I didnt see anyone mention GLOBAL FOREX TRADING (GFT). I am thinking about going with these guys because they allow 100:1 leverage, mini accounts, and have spreads as low as 1 pip on EUR/USD and EUR/GBP (although I bet their spreads are more like 2-3 pips). Additionally, they have a moblie platform which is important to me since I am a consultant and cant always get through my clients firewalls, I figure I will just us online charting and hopefully trade by that. Anyway I am a newbie and I just figured I would put it out there.
They are an ECN. THERE IS NO FIXED SPREAD IN FOREX.
You can google and find out what I really think about “FIXED SPREAD BANDITS”.
I’ll leave it at that so I don’t get banned.
How do I avoid the spread?
I explained this to someone yesterday in an IM.
With MBT you pay a commission rather than having a “FIXED SPREAD”.
It’s “apples and oranges” so don’t try to compare. “THE MATRIX HAS YOU” and you need to “FREE YOUR MIND” to understand what I am about to explain.
Let’s say the current bid/ask is 1.5010 x 1.5015
The current spread is 5 pips.
You want to SHORT.
You SHORT at 1.5010.
You set a TP at 1.5005.
Bid/Ask becomes 1.5005 x 1.5009 and the current spread is 4 pips.
At MBT, you will get filled if the bid is 1.5005 and someone TAKES your offer.
Bid/Ask is now 1.5004 x 1.5009 and YOU HAVE YOUR PROFIT.
Note: the ASK never reached 1.5005. THIS IS IMPORTANT!
If you entered this order at a FIXED SPREAD BANDIT, whoops I mean broker, your order is STILL OPEN!!
The bid/ask must become 1.5000 x 1.5005 and your order HITS the Ask.
DO YOU GET IT?
If not, then read this over and over and over again until the LIGHT BULB goes off!!
The day I found out about MBT is the day I opened an account there and stopped trading with FIXED SPREAD BROKERS.
The simplest thing to do is to load up a demo account at MBT Group and see it with your own eyes.
When you place your TP Bid offer at 1.5005, your bid is displayed on Level II.
The point is with MBT your offer gets hit.
With FIXED SPREAD BROKERS you have to wait to hit their offer.
Maybe this might help:
First:
1.5010 x 1.5015
and price drops…
1.5009 x 1.5014
1.5008 x 1.5013
1.5007 x 1.5013
1.5006 x 1.5012
1.5006 x 1.5011
1.5005 x 1.5011 You may get hit
1.5005 x 1.5010 You may get hit
1.5004 x 1.5009 YOU COVERED 5 PIP GROSS PROFIT
AND LET’S CONTINUE
1.5003 x 1.5008
1.5002 x 1.5007
1.5001 x 1.5006
1.5000 x 1.5005 YOUR FIXED SPREAD BROKER FILLS YOUR ORDER.
Does that make it clearer??
What about the commission cost?
The commission varies depending on the pair trading.
It is $.50 per 10k minilot on USDJPY. So if I gross 2 pips, I am making money.
From the MBT site:
[B]Commission Rates
Fixed spreads are a way for FCMs to markup or markdown the best bid or offer. FCMs do this to hide their fee into the price of the currency pair instead of displaying their best quote. Common sense tells you that no one works for free, so when you see an FCM claim they have �no commission�, that should be a red flag. So how are they getting paid? Its simple: they are making money with the built-in markup/markdown in the spread.
Our FCM, MB Trading Futures, has nothing to hide. They offer tighter spreads with no markups/markdowns and openly display a low commission rate.
Commissions are based on total dollar amount traded: $5 per $100,000 traded.
[/B]
I’m counting the number of times this message is copied and pasted. So far it’s 3, but I’m sure I’ve missed some. The allusion to [I]The Matrix[/I] gives it an unforgettable air of profundity (even if the explanation is anticlimactic) and knowing I “get it” when so many others don’t, apparently, is always gratifying every time I see it. And I’m always reminded of how useful a tool google really is. I like that.
edit: make that 4; the one above and on another thread were posted a one minute apart. I’m curious if it’s saved as a Word file or not, just in case the opportunity to spread the quasi-ECN gospel presents itself. Or maybe wordperfect, or even a simple text file.
He’s also an IB for MBT so gets credit if people sign up through his link … but did that surprise you? 
I did open an account with MBT but gave up when I found it takes forever to fund it, they only accept wire transfers ($$$) or checks sent by regular mail. Someone really needs to tell these people about the internet!
I had an equities account with them some years back & liked them, they are honest … but IMO not yet ready for 21st century internet-based trading.
I’m with FX Solutions now, it took 4 hours from filling in the online app to approval AND funding 
I love their trading platform too.
As to spreads, unless you are constantly scalping, I don’t see what the problem is. I trade mostly the GBP/JPY and GBP/CHF both of which have huge spreads … but even huger rewards when you learn how to play 'em. 
Speaking of which, if anyone is interested in dissecting the guppy, come join us under Holy Grails, Swing Trading the Ichimoku Kinko Hyo thread where we study japanese (not really!) but we do put the guppy under a microscope using the IKH charts.
People need to know the truth about ECN.
ECN is always pushed as being some
Holy Grail because there is no fixed spread,
you can scalp, etc. It’s all hype. And this
hype is often eaten up by newbies who
erroneously think that low or no spread
will yield them bigger profits. Not so,
their inexperience will in fact end up costing
them more because the commissions will eat
them up alive. Stock daytraders who use
ECN will also attest to this. Speed of
execution and transparency are the only
advantage to ECN and they are only an
advantage if you have sizeable balance
and only if you intend to scalp huge PIPs
trading huge lots but only do 2-4 trades
per day. What ECN pushers don’t tell you
is that the commissions tend to be more
outrageous than the PIP spreads you see
at the likes of IBFX, FXDD, FXCM, etc.
Let’s be honest… spreads aren’t so bad
now with the advent of no dealing desks.
I use ECN myself but don’t get sucked into
ECN pushers. As you can see, all they ever
push is “no fixed spread”. Trust me, this
is irrelevant if you are a newbie. You’ll
soon be grumbling about the high rate
of commissions.
Honest bottom line: ECN is only for you if you
have a high balance and you intend to scalp
huge lots per trade. Not micro lots, not
nano lots but huge 10-50 Standard lots
per trade ($10,000-$50,000 in margin).
And how you make money is with small
take profit PIPS always less than 5 PIPS.
The money comes from the huge lots
being traded and no spread advantage.
And then still have at least 90% margin
available for drawdown. If this doesn’t
fit your bill, ECN is not for you. Do you
all remember all those stock daytraders
in the 90’s who all became bankrupt because
they bought in to ECN day trading nonsense?
Same thing is happening in FX these days.
Don’t fall for it unless you are ready for
big time scalping. And honestly, never
trust anyone pushing some link that gets
them some signup bonus or credit. And
I do my long-term trading using IBFX.
Level II quotes both in stock daytrading
and now being pushed in FX both totally
overrated. It is pushed too much and to
newbies to boot. It will only end up
causing more bankruptcy and the disaster
we have all seen when internet bubble
burst. FX hype is only now starting…
I wonder how many people will be
financially ruined in next year or so?
Be careful… if you know how to trade
you’ll do more than fine with regular
"brokers". They aren’t crooks and
they aren’t bandits. Don’t begrudge
them the right to earn profits just like
you. At least they won’t commission
you to death whether you win or lose.
Oh, ya… one more important note.
True ECN like the true ECN in
NASDAQ does not exist yet in the
forex market. It’s all semantics… so
a bit of word playing is being done
by so called ECN fx brokers who try
to steal poor inexperienced people
away from FX’s established brokers.
I for one do not like this ploy. And
again, all they push is the no fixed
spread. But they really are not true
ECN like the NASDAQ model.
It’s not saved as a word document. I just look for it here and copy/paste.
I strongly believe it is important for traders to know the fact that there is NO FIXED SPREAD in Forex.
forex is constantly move, so what i dont get is if there is a 4 pip spread and you want to eliminate that in the way described above, what happens when you place your order 4 pips below the current price hoping that someone takes it, then the price moves down 4 pips before anyone takes it and triggers your order? you then have the same 4 pip spread as normal? unless they take your offers straight away, its going to be very common that sort of thing happens? or does it work differently than that somehow?
What happened to EFX? I did a google search and found that post.
To Ewokuk,
I use both GFT and MBT platforms.
Spread is spread is spread. No matter who you deal with there is a bid/ask.
With MBT the spread will fluxuate almost all the time. I’ve seen it at 0 or in the negative where bid is higher than ask sometimes. And there can be slippage where your order is filled close to your price but not quite on it. But you will always buy with ask and sell with bid.
To Conan,
EFX is no more, they were absorbed into MBT. They were an introducing broker, kind of like our friend here TheRumpledOne.
EFX merged with MB Trading.
If you use LIMIT orders there will be no slippage. You can only get price improvement.
If you place a sell order on the ask, and someone enters a buy market order or a buy limit at or above your offer, you will get filled. I do this all the time.
OK RumpledOne,
I’ve spoken with MBT,
If you are short as per your example - 0010, and you set a TP buy (not sure why you say bid) at 0005. Your ASK still needs to hit 0005 even with a limit order. Has nothing to do with bid at this point. Now they do say it will be filled at your price “or better”, which on a buy order is usually lower, which is what your whole example is based on.
Perhaps when you write an example like this, put all the details in (Limit order)and try to make it less confusing.
I understand the different order types at MBT and you had me scratching my head, it’s not a clear example.
The example was showing the BID/ASK values as time passes.
The ASK does NOT need to hit 0005 if you use a limit order to cover.
You enter your limit COVER order at 0005 and it appears on the bid.
It will get filled if it is the best bid and a market order is placed OR if a limit order to sell comes in at 0005 or lower.
The part you are missing is the LIVE MARKET ORDERS that can be placed on the ECN.
Best thing to do is download the demo
and execute the orders. If you have a real money account, try it with your next order and see it work.
I do this all the time so I know it works.
I will try that, but if you’re talking to me and you know I already have MBT. Why post the link other than just another chance to post it?
Forex Broker Guide
Introduction
The following is a list of questions you may like to consider before opening an account. You can use this checklist to narrow down your selection of companies that fit your requirements. You may also wish to refer to the forex broker ratings page on this site to read about traders unique experiences with particular brokers.
The following links will also give you some background information on U.S. FCMs (Futures Commission Merchants).
* Selected Financial Data for FCMs
* NFA Background Affiliation Status
-
Word of Mouth
- What do other traders say about the broker?
- What is their customer service/dealing desk like?
-
Customer Protection
- Is the broker regulated?
- What regulatory organisation are they registered with and what protections does this afford you?
- Are client funds insured against fraud?
- Are client funds insured against bankruptcy?
-
Execution
- What business model do they operate? i.e. Are they a Market Maker [?], ECN [?] or no-dealing desk broker [?]?
- If they are an no-dealing desk broker or ECN, do the counterparties to your trade see your resting orders? i.e. Stop-losses and limit orders
- How fast is their order execution?
- Are orders manually or automatically executed? [?]
- What is the maximum trade size before you have to request a quote?
- Are all clients trades offset?
-
Spread [?]
- How tight is the spread?
- Is it fixed or variable?
-
Slippage [?]
- How much slippage can be expected in normal and fast moving markets?
-
Margin [?]
- What is the margin requirement? e.g. 0.25% (max 400:1 leverage [?]), 0.5% (max 200:1 leverage), 1% (max 100:1 leverage), 2% (max 50:1 leverage), etc.
- Does it change for different currency pairs or days of the week?
- Will the broker increase it in volatile market conditions?
- At what point will the broker issue a margin call?
- Is it the same for standard and mini accounts? [?]
-
Commissions
- Do they charge commissions? (Most market makers commissions are built into the spread, whereas ECN’s will charge a small fee)
-
Rollover Policy [?]
- Is there a minimum margin requirement in order to earn rollover interest?
- What are the swap rates for going long or short in a particular currency pair?
- Are there any other requirements or conditions for earning rollover interest?
-
Trading Platform
- How reliable is it during fast moving markets and news announcements?
- How many different currency pairs can you trade?
- Do they offer an Application Programming Interface (API) to allow you to automate your trading system?
- Does it offer any other special features? (e.g. One click dealing, trading from the chart, trailing stops, mobile trading etc.)
-
Trading Account
- What is the minimum balance required to open an account?
- What is the minimum trade size? e.g. 1 unit, 1,000 units, 10,000 units or 100,000 units?
- Can you adjust the standard lot size traded? [?]
- Can you earn interest on the unused margin balance in your account?