Quote:
Originally Posted by forexchess
This is just silly... isn't there any way whatsoever to trade forex without your own broker being your enemy? That does sound, as you put it, like gambling in a casino against the house, the latter having the big edge.
Also, how does one know if one's broker is MM or ECN and is are they both counterparties to your trade?
Thanks!
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i had a little talk with a rep from Oanda in the "rate my broker" section of the forum. this rep claims Oanda doesnt trade against its clients but rather takes the same postion so if their clients are profitable they are too... i dont know if its true. i have just enough confidence in this broker to put my just a little bit of my hard earned cash with them. there still seems to be some shady practices on their part but all in all i hope what the rep wrote is true. most other brokers do seem to have their own interests at heart and if it means you have to loose then so be it.
its really hard to protect yourself against brokers. first of all we all need one if we want to trade and they know that. good brokers are regulated by different agencies that are suppose to monitor their activities. but like i said in another thread, this doesnt protect your money very well. the forex is not as heavily regulated and centralized as other trading markets so pretty much, your broker makes all the decisions and you just get to go for the ride. the best way to protect yourself is to research your broker extensively, dont keep your all you eggs in one basket, and find the right broker for your trading style style. if you are a long term trader then MMs with a variable spread is a good choice. if you trade the news then an ECN would probably be in your best interest. if you are some where in between both a day trader and a swing trader then you might want to consider a fixed spread MM (but they are still notourious for requoting and locking out people during volatile sessions).
as for knowing the difference between a ECN and MM. this is very important to be able to distinguish the two because many MM like to pretend that they are ECNs. first of all most ECN have variable spreads and you pay a commission to trade. ECN take quotes form multiple interbanks and they pass on the best prices to you. when you place an order your order goes directly to the bank. ECN shouldnt trade against you because they already get paid throught the commission. you also need a much larger initial margin to open an account. MMs only ask for about 200 bucks to open mini account but ECNs ask for about 7000-10000 bucks (so ECNs are really designed for the "big boys"). most ECNs only allow you to trade with 100K but some will allow you to trade 10K. there are no micro accounts so far with ECNs. anyways, finding an ECN isnt hard. there are only a handful genuine ECNs.
http://www.goforex.net/forex-broker-list.htm. there are a few more but i cant quite remember. i know forex factory has alot of discussions about ECN brokers on their forum so maybe ask people there for a more comprehensive list.