-) and yes one can trade curr. futures via an ECN, e.g. IB seems to be functioning as an ECN and offers curr. futures i understand, but this is not my area... good luck to you cloned777777 ;-)
imho If you trade against your broker there is no way you can win because they are not in the business of offering you a service for spreads. They need you to lose or they will lose. If on the other hand your broker hedges all your positions against an outside source, such as a bank, then your broker will want you to trade as much as possible because each time you enter a trade you give them the spread (their bread and butter) and they will want you to win so that you can tell to the world how wonderful they are. This sort of broker will do whatever needed to make you happy. If you are a consistent winner they will piggyback your trades so that they can also collect a piece of the cake. Could it be that I am too naive?
This is a fascinating thread. Ultimately, I think with the current Forex system of free information, free charts, small account sizes, and unsophisticated traders, there are ways to beat the system if you're more sophisticated, and say, using better data feeds. Forex brokers don't like being "taken advantage of" by people who beat the system. So don't do those things, and they'll leave you alone.
Here's something I found that should be of interest to all who trade forex. Regulatory ambiguity resulting from the Zelener decision is one of the major issues the CFTC is addressing in its reauthorization this year. The NFA and forex firms weigh in. When the Commodity Futures Trading Commission (CFTC) goes through its periodic Congressional reauthorization this year, retail forex, in particular the Zelener decision, will be at the forefront of review. The Zelener decision produced confusion in determining when a contract is a futures contract. In CFTC vs. Zelener, the U.S. Court of Appeals for the Seventh Circuit ruled that the forex contracts offered by the defendant were spot, rather than futures contracts. Because the CFTC's jurisdiction is limited to futures contracts, the court held that the CFTC lacked jurisdiction to bring an enforcement action against the forex dealer or its alleged agents for fraud. In the Commodity Futures Modernization Act of 2000, Congress provided a clear distinction between retail participants in foreign currency transactions, who would be subject to regulation and those participants who would not. Although the CFTC's jurisdiction on off-exchange forex contracts was clarified by the CFMA, that jurisdiction depends on a determination that a forex contract is a futures contract. "The NFA has taken a very visible role there; we firmly believe Congress should do something that essentially overturns or corrects the problems that were caused by the Zelener decision," says Dan Driscoll, COO at the National Futures Association (NFA). It's also important to remember that while the Zelener decision is related to a foreign exchange case, that did not limit its applicability to foreign exchange, so the NFA believes the fix has to go beyond forex to all commodities." ZELENER "FIX" Registered forex firms are keeping an eye on the Zelener issue as something the CFTC's reauthorization of 2005 needs to resolve. "Firms would be interested in a Zelener fix that clarifies [that the contracts in the Zelener case] are indeed under CFTC jurisdiction, then it would require firms not currently registered to become registered. And if solicitors [of these contracts] are brought under CFTC jurisdiction those firms would have to make a choice, 'Am I going to stay in this business and go through the registration process and be subject to CFTC and probably NFA jurisdiction, or am I going to get out of that business.' Those are the major factors. "It's bad public policy to allow people to set up boiler rooms and bucket shops that offer these things that look like, smell like and act like futures contracts. And then cleverly being able to work their contracts by saying 'you can't come after us because it's not a futures contract.' That is in our view what it comes down to," Driscoll says. Dan O'Neil, principal at Xpresstrade, says, "We wouldn't be surprised to see Congress attempt to define more clearly the differences between futures, spot and forward contracts. This was, after all, the crux of the issue in the Zelener matter. Ultimately, the CFTC's enforcement case was dismissed because it was found that forex contracts were outside the [CFTC's] jurisdiction, which is limited to futures contracts." Mark Galant, CEO at Gain Capital Group, says, "After the Zelener decision, there is no question that the reauthorization will include specific language about the CFTC's jurisdiction over retail forex." Enlarge 200% Enlarge 400% REGISTERED FOREX FCMS Futures has tracked down the main players in the retail e-forex business to provide you with an idea of their experience, flexibility and customer support. This table includes two lists: forex-only firms and futures and forex firms. Forex-only firms are ranked here by adjusted net capital. Firms offering trading in both cash or e-forex and futures are not included in the fotex-only ranking because their futures-related capital does not necessarily reflect just forex market activity. Firms offering both futures and forex are listed separately in alphabetical order. THIRD PARTY LOOPHOLE Besides the Zelener decision, there's a lingering loophole that allows unregulated third party soliciting agents who do business through registered members to avoid CFTC registration. While exchanges, which are already regulated, won't be affected by regulation, they welcome a resolution to the Zelener loophole. "The loophole in the CFMA enables unscrupulous individuals to create socalled 'bucket shops' that advertise on late night TV and target the unsuspecting customer with false promises about foreign exchange trading," says Terry Duffy, chairman of the Chicago Mercantile Exchange (CME). "Unfortunately, some people might think these transactions occur on an exchange, but they do not, and so they have none of the investor protection provided by a regulated exchange. The issue is a growing concern to CME and that is why we strongly urge Congress to close the loophole by reversing the Zelener case in order to protect individuals from potential fraud." Galant says his firm advocates mandatory registration of introducing brokers and other third parties. Others agree. "Everyone doing business with a retail client should be registered," says Muhammad Rasoul, COO of Global Forex Trading. "What : we're looking for is definition and consistency, we just want to make sure everyone has to play by the same rules and that it's clear who's going to be regulating us." Third party solicitors can be any individual or firm already in the business of trying to encourage the retail public to trade forex. This includes NFA members, introducing brokers, commodity pool operators or commodity trading advisors. The NFA works closely with the CFTC and has been working to expand its authority in the forex market, but it would like to see the CFTC gain more authority over third parties. "There is a myriad of ways that this can be accomplished," Driscoll says. "The NFA position is that we just waret to see the general principal fulfilled, we're not particular in the specific way it gets done as long as the overall big picture solution gets accomplished." Driscoll says one of the perceived loopholes in the CFMA is that the jurisdictional language focuses on who the counterparty is but is silent on individuals or firms that might be out soliciting the public. "The whole idea that soliciting agents are brought into CFTC jurisdiction is something that is on the table for CFTC reauthorization," Driscoll says. "There tends to be more across the board support for doing something...some sort of changes that anyone who's involved in soliciting the public on retail forex would be brought under the gambit of the CFTC." The NFA adopted some forex rules in December 2003. "First we adopted the rule that said our forex dealer members, who are all registered futures commission merchants (FCM) that do retail forex, would be themselves jointly and separately liable for any bad things that any of their soliciting agents did who weren't registered NFA members," Driscoll says. The NFA also adopted a rule that states that any NFA member introducing business to a forex FCM would be responsible for violations of the NFA's forex rules. "Right now we have about 25 NFA-member FCMs that are forex dealer FCMs," Driscoll says. "We currently have a rule in place that says that if they employ third-party account managers or solicitors who become NFA members then the forex dealer FCM is not liable for all of their actions. But if they employ firms that are not registered NFA members then they are responsible for all of their actions. It still doesn't bring this in to the CFTC jurisdiction. It still doesn't require a registration for those people. But at least we were able to adapt our rules to make them responsible to us if they're going to be our members. "Our rules can only apply to NFA members and you can't become an NFA member unless you're registered with the CFTC," says Driscoll, noting that the only way to crack down on these firms would be to have Congress require they register with the CFTC, which in turn would force them to become members of the NFA, and subject to its rules. "We were able to do certain things ourselves within our own authority to make sure that the rules applied to our members. Congress really is the only one that can make sure they come under the jurisdiction of the CFTC, and as a result of that the NFA, and that's why were talking with Congress." Driscoll says.
to put in manual the account of the people who are use to make scalping. There is the reason: Think that the retail forex market broker, have to decide what to do when you put an order, he have 2 choices, or pass your order in to the market (means he have to open a trade as yours with some bigger counterpart) or have to absorb your position, means is trading against you. Don't miss understand the meaning of trading against you, by trading against you, I mean, the broker instead of open for his own trading purposes a position that could be contrary as yours, take your position as a counterpart of his own, by this he can give you more liquidity one of the facts that allow him to give you narrow spreads. When you have a scalper, or a nervous trader who open and close very often his trades, the problem is this: If you observe what a broker do the most of the time is absorb, part of the spread that his bigger providers offer to him, by doing this: lets say that the EUR/USD is going up, so for instance, the broker give you a price of 1.2000 bid 1.2002 Ask, while he is having a 1.2002 for bid and a 1.2005 for ask, ok? Why? because if you sell right now you going to loose, so he can give you a smaller spread that he is receiving because the cost of the spread are against you. Now lets say that the price change and now is in a drop, suddenly you'll observe that the broker do this: Bid 1.2005 ask 1.2007,while he is having a 1.2001 for bid and 1.2006 for ask see, he still delivering to you a apparent tight spread, but once again he is passing to you the cost of the spread. As far as now, the tight spread is only a publicity strategy to make you thing that you are going to have a better chance to win, but in fact, it's quite the opposite. And now here is the reason why they change a trader who change to fast his trades: the problem here is that if you are getting in and out very often and you do it with operations (regularly putting more than 50,000 on the market, i mean 5 mini lots or more) he will need to put very much attention in what are you doing to avoid get stoked with your position that perhaps he has just passed to the market when you are all ready quitting it.