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Thread: Better execution in tiny, no-name Brokers?

  1. #1
    I'm relatively new to Forex and have so far experiences with 3 brokers. One is a major worldwide player (can name it, if doing this is appropriate) that has been discussed in great detail here on this forum as well. Both are small regional ones in an East European country and are providing local support only.

    During explosive times, the two local ones have given better execution, which I find difficult to believe actually. What I mean is this type of scenario:

    Several times I'd positions in major currency pairs that I was holding at times of major economic announcements. Say I have a buy in EUR USD, I bought in at 1.23050 and also the most recent trade is 1.23220. I've a profit and I don't wish to lose it all if the prices plummet, so I set a stop loss at, say, 1.23120.

    In the above described situation, in a regional little broker, if the prices plummet, dropping just like 150 points in half a second, I'd the halt loss get executed very near my stop loss amount. But in the large, global broker I can escape my place at a much worse price only, say at 1.2350 or worse... How come?

    I was told this is because the huge broker won't book the transactions but matches/routes these (I've a True ECN account) while the small brokers will book the transactions and consequently will execute better under the above described circumstances, that never made sense to me. Of course under normal trading conditions the worldwide broker offers much better terms; trading prices (disperse commission) are far less in the worldwide broker. But in volatile times, it's the regional men (I tried two and both beat the worldwide participant ) that execute much better. Can anyone clarify the dynamics here?

  2. #2
    Little local ones in an East European country? I'm searching for a stable broker for new forex account. Could you notify the title of both mentioned? Or any suggestion? I trust people's vote. thanks.

  3. #3
    Quote Originally Posted by ;
    I do not have a solid answer, but I have experienced similar outcomes. With the large broker, there is apparently a small delay in upgrading price, even in slow times. I believe they have to get an algorithm that retains slippage in their own favor. With the smaller brokers, so far, trades implement at price and price is what it is. Maybe the large brokers have more cash to invest in software? If that is the case, then it is logical to state the smaller brokers tend to be closer to ECN conditions.
    There seems to be a small delay in upgrading price
    Do you mean that the prices freeze and every moment so jump to a new level, instead of smoothly and continuously changing?

    With the smaller brokers, so far, trades execute at price and price is what it is.
    Again, please elaborate, because this is an interesting point. Do you mean good old slippage? As in, you find a buy or 1.23450 on the display, you hit the buy button but you wind up buying it at 1.23452...? Quite simply the normal slippage?

    Thank you a lot for your input; it brings up interesting points.

  4. #4
    Yeswith the bigger broker I am considering, price appears to update every few seconds vs. Instant like others. . .as far as slippage goes I have never had a real difficulty with it. In fact I anticipate it. Price is shing, the odds of it being the specific same that a few hundred milliseconds from now are fairly slim. a broker, if you could make your feed send every few could command the slippage in your favor or hide it. Sounds kind of conspiracy theory similar to, but it is a possibility.
    My main problem with the broker I was with, was that the regs put by the cftc in the united states. Fifo. I am taking my chances with a bigger unregulated foreign broker. Thus far so good.

  5. #5
    I really don't have a solid answer, but I have experienced similar results. Together with the huge broker, there is apparently a slight delay in updating price, even in slow times. I believe that they must have an algorithm that keeps slippage in their favor. Together with the smaller brokers, up to now, transactions implement at price and price is what it is. Maybe the big brokers have more money to invest in appliions? If that is the case, then it's logical to say that the smaller brokers are nearer to ECN conditions.

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