Currency trading (Aug 7th > 11th)

[a_gnome]

yes, IB is direct access.

you can check their prices & spreads on their home page.

cable spread is usually 1 or 2 pips (in european market hours). But you can also sell the ask and buy the bid, and even place/hit orders inside the interbank spread.

commision on GBP/USD is approx 0.75 pips on amounts above (£65K). However they don't deal in fixed lot sizes, so you could buy/sell £145,959 if you wished to hedge an exact position in another market.

According to the IB web-site the commission should be 0.2 pips per side but with a minimum charge of $2.50 so if you trade anything abouve $125k you'll be charged 0.2 pips per side.

I've only used IB FX for paper trading at present and it looks very good except that the stops require two ticks through the price. I did a comparison between IB and OandA during the news breakout just now and got filled on OandA at 43 and IB at 39 for a sell stop, despite OandA's increased spreads.

I'd say that for using limit orders IB is fantastic as you can be on the right side of the spread and also since it is multi-contributor you can get filled as long as any one of the contributors quotes at your price even for a split second.

The multi-contributor bit means that the prices have a bit more noise inherent in them that a single contributor (e.g. OandA) which is good for limit orders but not so good for stops (which is probably why they have the 2 tick through rule).

 

[leovirgo]

you saying that's real wonga leo !? respect!

It's backtesting. Still I like the smoothness of the curve.

 

[martin brown]

a_gnome, the IB commission is 0.2 basis point * Trade Value.

so if the fx cross is at parity with the dollar then it will be 0.2 pips a side.

however don't confuse basis points with pips. its not the same thing.

if you are trading gbp/usd then spread will be higher.

£100K * 1.90 = $190K

$190K * 0.2 * 0.0001 = $3.8 per side

$3.8 x 2 = $7.2 round turn.

$7.2 = 0.72pips.

re: Oanada & IB comparison, where did you place your sell stop?

 

[coolTrader]

For currency trading on IB. I was not impressed at all. You pay commission and dont make the mistake of using market order. Basically they will execute it where ever they want and the stop loss needs some getting used to if you use 30points stop this could mean you get fill for 30 or more points.

If you are using OANDA don't be tempted to changing over. Several times my orders where not executed I called them up during asian session and it is all a joke. It took 3monts to refund my money.

Like to know other peoples opinion. Make sure you read the small prints. Sometimes they are on the other side.

Legal notes

(3) IB acts as agent or riskless principal in foreign currency exchange transactions. Such transactions are executed against an IB affiliate or a third party, which acts as principal in such transactions and may have a long or short position and may have profited or lost in connection with the transaction. Foreign currency exchange transactions executed by Customer through IB are not regulated or overseen by the SEC or the CFTC.

 

[wasp]

Has no one tried the likes of hotspot or currenex here?

From everything I have read they seem to be the best choice to me. Maybe its because so little number of people use them that I haven't heard anything bad, but they look the most proffesional and fair (ECN's) going.

 

[jonnyy40]

I couldn't get charts to appear using the 'tools' button.There doesn't seem to be backfill available either?Means there's no permanent record.Pity as IB is normally reliable and it would be a cheap feed.

 

[martin brown]

For currency trading on IB. I was not impressed at all. You pay commission and dont make the mistake of using market order. Basically they will execute it where ever they want and the stop loss needs some getting used to if you use 30points stop this could mean you get fill for 30 or more points.

If you are using OANDA don't be tempted to changing over. Several times my orders where not executed I called them up during asian session and it is all a joke. It took 3monts to refund my money.

Like to know other peoples opinion. Make sure you read the small prints. Sometimes they are on the other side.

Legal notes

(3) IB acts as agent or riskless principal in foreign currency exchange transactions. Such transactions are executed against an IB affiliate or a third party, which acts as principal in such transactions and may have a long or short position and may have profited or lost in connection with the transaction. Foreign currency exchange transactions executed by Customer through IB are not regulated or overseen by the SEC or the CFTC.

cooltrader,

if you want to trade forex via direct access you have to pay commission . i dont see what the problem is when the spreads are so tight.

re:market orders, i assume you mean "slippage" in a volatile market.?

the interbank forex market is unregulated. period. it does not matter who your broker is.

yes, its true you can trade directly with other IB clients without the trade being executed on the interbank market, but this imo is a positive if you can trade inside the spread. It is also true that timber hill (their prop firm) may take your trade, so what?

can't comment on your experiences re: unfilled orders, i do recall reading that they have "down time" for maintenance during the night when it is quite, and that these times are posted on their website.

If you do NOT want to trade direct access then i'm sure Onanda is a good option.

however, the discussion was re:direct access brokers. so if you know a broker that can offer this service then please share.

 

[coolTrader]

cooltrader,

if you want to forex trade in direct access you have to pay commission . i dont see what the problem is when the spreads are so tight.

the interbank forex market is unregulated. it does not matter who your broker is.

OANDA don't charge commission CMC don't charge commission I can go on but... Also to convert your profit back to your base currency you pay..

Have fun using them since you don't see any problems with them. :cheesy:

 

[martin brown]

cooltrader,

Oanda & CMC do not offer direct access.

imo, having a multi currency account is important for anyone who wants to hedge their portfolio.

IB do have a fee for account curency conversion. They only convert when you request such a transfer, and not automatically after each trade. Again i dont see the problem with a conversion fee when it's only 1 basis point (ie 0.01%), and the rate is the spot market.

http://www.interactivebrokers.com/en/accounts/fees/commissionForex.php?ib_entity=uk

 

[coolTrader]

cooltrader,

Oanda & CMC do not offer direct access.

imo, having a multi currency account is important for anyone who wants to hedge their portfolio.

IB do have a fee for account curency conversion. They only convert when you request such a transfer, and not automatically after each trade. Again i dont see the problem with a conversion fee when it's only 1 basis point (ie 0.01%), and the rate is the spot market.

http://www.interactivebrokers.com/en/accounts/fees/commissionForex.php?ib_entity=uk

Do you work for interactive "Brokers"

 

[martin brown]

Do you work for interactive "Brokers"

no.

if you read the thread you will see i responded to Zuke, who wanted to know if IB offered "direct access".

I'm just trying to be helpful.

 

[a_gnome]

a_gnome, the IB commission is 0.2 basis point * Trade Value.

so if the fx cross is at parity with the dollar then it will be 0.2 pips a side.

however don't confuse basis points with pips. its not the same thing.

if you are trading gbp/usd then spread will be higher.

£100K * 1.90 = $190K

$190K * 0.2 * 0.0001 = $3.8 per side

$3.8 x 2 = $7.2 round turn.

$7.2 = 0.72pips.

re: Oanada & IB comparison, where did you place your sell stop?

Ah! Thanks for clearing that up.

Re: stop position it was at 50 so 7 pip slippage for OandA and 11 for IB.

If I can add my 2p's worth to the direct access discussion, the problem with non ECN brokers (OandA et al.) is that they know your position before they give you a quote so there is a built-in conflict of interest in this situation. Most of the time if you are trading small enough size and if you aren't taking too much money off them (because that's where your profit is coming from) they don't mind but if you are too big and too profitable even OandA will put you on "manual fills" which means that they will steal a couple of pips from you every time you trade. Especially since OandA's stop or limit execution price is "the next price that their server quotes" they can always claim that this was their next price and there's nothing that you can do about this. I know all this because this happened to a client of mine who was trading big size (>$1m) and was making very good money off them.

Having said all this I do think that OandA are the best of the non ECN brokers and I like their tight spreads and the fact that you can trade any size and in general they seem pretty fair. However an ECN such as IB is much fairer since there is a buffer between you and the counterparty who will then not know your position. The ECN quotes are completely automated and usually tighter than any non ECN dealer though after IB's commissions there may not be much in it compared to OandA. As I mentioned earlier there is an added benefit when trading with limit orders in that with a multi-contributor ECN you are more likely to achieve your price.

 

[martin brown]

a_gnome, v.good post.

what do you make of IB's "market order" execution?

i'm wondering if "market orders" take priority over "stop orders" in a fast market.....

 

[martin brown]

cooltrader,

Oanda & CMC do not offer direct access.

imo, having a multi currency account is important for anyone who wants to hedge their portfolio.

IB do have a fee for account curency conversion. They only convert when you request such a transfer, and not automatically after each trade. Again i dont see the problem with a conversion fee when it's only 1 basis point (ie 0.01%), and the rate is the spot market.

http://www.interactivebrokers.com/en/accounts/fees/commissionForex.php?ib_entity=uk

i've just checked the rate IB uses when converting account currency.

although it may be based on the "spot rate", the spread is actually 190pips!!

which makes the "1 basis point" conversion fee irrelevant in comparison

 

[a_gnome]

a_gnome, v.good post.

what do you make of IB's "market order" execution?

i'm wondering if "market orders" take priority over "stop orders" in a fast market.....

The usual model is that a stop order becomes a market order once the price level has been triggered so it will simply be a matter of "first in first out" as to when the stops were placed. I don't know how it decides which is executed first if a market order comes in at the same time as a stop order is triggered.

I have been thinking about developing something using the IB api so that stops are triggered on first touch rather than after two touches as at present. This will be closer to what I am looking for when trading news break-outs.

 

[a_gnome]

i've just checked the rate IB uses when converting account currency.

although it may be based on the "spot rate", the spread is actually 190pips!!

which makes the "1 basis point" conversion fee irrevelvant in comparison

Yes, to convert currencies you use IDEAL rather than IDEAL PRO though as I write the GBPUSD spread is only 14 pips and I think that you can post IDEAL trades yourself so you can deal inside the spread.

 

[martin brown]

Yes, to convert currencies you use IDEAL rather than IDEAL PRO though as I write the GBPUSD spread is only 14 pips and I think that you can post IDEAL trades yourself so you can deal inside the spread.

yes, IDEAL is now only 14/15 pips.

I guess Sunday night (when the spread was 190pip) is not the best time to convert account currencies . :cheesy: