Question about Fixed Spread VS Commission

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Postby jhtumblin » Mon Nov 13, 2006 6:31 am

How do you explain the exorbitant rollover rates of EFX as compared to 'fixed spread brokers'? When you place limit orders, how do you know what the spread is at the point of execution? Under what circumstances is trading with an ECN better than a bucket shop?

Are you talking about the spread @ time of rollover? If so it is not exorbitant it is actual. Refer to my previous post.

You can only know what the spread is at the time of execution on a limit order if you are watching the order execute, or otherwise have a means of tracking the bid/ask prices during execution (a program perhaps?)

I personally have found no circumstances when trading with a bucketshop is better than ECN (Once again if you are the average retail client)

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Postby 4x=0 » Tue Nov 14, 2006 7:06 pm

jhtumblin wrote:Are you talking about the spread @ time of rollover? If so it is not exorbitant it is actual.

We know it's real. Real HUGE. It's actually, really, very large. Exorbitant, yes. Best not to trade at those times. Or around the daily maintenance. However, as the above image suggests, EFX spreads are usually always very tight.

About the ECN v. Bucket debate: My broker is hosting a live webinar on Thursday conerning various topics such as Dealing-Desk v. Non-Dealing-Desk platforms, which could be generally translated to mean "fixed v. variable brokers". Perhaps I will return with the truth on the matter.

Plus the webinar will be featuring a
special guest Panelist who has been a professional trader for the past 16 years.

Should be awesome. Especially with the additional "benefits of trading LevelII" topic.


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Postby dbw451 » Sun Sep 30, 2007 1:14 am


ECN brokers' FOREX commissions can be a little more complicated than either just fixed or percentage. For example, Interactive Brokers is a tiered percentage with a fixed minimum. The percentage tiers are based on trade value. IB's current FOREX commission structure is:

< $25,000 USD => 1 basis point * Trade Value
<= $1,000,000,000 USD => 0.20 basis point * Trade Value
<= $2,000,000,000 USD => 0.15 basis point * Trade Value
> $2,000,000,000 USD => 0.10 basis point * Trade Value

$2.50 USD minimum per order for all tiers
where 1 basis point = 0.0001.

Now there is still a quote spread that your trade needs to overcome to be profitable but the quotes are the best available quotes and not marked up like the spreads of many bucket shops. In other words, with IB you know how much you're paying IB for commissions, the commissions are not hidden in an inflated artificial spread.


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Postby Trade Viper » Sun Sep 30, 2007 2:24 am

Avery whats up, send me some Advil I have a headache From this thread. Actually there is some good stuff here. The one thing nobody has mentioned is that you cannot scalp with a fixed spread, 3 wide = a move of 9 to make six, or better yet 8 to make five. So scalping is very hard. Also with a fixed spread you are going through a deal desk and not STP, if you want to trust a deal desk, well no whining later. CurreneX continually will show choice on the EUR, of course that is my hub, others may be different.

At this time EFX is as close to CurreneX and an institutional feed as you can get.

When we were setting up I spoke to FXCM about setting up on CurreneX, they did a demo walk through with me, and since I had already set up a demo account with another broker I could compare the two. I saw that the FXCM CurreneX feed was three wide while the other broker was 1 to choice on the EUR. I asked why the difference and I was told that 3 wide was the real market and 1 to choice was an "artificial" market. Yeah right, needless to say I am not with FXCM.

By the way, I would really like to try some of your stuff but as you know I am a trader and not a programmer, so as soon as your wandering partner returns from his jet setting lifestyle, maybe you can convince him to code up the straddle to work with NT build 14

Anyway thanks for an alternative view.

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Postby TheRumpledOne » Sun Sep 30, 2007 2:17 pm

Ha ha, Viper, too funny.

Please do NOT PM me with trading or coding questions, post them in a thread.

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