MBT is not offering live accounts on mt4 yet, I just checked with them.
Good Infoā¦i havenāt checked with them but talked to someone who indicated they where using mt4ā¦mustāve been demo. Now that I think about it I remember hearing that it would go live in Juneā¦
Did they say when they would be up and running?
they never answer that Q, they say they are still working out some bugs.
I did alot of research on MB trading, and they looked good, the only reason I am not with them, is because of tax complications (Iām not American)
Iāll definetively see how MB (an ECN Broker) really work. For now, one thing for sure, it is more expensiveā¦
Thereās no spread, but a commission:
MB Trading - Stocks Options Futures Forex Online Discount Trading
Still, how much does it worth to not be scam on SL and TP? Thatās right, in the long term, itās priceless.
There is of course a spread - you are in the real market with an ECN. You also have to trade in full lots otherwise MB route your order internally and you are in a MM situation
So, what you say is: the minimum we can use to trade with an ECN Broker is 1 standard lot, meaning (10$/pips)?
Otherwise, we are fu***? Is that correct?
Regarding the previous three posts on this thread, I checked with MB Trading and got the following information.
MB Tradingās normal order flow is as follows:
[B]Your order > MB Trading [STP broker] > 3DFX [ECN] > interbank network [Where your order is executed (matched)].[/B]
If your order is of such a size that there is no liquidity for it at the interbank level, then it will be matched internally (against another customer order of equal size) at the ECN level (3DFX, not MB). This is more likely to happen with very small orders (for instance, 1 micro-lot), than for larger orders. In this case, 3DFX (the ECN) is NOT acting as a market-maker ā they are simply matching your order to an opposite order from another customer.
[B]3DFX does not act as a market-maker (counter-party to your trade) at any time.[/B]
[B]MB Trading does not act as a market-maker at any time.[/B]
MB Trading does not offer standard-, mini-, or micro-accounts. They offer one type of forex account, in which the customer specifies the amount of currency he/she wishes to trade, with a 1K minimum and 1K increments. In other words, you can trade any multiple of 1K. If you trade 10K, other brokers would call that a mini-lot; but, MB just calls it 10K.
As for the cost of transactions, MB Trading charges a commission (approximately 1 pip) to open a position, and another commission (again, about 1 pip) to close the position, on top of the bank (wholesale) spread.
The last time I did an analysis, [B]the total cost (spread + commission) of a typical trade at MB was about 25% LESS than
the cost of the spread for the same trade at FXCM.[/B]
Still no word on when MT4 will be available to customers through MB Trading.
Clint
Well, itās going to take me a while to get it all right āunderstand it all wellā, but, a big thanks to you for your research on the subject.
Still, it look like someone who want to use them have to be ready to trade big moneyā¦
I really have to try their MT4 demo, and then, Iāll seeā¦
Iāll keep you all in touch.
Hey, melisky
I donāt know how I gave you the impression that trading with MB requires trading big bucks. Thatās just not the case. You can trade in amounts of 1K ā thatās one micro-lot = 1,000 units of currency ā or you can trade bigger. Itās your choice.
[B]And, no matter what size you trade, with MB Trading the broker will never be trading against you[/B].
As I understand it, that is one of your big concerns.
If this broker interests you, I suggest you download their demo account, and get acquainted with their platform and their order types. As I mentioned before, their order types are unusual. You might like them, or you might hate them ā but, you wonāt know until you try them.
You can have a look at MB Trading order types, without downloading the platform, by going to:
MB Trading - Stocks Options Futures Forex Online Discount Trading
Good luck.
Clint
1 Like
This was a good read thanx to the original poster Melisky & others who shared their experience to help us āNew Tradersā 
Keep it upā¦ 
Hello, I am new to Forex and I have a few questions about brokers.
- How can you tell or find out the type (retail, market, ECN, STP, etc) that each broker is? Is there a list somewhere?
For example, I heard some fairly good things about GFT and Oanda, but how can I tell if they are retail/market brokers or ECN or something else?
I would ask each broker individually, but if they are retail/market brokers I strongly doubt that they would admit to this upfront; I canāt see any of them saying: āWe are a retail/market broker and we win when you lose.ā
- I also have a specific question about FXCM. This is what they claim on their website:
No Dealing Desk Execution
[ul]
[li]No conflict of interest between broker and trader[/li]> [li]No dealer intervention in trades[/li]> [li]Price providers (Banks) do not see your stops, limits, and entry orders[/li]> [li]Competition reduces the potential for market manipulation by price providers[/li]> [/ul]
So, no conflict of interest AND no commissions? Is this too good to be true or are they legit?
Did/does anyone use FXCM (live)? If so, what were/are your experiences with it? Would you recommend it?
-
Who are the overall top 5 brokers (the biggest names) of the Forex market?
-
Who are the top 5 [B]non-retail/non-market[/B] brokers?
Thank you.
Maple,
Youāve asked enough questions to keep this thread going for days or weeks.
Later, Iāll take a shot at your question #2. (Iām going to leave the rest of your questions for others to answer).
But first, some general comments on brokers, and the search for a good one.
You are new to this, and you have asked some questions whose answers are [B]partly subjective[/B] and [B]partly objective[/B]. No trader, no matter how experienced, can say āThis is the best broker, because ā¦ā without injecting his own subjective personal opinion into the answer. As a result, the best you can hope for on a forum like this one is a range of opinions, which you will have to sort out according to [B]your own subjective thought process[/B]. You will never find the ABSOLUTE kind of answers you seem to be asking for.
That being said, you have to do your own research, draw your own conclusions, and make your own decision about which broker to use. Choosing a broker may require more [B]due diligence[/B] on your part, than any other decision you will make as a trader.
Here is a resource that might help you see the forest, before you get lost in the trees. About 18 months ago, on another board, Mary McAllister posted a link to a long, complex article by Darkstar with the title [B]The Structure of Forex Brokers[/B]. Darkstarās article was originally posted on the Forex Factory Forum back in August of 2006. Since that time, in response to numerous requests, he has given permission for his article to be re-posted on other forums. However, it consists of a series of 7 consecutive posts, and it is far too long to copy and paste here. So, Iāll link to it, instead.
I donāt think this Forum will allow a direct link to FF, so Iāll give you a partial link (without the URL prefix): The Structure of Forex Brokers @ Forex Factory
Donāt try to click on it. Just copy and paste it into your browserās address bar; your browser (IE or Firefox) should automatically add the prefix, and connect you to Darkstarās posts.
And finally, terminology can trip us up sometimes. The terms ābrokerā, āretailā, and āmarket-makerā seem to be causing some confusion on this thread. Maybe this will help to simplify things.
For us (little minnows swimming with sharks), every broker available to us is a [B]retail broker[/B], because (1) the only access we have to the worldwide forex market is through a [I]broker[/I], and (2) we are [I]retail[/I] customers, because we are tiny compared to the big players. Retail brokers are neither good, nor bad, by definition. They are only good, or bad, depending on their behavior.
Regarding market-makers, anytime a price offered to you is quoted in terms of a [B]spread[/B] ā an ASK price if you want to buy, and a BID price if you want to sell ā there is a [B]market-maker[/B] somewhere in the order-flow. That market-maker may be your own retail broker; or it may be a tier-2 or tier-1 bank. But, trust me, thereās a market-maker upstream from you, somewhere.
If you believe that a market-maker has a built-in conflict of interest with his customers, then you might want to put some distance between yourself and the market-maker. In other words, you might want to use an STP broker, who is not a market-maker. Just realize that, one or two steps up the line from your ānon-market-maker retail forex brokerā, there IS a market-maker executing your trade.
Sorry this post got so long. Some other time, Iāll tackle your question #2.
Clint
Well Melisky I for one tend to agree with you somewhat.
Definitely not all but some brokers are indeed scamsters. its best to stay away from smaller brokers who are not registered with the nfa or cftc, those registered in cyprus, and others registered with east European regulating bodies.
In addition to this brokers do actually trade against clients, what they do is watch clients and complie statistics. For example it seems theyāve found clients who use limit orders when they begin trading and later switch to market orders after the lose money in the hope of improving their trading strategyy have a very high percentage of blowing out. So they tend to take opposite popsitions as from their statistics theyāre pretty sure its only a matter of time before such clients blow their accounts.
This is just an example. If you do a google search for āMT4 brokers virtual dealer plug-inā youāll find another way they cheat and what their capable of.
This is made and marketed by boston technologies and when we brought up the subject in the mt4 forums the thread was prompltly deleted not once but twice.
So I agree with you partially. Many or infact most do cheat. Just recently I was reading at pipcop alapri increased the spread for a pair which was doing exceptionally well in the fapt EA. All of a sudden! Funny how that should go up and all other spreads remain unchanged.
Lastly donāt listen to what ppl say some will say yes others will say no, study yourself and come to your own conclusion. Donāt be swayed by pplās opinion, even if your against the crowd.
Well thats all I have to say.
Thanks for your help Clint.
Iļæ½ve looked at many, many, many, brokers and found several that I am interested in. Out of those, there are two that I am leaning strongly towards.
When I asked for the top brokers, I just wanted to find out who the biggest players in this market are.
For example, the two big fish in the OS business are Microsoft and Apple. Love them or hate them, this is a fact.
I already have somewhat an idea of who they are, and I just wanted to compare this with what you experienced traders say.
When looking for this information you mostly end up at some Forex review site which rates the brokers based on ļæ½userļæ½ reviews. However, when you read the reviews they make every broker seem like the devil.
I also found some actual articles on this question, but they seem to contradict each other. One says that Brokers A, B, and C are the biggest, another says that brokers D, E, and F are the biggest, and so on.
Yeah, I realized now that I used the wrong terms. Instead of ļæ½retail/marketļæ½ I meant ļæ½Dealing deskļæ½.
Better for that market-maker to be far away and not know your stops and limits, than for him to have complete and direct access to your account.
Just to clarify Question #2, I realize that FXCM still makes money from the spreads. Itļæ½s just that usually these kind of brokers are the ļæ½dealing deskļæ½ type and the ones that make money from just commissions are the ļæ½no dealing deskļæ½ type. I found this FXCM claim to be weird because they are breaking away from the pattern that I noticed.
Wouldnāt the first priority of any trader be experience first then the broker. In other words couldnāt a trader with a great deal of experience be profitable with most brokers since there is always a charge to trade regardless? The top four brokers as far as capital wise are all M/M and im sure there are plenty of profitable traders with them.
Maple,
Here is a portion of one of my previous posts, which answers your question about the biggest forex brokers.
There is some interesting information published monthly by the CFTC, on the capitalization of Futures Commission Merchants (FCMās), a classification which now includes (as of 2008) retail forex brokers. The CFTCās report, titled Selected FCM Financial Data, lists commodity futures brokers, forex brokers, and certain futures clearing firms in one alphabetical listing, followed by several columns of financial data. If you want to compare the relative size of two brokers, you can simply compare the figures in the column headed Adjusted Net Capital. For example, FX Solutions has adjusted net capital of $43,785,065., and Alpari (US) has adjusted net capital of $19,690,941. In each case, these numbers represent the brokerās own funds AND the funds of all their customers, combined in one total. Unlike commodity futures brokers and stock brokers, forex brokers are NOT required to segregate customer funds. This should (and probably will) change in the future. In the meantime, there is no way to tell from the figures in this report how much customer money each broker has on deposit. It may be tempting to use the Adjusted Net Capital figure as an indicator of market share, but this could be very misleading.
I went through the CFTCās alphabetical listing, and pulled out all the retail forex brokers I could identify. For what itās worth, they are listed below in order, according to adjusted net capital. Notice that some of these brokers are not just forex brokers; some handle both futures and forex; some are also stocks and options dealers; and two of them (Citi Group and Deutsche Bank) are large commercial banks (and interbank participants), as well as being retail forex brokers. All of the FCMās in the CFTC report are U.S. corporations or LLCās, regulated by the CFTC and the NFA (or other industry self-regulatory body). Foreign-domiciled brokers, such as Saxo Bank (Danish), Dukascopy (Swiss) and ACM (Swiss), are regulated by government agencies in their own countries, and do not appear in the CFTC listing. Also, introducing brokers (IBās) do not appear.
Here are the U.S. forex brokers currently listed as FCMās by the CFTC, ranked according to Adjusted Net Capital, as of 1/31/09:
CITIGROUP GLOBAL MARKETS INC* - (CitiFX) ---- $ 7,149,522,573
DEUTSCHE BANK SECURITIES INC* - (dbFX) ----- $ 5,901,107,907
MF GLOBAL INC** - (MFG) ----------------------- $ 657,659,591
INTERACTIVE BROKERS LLC* --------------------- $ 618,460,008
OANDA CORPORATION --------------------------- $ 169,501,514
GAIN CAPITAL GROUP LLC (Forex.com) ----------- $ 107,390,780
FOREX CAPITAL MARKETS LLC - (FXCM) ----------- $ 98,456,604
ROSENTHAL COLLINS GROUP LLC* - (RCG) --------- $ 86,237,076
GLOBAL FUTURES & FOREX LTD* - (GFT) ---------- $ 76,055,556
FX SOLUTIONS LLC - (FXSol) --------------------- $ 43,785,065
INTERBANK FX LLC - (IBFX) ----------------------- $ 39,945,958
CAPITAL MARKET SERVICES LLC - (CMS) ---------- $ 29,255,080
PEREGRINE FINANCIAL GROUP INC* - (PFG-BEST) ā $ 26,005,257
IG MARKETS INC* -------------------------------- $ 24,132,296
FOREX CLUB FINANCIAL COMPANY INC ------------- $ 22,409,695
ADVANCED MARKETS LLC ------------------------- $ 19,873,581
ALPARI (US) LLC --------------------------------- $ 19,690,941
ODL SECURITIES INC* ---------------------------- $ 19,572,976
IKON GLOBAL MARKETS INC* ---------------------- $ 16,548,536
I TRADE FX LLC ---------------------------------- $ 16,081,083
GFS FOREX & FUTURES INC - (GFS) --------------- $ 15,957,382
EASY FOREX US LTD ----------------------------- $ 15,440,303
MB TRADING FUTURES INC* - (MBT) -------------- $ 15,227,957
MG FINANCIAL LLC*** - (MG Forex) --------------- $ 5,406,476
- denotes forex brokers engaged in one or more of the following: futures, options, equities and/or banking.
** MF Global handles spot forex transactions for institutional clients, but not for retail customers.
*** MG Financial is a wholly-owned subsidiary of Rosenthal Collins Group, whose capital supports MG Financial. Note that, by itself, MG Financial does not meet the current CFTC Net Capital Requirement of $15,000,000 for forex brokers.
Use these numbers as a rough guide only. Adjusted Net Capital is not the same thing as market share, although it might serve as a rough proxy. The CFTC probably has data on market share, but it is not made public.
Also, consider this. There has been a lot of discussion on this thread about MB Trading as a good broker to consider. But, looking at the ranking above, you will see that they are virtually dead-last (because MG Financial is not a stand-alone broker in terms of capitalization). Furthermore, MB Trading has just enough Net Capital to meet the current CFTC requirement of $15 million.
But, MB Trading is a pure STP broker ā which means that MB Trading does not act as counter-party to any customer positions, and has no exposure to forex market risk. Therefore, the criteria for judging how much capital is adequate for a forex broker should be (but isnāt) different for MB Trading, as compared to a deal-desk (market-maker) broker.
Finally, there is a more recent CFTC report on FCM capitalization:
http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0209.pdf
Clint
Maple,
Iāll try to tackle your question #2 regarding FXCM. First, let me jump to the end of your question, where you asked whether anyone uses FXCM.
I trade live through FXCM. I also maintain an FXCM demo account for experimentation. I started out with FXCM four years ago, and I have never switched (although I have flirted with MB Trading a couple of times). Based on my experience with FXCM, I would recommend them. But, keep in mind that I have no other experience to compare them to. They simply have never burned me badly enough to make me switch brokers.
Back to the beginning of your question. There is a wide spectrum of forex brokers, ranging from deal-desk brokers to STP brokers. Letās start by looking at both ends of this spectrum, and then see where FXCM fits is.
Deal-Desk Brokers
At one end of the spectrum are the pure market-makers (deal-desk brokers). Originally, all retail forex brokers (including FXCM) were in this category. Their business model was copied from the OTC stock market of 2 or 3 decades ago. If you placed an order to buy with one of these deal-desk brokers, the broker became the seller. At that point, you were net long, and your broker was net short; in other words, you both had a position in the market, along with the market-risk which that entailed.
Your broker had the ability to hold his position as counter-party to your trade; or, he could close his position by doing whatās called āoffsettingā it. In order to offset a net short position, for example, he would simply buy an equal size position from his affiliated bank. The brokerās decision to hold, or to offset, any given position was based on his opinion of the direction of the market. In other words, your broker was speculating, just as you were. And he had some sharp traders handling these activities for him.
On the surface, there was nothing wrong with this market-maker business model ā after all, in order for you to buy, SOMEONE had to sell to you. But, the broker had so much information about you ā including all of your open positions, all of your stops, all of your take-profit points, how much equity you had in your account, and what your trading habits were ā that it was almost impossible for him NOT to take advantage of you.
And he had control of the spread. By momentarily widening the spread, on either the Bid side or the Ask side, the broker could trigger pending orders (entries, stops, t/pās) which would not otherwise have been triggered in a fair, impartial market situation. Like criminal suspects, deal-desk brokers had the means, the motive and the opportunity to victimize their customers. And many did just that.
Customer dissatisfaction with deal-desk brokers, and complaints to the CFTC and the NFA, have led many brokers to devise new business models in order to head off a regulatory crackdown. Which brings us to the rest of the broker spectrum.
STP Brokers
At the other end of the broker spectrum are the STP (straight-through processing) brokers. MB Trading (MBT) is the only pure STP broker that I know of. Their execution method has been described previously on this thread, so Iāll review it only briefly. Recall that MBT passes wholesale bank spreads directly downstream to their customers (without a mark-up), and they pass their customersā orders upstream to an entity known as an ECN (electronic communications network). The ECN (which is affiliated with a number of banks) then either (1) fills the order internally, by matching it to another customerās incoming order, or (2) passes the order upstream to the bank offering the best Bid or Ask price at that moment. Whichever way the order is filled, neither the ECN nor the bank knows anything about the customer who placed the order. Most importantly, neither the ECN nor the bank can see the customerās stop-loss and take-profit orders (those pending orders reside on the brokerās server until triggered).
Because the STP broker does not mark up the spreads he receives (through the ECN) from the banks, he needs some other way to make a profit. And that way is a commission added to each customer transaction. So, the customerās total transaction cost includes the (wholesale) bank spread plus the brokerās commission.
ECN Brokers, and No-Deal-Desk Brokers
If a true STP broker and an ECN were to merge into one operation, the result would be an āECN brokerā. That has never happened. However, a number of deal-desk brokers claim to have eliminated the deal-desk, and to have established their own network of affiliate banks; and, therefore, they claim to be ECN brokers. FXCM is one of these brokers.
FXCM functions as an ECN broker, although they donāt call themselves that. They prefer the label āNo Deal Deskā broker, and they use the abbreviation NDD in some of their advertising. According to FXCM, No Deal Desk means: (1) FXCM does not act as counter-party to customer trades, (2) all aspects of FXCM order processing are handled by their automated system, without broker intervention or manipulation, and (3) FXCM electronically routes incoming orders directly to one of the big banks with which they are affiliated, based on the competitive Bid and Ask prices furnished to them by those banks. As a result, FXCM claims that they never trade against any customer, nor do they have the opportunity to do so.
FXCMās profits come from a mark-up to the wholesale spreads quoted by the banks. Here are a couple of quotes from
Jaclyn Sales, FXCM Public Relations Coordinator, from an interview with the Forex Blog at earnforex.com:
āOur No Dealing Desk system gets prices and liquidity from 7 of the worldās largest global banks and financial institutions (we plan to add more in future). FXCM streams the best available prices we receive from these institutions, plus a clearly disclosed markup, to our clients. The markup is typically one pip on either side. This pricing model clearly aligns our interests with that of the trader.ā
āAs I mentioned before, FXCM is compensated through a disclosed markup to the prices we get from several global financial institutions, acting as sort of an agency-model broker. That means that FXCMās revenues are purely based on volume. So, FXCM is concentrating on attracting high-volume traders.ā
Hereās a link to the entire interview: Interview with FXCM - Forex Blog
The Bottom Line
Brokers, including FXCM, have highly-paid people to write advertising and public relations blurbs, in order to make themselves look good. Iām not suggesting that any of them lie, outright. But, I would definitely suggest that you exercise due diligence in evaluating broker claims. When you consider a particular broker, make sure that you understand what that broker is claiming to be, and how they are claiming to operate.
This thread started with the statement that all brokers are scams. I canāt agree with that statement. But, there have definitely been scams, frauds and abuses perpetrated at certain times by certain brokers, in the short history of retail forex. None of that bad behavior would have been corrected were it not for the alertness, the due diligence and the protests of their customers.
So, keep your eyes open and ask questions.
Clint
Truly a great post Clintā¦thanks for taking the time to type it out for us.
[B]Thank you, sir.[/B]