What is the latest information on intent to eliminate multiple market closures everyday? My latest understanding is that there is still a down period every day and still a requirement to be on US or Asia based servers which requires additional down time while the servers are updating... 24 hour a day, uninterupted acces to the spot market is the standard in the currency market... so prefer not to hear about overnight access to futures, etc.
I completely understand point d) and have no problem with it. I think this set-up has it's advantages, but not in volatile markets. When the rates are moving rapidly no other retail trader will be holding the bag - its up to the much dsliked market-makers (referred to on this forum as 'bucket shops") to provide liquidity. The point that your liquidity providers cant see stop orders is interesting but inconsequential. For example, one of companies claiming to use the ECN model uses Saxo Bank as one of their liquidity providers. Saxo bank is routinely referred to on this forum as a 'bucket shop'. THe fact that they cannot see MY stop order doesn't change anything: surely the company of their size would not be 'manipulating' quotes in view of my position, but their overall exposure. Thus, if they decide to quote 20 points off the market my stop will be taken out regardless of whether I trade directly with them or through IB. The main question: WHO IS THE COUNTER PARTY TO MY TRADES remains unanswered. You cannot just say "banks, hege funds, etc..." because surely for every trade I am entitled to know EXACTLY who the couterparty is, i.e. bank A, company B etc. Remember, this is an OTC market, not an exchange. Is this specified in the Customer Agreement? Probably not and the reason is, like I said before, it seems that IB is a counter party to my trades. In other words all we have to rely on is your verbal or WEb site assurance that somehow all IB's risk is immidiately transferred away to market makers ('bucket chops' ?). Which makes the whole scheme look 99% look like a simple 'white-label' arrangement. I am not saying the ECN model is worse than the traditional one (using your terminology). It's just that there is no 'better'' model by design - every trader has to test out and see what's best for him/her. I think that claiming the 'better-by-design' is basically taking advantage of inexperienced traders' fears and ignorance and cannot be healthy for this market.
I have watched IB's forex ECN evolve over the past 6 months. I have been using them more and more. Like any other broker ---you got to get used to them. But IB is running a good ecn. Everything is competitive. The Market Makers are very competitive and even in fast markets they are there. I have not had a stop or any other order screwed up (knock on wood). Everyone in Forex likes a different broker. I have a desk trading background mostly in futures. I have found the following to be good. Oanda (although I no longer hav an account there---I like them). Hotspot (they are another ECN and are now on the TT network). IB is also very good. They will not cut deals on Commissions like other ECN's but they have good market makers. Also there is the good ole CME. Anymore there are a lot of slags trading CME forex futures. Also there is a newer ECN named EFXgroup---that I have heard good things about. But I have yet to do business with them. If you are using three brokers. Those three brokers are going to have the same liquidity providers to a certain extent.
There are wholesalers and retailers in Forex. Saxo Bank can be both depending on were you are in the food chain. The spreads they provide some people are a far cry to the spreads they are providing others. I do not understand. If you want to meet your counterparties ---you have to trade in a Pit. In forex ---it would be over ther phone. But what difference would it make if DB takes your trades over the phone or online through IB's ECN? You talk about 20 pip widening of spreads. Well that can happen anywhere under certain conditions. NO one in the world can guarantee a market. If you have competing market makers. They are going to be competing on all levels. No one is going to let it get that far out of line. They are going to arb it back in line.
TGM, Thnks for your points about IB. I tried it when they first offered forex and found it too thin but it sounds like they are getting more volume. I think the main point is that for example oanda may be market makers but they offer close spreads and generally do not let the spread widen on the main currencies. Misha 7 makes some great points about the different models, it is not always clear cut which is best I trade both currency futures(with Ib) and forex (with oanda and other brokers): at times I am better off going with the future market and at other times with the forex brokers.
robert, more volume is immaterial, it is the addition of liquidity that matters. this has improved substantially since our initial offering. If you do give it another try, I'm confident you'll be pleased with the results. On another note, as of today, the IB home page is showing "live" FX quotes (I put that in quotes as they might update every 15 seconds).
Misha7, I am not trying to flame you, I am trying to help you. I believe you fundamentally do not yet understand IB's FX model. Let me give you one example as to why I say this. You say that it is just as bad to trade with Saxo through IB as it is to trade with Saxo through Saxo's retail operation. You say it doesn't matter that Saxo, through IB, can't see your stops placed with IB. You say that Saxo can run your stop placed with IB, as easily as it can run your stop placed directly with Saxo. If you place a stop with Saxo, they can run your stop at will, simply by moving their quotes far away from the market, and by playing other tricks to avoid honoring those temporarily spiking quotes when other traders seek to execute against those spiking quotes. But if Saxo tries to do this when your stop is placed through IB, your stop will not trigger. Your stop will not trigger because at IB, you will have many different market-makers, customers, and other counterparties competing for your order. Your stop can be triggered only if ALL of these various potential counterparties together spike their quotes far away from the market. If even one potential counterparty keeps his quotes near the market, then this one holdout will prevent your stop from triggering. The only quotes that matter, for purposes of triggering your stop, are the best bid and best ask. If Saxo spikes its quotes away from the other quotes, in the IB model, then Saxo's quotes will simply become irrelevant, rather than triggering your stop. The IB model creates another form of insurance to prevent stop-running. If all those quoting in the IB model somehow did conspire to move their quotes far away from the market, in order to trigger stops, then other participants could execute against those conspiring, causing great losses to those stop-running conspirators. This is because in the IB model, all quotes are firm and executable, and there is no such thing as re-quoting or manual quoting or freezing or other dirty tricks to avoid honoring a displayed quote. One of the reasons bucketshops are fundamentally evil is that they are able to run your stops, since they are not operating in a competitive marketplace. The competitive marketplace, provided by IB, makes it virtually impossible for your stops to be run, because natural competitive market forces work to prevent stop-running. If your stop is triggered at IB, you can rest assured it was due to actual market fluctuations, rather than manipulation by your own broker. I hope this gives you pause, and helps you to have a better understanding as to why it is such a bad idea to do business with bucketshops. If you want to understand why bucketshops are bad, you need to start thinking about the differences between trading in a bucketshop, with only one all-powerful counterparty, on the one hand, and trading in a competitive marketplace, with many competing buyers and sellers, on the other.
Hi TGM, In your experience in IdealPro, do you find that putting in stop entry or exit orders could be a potential problem if market is fast and the market makers do not quote so tightly? And in your experince, during fast markets like before news or data announcement, what is a typical spread in quotes in EURUSD pair? Thanks