Hi guys, im trying to trade forex using MT5. I notice that limit order is somewhat not that clear and has a subtle difference to what i know. for example when i used a demo account or strategy tester, and the USDNOK is trading at
ask - 7.97158
bid - 7.95977
if i put a buy limit order in between,
ask - 7.97158
buy limit order - 7.96000
bid - 7.95977
im expecting that now i am on top of the bid prices in the depth of market (DOM). i am essentially the best bid price and should be filled when a market order arrives, but that is not that case when i run a strategy tester or trade in demo account. It will only be filled when the ask price reached my buy limit order price.
What im trying to clear is that the limit orders are not exactly being put into the limit order book? or maybe because im using a demo account? it looks to me limit order is just essentially a glorified pending market order BUT with an exact or better fill. please correct me if im wrong.
any suggestions which brokers essentially put your limit order into the DOM or limit order book? or any platform for that matter?
are retail traders doomed to never experience the DOM or limit order book?
Retail traders who are trading CFDs/spot, more or less; yes.
Here are the main things you need to know:
Spot/CFD forex is a decentralized market
No currencies change hands when you “trade” with a CFD/spot broker: it’s just a bet against a counterparty on the price-movements of their own “product”
Your “trade” isn’t in a market at all and for this reason, “depth of market” doesn’t really arise
“Depth of market” and “order book,” in the trading world in general, are two alternative names for the same thing
Different spot/CFD “brokers” use the word “limit” with a range of subtly different meanings, and you need to be careful to check exactly what yours means
Don’t be fooled by the abbreviated terms that spot/CFD “brokers” use, like “NDD,” “DMA,” “ECN,” “STP” and others, which are intended to encourage you to imagine that they’re not really your counterparty. They are.
i think there are some who are ECN to the liquidity providers. so they route it to the liquidity providers. but since the liquidity providers and brokers are different entities, (and probably wants to monopolize the game), these brokers are not allowed to put “true” limit orders that put in the bid or ask side of the LOB/DOM.
DMA should be different since they have “Direct Market Access” exactly as it is. but as you said i think they also subtly change the meaning into an ECN. just a routing broker.
what do you think, do you think we have a chance to taste true limit orders? for example centralized exchange in crypto (e.g. crypto binance, etc) have these limitations too?
You can see what your “broker” tells you is a DoM and you’ve apparently, mistakenly, decided to believe that it must be a DoM otherwise they wouldn’t be allowed to call it that.
But they are, and it isn’t.
It’s just a display of the pending orders of their own other customers, very often with fictional extras added to make it look more realistic.
It has no realistic value for your trading decisions.
There can be no “depth of market” without first having a “market”.
You’ve apparently decided to believe that they’re “brokers,” too.
Alas, no: all too often they own those “liquidity providers” themselves, and they don’t have to tell you that, and therefore they don’t tell you that.
Think about what you’re saying, Franz: how could there be any “direct market access” without there first being a direct market?!
It’s not a centralized one. Every broker has their own. They’re not the same. It’s not a market. They’re not financial instruments. No currencies change hands when you “trade” them.
Sorry if I sound critical. That isn’t my intention, but it really does seem like at the moment you believe a few things that are just factually incorrect, and unfortunately you sound very certain about them, too! This honestly does make it very hard to help you.
