Hi,
My broker is FXopen and i have 1000 to invest. Should i open a micro account or ECN ?
Thanks
Micro.
And always remember, at the retail level, all brokers are pretty much market makers. Whether they claim to be ECN or not.
Hi,
Thanks for the answer. So why is micro better for an account that size ?
Micro lots tend to minimize your exposure and if you are just starting out, you may want to do the micro after trying out the demo…
There is nothing to do with market maker - ecn and micro lots.
Mostly all brokerage firms are market makers. Try to find someone on the real market. And I think You should try the market with more than 1000 $.
Look in the rate my broker part to find Your way.
You are quite correct (as always) and I’m pleased that someone has brought up this matter at this time (for personal reasons which I’m sure will be of no interest to you).
Somehow there seems to be a lot of confusion surrounding this issue not to mention (evidently) the Spot FOREX Market in general.
OBVIOUSLY I’m going to use Deltastock as an example because a) I know how they operate OBVIOUSLY and b) they’re a ‘classic’ example of a Market Maker AND a ECN/STP Broker (how any of the other Broker’s operate is none of my business neither do I need to know or have any interest in knowing).
Let’s take one step back here. This IS NOT the Stock Market (or the Commodities Market for that matter). There seems to be a bit of a misnomer or a misunderstanding that in the Spot FOREX Market for evey trade there has to be a willing buyer and willing seller (which really is ‘Stock Market’ jargon). In Spot FOREX this is a bit ‘blurry’ to most it would seem. In the Spot FOREX Market: there is INDEED AND ALWAYS WILL BE a willing buyer and a willing seller when a trade is concluded. However: MOST times (and depending on the trade size) the buyer or seller on ‘the other side of your trade’ WILL BE your broker. Now your broker may ‘match’ client trades in-house OR take the risk themselves. If the broker’s risk reaches a certain level then they will offset THEIR risk with another larger liquidity provider and so on and so forth.
So what I’m saying is that a Market Maker can ALSO be an ECN as is the case with Deltastock. Deltastock has four (or five i.e. I have not checked this morning but I know there’s more on the way) liquidty providers. The trader can choose which liquidity provider they wish to have their trades routed to via the ECN. If you decide to choose Deltastock as your liquidty provider on a trade: then being a Market Maker TOO they are then also the Counterparty to your trade.
And this is where a lot of ‘issues’ start out (and I believe is the reason for this thread being started and the question being asked). If the broker is the Counterparty to your trades then the ASSUMPTION is made that the broker will do whatever possible to ENSURE that you lose money because your loss is their profit because they’re a Market Maker. Well unfortunately: while this is true in the case majority of cases it is NOT a ‘given’. ASSUMING an honest broker who is a Market Maker and therefore Counterparty to your trades: think about it another way??? If Market Makers such as Deltastock, for example, didn’t exist, then you wouldn’t have a Spot FOREX Market as you know it. If you’re buying or selling one micro (on nano) lot: how on earth are you going to find another trader sitting somewhere in the world that is prepared to accept your bid or offer and conclude the trade???
One other thing I’d personally like to note here: Brokers are NOT CHARITY ORGANISATIONS EITHER. They are there to facilitate your being able to trade and for that they are DUE compensation. Many would be VERY surprised at the cost of a) opening a Brokerage and b) just keeping that Brokerage running on a monthly basis. So: your Broker is NOT NECESSARILY your enemy!!! They’re simply a ‘service provider’ of sorts. Anybody here have issues with paying their Internet Service Provider or Mobile Phone Operator??? Well there’s no difference. AT ALL as a matter fact i.e. some Internet Service Provider’s will ‘screw you’ SOMEHOW as will some Mobile Phone Operators. So when that starts happening: you change your Internet Service Provider or Mobile Phone Operator. No different when it comes to Brokers!!!
What I’m saying is this really: a Broker that is a Market Maker and is therefore the Counterparty to your trades is NOT NECESSARILY ‘out to get you’. Oh it does happen. Just take a ‘quick squiz’ at some of the Reviews and Ratings on Forex Peace Army as but ONE source and read some of the ‘horror stories’. The point is: ONCE AGAIN the only two important things that count are a) doing your due diligence when choosing a broker because not all brokers are the same when it comes to integrity as is blindingly obvious and b) LEARN TO TRADE and educate yourself.
Now just let me say this: the above is in no way directed at you ristop personally or otherwise. I’m just getting increasingly frustrated at the misinformation and paranoia that seems to be ever increasing. Traders (especially new traders) spend MORE time worrying about stuff they’ve heard and read on some or the other forum(s) than they do actually learning to trade. To make matters even worse: the stuff I’m talking about is normally just reguritated stuff being regurgitated by yet ANOTHER member of a forum who THEMSELVES don’t know what they’re talking about. Let me put it this way: if you know what you’re doing I’d even go so far as to ‘stick my neck out’ and say that EVEN AT a ‘Broker of ill repute’ you’d STILL be able to make money (the ONLY caveat being is that if it is a ‘Broker of ill repute’ then you’ll probably find that their registration and regulation is either ‘dodgy’ or nonexistent so if they go broke then, well, of course, your money is gone PERIOD). But yes: and in all probability but with great difficulty and much frustration. But there is only SO much a dishonest broker can ‘do’ to you and your trades. In other words: there is a limit as to how far they can ‘push the envelope’ WITHOUT making their ‘tactics’ obvious. So if you KNOW how to TRADE: the ‘odds’ are STILL ‘stacked in your favour’ as it were.
And, well, I guess, I’m also getting a bit sick and tired of ALL Brokers, who also happen to be Market Makers, being ‘tarred with the same brush’ to be honest.
Anyway. Here is a link to a post on my forums giving some additional detail if you’re interested (just skip to the heading ‘Different Market Segments’ in the post):
Technical Trading Systems at TechTraderCentral - What do you need???
And ironically and right at the bottom of this page there are several other threads on this particular topic listed under ‘Similar Threads’. I’ve not read them all but this one is pretty concise and clear (and was not written by me):
I hope this helps and answers in detail your question (and anybody and everybody else who doesn’t quite ‘get’ the concepts discussed here).
Regards,
Dale.
$1000 on ECN is the bare minimum. I would recommend $2500 or so as a minimum on ECN to give yourself some leeway.