Would you trade more if broker fees were lower? - Page 2
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Thread: Would you trade more if broker fees were lower?

  1. #11
    Quote Originally Posted by ;
    thats pretty much hopeless though. Brokers dont make the spreads, the banks that they use do. Spreads are wholly based on the amount of orders at different prices on the market. Those arent the regular retail orders, theyre the significant bank orders. Banks do transaction forex like we do. They actually have bid prices and ask prices. Enjoy, ill buy 10,000,000,000 in 1.2345 or I'll sell 1,000,000,000 in 1.2349. These different prices are what account for those spreads. These spreads trickle down to us. So spreads technically cant be 1-2 pips on each pair. If you find a broker that does so, it usually means they're spending the real spreads and only providing you 1-2 pip spreads that means theyre likely chrging you someplace else really bad. Never expect a broker that provides spreads. It is only a bait and switch fashion tactic.
    I believe we are speaking about bucketshops here are not we, they pretty much do exactly what they want and make up quotes and spreads to match themselves and to pull in the punters. What they do to them when they are inside is another matter!

  2. #12
    Quote Originally Posted by ;
    thats pretty much impossible however. Brokers dont create the spreads, the banks that they use do. Spreads are all based on the amount of orders at different prices in the market. These arent the normal retail orders, theyre the big bank orders. Banks do trade Currency Market like we do. They have bid prices and ask prices. Like, sick buy 10,000,000,000 in 1.2345 or I will sell 1,000,000,000 in 1.2349. These different prices are what account for the spreads. These spreads trickle down to us. So spreads technically cant be 1-2 pips on each and every pair. If you find a broker that does so, it means they're paying the actual spreads and just providing you with 1-2 pip spreads that means theyre probably chrging you someplace else really awful. Never expect a broker which provides low spreads. It is only a bait and switch style tactic.
    What do you mean don't anticipate a broker that provides low spreads? First of all, banks cope currencies in many distinct ways, using many distinct derivatives aside from spot. As an example, banks utilize an aggregate of different feeds to get liquidity and then offer there own liquidity via an API or through their own platform. With that being said, spreads vary based on the customer connection, the sum, and the market itself. As retail trading has grown vastly through the years, more banks are now supplying pricing for retail traders, either to the retail trader right, or to retail Market Producers to offer to a retail customer (most of the time that price is indied up into the customer) and to ECN's. ECN's take many distinct banks' feeds and aggregate them to provide a much better price to the end customer. Generally, Market Makers do exactly the identical thing, therefore they get a better price to deal off of and what price they wish to show to the customer is up to them. They do precisely the exact same thing banks are except on a much smaller scale and just with place. With all of that being said, the more banks a broker utilizes the better spread they'll have the ability to offer you the end customer. An aggregate feed like Currenex or even Hotspot will frequently show less than a pip on most of the majors during New York and London. Now based on the broker or the Market Maker you might never see how low prices can get, which depends on if they mark up the spread or not. I dont know why you believe you cant trust a broker offering low spreads? It's very easy these days to figure out how a broker makes their money which should let you know how trust worthy they are. The only other hint you'll get is how quickly the execution is later trading with a particular broker. For example, a broker offering a 0 pip spread on pairs and not charging for losing transactions but charging 6 pips for winning transactions is not a trust worthy broker. But a broker showing factor spreads, which are often showing less than a pip on majors based on the market and charging a fair clearing fee are more times then not are trustworthy.

  3. #13
    Quote Originally Posted by ;
    What do you mean don't anticipate a broker that gives low spreads?
    I supposed 0-3 pips on all pairs

    Quote Originally Posted by ;
    With that being said, spreads vary based upon the client relationship, the amount, and the market it self.
    If they are liquidity providers such as a bank or something, then. If they arent liquidity providers they don't have any control over spread. If they give you smaller spreads, that means they are paying greater spreads themselves. In this instance, you would probably need to have millions of dollars in an account for them to consider it.

    Quote Originally Posted by ;
    ECN's take many distinct banks' feeds and aggregate them to give a much better price to the end client. Generally, Market Makers do the identical thing, therefore they get a better price to deal off of and what price they want to reveal to the client is up to them.
    Id agree, but they still need to pay spreads into the bank. They arent going to cover six pips and cost you just one. thats retarded. If they are doing this, then they are charging you someplace else or they arent totally legal someplace.

    Quote Originally Posted by ;
    They do precisely the same thing banks are anyhow on a much smaller scale and just with place. With all that being said, the greater banks a broker uses the better spread they'll be able to offer the end client.
    not neccesarily. They might be using a ton of banks for their prices, but maybe not for liquidity. There isnt an infinite supply of leverage in the world. In order for you to be able to exchange, there needs to be someone who provides that cash. The people who supply that cash (banks) would be the ones who bill spread.

    Quote Originally Posted by ;
    I dont know why you believe you cant trust a broker offering low spreads?
    It's not very low spreads generally, it's all but non existent spreads. Again, the brokers need to cover spreads and they have to get their money someplace.

    Quote Originally Posted by ;
    For example, a broker offering a 0 pip spread on pairs rather than charging for losing trades but charging pips for winning trades isn't a trust worthy broker.
    See this is what I was talking about as being dishonest. The more im reading your article the more I believe I couldve written my response clearly. This kind of thing is a scam to lure newbies in and take their money someplace else.

    Quote Originally Posted by ;
    However, a broker revealing variable spreads, that are often showing under a pip on majors based upon the market and charging a fair clearing fee are somewhat more times then not are reliable.
    Im not talking about brokers who charge fees though. In case you mentioned, I concur. They charge small spreads but they compensate for it in other fees. Im talking about brokers who've insanly tiny spreads and dont cite any other fees.

  4. #14
    Fxtrader42 and blacksun1

    I think you guys are missing one important point here, the majority of MM's at this level are bucketshops. Why would volatility and spreads in the underlying market (in ordinary market conditions) irritate them?

  5. #15
    Quote Originally Posted by ;
    I think you guys are overlooking one major point, the majority of MM's at this level are bucketshops. Why would volatility and spreads in the underlying market (in normal market conditions) irritate them?
    Trends and bigger profitable traders. When they don't offset their web risk they could go bankrupt. It's happened before.

  6. #16
    Quote Originally Posted by ;
    Trends and bigger profitable traders. If they don't offset their net risk they could go bankrupt. It has happened before.
    If/How/When bucketshops hedge vulnerability is not the same subject I believe and does not affect the spreads they're quoting (such as I say, in normal market conditions).

  7. #17
    The reason it impacts them is they still need to pay spread. If they didnt need to cover spread, neither would we, but if they're a forex broker they need to cover spread. So if they cover spread, but they arent charging you spread, where are they getting the money to pay for the spread? Thats what im asking. When they dont come out and say they're receiving their money from another source like greater commissions or account penalties, then they're ripping you off secretively.

  8. #18
    Quote Originally Posted by ;
    the rationale it affects them is they still need to pay spread. If they didnt need to pay spread, neither will we, however if they are a FX broker, they need to pay spread. So if they pay spread, but they arent charging you spread, where are they getting the money to pay for the spread? Thats exactly what im asking. If they dont come out and say they are receiving their money from a different source like higher commissions or account penalties, then they are ripping you off secretively.
    Ummm, they are bucketshops? They hedge aggregate not person, they could show you whatever they want to reveal, -1 pip spreads, 100 pip spreads, any price (within reason many of these)....it's a digital FX world and has very little to do with the inherent market except for very loose pricing.

    What, you think Oanda can show .9 pip spread on Eur/Usd and not charge commission because of their excellent liquidity suppliers? You think they widen spread to 30 pips on Gbp/Usd for 15 minutes because that's what their liquidity suppliers spread is? Oh come on...

  9. #19
    Bottom line... you get what you pay for.

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