Newbie trader here. This is my first post :D:D. I’m thinking about going live within the next 1-2 months and I need to intelligently decide which broker to choose. To me, financial stability is incredibly important when choosing a broker (especially with the $5 million upcoming rule by the NFA). Also looking for one that isn’t a bucket shop. That’s why I was considering choosing Deutsche Bank. They’re very large and I would feel sound with them having my money. Does anyone use them?
Additionally, I’d like to consider a broker with tight spreads. I trade G/J mostly, and my current demo account at I-trade has a 12 pip spread :mad::mad:.
I read somewhere that some brokers do not charge interest for holding a position multiple days. Is this true? Also, are there brokers out there, where if you hold a position for multiple days, they add interest to your account?
Lastly, I’m still trying to figure out dealing desk vs non-dealing desk. From what I understand, dealing desks are MM’s and they get paid on the spread. When you take a position, they take the opposite position. So if you’re a consistently profitable trader, they lose money?
Non-dealing desks are ECN’s that get paid on a commission basis for executing the trade. They have a spread, but you can pretty much get in and get out at the price you want? If you’re consistently profitable, doesn’t matter to them?
I apologize if these are really newbie questions, just trying to get my ducks in a row.
I’ve never used them but, considering that they’re one of the biggest banks in the world, I’d say they’re probably good to deal with.
12 pips? Ouch!
Looking at the Deutsche Bank site, it says their spread for the GBP/JPY is 8 pips. EFX’s spread is between 3-4 pips.
Most brokers charge and pay interest when you hold the position overnight (called swap/rollover). There are some who don’t charge or pay interest. A search through the forums will uncover them.
Again, a search for “ecn” or “market maker” will get you more info.
A Market Maker can also be a non-dealing desk broker. Therefore, not all non-dealing desk brokers are ECN’s. Whether you can get in and out at the price you want will depend more on the volatility of the market than the broker.
Thank you for the reply In2Blues. I’m still researching. DB won’t work for me as I would have to use regular standard 100K lots. Based on my initial account size, this will not work for me.
That link was great too! Very objective and educational. Thank you very much!
As far as ECN’s are concerned, EFX is my choice hands down. The only thing is that I don’t think they pay interest.
You might want to look at Oanda. They have no minimum account balance, you can trade micro lots, and they pay interest by the second on trades, as well as on your account balance. Of course, it depends what currencies your using whether you’d pay interest or receive it.
I had an online chat session with a rep from Oanda earlier today. I really only want to trade minilots with as low a leverage as possible (Oanda has 50:1 and I was checking out MBTrading but the lowest they had was 100:1). What’s the minimum leverage for EFX (yes this is the lazy route but I figure you know from firsthand experience)?
OK. But I’m confused about how interest works. I asked the Oanda rep about it today. My understanding is I’m charged interest when I close the position and if I hold the position after 4 PM. I went there and if I’m playing GBP/JPY, and if I hold 10 units, for 24 hours, I earn .0026.
So this means I gain approximately 2 pips, or they deduct 2 pips? I apologize if this is a really retarded question, but I’m only just beginning my Forex trading days and I want to do everything possible to get the odds in my favor.
EFX is the same as MTTrading, since they’re IB’s for MB.
Oanda’s highest leverage is 50:1, but you can go down to 10:1 with them.
You pay or earn interest in three ways:
On open positions held at 4pm (close positions before 4pm to avoid interest)
When you close open positions
On your account balance
In all cases interest is credited/deducted directly from your account balance.
Whether you pay or earn interest is determined by the currency pair you’re trading (i.e. the interest rates for the respective countries). I usually trade GBP/JPY, so on long trades I earn interest and on short trades I pay interest.
As for account balances, I’m not completely sure as I haven’t really read their interest page. Mine is held in USD and I earn interest every night.
I was asking a GFT rep today (yes speaking to another broker), about interest. They have the same thing regarding interest. I.e. depending on the pair, interest is eaither earned/paid. They have triple roll wednesdays though. That’s different. Interest is earned/paid three times on wednesday. I’m looking at it as a bad deal though b/c what if my strategy includes only playing the currency in one direction for that day?
However, I’m liking GFT at this point. $50 million plus in capital. But they’re a MM and dealing desk. I could be way off but I thought dealing desks means the broker offsets their position by taking the opposite position I take in the market. Here’s what the rep said:
Michael: i don’t suppose you can answer dealing desk or non-dealing desk…
Ryan: dealing desk
Ryan: which do you prefer
Michael: non dealing desk
Ryan: may I ask why?
Ryan: Thank you, one moment while I try to locate your information
Ryan: There is a lot of information out there that is misleading about MM
Ryan: disregard the thanks you line I hit an auto response key
Michael: MM I’m not concerned about. Brokers make $$$ from the spread, which is fine to me. Dealing desk means the broker will take an opposite position I take in the market. Non dealing desk doesn’t do that
Ryan: not true at all
Ryan: Dealing desk have the power to fill your trade immediately
Ryan: GFT fills your order then offsets the trade
Ryan: with a dealing desk if there is an issue with your trade you can call the desk. With a non dealing desk you have no one to call
Ryan: where do you think your trade is being filled at with a non dealing desk firm?
Ryan: A dealing desk in the background. Now their not doing it for free and the non dealing desk firm isn’t doing it for free. Your actually paying 2 firms when trading this way
Michael: I mean is GFT offsetting the trade by taking the opposite position I take?
Ryan: if you buy we sell it to you then go to a bank and buy it from them to make GFT flat.
Ryan: we don’t make the whole spread
Ryan: if it is 3 we pay 1 to 1.5 pips when we offset the trade
Michael: oh I see.
Ryan: You make the trade
Ryan: right
Michael: that explains it
Ryan: non dealing desk firms say dealing desk trade against they client. How do we do that when you make your own trade and we just fill the order. We don’t know your making that trade until it fills.
Ryan: Also your trade could be offset by another gft client also
Ryan: we have an auto-fill system here at GFT
Ryan: the dealer don’t fill every order
Ryan: what website did you read all of this from?
Michael: i’ve been to so many websites and read from various sources so i can’t recall which one specifically
Michael: do you guarantee stops and exit limit orders?
Ryan: guarentee a fill yes
Michael: guarantee a fill? That means I’ll be able to get out of the market at my stop price and my exit limit price?
Michael: my interpretation is i’m guaranteed to get in at the price i want. But can i also get out at the prices i want?
Michael: From the EFX website: "The forex market has existed for years based on a �deal desk� system. Firms offer �no commission, fixed spread� quotes in the forex markets, and then trade against their client orders. We don’t believe in the deal desk system and we think you should have the tools to access the true market yourself."
Michael: Ryan are you there?
Ryan: yes
Ryan: limit orders are filled at your price or better
Michael: ok. Well thanks for your time today. I like the fact GFT has over $50 million! I’ll most likely be back to try out a demo and check out the system some more. Got a few more brokers to check. Thanks again!
Alright so does the above convo sound Kosher about dealing desk vs non-dealing desk? I never knew choosing a broker could be so intense…sheesh!
So far my tops are Oanda (b/c of capital, I like the interest feature now that In2Blues cleared it up for me, low leverage, tight spreads); GFT (also for capital reasons, but lowest leverage is 100:1 and spreads are ok); and EFX (their platform looks neato, but from what I’ve found their capital is much lower than the previous 2, and 100:1).
In2Blues - thank you again! After even further research, it seems like I could’ve gone with your 2nd post to me - Oanda or EFX. Those 2 seems like the best fit for me. Will probably try out Oanda first. Gracias!
Actually, one last question - do either of those 2 allow scalping? When I say scalping, I’m referring to opening/closing a position from seconds to minutes with minimal amount of pips and large positions? I don’t use a scalping strategy yet, but it doesn’t hurt to be prepared.
Actually, that’s standard practice because they actually look ahead (not the specific day you trade) so they have to account for the weekend. Oanda is the only one I know of who does it differently.
You know, a lot of people are overly concerned about the capital issue, and it’s really not necessary. You should read the EFX thread at Forex Factory, where it’s explained.
So does their computer if they were allowing the trades to go through directly like an ECN. So, you have to ask yourself, if they’re not allowing the trades to go through directly, then why not? What advantage is there to a broker who “intercepts” the trades and fills them later?
A good ECN will have a Trading Desk to call if there are problems. That’s different than a Dealing Desk. EFX, for example, has a Trading Desk you can call to open/close orders if their platform or your Internet connection goes down. In that case, they must do your order “manually”, but it still goes directly to the market. They don’t take a position opposite to your trade.
LOL
I’ve never heard it described that way before.
Since all orders are on their computer, and they have to offset those order because they aren’t going directly to the market, then they know which orders are there, right? They may not look at individual orders, but they certainly know how many orders they have at a certain price and how many Stop Losses there are at a certain price, which allows for Stop Hunting. I’m not saying GFT does that, it’s just an example of what some broker do. GFT actually has a good reputation and their charts are excellent.
You’ll notice that he didn’t say “Yes, your stops and limits are guaranteed”? I think you scared him when you quoted EFX.
A “guaranteed fill” only means that your order is guaranteed to be executed, not that the price you want is guaranteed. No broker will guarantee that your Stops and Limits are filled exactly, unless you have a huge account with them.
The fact is that, as long as a broker makes their money from the spread and doesn’t send your order directly to the market, there is potential for abuse. This is a fact of Forex life (at least for the moment). Only true ECN’s send your orders directly to the market, and they make their money from commissions, not spreads. So, there’s no need for them to stop hunt or “offset” orders.
I know EFX does. They’ve said that themselves. Since they make their money from commissions, and not “offsetting” your order, it doesn’t matter how quickly you get in and out of the market.
I don’t know about Oanda for sure, but I do remember reading somewhere that they weren’t too fond of scalping.
I hear that dbfx (Deutsche bank) now allow 10k mini lots. Prior to this, they only allowed std 100k lots so thats a big help to new traders. My current broker Alpari jump from c. 5k micro (?) lots to full 100k lots. :eek: This is a big jump and requires substantial funding.
I have a live account with dbfx but haven’t used it yet as I am still on the micro lots. The platform looks very similar to fxcm and it is alleged there is a formal tie up, but I don’t understand what that might be. I did ask dbfx to clarify the alleged link, but did not receive a clear or satisfactory response.
The obvious advantage of trading with them is that they are not likely to run off with your funds if business is bad.
The forexbastards site has reviews on this and other brokers but a lot of them are subjective or inconclusive I feel. There are too many reviews from people with demo accounts, which, as I discovered, function somewhat differently to real money accounts.
Again, if anyone has practical experience of trading with dbfx, it would be nice to hear about it.
FXCM allows white labelling (i.e. selling the platform but enabling a company to put their name to it). DBFX replicates the FXCM platform so exactly that this is the only feasible answer. I use FXCM btw, and have found their service good.
What Oanda really frowns upon is automated scalping that is set for 9/10 of one pip profit, or 2 pips even, etc - in other words a computerized trading strategy that replicates when a pair exhibits certain criteria. Using a strategy and following it as an individual trader is not frowned upon and with their low spreads they need trade orders.
