Which Broker has the best spread.... and better market conditions

[Magos]

Who would you choose when you open account?
How much does spread matter?

For the purpose of this question I am using an independent spread analyser website to analyse broker spreads:http://www.fxblue.com/spread/symbol.aspx

And as you can see all 3 brokers have very similar spreads; but which one is better? how do trade conditions change from broker to broker? what should traders look for?

• JFD Brokers
• zebrafx
• ICMarkets
• or others...

Disclaimer: This post is by no means of a commercial nature.

 

[fxmade2trade]

Who would you choose when you open account?
How much does spread matter?

For the purpose of this question I am using an independent spread analyser website to analyse broker spreads:http://www.fxblue.com/spread/symbol.aspx

And as you can see all 3 brokers have very similar spreads; but which one is better? how do trade conditions change from broker to broker? what should traders look for?

• JFD Brokers
• zebrafx
• ICMarkets
• or others...

Disclaimer: This post is by no means of a commercial nature.

you are looking for brokerage commission, however you may come across a few that charges more but have better services.

 

[Magos]

Commissions & Stop out levels

you are looking for brokerage commission, however you may come across a few that charges more but have better services.

Commissions:
JFD Brokers: 4.0 USD
zebrafx: 4.50 USD
ICMarkets: 3.50 USD

Stop out levels:
JFD Brokers: 75%
zebrafx: 20%
ICMarkets: 80%

 

[fxmade2trade]

Commissions:
JFD Brokers: 4.0 USD
zebrafx: 4.50 USD
ICMarkets: 3.50 USD

Stop out levels:
JFD Brokers: 75%
zebrafx: 20%
ICMarkets: 80%

yes i am bias i use oanda

 

[Magos]

I admire that you admitted that you are biased - it takes courage.

Oanda spreads : http://fxtrade.oanda.com/why/spreads/
1.2 ✓ (as they say in the website)

Also in mt4i: http://www.fxblue.com/spread/symbol.aspx
1.1 (in demo)

Stop outs : Half of your Margin Used divided by the Margin Closeout Value. The closer this percentage gets to 100%, the closer you are to an immediate margin closeout.

fxmade2trade I see you are trading from the US; maybe OANDA is not too bad for you! But if you were trading from somewhere else I am sure you will not be trading with OANDA; there are better deals out there.

 

[Traderallen]

I use MB trading for Forex,options, and equities. I have been with them for more than 10 years. The reason I stay with them are quite simple. My order fills are always right on par with a should be. The one time in over 10 years that I got a bad fill I called them up and they corrected it.

 

[Magos]

MB Trading: http://www.mbtrading.com/forexSpreadsPairs.aspx

Does not have the best spread for sure!, but is a reputable broker. Bad fills can happen, I am glad that you got the chance to correct it.

I am sure you can get a better deal including: spreads, costs and stop out levels.

 

[Traderallen]

MB Trading: http://www.mbtrading.com/forexSpreadsPairs.aspx

Does not have the best spread for sure!, but is a reputable broker. Bad fills can happen, I am glad that you got the chance to correct it.

I am sure you can get a better deal including: spreads, costs and stop out levels.

Right, but the OP left out one important thing and that's slippage. Many Brokers mask their good spreads with added slippage for profit. Also there are many other ways brokers take advantage of the trader.

I once had an account with F###x dot com I cannot make a dime trading with them. Then I got an email from MB about their new MT four platform (years ago) they had made a video on YouTube showing software changes they had to make on their side of MT four program so it would meet their requirements as an ECN. They probably didn't mean to but as I watched the video as they described many of their changes it would occur to me,,, it's no wonder I can't make any money with F###X I'm getting ripped off in so many places. For example if I enter the trade I would already be to pips in the hole due to the spread. For me to set a stop I cannot place it within three pips of the current price which when you add the spread of two pips that means my closest stop that I could possibly place at the time would be 2+2+3 = 7 pips, but remember my stop is only three pips from the spread, so that means with a seven pips stop the currency only has to move three pips and I'm stopped out for a seven PIP loss. How's that for fuzzy logic. With MB you could but your stop right up next to the price if you chose to. In my spreads on the euro are usually less than one PIP.

 

[Magos]

Fair brokers

Right, but the OP left out one important thing and that's slippage. Many Brokers mask their good spreads with added slippage for profit. Also there are many other ways brokers take advantage of the trader.

I once had an account with F###x dot com I cannot make a dime trading with them. Then I got an email from MB about their new MT four platform (years ago) they had made a video on YouTube showing software changes they had to make on their side of MT four program so it would meet their requirements as an ECN. They probably didn't mean to but as I watched the video as they described many of their changes it would occur to me,,, it's no wonder I can't make any money with F###X I'm getting ripped off in so many places. For example if I enter the trade I would already be to pips in the hole due to the spread. For me to set a stop I cannot place it within three pips of the current price which when you add the spread of two pips that means my closest stop that I could possibly place at the time would be 2+2+3 = 7 pips, but remember my stop is only three pips from the spread, so that means with a seven pips stop the currency only has to move three pips and I'm stopped out for a seven PIP loss. How's that for fuzzy logic. With MB you could but your stop right up next to the price if you chose to. In my spreads on the euro are usually less than one PIP.

Yes you are right.
Market execution implies slippage and
Instant execution implies re-quotes.

Brokers tend to slip but when it comes to your F###x dot com there should have not been slippage if you were trading under 5M per click which means 50 lots; and I assume you did.

According to NFA reports which F###x dot com BROKERS NEED TO GIVE POSITIVE SLIPPAGE TOO.

Finally, ECN should allow traders to place stops wherever they want i.e. as closer to the spread.

 

[fxmade2trade]

Im sure it may not be the "best" but the services and support are what i pay for, and yes I am sure a lot is better outside the U.S. lol

 

[Thunderstorm]

I am executing with FX International Markets www.fxim-markets.com (I hope, it´s ok for a newbie) to mention it here). Although they are an offshore boutique (yeah, I have heard all possible "arguments" against offshore brokers I can think of) - they have better spreads than London Capital Group, Marex, Fixi, Velocity, Baxter, GFT UK (institutional), ADM, Sucden and so forth. My guess, it´s always good to deal with a broker that has several FX hedge fund as their clients

Anyway, the back office is real time, execution times below >20ms and liquidity as much as you need (I was told they have over 60 liquidity providers).

By the way: don´t knock on their doors below 50k. :smart:

 

[fxways]

Spread vs. Swap & Adaptation of Trading Strategy to Broker Behaviour

Who would you choose when you open account?
How much does spread matter?

For the purpose of this question I am using an independent spread analyser website to analyse broker spreads:http://www.fxblue.com/spread/symbol.aspx

And as you can see all 3 brokers have very similar spreads; but which one is better? how do trade conditions change from broker to broker? what should traders look for?

• JFD Brokers
• zebrafx
• ICMarkets
• or others...

Disclaimer: This post is by no means of a commercial nature.

I have several accounts and currently trade most on Alpari.

Spreads are
- not an absolute measure and the spread offered for trading client does not have to be symmetrical!
- not most important broker fee if you are not a heavy trader
- mostly not as important as good swap rates, specially if you hold your positions longer than just intraday

So don't only look at spreads. Analyze your trading and calculate whether spreads are really more important than swaps. Count the number of executions per months versus the number of nights you are rolling open positions. Try to evaluate how important .5 spread might actually be for your annual performance compared to overnight costs.

Apart from that you might want to adapt your trading strategy to your brokers behavior and execution fairness. Read more: http://www.amazon.com/FOREX-WARS-BR...TF8&qid=1407323257&sr=8-1&keywords=forex+wars

Adapting the strategy means considering more the rolling costs and changing the time frame in order to have less but more significant trades with higher positive chance-risk ratio.

 

[Magos]

A bit misleading

I have several accounts and currently trade most on Alpari.

Spreads are
- not an absolute measure and the spread offered for trading client does not have to be symmetrical!
- not most important broker fee if you are not a heavy trader
- mostly not as important as good swap rates, specially if you hold your positions longer than just intraday

So don't only look at spreads. Analyze your trading and calculate whether spreads are really more important than swaps. Count the number of executions per months versus the number of nights you are rolling open positions. Try to evaluate how important .5 spread might actually be for your annual performance compared to overnight costs.

Apart from that you might want to adapt your trading strategy to your brokers behavior and execution fairness. Read more: http://www.amazon.com/FOREX-WARS-BR...TF8&qid=1407323257&sr=8-1&keywords=forex+wars

Adapting the strategy means considering more the rolling costs and changing the time frame in order to have less but more significant trades with higher positive chance-risk ratio.

Very nice reply but I disagree on the following:
1. Spreads might not symmetrical for sure but they do average out; and Alpari is far from being perfect!
Reference: http://www.fxblue.com/spread/symbol.aspx

2. Fees are very important since profitability of every trader varies on TCA (Transaction Cost Analysis) in the below example Q1 2014 8.8 USD per lot.
Reference: http://files.shareholder.com/downlo.../FXCM Q1 2014 Earnings Presentation Final.pdf

3. Swaps for brokers usually account for 10-20% of all profits slide 21.
Reference: http://cdn.plus500.com/media/Investors/Reports/Plus500_Investor_Presentation.pdf

 

[fxways]

Very nice reply but I disagree on the following:
1. Spreads might not symmetrical for sure but they do average out; and Alpari is far from being perfect!
Reference: http://www.fxblue.com/spread/symbol.aspx

Magos, I know you're a pro
Still: skews are worse if the broker is a broker-dealer, which most are. Hard to detect an averaging out in such cases as the skew is always against the clients position and widening spreads are also mostly in one direction.

2. Fees are very important since profitability of every trader varies on TCA (Transaction Cost Analysis) in the below example Q1 2014 8.8 USD per lot.
Reference: http://files.shareholder.com/downlo.../FXCM Q1 2014 Earnings Presentation Final.pdf

It depends on the strategy. Most retailers look at spreads but only do 20 execs per monthy while holding positions for weeks.

3. Swaps for brokers usually account for 10-20% of all profits slide 21.
Reference: http://cdn.plus500.com/media/Investors/Reports/Plus500_Investor_Presentation.pdf

That really depends on the broker, the swap fees and the client profile. But again, it's mostly an individual issue: how long is the trader holding the position vs. how many execs does he perform in which size and which account type...

Thanks for the really nice high level discussion!

 

[Magos]

To summarise:

Even if the broker is not a broker-dealer his liquidity provider is! Widening spreads in one direction is called skewing and is used based on the volume the broker or lp holds (inventory management).

TCA is very important, COSTS can not be ignored since they represent 50-60% of all brokers income.

From some of my research traders tend to hold trades for 8-9 hours on average but still average is a function that can not be trusted 100% since a lot of traders hold positions overnight... but it averages out on the long run.