Why is that? Why do so many folks trade FX on bucket shops? I don't quite get it, aren't you risking a lot of your money?
I'm not risking any more than I would trading through an ECN or trading futures, as a trader risk is about the only thing I can control. Why do you think trading FX with a reputable bucketshop is riskier? What would you prefer over a bucketshop, and why?
Maybe I don't have a complete understanding, but my view was based on the idea that with a bucket shop, they take the opposite end of your trade at all times. You aren't really trading with the market, you're trading with them, and they are trading with you based on what the market is doing. With an ECN, you are a completely equal player with anyone else. Your orders are transparent, they are crossed without any discrimination and the ECN has zero interest in your profitability. All they care about is fast execution and commissions, for which you are willing to pay more for knowing that you will not have your stops hunted or have artificial spreads. The ECN spreads are closer to interbank rates. In the case of IB or HotSpot, the rates are competitive and reflect the market as best as anything other than having a PB account. This means your analytics and strategies are going to be more accurate over time since they are based on reality and less based on artificial quote feeds. That's just my view, I could be wrong, so please speak up and tell me if you think so. Cheers...
haha, yeah any less traders, max out the bullshit. Seeing some straight fat spreads on cable. lofl and they do it right at decision/break points...
Well, I guess that's only natural before the Asian markets open - to see larger spreads. I must admit that 10+ spreads is pretty wild though, and spreads of 30 pips is pretty outrageous. If they can't sustain a market before regular hours - why offer such a bad deal? Seems like they are hurting traders' confidence more than doing any good...
It's certainly more challenging trying to scalp that's for sure! Even with those spreads it was possible to make a few pips, I surprise myself sometimes, lol
The bucketshop conflict of interest is an age-old debate which some people get quite fired up and passionate about! I can only go by my own personal experiences, just like anything else there are good and bad in the bucketshop world as well. Trading with the right bucketshop can have it's benefits over trading in the 'real' market, a lot can depend on their business model and how they handle risk. They all take the other side of the trade, sure, but it's what they do after that which can affect how they perform and whether they play tricks or not. Not all ECN's are equal though, some are bucketshops disguised as ECN's, ECN-style has become a marketing pitch to give the impression they're offering a level playing field. At the end of the day I guess it's down to personal preference and how your broker or marketmaker performs. If orders are filled at the price you want and quotes reflect the underlying market then no problem in my opinion.
I totally agree CABLETRADER. Bucketshop can work very well for you as well. Fixed spreads is just one of tha advantages. But also think about negative balance protection etc etc. As stated there are things to say for ECN trading and also for a bucktshop broker. And nt all bucktshops are the same. Also thinking an ECN offers a level playing field obviously has not much experience in trading on them. All ECN's have there own specifics where banks profit over customers. Just pick the right solution for your trading style and take good acre in of your funds, there's a best solution for everybody, but it's definately not ECN for all....
What broker offers negative balance protection? The only one I know that promises it (FXCM) fails to actually guarantee it in their agreement. Meaning its on their website but their client agreement doesn't have it. Otherwise interesting points. As for ECNs, there a few known real ones. IB and HotSpot come to mind.