Trading with or without dealing desk?
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  1. #1
    Join Date
    Dec 2006
    Posts
    12

    Default Trading with or without dealing desk?

    Hi pals,

    Anybody knows what the advantages and disadvantages of using a dealing desk with fix spread rate, as well as without dealing desk with lower variable spread rate?
    FXCM.com mentions the rate can be as low as 2 pips with the later, but of course it can be hger than fix rate under certain circumstances, correct?

  2. #2
    Join Date
    Dec 2006
    Posts
    46

    Smile Check out companies with ECNs or STP

    Hey,
    I'm going by what's on web sites, lowest rates that I've seen are from ECN based networks that go straight to banks. Or forget both and just go straight to a bank like Deutsche Bank at dbfx.com. I've seen pips as low as 1 pip for EUR/USD and 5 pips for GBP/JPY. With commission at $5 per $100,000.00. Maybe Interactive Brokers was lower than that, but I had a tough time understanding their spot forex products. No such thing as no commission brokerage. No such thing as a free lunch, or pigs flying.
    Good luck,
    mdetlh

  3. #3
    Join Date
    Dec 2006
    Posts
    99

  4. #4
    Join Date
    Dec 2006
    Location
    Wichita Falls, TX
    Posts
    2,805
    You have to look at the "all-in" cost of trading, and also consider your timeframe and trade frequency.

    I don't worry too much about 1-2 pips either way because I tend to trade longer-term and less frequently. A couple of pips makes virtually no difference in my performance. Likewise with a commission, if it's small. More important to me is the trust I have in my broker and the access I have to the tools and information I need, plus the pairs I want to trade.

    When day frequently and for smaller market moves, though, clearly the spread becomes a concern. You need to combine the spread with the commission (if any) to get a real read on the cost of trading with a particular broker/dealer.

    The question of fixed vs variable spreads also depends on your trading style and method. If you are going to trade during times when the spreads could be widened out (for example, around major data releases for some brokers) then going with a fixed spread broker would suit you better, most likely.

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