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disbellj
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ECN vs "spread bandit"

Postby disbellj » Thu Oct 09, 2008 8:21 pm

OK. This is my reply to MB Trading concerning the 5 pips mentioned in an earlier post:

"You replied:
"Dear Don,

You are not paying anything for the spread, however, when you enter a
trade you will have to make up the current spread to make a profit.
You entered at 1.3486 short and the ask in the picture you provided
was at 1.3491 which is the price that you could cover at the time.
This accounts for the 5 pip difference."

PROBLEM 1:
Well, if you look at the picture (attached in an earlier post), you'll
see that on MBT Navigator, that on EURUSD, Ask was at 1.3491, and Bid
was at 1.3486. That's a 5 pip spread on EURUSD! That happened right
after I placed my order. No wonder people weren't buying any more and
the price went down! The spread increased 3 pips!

At this exact same time, you'll see EURUSD on FXDD Metatrader 4
platform, it says the Ask is 1.3489 (2 pips lower than MB Trading at
exact same time) and Bid is 1.3487 (1 pips higher than MB Trading at
the same time). So MB Trading screwed me on the Ask and the Bid, by
both being different (in MB Tading's favor no doubt) than FXDD. So
this is one concern.

Even if that was not enough of a problem (which it is a BIG problem),
I'm constantly getting told I don't pay spread with MB Trading. Let's
take a look, and maybe you can help me understand this:

PROBLEM2:
MB Navigator (earlier today):
Ask: 1.3670
Bid: 1.3668

If I buy at 1.3670 (Ask) and sell at 1.3670 (Bid), I have lost 2 pips
(whether MB made that as profit does not concern me, someone is making
the spread off me). I also pay commission.
If I buy at 1.3670 (Ask) and sell at 1.3680 (Bid), I make 10 pips. I
also pay commission, which lowers my profit another 1.5 - 2 pips, so
really profit is like 8 - 8.5 pips with a move of 12 pips.

Regular broker (FXDD):
Ask: 1.3670
Bid: 1.3668

If I buy at 1.3670 (Ask) and sell at 1.3670 (Bid), I have lost 2 pips.
I don't pay commission. So my cost is 2 pips for the trade.
If I buy at 1.3670 (Ask) and sell at 1.3680 (Bid), I make 10 pips. I
don't have to pay commission. I'm in the same Ask price with either
broker. Bid had to travel the same distance on either broker (12 pips)
for me to make 10 pips.

So how are the trades any different on an ECN like MB Trading and a
market maker like FXDD? With FXDD, they at least tell me I'm paying
spread (up front about it), and that is how they make their money.
With MB Trading, they say I'm not paying spread, only paying
commission. But if I look at it, it looks to me like I'm taking the
same trades no matter which broker I'm with (assuming Ask and Bid are
same on both, both buy at Ask and sell at Bid, and Bid must travel 12
pips up for me to make 10 pips profit). I buy at Ask and sell at Bid.
No difference. Except with MB Trading, I pay an additional cost by
paying commissions, which are charged on both the entrance and exit
from the trade (so counted as two trades, where FXDD would only count
it as one).

Am I missing something here? Please open my eyes to the truth if I
have missed it.

Don"

Now unless they can give me a good reason why my 12 pip move gains 10 pips on FXDD and gains the same 10 pips on MBT Navigator, with the exception that I'm in addition also paying commission for two trades every round-trip, then I'll be taking my money from this ECN, and would rather go with a "spread bandit" where the issues seem clearer to me on what my true costs are.

Don

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Sweet Pip
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Postby Sweet Pip » Thu Oct 09, 2008 8:27 pm

illuminatedMind wrote:Hi Xmess Nice to see your doing well with this strategy
So far sometime i do well sometime i lose just need to practice more.
Does this strategy work only for the m5?
Sometime when price is well above 130 line and theres is a 3, i go sell when it barely touch the line but then it goes straight up whats wrong?


Hi IM
When the CCI is above 130, it can stay there for awhile as price continues to push the "3" up (repaint as they say). You need to WAIT for the CCI to start going back down and cross below 130 to start looking for a sell.
:)

disbellj
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Response from MB

Postby disbellj » Thu Oct 09, 2008 9:52 pm

Reply from MB:

"Dear Don,

Tried calling you to explain but there was no answer.

In what ever you trade whether it be stocks, options, futures, or forex, there is going to be a spread. The bid is going to be the highest price that someone is willing to buy and the ask is going to be the lowest price that someone is willing to sell. The difference is going to be the spread. This spread can widen in volatile markets.

The forex market is not centralized. It is to large, so that means quotes can differ at different brokers. It is not like the stock market that is centralized so that the quote you receive from one broker should be the same at another broker.

FXDD is a deal desk and takes the other side of the trade. If you lose money, they make money. Their spreads are fixed. That is what they do. Our spreads are not fixed and that is one of the reasons that many people leave the deal desk to trade at MB. We don't control the spread, it is a reflection of what is happening in the forex market. If the width of the spread does not appeal to you, you don't have to trade it. You are not paying for spread, but as with most trades you do have to make up the spread before you make a profit. Stocks, options, and futures all work in a similar way."

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Sweet Pip
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Re: Response from MB

Postby Sweet Pip » Thu Oct 09, 2008 10:57 pm

disbellj wrote:Reply from MB:

You are not paying for spread, but as with most trades you do have to make up the spread before you make a profit. Stocks, options, and futures all work in a similar way."


Hi,
So with either broker, you always start in the negative when using "market" orders.

The FX Board on MBT Navigator shows red & green lines for each pair ...I thought it meant if price is up or down but instead it means this:

...a color-coded spread meter for easy identification of the spreads (green indicates 0-2 pips, yellow is 2-4 pips, red 4+ pips ? depending on the currency pair.)...

...and it blinks alot so spreads are changing every second or so it seems.

But if using order level II "limit" orders, from what I understand you set your price in advance to trigger your order, and if it gets filled, you shouldn't start in the negative...I'm still playing with it but havn't had much time in the last couple of weeks to test this out.

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Postby pierre23 » Thu Oct 09, 2008 11:38 pm

Hey guys, how are we all?

I have been following the Never Lose Again thread on babypips (all 159 pages ._.) for the last week and now moved to kreslik to continue the readings of TRO.

First up I want to thank you TRO for dedicating your time and effort in "shedding the light" in Forex trading. I say shedding THE light and not shedding NEW light only because what TRO has been saying all along was right under our noses the whole time, behind all those $5000 indicators and courses and quite frankly behind those who are in it to make money for themselves, no matter what, be it you lose a few hundred in the process or go broke. So again a big thank you TRO.

I just want to share my thoughts on you getting banned from the BP forums. I find it ridiculous and a joke. Your method of getting people to 'SEE' for themselves was and still is extremely effective imo. They've lost a great contributer. I just hope others like myself manage to find the NLA thread on babypips, read through it, understand it, then, ultimately come here, as it seems most of 'real' education gets shunned upon there.

Don:
Like MB's reply stated, theres a spread in everything, stocks, options, futures and forex. From what I understand (correct me if I'm wrong) the "fixed spread bandits" incorporate their spread on top of the initial spread.

For example, if the EUR/USD spread was 4pips, a "FSB" would add on an additional say 2pips. So when you go into their software, from what I believe you would be seeing a 6pip spread on the EUR/USD. Where as if you were with an ECN, you would be seeing the 'true' spread, 4pips, and only paying commission on your trades. Theres ALWAYS going to be a spread, its the difference between the bid and ask price, someone has to be buying when you sell, someone has to be selling when you buy.

On that note, I remember a post from TRO, showing the spread changing from 3 to 1 within 4 minutes (don't quote me on the digits). This would be a true ECN broker, because in reality people are changing their bid and ask price, therefore the spread will change too. (Again, correct me if I'm wrong)

Well, thats the end of my novel. I trust this will be the first of many posts. :P

TRO, after I'm confident in trading demo, and have success in a live account, you'll be seeing a donation from me, as a token of my appreciation.

Pierre.

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Sweet Pip
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Postby Sweet Pip » Fri Oct 10, 2008 12:00 am

Unfortunately it looks like I wouldn't be able to use MBT for a broker...the only Canadian province they accept accounts for is Ontario...and I'm in British Columbia (BC) so looks like I'll have to find somewhere else...hmmm :(
It's not always about getting what you want...it's wanting what you've got!

illuminatedMind
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Shi channel true

Postby illuminatedMind » Fri Oct 10, 2008 12:47 am

Hey guy i just used the shi channel true and im starting to love this indicator
i just want to ask if anyone know more detail about this indicator.
I just made 1114 pip with 1h chart :shock: , (thank you god you didnt kill my account)
before i start using this again i just want to make sure to know more detail of this or if i was just damn crazy lucky, Yea i know that was dumb of me trading without knowing fully function of this indicator :lol:
I Only exist for those who seek me...

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TheRumpledOne
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Postby TheRumpledOne » Fri Oct 10, 2008 1:31 am

Do not concern yourself with how it works. Focus on how to use it.
IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT!

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

xmess7
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Postby xmess7 » Fri Oct 10, 2008 5:23 am

Sweet Pip wrote:Unfortunately it looks like I wouldn't be able to use MBT for a broker...the only Canadian province they accept accounts for is Ontario...and I'm in British Columbia (BC) so looks like I'll have to find somewhere else...hmmm :(


Sweet pips:
You don't know anyone here in the states or better yet in Ontario? If you do you can have them setup the account for you. TO MBT they can act as managers. In reality you would manage it, of course.

There are ways of doing things that are legal :).

pierre23
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Postby pierre23 » Fri Oct 10, 2008 6:21 am

Could someone please direct me to the TRO bias multi meter? I have the candle colour and heat multimeter, just looking for the bias

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