Hi,
I started learning to trade about 2 weeks ago, and have been using the paper trading account on Trading View. I cannot find the answer to my question online, I would really appreciate on any answers or pointers:
Why are there different “platforms” for the same currency pair? For example, on Trading View, EUR/USD has some 30 entries corresponding to different brokers, like FXCM, Oanda, Pepperstone, Eightcap, Capital, and so on. Why don’t we use the same chart for convenience?
For each broker “platform”, the volume traded and the candlesticks are slightly different. Are the volumes shared across different platforms for the same currency pair? I.e., If the volume is too low to execute a SL or TP on a Pepperstone EUR/USD, will the order be executed via a FXCM EUR/USD, i.e. are these markets connected? In other words, by picking a platform, is the liquidity of trading limited to that platform alone, or is it tradable across all currency-pair platforms? (My guess is that it is confined to the platform, otherwise why would the volume be different on each platform chart?)
In relation to liquidity and trading volume: Is the Spread Betting market volume separate from CFDs volume? For example, say there is10K volume trading on Spread Betting for EUR/USD (Pepperstone, lets say), is this volume distinct and separate from the volume traded on CFDs for EUR/USD (Pepperstone)? (My guess is again, that they are distinct, because the charts show different volumes). Therefore, if the volumes are indeed separate, am I right to conclude that it is crucially important to pick not only a high volume currency-pair, but a high volume platform, AND a high volume Spread-Betting vs CFD platform, to avoid slippage and volatility? For example, you might be trading EUR/USD Pepperstone CFDs on 1K volume, but the same EUR/USD Pepperstone Spread Betting is 10K – it would be a major factor to consider.
Lastly, if all these assumptions are correct, that means brokers are basically making up prices because there isn’t a centralised standard. That sounds soooo dodgy. So a broker can literally change their charts whenever they like to suit themselves, am I right in saying that? You might be looking at a chart and come to a conclusion about your analysis of the market, you might place an order, but your broker’s chart might move differently and we can never know if that is true market influence or just the broker doing it. Right?
Please share your thoughts as I cannot find any clues, and don’t even know what keywords to search on google.
The platform is the “shop-floor” of each broker where they inmvite you to do business with them. Just like supermarkets, they will each be different.
Our trading is done with our broker. Each only has a count of what trades they themselves are handling. Nobody has all these statistics for the world. Brokers’ charts vary very slightly because again each is independently collecting price data - there is no single definitive chart because there is no “exchange” to produce it.
I don’t know the answer, but the assumption behind your question make sperfect sense.
Yes, brokers’s prices differ, particulalrly their spreads, the difference between the buy (ask) price and the sell (bid) price. That’s because they are competing commercially with each other - that’s capitalism. The result is it’s always possible to find a better price. Just like you can visit 5 different supermarkets and buy bread at 5 different prices. Just make sure that if you are comparing at charts from two different brokers, both show the same type of price - bid, ask or mid.
Some good questions and I doubt anybody on here actually knows the answer.
Volume is number of ticks, not volume traded so it would seem reasonable that the same liquidity provider would have the same volume.
Given that the brokers can be the liquidity provider and usually are, it makes sense that they’re only matching orders within the same server rather than across all of them.
Brokers are making up the price within reason. And it’s entirely possible that even the strongly regulated companies move price for their own benefit. It’s a feature of this industry and nothing you can do about it other than trade futures which are centrally regulated.
Thank you, I have not looked into futures much, would you say that futures, options, and CFDs are all better regulated than Spread Betting? What do you trade if I might ask and do you do anything to mitigate the broker moving prices for their benefit?
I have been doing well on a Trading View practice account, my main hesitation with going live is that this whole business feels shady and I don’t want to be ripped off. I know how spreads change, slippage occurs, stop losses might not be triggered, and liquidity changes. One slip and I might not even be able to close a position, that scares me.
SB in the UK is regulated exactly like CFD’s, by the same regulator. The main difference is that profits from SB trades are exempt from UK Capital Gains Tax: you don’t even have to submit any paperwork or records. The practical differences are minor - mainly that SB prices usually show a slightly wider spread than on a CFD account so if you’re going to be scalping, don’t use SB.
Retail traders do not have access to the FX market . They only trade with their retail FX broker. And the chosen broker only takes in and pays out to their traders while taking their own commission mainly from spreads and fees. Therefore it is essential to trade with a regulated broker who segregates clients accounts from their own.
In order to actually trade with other FX traders, meaning you’d be trading against a counterparty who is NOT your broker, you need to be an institutional FX trader like the banks, insurance companies etc.
Thanks for all the responses. I know this is going off topic, but the underlying reason for this post is about CFD vs spread-betting (brokers, risks, liquidity). I suspect that there is more to it than just tax. Here’s a quote from varianse(dot)com/en/forex-education/broker-knowledge/cfd-vs-spread-betting-the-final-word/
“CFDs were born out of financial markets and if you use an ECN or DMA style broker, liquidity is being directly sourced from institutional participants. Spread betting isn’t really utilised by institutions, so if you are trading through a spread better, there really is a third party involved in showing the prices you see on your platform…CFDs trading is also more true to form relative to trading the underlying physical. Rather than size your positions by point with spread betting, CFDs actually involve buying and selling position sizes just as you would do if you were trading the underlying instrument.”
What I’m getting from this is: In Spread Betting, you are trading with your broker; they open and close your positions, and they set the prices, and can move them for their benefit, or choose not to close your position for their benefit. In CFDs (specifically DMA brokers), you are trading directly with the market; you buy and sell contracts directly from other traders, and pay a commission to your broker to execute the trade.
Is this correct? If so, it’s a no brainer to trade CFDs because SB is an unfair game. The CGT allowance is something else obviously. I wonder if any experienced traders have any thoughts on this?
Once you take commission into account, there’s virtually no difference between spread betting and CFDs. I went through Pepperstone normal, razor and spread betting accounts and found the spread + commission is virtually identical cost. The difference is that they offer commission discounts for frequent traders. But that doesn’t offset the tax you’d have to pay if you’re successful.
I have a spread betting account and never had any cause to cry foul. When it’s gone wrong,it’s my fault and all brokers show the same moves within a small amount
Don’t believe all the marketing sham. Whatever you’re trading, your broker is the counterparty. They are usually the liquidity provider and all the fancy acronyms are to confuse people into thinking there’s a central market.
But regulated by the FCA means they can’t really manipulate price. What you see on finviz.com is always very close to the quote price