I just posted a question regarding the best ECN broker, but maybe I jumped the gun.
So I had intended trading last year and some personal stuff cropped up and it didn’t happen.
At the time my research had brought me to the conclusion that one was better going with an ECN broker. Sure - the spreads may be wider but at least the playing field is more level - i think that is a good synopsis of the conclusions I had drawn.
But is that really the case?
Please let me know your thoughts.
S.
Everyone will say ECN all the way and to some extent I agree, but to some degree you have to look at your situation. Most ECN (true ECN brokers) require a pretty large some of capitol to open an account. Also your transactions are not guaranteed to be filled at the price you want (if at all). Your other options are STP brokers like FXCM or a market maker. Both are pretty close to the same IMO. A STP will put your order through to various institutions with there name on the ticket. A market maker will process your transactions typically by either combining orders to put on the open market or taking the other side of your trade. The benefit with a STP is no one else knows where your stop might be place but they also have a higher spread (for the most part). With a market maker you can open accounts with low capital and enjoy low spreads. On the flip side since they could be taking the other side of your trade and control your charting software, do you really want them knowing where your stop is placed to?. IMO it does not matter as long as you have a reputable broker. Most brokers will not jeopardize there reputation to take your milk money. Not saying it has not happened but you will hear millions of horror stories of this when in fact most of them are the traders fault. Yes if you can go with an ECN but realistically do your homework on your broker and you should be fine. FXCM, Oanda, should suit you well as they offer free demo accounts that do not expire. Learn to trade and by then you will know the broker that suits you the best.
I’m not going to bombard you with questions, I promise: Just 2 more;
The brokers you mentioned above, are they ECNs or market markers?
Do you have any opinion (you’d like to share 
about MT4 VS MT5?
Judging from your comment, I am sure you still don’t understand the players in this business, or you are just a paid advertiser for one of the brokers you mentioned. Can you tell me what ECN means? Do you know that an ECN broker can still execute orders using STP?
Lol! Our Mr Bobmaninc is one of our long time member here and No he is not a paid for advertiser ( unless he switch a career that we are not aware off)
Have you ever try asking our dear friend Google about ECB and STP? You should try that sometimes…
@ Bobmaninc- Welcome back! Haven’t seen you in a while
That’s an obvious reason why dealing desk brokers customers, coming in at the bottom of profitable customers in the quarterly year statistics …
FXCM has ridiculous 2.6 pips spread on EUR / USD when client choosing ECN model …
FXCM dealing desk client get 1.6 pips spread but then sits fxcm other side of the table they have no interest that the customer is a winner …
Market Maker - This type of broker makes the market. This means that every time you buy or sell a pair the broker is the counter party. If you lose your money, this means that the broker earns it. So you can see that their interest is you losing money and that’s bad. This type of brokers are OK for smaller amounts but when you’ll start making trades at 5$/pip they will delay your execution or even make your trades re-quote. If you are a profitable trader, they will hate you and depending on their ethics, might specifically target you and hunt your stop losses. There is a plugin for mt4, specifically designed for that, and its made by Metaquotes! But what would you expect from a Russian company anyways?
ECN Broker is a broker that offers you direct trading on the real market. This broker makes money from commission. Few will make money of padding the spread displayed to you: let’s say if the current real spread on an GBPUSD pair is 0.3 pips, this broker might display you a 0.6 pips spread, so they are making 0.3 pips on every trade you make. My ECN broker can even offer you negative spreads! (IC Markets, amazing broker, but doest accept Americans). ECN’s interest are 100% aligned with yours. They want their clients to be successful and make money. However, due to the nature of the beast, on the interbank you might get slippage. However, with good brokers, the slippage can work for you and isn’t only negative slippage.
STP Brokers are a hybrid between Market Makers and ECN brokers. This type of broker displays most of the time its own quotes which are correlated to the actual inter banking quotes.
And now here is the real complexity of STP brokers: This brokers sometimes routes your orders to the real market (acts as an STP broker) but other times it doesn’t and acts like a Market Maker.
STP brokers use complex algorithms that finds if a trader is successful and automatically routes those traders to the real market while small and losing traders aren’t routed to the market. This way the broker profits twice: once by clients losses and another by not losing money to successful traders.
I think ECNs are the best by far. They also tend to have the smallest transaction costs of all (commissions and/or spread) vs STPs and MMs.
DEALING DESK FOREX EXECUTION MODEL
FXCM also offers forex execution via a Dealing Desk execution model.[B] FXCM can act as a dealer on some or all currency pairs. Note, however, that FXCM is the counterparty to any trades that you undertake. In this model, FXCM’s compensation may not be limited to our standard markup and our interests may be in direct conflict with yours. [/B]Additionally, we face market risk as a result of entering into trades with you.FXCM may take steps to mitigate its risk arising from market making more effectively by, at our sole discretion and at any time and without previous consent, transferring your underlying account to our NDD execution offering.[B] FXCM may also choose to transfer your account to our No Dealing Desk (NDD) offering should the balance in your account exceed the USD $25,000 maximum.[/B]
[B]On FXCM’s 12 most popular currency pairs (listed below), the Dealing Desk execution offers competitive spreads that may be up to one pip lower than FXCM’s NDD spreads. In its Dealing Desk offering, FXCM will not always act as the dealer and may utilize NDD execution for any currency pairs it offers. When FXCM does not act as the dealer, FXCM employs backup liquidity providers [/B]that will fill in during these times. Please note that FXCM’s Dealing Desk employs fewer liquidity providers than the No Dealing Desk (NDD) execution option. FXCM does not guarantee that quotes, prices, or spreads will always be better on one form of execution as compared to the other. Customers should consider many factors when deciding which execution type best suits their needs (e.g., conflict of interest, trading style or strategy, etc.).
ECN always has the lowest spread. Nowdays most breakers are becoming ECN due to lots of competition.
Why offer FXCM 2,6 in spread EUR /USD from their ECN platform and 1,5 pips spread from their dealing desk platform !!!
I’m still do not understand about dealing desk broker…
Please someone here explain me about what is this??
Dealing desk is the same as Market Maker
Because ECN/STP the have to go through a bank and have to pay the banks rates and still make there spread. Therefore the spread will be higher
Dealing desk they are the market and keep all the spread thats why they can offer it lower than the STP plattform
Well how about you tell me what ECN is then???
And no I am not paid by FXCM or Oanda I am paid from people like you in the market. But now that I think of it it does come from my FXCM account so technically so could say I am paid by FXCM but not for advertising. 
First, for everyone’s clarification, FXCM offers clients the choice between two forex execution types: No Dealing Desk (NDD) and Dealing Desk.
Second, I believe what you’re seeing in that report is how the leverage you use and the amount of capital in your trading account can affect your profitability. I mentioned this in earlier discussions about leverage with data compiled by DailyFX research from over 10,000 FXCM client accounts: “Traders with at least $5,000 of capital tend to use more conservative amounts of leverage. Traders should look to use an effective leverage of 10-to-1 or less.”
The same study showed that FXCM client accounts with a balance of $10,000 or more had a profitability rate of 44.09%. That’s right in line with the data from that report. The first broker listed has a minimum balance requirement of $10,000 for all their accounts, while the second broker on the list has minimum trade size of only $1, which means even their smaller accounts can trade with low leverage.
It’s important to keep in mind that FXCM charges no commissions on top of our retail No Dealing Desk spreads. Instead, we apply a fixed pip markup. For traders who prefer a spread + commission pricing model instead of the pip markup, that’s available with our Active Trader accounts.
[B] My point is that FXCM as ECN broker is a very expensive broker compared to other serious ECN brokers on the market …
[/B]
Compared to Oanda is an ECN broker offers a average spread
EUR / USD around 1.1 pips in spread
[B]FXCM ECN offers 2.6 pip spread in order to perform the same service , which is 136% more expensive than Oanda … ! ![/B]
FXCM marketer 's dealing desk, where you operate with a spread of 1.6 pip
which is 45 % more expensive than Oanda ECN platform …
B[B]Big minus you are playing against FXCM 's , which is based on that customer must lose! ! …[/B]
*
[B]Jason
I agree when comparing statistics, you need to compare on equal terms …
Oanda and FXCM has a realitvt same customer group under 5K anyway Why is this average group of customers to OANDA much more profitable than FXCM !! .[/B]
One reason is the price …
[B]Smbu refers to the same statistics in their e - book indirectly they say you are an idiot if you use FXCM as a broker , ,
Just as you beckon to you traders to use dealing desk platform , indirectly telling you client you will lose anyway, so it’s better you give money to us ( FXCM ) than the market …[/B]
Had customers earned on forex , would fxcm no longer operated with dealing desk … !
*FXCM active traders is a joke. FXCM requires 25 K for open account that is a utopia for most
Spread 0.8 plus commission of 4.4 = 1.24 pips per trade
In other words Oanda $ 100 customers have 13% better terms than FXCM its 25 K customers …
Dealing Desk
When acting as Market Maker the FOREX company uses a Dealing Desk to receive the orders and to feed you with the currancy rates that you would trade on. Again, the currency rates provided to you as a trader are either the same or very close to what the big banks provide to the broker. In this execution model when you trade profitably you make money off of your FOREX broker. On the other hand – your broker profits from your trading losses. In other words – you trade against your brokers capital and your money are not traded on the interbank FOREX market.
What you’ve said here is incorrect. You’re looking at a broker that uses dealing desk execution and comparing their spreads to FXCM’s No Dealing Desk (NDD) spreads. Look at our dealing desk spreads across all the major currency pairs and in all market conditions including news events, and you’ll find them to be competitive with other brokers using the same execution model.
You’re implying that it’s not possible for traders to make money with FXCM’s dealing desk execution option, and that is not correct. Furthermore, it contradicts your recommendation of another broker that uses dealing desk execution. The reason you have this misconception is because your description of dealing desk execution is incomplete and lacks important details that explain how it’s possible for both the trader and the dealing desk to be profitable. It’s not always a zero sum game like you say.
While it’s true that when operating a dealing desk a firm may actively be taking a position in the market, where your loss could equal their gain or vice versa, that is only part of the picture. Dealing desks can also make money be internally offsetting the buy orders from some clients with the sell orders from other clients and profiting from the spread. Dealing desks can also take their overall exposure from many client orders and offset that with an order of their own with their liquidity providers. In this way it’s possible for both the dealing desk and the trader to be profitable.
However, as you suggested, there are certain strategies expose dealing desks to more risk, such as automated strategies or strategies that trade at a high frequency. To better manage their market risk, some dealing desk firms actively intervene in their clients’ trading by re-quoting orders, delaying execution, skewing prices, or widening spreads.
FXCM is different, because we offer both DD and NDD execution. If you are trading on DD execution and your trading style exposes us to more risk than we’re comfortable with, FXCM can at our discretion change your execution type to NDD. This is how FXCM can comfortably offer both options without having to resort to some of the common “dealer intervention” practices listed above which take place at many forex brokers.
While all trading styles are permitted on our DD execution, we encourage traders who use automated, high-frequency or scalping strategies to open an NDD account, which is fully compatible with all trading strategies. Please note that FXCM reserves the right to switch your execution type to No Dealing Desk should your trading style expose us to more risk than we’re comfortable with. However, as I’ve explained here, this has more to do with the trading style itself (scalping, news trading), rather than whether a trader is profitable.
I’m not familiar with Smbu. Do you have a link to where they say this?
I’m glad you agree that it’s important to compare apples to apples. That means, when looking price, you have to compare the spreads from the dealing desk broker you mentioned with the spreads from our own dealing desk execution option, in which case, you’ll find us to be competitive. That means it’s unlikely that price was the reason for the difference in the statistics you saw.
As I mentioned in my previous response to you, what you’re seeing in that report is how the leverage you use and the amount of capital in your trading account can affect your profitability. The dealing desk broker you’re comparing us to allows traders to place orders as small as $1, which means even their small balance accounts can use low leverage. At FXCM, the minimum trade size is $1000 or a 1k micro lot, because that’s the smaller order size we can offset on NDD execution with our liquidity providers.
Spreads are important, but they are just one factor out of many to consider when choosing a broker along with 24 hour customer support, trading platforms offered, charting, educational resources and safety of funds. At FXCM, we seek to provide competitive spreads on great trading platforms and a safe place for you to hold your money.
It’s no secret that the brokerage industry has been in the midst of a price war for the past couple of years. That combined with lower trading volumes over the past couple of years have caused many brokers to struggle. There was even a broker in Europe that went bankrupt after trying to entice clients with 0 pip spreads. That year also saw the failure of a US broker that had previously touted their razor thin spreads. We’ve had other brokers have to pull out of the US after being unable to meet regulatory capital requirements. Just recently an Australian broker went bankrupt as well.
If recent events have taught us anything, it’s that the financial stability of the broker you choose can have huge implications. Unfortunately, the vast majority of forex brokers are privately held companies, so it’s hard to know the state of their finances. Are they profitable, or are they barely staying afloat? How can you know whether they are safe place to keep your money?
All traders need to ask their brokers the following questions regarding their financial stability.
[ol]
[li]What are your revenues?
[/li][li]How profitable is your firm?
[/li][li]Do you have a top-tier third party accounting firm auditing your financials?
[/li][/ol]
FXCM is a publicly-traded company (NYSE ticker: FXCM), so information regarding our financial data is readily available. It’s one of many reasons why traders have entrusted us with $1.264 billion in client funds.
Mr. Jason
The cost of trade is among the most important factors for a trader … It is not without reason that " traders" select currency futures as an instrument rather than the spot market due to the price …
*The price to trade spot will probably be more and more equal as futures brokers offer .
This is something Dukascopy has understood .
When you compare the price between brokers , then you must compare the cost irrelevant matter what type of execution platform brokers they offer …
The customer wants to trade at the best price …
[B][/B]
[B]I never said that you can not make money at FXCM DD platform .
I have said that FXCM as broker speculate that the customer statistically will lose over time regardless of how
you pack into the quarterly client profit statistics .[/B]
[B]The big difference is between Oanda and FXCM
Oanda does not profit on their clients’ losses, this doing FXCM active from their dealing desk
[U]So FXCM business model is based one that client have to lose if not FXCM will lose their money [/B]
[/U]
We both know that Oanda is not an ECN broker but operates with a dealing desk .
(no reaction that I said Oanda was an ECN broker )
*FXCM prefer that customers using DD not NDD …
*[U]One way to get customers from NDD DD is to offer a spread that is miles above other ECN brokers .
[/U]
Basically, a broker is an intermediary who takes % of the transaction who occur. There is basically no conflict of interest between broker and clients …
*FXCM however, is the opposite…
[B]Dealing Desk brokers may Actively trade against your positions . They can profit when you lose . Alternatively , they may lose when you profit . Because of this , Dealing Desk brokers are incentivized to manipulate your orders .
[/B]
[B][U]
My question Janson if 95 % of FXCM DD customers are profitable …
Will FXCM lose money … on DD platform or would FXCM do the same like Oanda is doing …
Janson
Why FXCM offers its customers NDD with a so high spreads compared to other ECN brokers ![/U][/B]
