Proof Dukascopy is also a Market-Maker! Raises question about FXOpen's ECN!

Hello dear BabyPips community,

first of all, the link:

As you can see, ‘execution type’ is Market maker and ecn!

So it’s not a pure breed ECN! Then, what about FXOpen, who are getting their Level 2 quotes directly from Dukascopy?

Are they all just a bunch of bucketshops?
What are your thoughts?

This is not proof of anything. I think you should do some more study and then a whole lot of research and then come back when you know what you are talking about.

Well, when you look at the price-feed of Dukascopy, you should be able to see that their pips ALWAYS increase/decrease in 0.5 steps, whereas HotSpotFX does so in 0.1 steps.
Also, they are not regulated by the FINMA in Switzerland!
AND, just recently they introduced a whole bunch of exotic pairs which they also had BEFORE they became a so-called ECN and were still a MARKET-MAKER!
And let’s not forget that they lowered their minimum deposit just recently to 1k!

So, Mister, what is your response to THAT?
I seriously hope I don’t overwhelm you with my response…

I seriously hope I don’t overwhelm you with my response…

Nope, you have not overwhelmed me…simply because your response lacks substance.

Nothing of what you mentioned proves anything. When I was a noob, I also used to think that spreads were the be all and end all of trading and that they revealed all. I have come to learn that this is only a small part of the picture.

Order routing within an ECN environment is a technically complicated matter and pip movements of 0.5 pips may well have a practical significance to it rather than proof that they are a market maker. Spreads go hand in hand with liquidity…it may not be practical for them to offer every single 0.1 pip step as a change in spread and assure order execution at the same time.

The fact that they are not regulated also means nothing…forex is an OTC market which means that it is a totally decentralised market place and brokers can choose to be regulated where-ever, if ever. It says nothing about their trading model.

I don’t trade with them(I did demo their MT4 for a while…long enough to convince me it was an ECN model) so I am not familiar with their new exotic pairs, and I have no idea why you think the introduction of these pairs makes them a market maker. I guess I should watch out for my broker introducing new pairs, hey?

The fact that they dropped their minimum deposit also means nothing. Retail forex is one of the fastest growing markets in the world. They would be stupid to ignore the volume they can achieve from small traders. It is called evolution and it is happening with most brokers out there.

Whats your beef with them anyway…lose some money did we?

No, I didn’t lose any as I am not live with them, but checking out different ECNs to determine which one’s the best for me.
So, may I ask which one you are using?

I use MB Trading and Jade. Jade is STP but works just as well.

I think Dukas is going to be good when they go live with MT4. I just got sick of their 14 day demo limit.

Well, I quote from their website:

Brochure on Risks in foreign exchange trading on the SWFX Swiss forex marketplace

  1. conflicts of interests

The user understands that the business model of the SWFX Swiss Forex Marketplace consists in ensuring best execution for the transactions of the Users and matching the transactions between any of its Users or Counterparties, each trade being instantly hedged with a countertrade. In that respect, on the SWFX Swiss Forex Marketplace, Dukascopy is counterparty of each trade and counter trade, In some circumstances, Dukascopy may not hedge entirely or may not hedge at all certain trades, In such cases, Dukascopy may have opposite positions towards Users.

Risk disclosure and acknowledgment

  1. Dukascopy reserves a discretionary right to check any order before execution.

Seems trustworthy, right?

Just noticed also:

When you watch a corporate video of theirs, in the end they will almost always flash the Dukascopy logo with a particular sound.
That particular sound I had already heard somewhere…
Guess what?

It’s the sound the TRANSFORMERS make in both movies from Micheal Bay!
You should really check it out!

They are even stealing from Hollywood! We should tell Paramount Pictures and get them fined!
They deserve it for lying to their customers…

Ok, that last post of your comes from the lunatic fringe…if this is your idea of learning about forex, then you need to be seriously asking yourself if this is the business that you should be in.

Your second last post has some merit, although, it still shows a lack of understanding of the markets that you are dealing in. MB Trading is also counter party to all my trades and here is the explanation for it. The quote is courtesy of Justin who is the main representative/owner of MB Trading and often posts on another popular forum.

I’m not really sure what you mean about challenging the regulators about the fact that we are the counterparty to your trade. What is there to challenge? As I stated (I thought very clearly), we ARE the counter party to 100% of our customer trades because we have the clearing arrangements with the liquidity providers in our system. You (the customer) does not. You can’t trade with XYZ bank directly. You don’t have a signed document with them that says that at the end of the day, one of us will pass so many Euros or Dollars or Pounds to the other based on the net of trades that matched off during the day. For you to have that would require that you personally have a large (typically seven figure) deposit with that provider along with a legal agreement. That’s why you use a broker. It’s our job to have the infrastructure in place, just like when you select a stock brokerage. You can’t possibly have a clearing arrangement with all market makers that says that you both agree to pay for and swap shares of stocks on behalf of yourself. That’s what a broker is. It’s funny because the same language applies in all clearing arrangements in the stock world, but no one says “I think e-Trade is trading against me.” Everyone understands the point of a clearing firm and the broker-clearing firm relationship.

GFT has a roar at the end of their videos. I think they are stealing it from Tarzan!!

“The fact that they are not regulated also means nothing…forex is an OTC market which means that it is a totally decentralised market place and brokers can choose to be regulated where-ever, if ever. It says nothing about their trading model.”

K.H. - I really disagree with this statement. Not having a regulatory body to turn to is giving the broker the only say in a dispute or action. Plus the Swiss, having had several bucketshops wracking up complaints of suspect dealings, slippage, etc., instituted very stiff regulatory rules and soon, if not now, all FXbrokers will have to have a Swiss license to do business there. An old thread by ForexSavior go into great detail about this. Shady operators used the Swiss culture image to appear to be on the up and up. If you can’t trust the Swiss who can you trust was the idea. D.


I agree with the spirit of your comment, in that, yes, there are some unscrupulous brokers out there that would do these things…we could have an interesting debate on the benefits of regulated brokers, however, that was not actually my point.

I was saying that, the fact that they are not regulated by whoever does not represent proof that they are a market maker.


K.H. - got it. Thanks. d.

lol, Dukascopy a market maker, biggest joke all year.

Well, as it became apparent, even ECN’s like Dukascopy or MBtrading DO take the other side of one’s trades! And it even seems legit, as was already explained!
BUT what does PFGBest then do?

I quote from their website:

"Most Popular Questions Asked Regarding our MT4 ECN

Q: Is the PFGBEST MT4 ECN Platform a true ECN?
A: Yes the MT4 platform has 9+ major banks that provide liquidity and take the trades.

Q: Do you take the other side of the trades on MT4?
A: No we do not take the other side of the trades. We are a straight through processing ECN.

Q: Is your MT4 ECN robot friendly?
A: Yes since we have multiple banks and we do not take the other side, we want you to make money and stay with us. The banks do not get to see beyond our bridge if you using an EA or a robot.

Q: Do the Banks on your ECN see our pending orders like Stops and Limits?
A: No the Banks do not see pending orders, nor do they see EAs or Robots beyond the bridge we use.

Q: Do you offer Mini lots or micro lots on your MT4 ECN?
A: We offer mini lots 10K but do not offer micro lots. The banks do not like to take micro lots as it has the same fixed costs as a mini lot or higher lot does. Dealing desks which take the other side offer micro lots."

So, there you have it folks, apparently, they are not taking the other side of your trades!
But how is that even possible?
Two possibilities:

  1. PFGBest is lying.
  2. People on this forum are not all that well informed.

So, which one is it and what is your opinion?

PS: That Transformer-Sound thing is true! Just go and check it out for yourself!


Go to the PFG website and download their documents required to open an account. The one you are looking for is called the ‘Foreign Currency Transaction Notice’. In it, it CLEARLY says that they are counter party to your trades. I would have cut an paste it for you but it is a protected PDF document.

Now, perhaps the time has come to face the fact that YOU are the uninformed one and you should be learning, rather than trying to make a mountain out of a molehill.

Yes, you are right!
But then I ask myself, why are they stating that they do NOT counter-trade you on their FAQ?
I mean, clearly they are lying!
And besides, the real question is:

Do they have the power to mess with your trades?
Are they making money when you lose?
What difference is their left between a Market-Maker and an ECN besides the Depth of Market (DOM), then?

I would be glad if you can answer my questions!

I don’t believe PFG are lying…I did trade with them for a while and they are ok. We are talking semantics here. It is clear from the previous explanation that, for legal reason, the broker has to be counter-party to your trade(in practice, I don’t believe this to be the same as being on the opposite side of your trade). The only analogy I can think of is that of a property owner…you own a house and it is registered as yours but the bank actually holds the title deed. They are a ‘counter party’ to your property.

I will stick my neck out and say that I am not convinced that market makers ‘trade against you’. People would love to believe that it is the broker and not their poor trading skill. In the case of a market maker, they have thousands of trade in a day but yet people believe that the broker singled out their 0.01 lot trade. The market maker broker model is an extremely profitable one and does not rely on them exposing themselves to the market. However, if you look at the position that the market maker is in…he has to take the opposite side of your trade, even if it does not suit them. It does not come as any surprise then that they will tip the scales in their favour.

Also, some market makers are better than others…better capitalisation allows them to contract with bigger liquidity providers. Bigger marketing budget allows them to pull in more clients so it is easier to hedge themselves out of your trade. Bigger budget means more powerful servers and better execution. The weaker a MM is, the more ‘tricks’ he needs to use to lower his market exposure…he requotes, delays your trade, etc…these are simple realities not active trading against client.

Along comes the market execution or ECN broker. They have zero market exposure, because you as the client take that risk. This is why a market order is so risky…in theory your slippage can be unlimited. You place an order and you take whatever price comes back. You have no control over it and neither does the broker. They can afford not to mess with your price feed because there is no risk for them. Obviously repeated bad fill means that the broker is having problems probably limited liquidity providers, slow servers, and perhaps servers located too far away from their liquidity providers resulting in excessive latency…I would simply move on. The order flow at a market execution broker(ECN) can become very complex. MB Trading once told me that your order has up to 20 different routes that it can follow when entered…hence the ‘anonymous’ trading.

Another thing you mentioned in your first post is the issue of spreads. Spreads are only a small part of the storry. An ECN broker could show you the thinnest spreads on earth but if they can only offer you 1 minilot at that spread, it is useless. When the broker sets up his system he has to agree with his liquidity providers what size orders they will be able to fill at what spreads, so often a spread will be determined by a guarenteed volume per quote for example 20 million USD. An ecn can provide a partial fill which a market maker cannot do. A market maker has to fill your complete order and if this order consumes all his liquidity, he has to slip your order or delay it or requote it until he can fill it…there is no other way. He won’t fill it out of his own pocket. You may see that as trading against you, but I see it as the realities of the market that we play in.

I view brokers and their tactics as a simple fact of life. I look at them as the big shark in the swimming pool. You can either stand and fight(and get eaten) or you can concentrate on outswimming the other little fishes in the pool.

An account manager in Dukascopy explained this - they might act as a counterparty for a couple of seconds if they can’t find a counterparty for that particular moment. Not everyone accepts 1 000 unit orders, so this is their solution for this. Once the necessary amount for an acceptable order is accumulated or a counterparty is found, it’s taken by the counterparty. :wink:

Really, who cares? There is ALWAYS going to be someone on the other side selling or buying the currency you’re trading. :rolleyes:

You need to be watching a broker for slowing your executions, blocking or freezing your platform and manipulating price to take out your stops. :eek:

I have been through seven (7) brokerages thus far and do currently trade live via Dukas. I have for over three years now and never experienced any of the above.

Some say… But they charge a commission. Once again, who cares! I trade daily and it’s just a part of doing business (a business expense) but I also receive a nice 45% refund every month on said trading commission.

Additionally, the .5 pip step is because not all their liquidity providers are able to provide them a decimal price.

Trade to trade well,