Do you have some experience with this broker ? Is it a serious service ?
Do they offer the same spreads on real accounts ?
I have had a live account (non-forex) on their 'Navigator' platform for several years. It was very unstable at the beginning, but is stable for the last year or so. I have a demo fx account on their version of MT4. It is going through the unstable period, with no ETA for live accounts. They will eventually be a reliable connection to an ECN, but it may take 3-6 months. Their stock quotes are susceptible to bad ticks, and their demo is showing some of the same tendencies, so it is advisable to filter their tick data. Their fills are rapid and accurate.
I trade with MB Trading.
MBT is an ECN. THERE IS NO FIXED SPREAD IN FOREX.
You can google and find out what I really think about "FIXED SPREAD BANDITS".
I'll leave it at that so I don't get banned.
How do I avoid the spread?
I explained this to someone yesterday in an IM.
With MBT you pay a commission rather than having a "FIXED SPREAD".
It's "apples and oranges" so don't try to compare. "THE MATRIX HAS YOU" and you need to "FREE YOUR MIND" to understand what I am about to explain.
Let's say the current bid/ask is 1.5010 x 1.5015
The current spread is 5 pips.
You want to SHORT.
You SHORT at 1.5010.
You set a TP at 1.5005.
Bid/Ask becomes 1.5005 x 1.5009 and the current spread is 4 pips.
At MBT, you will get filled if the bid is 1.5005 and someone TAKES your offer.
Bid/Ask is now 1.5004 x 1.5009 and YOU HAVE YOUR PROFIT.
Note: the ASK never reached 1.5005. THIS IS IMPORTANT!
If you entered this order at a FIXED SPREAD BANDIT, whoops I mean broker, your order is STILL OPEN!!
The bid/ask must become 1.5000 x 1.5005 and your order HITS the Ask.
DO YOU GET IT?
If not, then read this over and over and over again until the LIGHT BULB goes off!!
The day I found out about MBT is the day I opened an account there and stopped trading with FIXED SPREAD BROKERS.
The simplest thing to do is to load up a demo account at MBT Group and see it with your own eyes.
When you place your TP Bid offer at 1.5005, your bid is displayed on Level II.
The point is with MBT your offer gets hit.
With FIXED SPREAD BROKERS you have to wait to hit their offer.
Maybe this might help:
1.5010 x 1.5015
and price drops...
1.5009 x 1.5014
1.5008 x 1.5013
1.5007 x 1.5013
1.5006 x 1.5012
1.5006 x 1.5011
1.5005 x 1.5011 You may get hit
1.5005 x 1.5010 You may get hit
1.5004 x 1.5009 YOU COVERED 5 PIP GROSS PROFIT
AND LET'S CONTINUE
1.5003 x 1.5008
1.5002 x 1.5007
1.5001 x 1.5006
1.5000 x 1.5005 YOUR FIXED SPREAD BROKER FILLS YOUR ORDER.
Does that make it clearer??
What about the commission cost?
The commission varies depending on the pair trading.
It is $.50 per 10k minilot on USDJPY. So if I gross 2 pips, I am making money.
From the MBT site:
Fixed spreads are a way for FCMs to markup or markdown the best bid or offer. FCMs do this to hide their fee into the price of the currency pair instead of displaying their best quote. Common sense tells you that no one works for free, so when you see an FCM claim they have “no commission”, that should be a red flag. So how are they getting paid? Its simple: they are making money with the built-in markup/markdown in the spread.
Our FCM, MB Trading Futures, has nothing to hide. They offer tighter spreads with no markups/markdowns and openly display a low commission rate.
Commissions are based on total dollar amount traded: $5 per $100,000 traded.
IT IS NOT WHAT YOU TRADE, IT IS HOW YOU TRADE IT!
You are on the internet - If you (google) search for it, you'll probably find it.
I agree, it's good to see TRO on this board.
I have a couple of questions/comments/observations about ECN brokers though.
Firstly, what exchange do the likes of MBT hook onto? Are these CME contracts that you are trading? And do you actually get to see the full order book (Level 2) or just the touch (Level 1) with their platform?
I have seen the CME book and, just before major data releases like NFPs, there will be just one or so contracts at touch making it look attractive to the outside world, but there may be no other contracts backing this up for 10, 20 or 30 pips either side. So a robot will maintain the attractive touch until the moment that the data is released, then once the bid or offer is taken with the data release the market will instantaneously gap however many pips in the appropriate direction.
The inexperienced can really get caught out in this scenario.
Secondly, I think I'm right in saying that there are additional costs for the "bridge" which is required to interface MT4 with with the ECN platform. From the little I've seen and read there are several options with costs upwards of $150 per month. Would that be correct?
So my mindset is such that I can see the attraction of an ECN broker for scalping in reasonable size in stable markets (in just the same way as DMA is useful for manipulating stock markets), but I have to question whether it is the answer for everyone. A lot of people reading these forums are small time players for whom FX trading is just a hobby and they are clearly best suited to $500 micro accounts.