first of all, a disclaimer: i am not in the habit of defending broker/dealers.
that being said, the event you are mentioning has no bearing whatsoever on whether or not your broker/dealer is an ECN. also, in this regards, we should be more specific and make sure that all novice or prospective traders on this site reading this do not come to the wrong conclusions, and that is to say that there is a marked difference in meaning between the following: ECN, STP, DMA, MTF, ATS, A-book vs B-book model, agency model.
so i'm going to go through the list one at a time as i think there is still way too much confusion among retail traders out there re these terms, confusion that is readily being exploited by the marketing departments of many broker/dealer outfits. by the way, all of this can easily be found on wikipedia from where i am quoting all the following:
ATS vs MTF: 'Alternative trading systems (ATS), are United States Securities and Exchange Commission approved non-exchange trading venues specifically designed to match buyers and sellers to find counterparties for transactions, instead of trading large blocks of shares on the normal exchange, a practice that can skew the market price in a particular direction, depending on a security's market capitalization and trading volume.
ATS have to be distinguished from electronic communication networks (ECNs), that are a "fully electronic subset of ATSs that automatically and anonymously match orders".[1] The equivalent term of ECN under European legislation is a Multilateral Trading Facility (MTF). These venues play an important role in public markets for allowing alternative means of accessing liquidity.' (source:
Alternative trading system - Wikipedia, the free encyclopedia)
the term alternative is used because ATS are an alternative to a centralized exchange market place like stock exchanges, for example.
by the way, the only and first SPOT Forex MTF regulated by the FSA is LMAX in London . also, for those of you who want to find out more, there is a very informative thread that has some posts redirecting to a technical presentation given by the LMAX engineers explaining how they achieve a phenomenal transaction throughput rate of 6 million orders/sec, 100K transactions/sec, and 25 million messages/sec with latencies lower than 50 ns! you can find out more here
www.forexpeacearmy.com/forex-forum/...ers-refresher-intermediate-level-traders.html . i think it's either on page 2 or 3. for the techies reading this, it is even more amazing when considering it is all implemented on the JVM--that's right, no C or C++. now that's amazing. anyway….
ECN: 'An Electronic Communication Network An electronic communication network (ECN) is a financial term for a type of computer system that facilitates trading of financial products outside of stock exchanges.' (source:
Electronic communication network - Wikipedia, the free encyclopedia)
BUT ALSO
ECN: Electronic Crossing Network: 'A crossing network is an alternative trading system (ATS) that matches buy and sell orders electronically for execution without first routing the order to an exchange or other displayed market, such as an electronic communication network(ECN), which displays a public quote. Instead, the order is either anonymously placed into a black box or flagged to other participants of the crossing network. The advantage of the crossing network is the ability to execute a large block order without impacting the public quote.
Examples of crossing networks are be Liquidnet,[1] Pipeline,[2] ITG's Posit[3] or Goldman Sachs' SIGMA X.[4] (source:
Crossing network - Wikipedia, the free encyclopedia)
==> THEREFORE if someone advertises as being an Electronic Crossing Network, it does not imply in the least that they also are an Electronic Communication Network, which is how the ECN term seems to be usually understood in the retail community. Caveat emptor.
STP: Straight-through processing usually refers to back office processes and has nothing to do with the kind of market access the trader will experience. 'Straight-through processing (STP) enables the entire trade process for capital markets and payment transactions to be conducted electronically without the need for re-keying or manual intervention, subject to legal and regulatory restrictions. The concept has also been transferred into other sectors including energy (oil, gas) trading and banking, and financial planning….
When fully realized, STP provides asset managers, brokers and dealers, custodians, banks and other financial servicesplayers with tremendous benefits, including greatly shortened processing cycles, reduced settlement risk and lower operating costs.' (source:
Straight-through processing - Wikipedia, the free encyclopedia)
DMA: ### you should read the whole page; i am just quoting the most relevant part for the impatient ###
'Foreign exchange direct market access (FX DMA) refers to electronic facilities that match foreign exchange orders from individual investors and buy-side firms with bank market maker prices. FX DMA infrastructures consist of a front-end, API or FIX trading interfaces that disseminate price and available quantity data from multiple bank contributors and enables buy-side traders, both institutions in the interbank market and individuals trading retail forex, to trade in a transparent, lowlatency environment.
Other defining criteria of FX DMA:
* Trades are matched solely on a price/time protocol. There are no re-quotes.
* Platforms display the full range (0-9) of one-tenth pip or percentage in point consistent with professional FX market quotation protocols not half-pip pricing (0 or 5).
* Anonymous platforms ensure neutral prices reflecting global FX market conditions, not a dealer’s knowledge or familiarity with a client’s trading methods, strategies, tactics or current position(s).
* Enhanced control of trade execution by providing live, executable price and quantity data enabling a trader to see exactly at what price they can trade for the full amount of a transaction.
* Orders are facilitated by agency brokers. The broker is not a market maker or liquidity destination on the DMA platform it provides to clients.
* Market structures show variable spreads related to interbank market conditions, including volatility, pending or recently released news, as well as market maker trading flows. By definition, FX DMA market structures cannot show fixed spreads, which are indicative of dealer platforms.
* Platforms build a fixed mark up into the client’s dealing price and/or charge a commission.'
(source:
Direct market access - Wikipedia, the free encyclopedia)
DMA is what most think of when they ask for or speak of 'true ECN'. as regards DMA, I have been testing Integral's client platform (integral.com) called 'Integral FX Inside' as offered through RJO'Brien, which is a futures firm also offering SPOT FX now, established in 1914, and from what people tell me, with an excellent reputation (but for how long? read the Wall St Journal article i reference below to understand why i write this); it's a US firm based in Chicago, so of course, they also have a US site.
however, i am not using any financial institution in the US anymore, not after all the mess and scandals of the past few years: PFG, MF Global, BlackRock getting screwed by Bank of NY-Mellon--quote:
'BlackRock recently altered the way it trades currencies, either doing the trading itself or demanding evidence from custody banks that it is receiving prevailing market rates ' (you really should read this in its entirety--source:
Suspicion of Forex Gouging Spreads - WSJ.com). it's a long list.
what happened with BlackRock and Bank of New York Mellon is scary. consider this: banks executing Forex transactions on behalf of a firm like BlackRock, have no qualms screwing their clients--in this case the world's largest asset manager. if the big guys play dirty with each other, what could possibly make you believe that your retail broker/dealer cares about you and your trades? what chance does the retail trader really have, especially in the US where the amount of protective regulation for SPOT Forex retail trading is next to nil? compare the situation of SPOT Forex to the currency futures market. even in the latter case, they can rob you blind (MF Global and PFG are great examples of that) and regardless of regulation, the clients still are not sure they can get their money back.
it's a freakin mess, that's what it is. the only way to keep them honest is to make them lose money when they screw you, another way of saying that your and their interest should align. increased transparency on how orders are processed and on quality execution (transparency that can be provided by 3rd party technology firms such as Corvil , which is used by ADS-Securities out of Abu Dhabi will reveal any monkey business. and if such occurs, then you just close your account and move on, and when more and more traders do so, the firms who don't change their practices just go out of business. but it's hard to change your practice when at the same time having to clear your reputation because once trust has been broken, it is that much more difficult to regain it, which makes it hard to convince potential clients to sign up: a vicious circle instead of a virtuous circle. correct me if i am wrong, but that is the only defense we have.
ok, back to the main point.
'Agency model' means a broker/dealer not using a market maker model to make a profit by trading against the clients; sometimes you see the former referred to in some print material as A-book model, and the latter as B-book model.
now that we have clarified the basic terminology, the conclusion:
here is what i understand from your post:
1- you left your trades open over the weekend
2- you had SLs (stop losses) in place hoping they would handle any adverse contingency should the market gap open against your positions
if this is correct, here is my comment/advice:
- first, read this from the SEC website:
Investor Tips: Trade Execution ; yes, i am aware that they are talking about the stock market; nonetheless, it does apply to the currency or futures market as well;
- second, remember that no one can guarantee any SL at the price you request because no one can guarantee that the market will not gap; let's think about this: let's say you place a limit buy order at 1.4100 EUR/USD and at the moment of placing this order the market price is at 1.4085. now imagine that the market gaps, that is, jumps from 1.4085 to 1.4160 (doesn't matter why, just know that it can happen and did happen in the past; and i don't mean necessarily at those prices; this is just an example). after the gap, your limit order never becomes a market order because the limit price you specified never got hit due to the gap/jump. so what is the broker/dealer supposed to do now? execute your order? they could, but you would need to have entered a LOO order (Limit-on-Open) if i am not mistaken (someone please correct me if this is not accurate).
here, an order type list: en.wikipedia.org/wiki/Order_(exchange)
if you are using MT4, then you can forget it and might as well reach for a gun and shoot yourself in the foot, for that is how bad MT4 is. 'bad' here means 'limited', and well… it is just bad, period. i know, i know, i am totally biased against MT4 but only because i have used other platforms that are just so much more user-friendly, so i cannot in good conscience tell anyone to use MT4. problem is, most retail traders out there are just too un-informed and don't study enough about this market and what is available to them. and don't get me started on EAs. that is definitely not the reason why anyone should feel stuck or forced to use MT4 because there are other options, and superior options at that. but i digress.
- third, many times the market does gap when the market re-opens after the weekend.
- fourth, there can be differences in price resolution or granularity depending on the company you deal with because not every company gets their price stream from the same LPs (liquidity providers). that being said, your friend's order might have had different entry/SL levels that got hit before the market gapped to the downside.
- fifth, your broker/dealer's client management system software knows your trade patterns and win/loss ratio. based on that, it determined that if it took the other side of your trade, probability would be in favor of the company and therefore there was no incentive whatsoever to execute your SL orders. oftentimes, in many outfits, the orders from traders who are the most consistently profitable will be routed to the ECN or DMA'd to the real market, and the order from traders that are consistently losing will be matched by the broker/dealer (as the market maker on the internal ECN, that is to say, the Electronic Crossing Network) because they know that the risk to them is very low because they have your whole trading history analyzed, so it's a good bet and therefore, their thinking is, 'why let that money go into someone else's pocket when you are giving it away anyway?'
note: speaking of broker software keeping track of trade patterns, i learned yesterday that by using the Integral solution with RJOBrien, the trader stops are not visible to other market participants and you can also hide your real order size (iceberg order). i need to go back and read the doc again, but i'm pretty sure i remember correctly.
-sixth, in a real market, there are no fixed spreads. remember that the amount of liquidity available at any given time determines the spread. example: let's consider the simplest case possible: let's imagine there are only 2 traders in the EURUSD market. and let's further imagine that one is a buyer and the other a seller. what do you think their strategy is going to be? in other words, what do you think makes most sense for the buyer to want in order to maximize his/her profit and vice-versa? answer: the buyer will want to buy as low as possible and the seller will want to sell as high as possible. THEREFORE --> neither one will have an interest in putting his/her executable price closer to the other one, and THEREFORE the spread is going to be HUGE. get it?
so now, by high liquidity we mean that there are lots and lots of traders coming in the market competing with each other to get a fill at a particular price point. the more money (that is, order size or volume) they put in the market at different price points, and the more opportunity you have to get filled at those price points for any of your orders that match the volume bid or offered.
example: let's imagine that in our previous example we now have a 3rd trader coming in. let's say that this trader is on the buy-side, that is, he wants to buy. so we have 2 traders who want to buy. they are now competing against each other to get filled. let's also imagine that the volume the seller is offering can only fulfill the volume of the first buyer, that is, of one trader only. so now the new buy trader who came in will want to get filled before the other guy does because if he doesn't, then the first trader gets to trade and make money (we assume the market is going up), and he is forced to watch and stay on the sidelines because there was not enough volume to fill/match his order.
so what his the 2nd trader's strategy gonna be? he will raise the price of the bid, that is, he will try to get closer to the price of the seller because if he does that, it means that the seller will not have to sell at the lowest price available (that's the first trader) but will be able to sell at a slightly higher price, thus a better price from the point of view of the seller. THEREFORE the spread will narrow.
and on market re-open after the weekend, the spreads on most pairs are quite wide, not to mention price gaps, as the liquidity is low. just watch your price feed every week when the market re-opens and watch it for a couple of hours and see what happens to the spreads during that time. from wide they will eventually narrow as more and more liquidity comes online.
ok, enough for the basic lesson. this is as simple as i can make it.
so finally, it is possible that FxPro may not be telling the truth in its marketing material on the website and handle orders differently depending on what kind of trader group you belong to. remember, broker sofware is very sophisticated and can group traders according to their trading patterns and results, and therefore handle/route their orders differently. this is not illegal, obviously, and i suspect most of the outfits out there do this.
the only good news is that if you become highly profitable, they might not want to spike the feed or hunt your stop losses anymore as they used to do in the past since most people know about these dirty tricks and they can easily identify such behavior now. also, by resorting to such dirty tricks, broker/dealers finally realized that they will kill the goose that lays the golden eggs because there is not an infinite amount of wannabe traders, and since most client traders are losers rather than winners, this means that the broker/dealers will put out of business most of their clients and when that happens they will in turn be out of business because it is and has become more difficult to get new clients to open accounts. just look at the american retail market and how much it has shrunk in terms of the number of RFEDs or broker/dealers who have decided to terminate operations in the US and relocate to a non-US country or simply focus on institutional level clients.
also, it is easier to identify whether or not your broker/dealer is using dirty tricks against you if you have access to a true Level 2 order book with full DOM (Depth of Market). furthermore, they most definitely will not want to take on the risk of losing by taking the other side of your trade. so, if you are such a trader, it seems that nowadays many broker/dealer understand it is better for them to just offload that risk onto some other marker participant and just charge you a commission for enabling the trade. i just do not know whether or not FxPro is such a broker/dealer.
finally, we would need to know more about your friend's order parameters to come to a definite conclusion. but just based on your info, it is inconclusive and i cannot decide whether or not FxPro is a scam, especially because what they are telling you makes sense as i explained above re the nature of this market's price moves.
hope this helps. never stop studying or researching. a good resource for learning more is this online magazine: e-Forex Magazine
-sw
Started with this company for five years and I had lose and now closed my account with Them because of what happened to me the month of March/2013 is as follows:
I sent Email regarding some issued of close in stop lose:-
attach with this email details about mistake in SL from my account , instead of SL 20 pips for 2 order :
1 - Order no (1) bye at price (1.30778) - (lot 0.30) - SL =(1.30578) should lose $60 but lose $507.30
2 - Order no (2) bye at price (1.30770) - (lot 0.30) - SL =(1.30570) should lose $60 but lose $505.80
But they eat my money But they responded as follows::-
Please note that all stop orders once triggered are treated as market orders. your order was triggered with market reopened price and because of Eurozone news during the weekend make a large movement in the marker and it is the reason why there is such a difference between your Stop Loss and Fill Price in this instance.
Please find the relevant clauses from our Order Execution Policy
If true what they say, one of my friends the same as what happened to me and the market moves 100pips was specific stop loss at 30pips, but the company that traded him only deducted specified
I think this scam company and I sure not true ECN I tried them previously and did not like about the case because spread was rising moments and lost because of this. If you want to keep your money away from the bug this fraudulent company
