There are so many articles about brokers, market maker and ECN/STP brokers, liquidity providers and… already published on this site. Although I believe novice traders can read those articles and learn about these important topics, still it seems one more article is needed to explain how to differentiate a market maker from an ECN/STP one.
In the past, most traders knew nothing about the market maker and dealing desk topics, and also true ECN/STP brokers. But now that traders have learned what these systems are, they insist to open their live accounts with true ECN/STP brokers. This has caused many of the market maker brokers to pretend to be an ECN/STP broker, whereas they are market makers behind the scene. How can you verify this before you open a live account with the broker?
Before I answer this question, please let me give a short explanation about market maker and ECN/STP systems. As I mentioned, there are detailed articles on this topic on LuckScout that you can read to learn more.
When you open a live account with a market maker broker, indeed you are trading with the broker, not with the real world wide currency market. The market is the broker itself. Although the currency pairs prices are almost the same as the other brokers, on a market maker platform, your orders never go beyond the brokers computers and you trade inside the brokerage firm. So, if you make profit, the broker has to pay it. And, the money you lose goes to the broker’s pocket. It means your profit is the broker’s loss, and visa versa. Read this article to know how a market maker broker makes money: Market Maker Brokers: Is It Bad or Illegal to Be a Market Maker?
Unlike market maker brokers, true ECN/STP brokers just route your orders to the banks that are also known as liquidity providers. They just connect the platform you install on your computer to the liquidity providers computers. They charge you some fees to do that, but they don’t make any money from your losses, nor they lose if you make profit. Read this article to learn about liquidity providers and the way they make money: How Do the Liquidity Providers Make Money and Are They Market Maker?
A market maker broker doesn’t become happy if you make profit. A consistently profitable trader is their biggest enemy, because the profit he makes has to be paid from their pocket. Although more than 95% of the traders lose on their own and the broker doesn’t have to make them lose, still most market maker brokers do their best to make the clients lose easier and earn harder. There are some ways to do that: 6 Ways Forex Brokers Cheat You
Unlike market maker brokers, true ECN/STP brokers don’t bother to make the traders lose, because it doesn’t make any difference for them. Indeed, most of them even help their clients to make profit and grow their accounts, because they will stay with the broker longer and will make bigger positions, and this means more money for the broker too.
Therefore, traders prefer to open their accounts with true ECN/STP brokers, because they don’t want to be cheated by the market maker brokers. The problem is, nowadays many market maker brokers claim to be an ECN/STP broker. Some of them even transfer your orders to a so called liquidity provider, but the problem is the liquidity provider is either another market maker brokerage belonged to the same company or a sister company, or, it is a poor bank somewhere in the Pacific ocean.
That is why I use the term “True ECN/STP” because there are “False ECN/STP” brokers too.
It is not bad and illegal to be a market maker broker. What is bad (or maybe illegal depend on who writes the rules) is trying to make the traders lose. Market maker brokers can make a decent amount of money because more than 95% of the traders lose on their own without having to make them lose. They even lose with the demo accounts too. However, the problem comes when market maker brokers get greedy and try to make more money within a shorter time. So they manipulate all traders’ positions, no matter if they are winning or losing traders. Of course, they do their best to stop the winning traders and make them close their account and leave.
You are following us on LuckScout to become profitable Forex traders. Many of you have become profitable demo traders already as per the program you are following on LuckScout (read this). However, you are worried about the broker you will want to open your live account with, when you were ready to. Unfortunately, we don’t refer anybody to any broker. Brokers email us on a daily basis and send tempting offers to refer LuckScout users to them to open live accounts, but we don’t even bother to answer them.
The reason is that past performance is not a guarantee of future results. Even if a broker has been doing good for years, they can change overnight and start cheating their clients, and we will be accused as the referrer too. So, although it makes a lot of money, we prefer not to enter such a game at all. However, still we can educate people to enable them to distinguish between bad (market maker) and good (true ecn/stp) brokers, so they can easily choose a good broker to open their live accounts with, when they are ready to.
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The Differences of Market Maker and True ECN/STP Brokers
Fortunately it is not that hard to distinguish between market maker and true ecn/stp brokers, even before opening a live account with them. There are some signs that you have to follow and come to this conclusion whether the broker is a market maker, false ECN/STP or true ECN/STP.
1. Spread
Traders like to pay less spread to make more profit. So, there is a competition among brokers to offer the lowest possible spread to attract more traders. Market maker brokers have full control on the spread. They can offer even zero spread, because everything can be set at their side. False ECN/STP brokers can do that also, because their liquidity providers are usually under their control too. True ECN/STP brokers have no control on the spread, because it is the liquidity provider that charges the spread. True ECN/STP brokers can add markups to the spread, but they cannot take it below what the liquidity providers offer.
Therefore, all the brokers who offer a fixed or zero spread are market makers. This is the first signal you have to notice. Spread cannot be fixed on the real currency market.
Also, brokers that offer higher than usual spreads are market makers, because nowadays liquidity providers offer very low spread. For example, EUR/USD spread is sometimes even below 0.6 pips. So, a broker that offers the minimum spread of 2 pips or higher for EUR/USD, is either market maker or a cheater ECN/STP that has added to the spread without informing the clients.
Commission is the only known legal way for the ECN/STP brokers to make money. Markups and adding to the spread is fraud.
2. Swap
Swap can also be fully controlled by market maker brokers. Indeed, market maker brokers can control everything, from the price, to spread, swap, market open/close time and… .
If a broker is offering a swap free account, it is a market maker broker definitely. There is no real liquidity provider that doesn’t charge any swap. It is one of their sources of income that they cannot ignore, because they also have to pay it to the other dealer and organizations they are dealing with.
Also, when swap is exceptionally high or low, the broker is market maker.
Please note that although swap has a special formula that uses the same interest rate for calculations, different liquidity providers offer different swap, because they can control it.
3. Lot size:
I have never seen a real, well-known and strong liquidity provider like Bank of America, Nomura, Goldman Sachs, Deutsche Bank, Citi Bank, JP Morgan, Royal Bank, HSBC and… that supports micro-lots (0.01). Therefore, brokers that offer micro-lots are either market maker, or false ECN/STP.
4. Leverage:
100:1 is the maximum leverage that well-known and strong liquidity providers support. Therefore, all brokers that offer a higher leverage are either market maker or false ECN/STP.
Another thing about leverage is that some brokers lower the leverage on weekends. They say they do it to protect the clients funds, whereas this is nonsense. They do it to make all the accounts that have negative positions, reach the stop out level and get wiped out. Any broker that changes the leverage is market maker or a false ECN/STP.
Those are the most important factors that you have to check with the brokers. Hope I have not missed anything here. Please let me know if there is anything else that I have to explain.
5. Scalping:
True ECN/STP brokers don’t care how you trade and make money and how early you close your positions. They allow you to scalp and you can do it if the markets allow you to. You can use scalping robots on your platform with true ECN/STP brokers. But market maker brokers are against scalping, because they don’t want you to make small profits. Therefore, they make limits on taking profit and closing the positions. They don’t allow you to close your positions too fast. When you see such limits, you should know that you are dealing with a market maker broker.
6. Stop Loss, Target and Trailing Stop Loss:
Market maker brokers have limits on stop loss, target and trailing stop loss size. They don’t allow you to set them too tight. But true ECN/STP brokers don’t care about these things at all.
7. Bonus
Bonus is another important sign that the broker is a true market maker!
I see that some brokers offer even a 50% bonus. Do you think a true ECN/STP broker who only makes money through commissions can afford to do this? They cannot afford it even if they make extra money through markups.
Stay away from the brokers who offer free bonus. They do it to attract small retail traders who don’t have enough money to open a reasonable account. And, they know that greed will make these trader to lose all. Losing the bonus doesn’t hurt the broker, because it is nothing but a number for a market maker broker. It is only the trader who loses his capital.
8. Negative Balance Protection
It is another trick by some market maker brokers. A true ECN/STP broker deals with real money. If a huge and sudden price movement occurs like the 15th Jan CHF Tsunami, and traders accounts go to negative balance because of having no stop loss or because the stop loss orders could not be triggered, then it is the traders responsibility to pay for the negative balance. It is your account and you are the one who have lost money, because of the currency you have been trading.
However, I have never seen that brokers prosecute retail traders for their negative balance, because if they say in advance that it is the trader who has to pay for a negative balance, then no trader dares to sign up for an account, because not only you can lose your trading capital, but you have to pay extra for the negative balance. As far as I know, true ECN/STP brokers take the responsibility themselves and pay the negative balance to the liquidity providers. They have to shut down the brokerage if they cannot do it, and they are the one who will be prosecuted by the liquidity providers.
With the market maker brokers, a billion dollar negative balance on a live account is the same as a billion dollar loss on a demo account. Do you pay any money to the broker when you blow up your demo account? Definitely not. You just sign up for another demo account. Then why do some market maker broker offer “negative balance protection”?
This is to deceive the traders. They want the traders to feel safe. Traders don’t know what is behind the scene. So, they prefer to sign up for an account with a broker that offers negative balance protection, whereas they don’t know that such a broker is a market maker who makes them lose, but the other broker who cannot offer negative balance protection is a true ECN/STP that becomes even happier if the clients make money.
Does it mean that you have to sign up for an account with a true ECN/STP broker that doesn’t offer negative balance protection? Then what happens if a strong movement occurs and your account goes to a negative balance? Read this article to receive the answer of these questions: The Swiss Franc Tsunami
Forex Trading through Real ECN/STP Brokers
Trading through ECN/STP brokers is the best option retail traders have. So far, we have published several articles about market maker and ECN/STP brokers, the differences they have and the reasons it is better to sign up for a live account with a true ECN/STP broker.
Trading through an ECN/STP broker is not like demo trading. It is trading with the real world wide currency market. I am going to explain about the facts that you will be faced with when trading through ECN/STP brokers. Please note that by “ECN/STP broker” I mean “True ECN/STP broker”, not the false and fake ones: The Difference of True and False ECN/STP Brokers
ECN/STP brokers route the traders orders to interbanks, also known as liquidity providers. So, ECN/STP brokers are nothing but mediators. They charge a small fee for each transaction. This small fee is the only legal and legitimate source of income that ECN/STP brokers have.
Unlike ECN/STP brokers, market maker brokers don’t route or transfer the traders orders to any third party. Trading with a market maker broker is exactly like demo trading, but trading through ECN/STP brokers is completely different.
Under the Market Normal Condition
1. Entry Price:
An ECN/STP broker transfers your order to a liquidity provider when you click on the buy or sell button. That liquidity provider accepts and executes your order at its own price, not necessarily the price you had on the platform when you clicked on the buy/sell buttons.
That liquidity provider price is usually different from your platform price, for two reasons: 1) They are connected to different price resources. Although prices are usually so close to each other, still there is a difference. Under the normal market condition, this difference is not more than a few pips usually. 2) Although the process of transferring your orders to liquidity providers is done automatically and electronically, it still takes some time to be done. Prices change all the time, and so, the price can be different by the time the liquidity provider receives your order.
This entry price difference is something completely normal when you trade with the real currency market through an ECN/STP broker. Novice traders who don’t have any live trading experience, complain about this price difference, and sometimes they go ahead of themselves and file negative reviews on different sites.
Live and real trading through a true ECN/STP broker, is different from demo trading. You have to send a request, and your requests has to be received, approved and executed. You cannot expect this to be done with your requested price. This is impossible.
This entry price difference is still much better than the difference you will experience when trading through some market maker brokers. Although they don’t route your orders anywhere, and all orders stay on the their servers, exactly like demo trading, some of them slip the price to make you enter the market with a price which is a few pips against your requested price (for example, you click on the buy button when the buy price is 1.1176, but your position will be taken at 1.1179 which is 3 pips higher. Even if you win in this position, that 3 pips plus the spread and swap will go directly to the broker’s pocket).
However, the price difference you will experience with an ECN/STP broker is not always against you. It is sometimes in your favor and sometimes against you, because it is based on the normal price differences, not intentional manipulations.
2. Exit Price:
It is almost the same with the exit price when you click on the close button. Your exit price will be different from the price you see on the platform when you click on the close button. This difference is normal with ECN/STP brokers. It is not always against you. Sometimes it is in your favor. However, market maker brokers who slip the price when you want to get in, also slip the price when you want to get out. This slippage is always against you.
When you set a stop loss and target order for a position, then, under the normal condition and in most cases the positions will be closed with the price which is too close to the stop loss or target order prices, unless the market is too volatile because of the news release (I will talk about this condition later).
Some ECN/STP brokers don’t let the liquidity providers know the stop loss and target orders. They have it at their own side, and when the price reaches the stop loss or target level, they send a closing request to the liquidity provider. In this case, the close price difference can be larger compared to the case that the stop loss and target orders are placed with the position that the liquidity provider is handling. The reason is the market volatility and the time that it takes to send the closing request to the liquidity provider, and the time the liquidity provider needs to receive and execute the request.
3. Pending Orders:
Like stop loss and target orders, some brokers place the pending orders with the liquidity providers, and some brokers hold the orders on their own servers. When the price reaches the pending orders value, they send the request to the liquidity providers. For the reasons I already explained above, with the first method, the entry price will be closer to the pending order value, but with the second method the difference will be larger. In both cases, it cannot be exactly the same, like what you see with a demo account under the market’s normal condition.
This difference is absolutely normal and is not more than 1-2 pips under the market’s normal condition. Again, the good thing is that when you trade through an ECN/STP broker, the entry price difference is not always against you.
Many market maker brokers slip the price when you want to enter the market through a pending order. This slippage is always against you. If you complain, they will answer that it is impossible to enter the market exactly with the desired price in live and real trading, whereas this is a joke, because there is no real market when you trade through a market maker broker. It is just the broker at the other side of the line.
4. Negative Balance:
Sometimes when the price moves very fast and the market becomes too validate, and at the same time the liquidity providers get bombarded with too many orders, it becomes impossible to execute the stop loss and target orders. It also becomes impossible to close the positions of the accounts that reach the margin call and stop out levels. The broker sends the request to the liquidity provider, but they cannot process it. It is the same when the order is already placed with the liquidity provider.
Therefore, some accounts that have no enough money to handle the negative positions, will have a negative balance when the liquidity provider succeeds to close the positions finally. The broker will not receive any warning from the liquidity provider if it still has enough money in the account it has with the liquidity provider. However, sometimes even the broker account reaches the stop out level and even gets a negative balance.
In both cases, the liquidity providers knows the broker as the responsible. It is the broker who has to pay the negative balance. But it is the trader who has to pay for his account’s negative balance to the broker. It is real trading after all, and each side is responsible for his own actions. You trade and you are responsible for the money you lose.
If the broker cannot pay for the losses, it can be prosecuted by the liquidity provider. And, it is the broker’s right to prosecute the client for the negative balance. The broker has to pay it to the liquidity provider, and you have to pay the broker.
Negative balance also occurs when you trade with market maker brokers. But to them, the negative balance is just a negative number. It doesn’t mean any money, and it has no value. Exactly like in demo accounts that $1,000,000 and $1 are the same and they both have no value. In spite of this, market maker brokers play a game and warn the traders to pay the negative balance, but when they see it can cause the traders to walk away and stop trading, they “generously” forgive the clients and recover the negative balances, to make the clients top up their accounts and keep on trading with them.
Some of them claim that they have something called “negative balance protection”. This has become more common since the 15th January CHF Tsunami. They claim that their “negative balance protection” works like an insurance for the traders. Whereas this is all nothing, but a dirty trick to attract the traders who don’t know what is behind the scene. People think that they are protected and nobody will prosecute them if something like 15th January CHF Tsunami happens again. So they sign up for a live account with that broker with peace of mind. The market maker broker attracts more money, whereas it is the ECN/STP broker who is the real participant of the Forex market. ECN/STP brokers cannot offer any “negative balance protection”, because it doesn’t make sense to do that.
Now the question is whether you will get into trouble because of a negative balance if you trade through an ECN/STP broker?
First of all, events like the 15th January CHF Tsunami are not going to happen even once every 10 or 20 years. It is possible that we never experience such an event again.
Second, although you will be responsible for your account negative balance, and the broker has the right to prosecute you because of it, I have never heard that they do this with the retail traders. They have to prosecute each trader who has a negative balance, take him to court and prove that he has to pay for it. It will be too hard and expensive for the broker. Even if they can do that and get the court order to take the money from the clients, they will not be able to do it, because in most cases it is somehow impossible. They have to hire a collection company to do it for them. This will cost more money for them. Besides, the collection companies don’t have enough authority to take the money from traders.
So, brokers prefer to take no action. Some of them will have to get out of this business because of the money they have lost. Many others will come to an agreement with the liquidity providers who also have lost money, but still need the brokers to make money: How Do the Liquidity Providers Make Money?
So there is nothing to be worried about.
In spite of this risk, professional traders still prefer to trade with ECN/STP, not market maker brokers, because ECN/STP brokers never cause them to lose money, but market maker brokers do. A market maker broker can never tolerate a consistently profitable trader. They want the losing traders only.
Under the Market Too Volatile Condition
What I explained above about the entry and exit prices and the differences you will experience, is true even under the market’s normal condition. However, sometimes markets become too volatile because of a big transaction or an important news release. It is when it becomes harder for the liquidity providers to execute the orders.
When you place a pending order and the price starts moving toward a special direction very strongly, reaches and goes beyond your order level very fast, then the liquidity provider cannot execute your order at the level it was set to. However, your orders will have to stay on a line, waiting for execution. Under such a condition, at any price that your order becomes executed, your entry will be the price which is in liquidity provider’s favor, not you.
For example, you set a buy pending order at 1.1187 while the price is below this level (buy stop order). Then the liquidity provider executes your order at 1.1500 which is about 325 pips above your pending order value, then your position entry will be 1.1500, not 1.1187.
Now, let’s say the price reaches 1.1187, but the liquidity provider cannot execute it there. However, instead of going up the price goes down after that while your order is on the line, waiting to be executed. Finally the liquidity provider executes your order when the price is at 1.1087 which is 100 pips better for you (it is 100 pips below your buy stop order level). In spite of this, your entry price will be considered at 1.1187 which is where you had set your buy pending order, not at 1.1087 which is the price the market had when your order was triggered.
It is the same with the stop loss and target orders.
There is the same problem when you click on the buy/sell buttons while the markets are too volatile and the price is moving too fast. However, in this case you usually get “off-quote” error and you will not enter the market. You will get this error even with a demo account when the price is moving too fast.
The Solution
The above events occur on the shorter time frames and for those who trade them using pending orders.
The solution is that you don’t set any pending orders and you don’t enter the markets when a strong news is about to be released. You wait for the strong time frames to form strong trade setups, and you enter the markets when they are calm and quiet.
When you take the too strong time frames signals, then they are usually agreeable to the direction that the strong news move the price. So, you will be at the safe side most of the time, and the strong price movements caused by the strong news, will make money for you.
The way that liquidity providers behave under the markets too volatile conditions may not look fair to you, but market maker brokers will be even more brutal to traders when the market condition is not normal. You can easily make money consistently with ECN/STP brokers without having to be worried about any of the problems I explained above, whereas a market maker broker doesn’t let you make profit consistently. When they see they cannot stop you from making money, they will email you that they are not able to offer their services to you anymore, and so, you must withdraw your capital and close your account.
The Leverage True ECN/STP Brokers Can Offer
100:1 is the maximum leverage that liquidity providers offer to the true ECN/STP brokers. What happens if a true ECN/STP broker offers a higher leverage, like 500:1, to its clients? How the orders will be handled then, and who will be the loser or winner if this leverage difference causes any losses or gains?
What happens if a true ECN/STP broker offers a lower leverage, like 50:1, to its clients?
To answer the above questions, you have to know about the true ECN/STP brokers and Liquidity Providers relationship first.
There are a few things that you have to know, to become able to answer the above questions:
1. Liquidity providers only know the brokers, and from a liquidity provider’s point of view, it is the broker who takes positions with the liquidity provider, not the broker’s clients who are retail Forex traders.
2. 100:1 is the maximum leverage that strong liquidity providers offer.
What does a 100:1 leverage mean?
It means in each position, the trader pays one part and the broker or liquidity providers pays 99 parts. For example, when there is no leverage offered by the broker, and so the leverage is 1:1 indeed, if you want to buy one standard lot (100,000 unit) of EUR/USD while EUR/USD price (rate) is 1.1134, then you will need to pay $111,340 as the margin. It means, $111,340 will be hold from your account as the margin of a one lot EUR/USD position. However, when the leverage is 100:1, then only 1/100 of this money, which is $1113.40, will be on hold as margin. To learn more about this topic, please read this article. Also, here is a margin calculator.
When you take a position and the price moves accordingly and you make profit, then you can hold it as long as you want. Neither you, nor your true ECN/STP Broker and liquidity are losing money because of this position.
What will happen if a position goes against you?
When the position has a proper stop loss, it will close the position when the price reaches the stop loss level. When the price reaches the stop loss level, either the broker sends a closing request to the liquidity provider, or the liquidity provider already has the stop loss level and will close the position.
What will happen when no stop loss is set? How long can a losing position be open to lose money? What if the trader never closes the position manually?
Naturally, the position can be left open as long as there is money in the trader’s account, because if the position loses more, then the account balance will become negative, which is usually the broker’s loss and traders never pay it. So the broker has to close the position when the trader’s account runs out of money because of a losing position. To do that, there is a broker side settings which is called stop out level.
When the account reaches the stop out level, the system should close your losing position(s). Usually, brokers set the stop out level to 5%. It is a broker side settings. When you want to open an account, you have to ask your broker about the margin call and stop out levels.
A 5% stop out level is a level that if the margin level goes below it, the system will close the negative positions. Margin level is the ratio (%) of equity to margin.
Let’s say you have a $3000 account and you take a one lot EUR/USD position while the leverage is 100:1. So, a $1113.40 margin is needed for this position.
When the position is at breakeven (entry price) and so the profit/loss is $0, then your margin level is $3000/$1113.40 which is 269%. Now, let’s say the position goes against you and goes to a -$2,944.33 loss. Then your account equity will be $55.67, and your margin level will be 5%:
Equity: $3000 – $2,944.33 = $55.67
Margin Level: $55.67 / $1113.40 = 0.05 or 5%
When your position’s loss reaches -$2,944.33, then the system should close the position immediately, before the position loses more.
As I already explained, liquidity provider only knows the broker and the positions it takes. It knows nothing about the traders who are the broker’s clients. In spite of this, as each trader has a different account balance, then their losing positions have to be treated differently. In the above example, if the account was bigger than $3000, for example if it was a $5000 account, the one lot EUR/USD position could still remain open.
Although liquidity providers don’t know the traders accounts, and they only know the broker, but they sill have to know how long each position can be left open. Therefore, with each position that the true ECN/STP broker routes to the liquidity provider, it has to send some other information. One of them is the leverage that the broker has offered to the owner of each position (which can be 100:1 maximum). The other one is situation of the account that owns the position. The liquidity provider has to know each account’s current balance and equity, because it has to know when an account reaches the stop out level to close the positions.
Managing the losing positions will be very easy for the broker if it allows the liquidity providers to have access to the accounts information. If it doesn’t, then it is the broker who has to take care of the losing positions and closes them (sends a close request to the liquidity provider) when an account reaches the stop out level. That can be risky for the broker when the market becomes too volatile and the liquidity providers receive too many requests at the same time. Therefore, true ECN/STP brokers prefer to set the system in a way that liquidity providers know the accounts current balance and equity, as well as the margin call and stop out levels settings, and also the leverage that is offered to each trader’s account. Liquidity providers need these information to manage the losing positions. They don’t care about the traders personal information like name and address. Only the broker has the traders personal information.
We are getting closer to the answer of our question 🙂
I have to repeat again that 100:1 is the maximum leverage that liquidity providers offer to the brokers. So, a true ECN/STP broker who allows the liquidity providers to take care of the losing positions by allowing them to have access to the information they need, cannot offer a higher than 100:1 leverage to traders, because liquidity providers know their own limits and they are the ones who hold and manage the open positions. If a broker sends a signal which is above the liquidity provider’s limit, it will be ignored. Liquidity providers treat the positions based on the 100:1 leverage. It doesn’t care that broker has offered a higher leverage to an account. So, when an account reaches the stop out level based on the 100:1 leverage, the liquidity provider closes the position.
Offering a higher than 100:1 leverage by a true ECN/STP broker is a technical error from the broker side. Broker can offer any leverage that it wants, but when it is a true ECN/STP broker, the positions it routes to the liquidity providers will be treated based on 100:1 leverage maximum. So, if a true ECN/STP broker offers a higher leverage to its clients, for example 500:1, and then routes the orders to the liquidity provider, they will treat the positions based on the maximum leverage they support (which is 100:1), and will close the positions when the related accounts reach the stop out level, whereas from the traders point of view, the positions still have to be left open, because the accounts have a 500:1 leverage and have not reached the stop out levels yet.
So, the broker has to keep the positions open at its own side, while they are already closed by the liquidity provider, because from the liquidity provider point of view, those accounts have reached the stop out levels, but from the traders point of view, their accounts still have a long way to reach the stop out level because their leverage is 500:1.
For a one lot EUR/USD position, a $1113.40 margin is needed when the leverage is 100:1, but this margin will be 5 times smaller ($222.68) when the leverage is 500:1.
Let’s get back to the above $3000 account example. It reached the 5% stop out level after losing $2,944.33 in its one lot EUR/USD position, while the leverage was 100:1. What if the leverage is 500:1?
As I mentioned, the position has to remain open. It has to lose more to reach the 5% stop out level, because the required margin for one lot EUR/USD position is $222.68 when the leverage is 500:1. It reaches the stop out level when the position loses $2,988.87 which is a $44.54 more loss.
The liquidity provider closed the position when it lost $2,944.33, but the broker has to close it when it loses $2,988.87.
This $44.54 is the broker’s profit, because when the trader sends $3000 to a true ECN/STP broker, indeed the broker has to deposit this money to the account it has with the liquidity provider. In the above example, $2,944.33 of this $3000 is lost in a position, whereas the trader has lost $2,988.87 in reality which is $44.54 more. The trader has lost this money to the broker, because the main position was closed by the liquidity provider and the position that was open, was a fake position.
However, the story doesn’t always end with the broker’s extra profit. Let’s look at the other side of this coin:
What if the market turns around and the losing position goes to profit, after the liquidity provider closed the position???
It is the Forex market and anything is possible. A -$2,944.33 losing position can change to a +$2000 position within few hours. When the main position is closed by the liquidity provider because the account reached the stop out level, the responsibility of the position that remains open is with the broker, because the trader doesn’t know what is going on behind the scene. He believes in what he sees on his account, and what he sees is a positive position. If he closes this position with profit, it is the broker who has to pay the profit. So that profit will be the broker’s loss, whereas if the leverage was 100:1 and the position was not closed by the liquidity provider, the broker could easily withdraw this profit from the account it has with the liquidity provider.
That was the answer of the first two questions. Now the answer of the third question:
If a broker who receives a 100:1 leverage from liquidity providers, offers a lower leverage, for example 50:1, to its clients, then it has to close the losing positions when the accounts reach the stop out level based on the 50:1 leverage. The broker has to do it on its own, unless they allow the liquidity provider to know that the accounts leverage is 50:1, and so the liquidity provider closes the positions when they reach the stop out level based on the 50:1 leverage.
If the broker doesn’t close the losing positions through one of the above ways, then the platform system closes the clients positions based on the 50:1 leverage, whereas they remain open with the liquidity provider, if the leverage is 100:1 at the liquidity provider side. This can be ended to the broker’s loss again, because it is the broker who has to pay, if the position loses more with the liquidity provider while the trader position is already closed with a smaller loss.
So, true ECN/STP broker have to be careful not to offer a different leverage to the clients, either intentionally or by mistake. It can cost them a lot.
his,
we read your articles like a holy book , it is indeed refreshing that a wealthy man takes out his time to try to help other novices without expecting reciprocation ..
after reviewing all brokers , i have decided to open my account with dukascopy as they seem to be the best at the moment.. thanks a lot!!
Thank you too Fasih.
Hi,
My broker gives the following.
1) Spreads keeps changing and charge commission with some fixed percentage differs from ccy to ccy pairs.
2) rollover /swap also with some fixed interest rate and differs from ccy to ccy pairs.
3) they give minimum lot 0.1
4) leverage 50:1
5) during market close period(from FRI 5pm EST to SUN 5pm EST), they show price changes in the trading platform but does not allow to entre/exit market
with the above points, I can conclude strongly my broker is a true ECN/STP right?
Hi Prakash,
Yes, it looks good to me.
Hi prakash, can you please share your broker?
It is hard to find a really good broker
Hi Kuskas!
kindly share your broker with fellow LuckScout members. Thereafter, it becomes an individual responsibility to carry out due deligence on the broker.
Thanks
Sorry Kuskas! The above post was for Prakash.
Thanks.
I’m am looking at Global Prime as a broker….what broker in your opinion should I go with? I distrust so many of them that it prevents me from trading
Hi Prakash
Can you send me the name of the broker especially if its regulated. My Email: [email protected]
To Mr Prakash, Please can you share your list of ECN broker. [email protected] Thanks a lot
his,
one request i want to make to u .. due to our bias to technical aspects of , i , specifically, find it difficult to assess vast pieces of information on fundamentals..
if u gotta time , can u write an article on how to conduct fundamental analysis effectively , i.e, which data are important, how to interpret them etc etc..
thanks very much.. god bless u..
Hi James,
It is a while I have started doing it. When there is an important news release, I write articles about it, analyze the news and charts based on it and inform the users in advance. Please check the fundamental category to see what I have done so far:
https://www.luckscout.com/category/fundamentals/
I’m glad I read your article. It’s very useful and my ideas are clearer now. You said there is a solution for people that cannot open an account with ECN/STP who don’t support micro lots. Can you tell me what this solution it, or I have to wait the article? Thank you.
Hi Caleb,
We will announce it when it is ready. Thank you for your patience.
Hi
Nice article with all the questions that have popped up over the months regarding brokers.
Question. That big surprise is it that you are going to open a brokerage!!!
In any event I wait with bated breath ☺️
Hi Barbara,
Thank you.
No, we are not going to open a brokerage.
Make another guess 🙂
Hi,
My guess is you are going to fund us to trade and share profits.
I need 1 million dollars please 🙂
Hi Youness,
No. That is not a good idea, because people easily lose the money they have got for free.
Hi,
Wish you replied before I ordered my yachts catalogue… 😀
Cheers
Don’t worry Youness. You will buy your Yacht. That is the smallest you can achieve.
Youness,
You should have sent your comment today, April’s Fool day!
Yes Barbara, tell me about April’s Fool Day…my kids put bricks under my car’s wheels and I was like why the car isn’t moving! 🙂
Thanks to you for your great help. I’ll wait.
Hi,
Dear sir i have live account with CC.
What about this broker???
I don’t know them.
hi,
my broker does not offer fixed spreads, does not offer swap free accounts, and minimum lot size is 0.1. it even sent me a list of their LPs upon enquiry. however, their leverage is as high as 500:1.
what do you make of them?
Hi Deji,
Sending the list of the liquidity providers doesn’t mean anything. How can you verify that they are really their liquidity providers?
Hi deji
I have the same experience; though i have not opened acct with the broker, i asked who their liquidity providers are. I was asked to check the corner of their web page. I believe recommend we find out from LPs. Do you have problem with them?
Hi, this is answer by CM in factory just a few minutes ago.
Image posted by Phylo, they claim as their Liquidity Provider.
http://postimg.org/image/vbudslj2b/
Hi KusKas,
Those liquidity providers that support micro-lots cannot be among the good ones I listed above. As you see he is saying “several of these LPs”. It means not all of them.
If you really insist to open an account with them, then you have to trade micro-lots for a while and see how it goes. If they don’t cheat, then fine. You can keep on working with them.
If only All brokers are ECN broker, maybe market should be much bigger than today’s size because money of retail trader add power to the market.
About ECN broker, if a true ECN broker not able to process micro lots, than maybe many of them are HALF ECN broker. I mean, they route mini-lots or bigger to the True Liquidity Providers, but they keep the micro-lots on their server so when I open micro-lot position, I am just make a demo trading with that broker.
That is true. Many brokers have both systems. They put the small account on the market maker system, and big and professional accounts on the ECN/STP system.
This seems very apparent with Fin (Finland) who offer and include everything but within clear categories in their trading account comparison page, Micro, ECN etc. BTW I’m not an agent for them but came across their site yesterday and I was impressed that their factuals are clear. However may think otherwise!
Thanks for this great article. I have a question that is it true that no commission account cannot be by the True ECN/STP broker?
If a broker doesn’t charge commission, it means it is either a market maker, or, it is an ECN/STP broker that makes money through markups which is hidden to traders usually.
Dear,
totay i experienced with my broker when my order is very close to hit tp ( more 10 pips only) price is struggle there too much time. more than 2 or 3 hours. so i closed my trade and then after 10 or 15 min price went up and reach more than 50 pips from my target price. i was wonder why is that. is my broker a mm ?
thanks
sajith
Hi Sajith,
This is not enough to say they are market maker and they have been trying to prevent your position from hitting the TP, because what you experienced happens under the markets normal condition very often. If you keep on seeing this over and over, and if the spread goes up when you have a short position, to prevent the position from hitting the TP or make it hit the SL faster, then you can say it is the broker who is doing it.
When a position doesn’t hit the TP, or hits the SL, most traders like to say that it was the broker’s fault (I am not talking about you; I am talking in general). That is why most of the reviews published over the Internet against brokers, are not true and are made by the +95% of the traders who lose.
I just don’t understand why the price moves in your desired direction only at the exact second when you decide to close the position. This happens over and over, and more often than not. It’s STRANGE and UNCANNY! (almost supernatural)…
Does this happen to you on a demo or live account?
On both. I just started trading live recently, so more on Demo. But it happened to me this morning live with USDJPY. It’s almost as if my broker is so capitalized that he can control the whole market, because I check other platforms’ charts…It’s just so bizarre!…
hi, one of the things that you Might encounter with a market makers is the history charts are very short, you can see a very limited time zone as little as 30 days only for some charts and few months for others charts.
Thank you!
Thanks very much for the article. I’ve been reading your articles for about five weeks and I’m practicing with demo-accounts. At the same time, I like doing some research about brokers, but I find it incredibly hard to find a true ECN/STP broker. Could you give us some tips? I know you don’t want to recommend any broker and I fully understand that but some advice how to find one would be very helpful.
I’ve written to so many “ECN brokers” within the last 10 days and every one of them seems to be a false ECN/STP broker. They offer high leverage, or also very funny, if you ask them about their liquidity providers via e-mail they’ll not answer any more… 🙂
Hi Sebastian,
You are welcome.
The above article is focused on the tips you are asking for. I don’t think there is any other tip that I can give you.
Hi,
You said, “True ECN/STP brokers have no control on the spread, because it is the liquidity provider that charges the spread.”
I do see my broker keeps on changing the spread. that means the liquidity provider(LP)/banks are changing the spreads. If so, then why and when the LP changes the spreads? If the spread is high or low what does it mean to the market condition?
moreover, I want to thank you for the great work. after I learnt(still learning) from LuckScout, now I started making profits, in other words, I reduced big loses.
thanks a lot, keep up the good work going. god bless you.
thanks,
Prakash.R
Hi Prakash,
Liquidity providers charge the spread because they provide liquidity to make money. They are not charitable organizations that work for the sake of God. They want to make money too. Please read this:
https://www.luckscout.com/how-liquidity-providers-make-money/
Thank you too.
when a position is opened is it not the spread at the time of taking the trade that is effective?
Or is it that the changing spread affects a live trade?
As I’m confused about how the broker increasing the spread affects a trade that has already been opened!
Barbara
Hi Barbara,
Increasing the spread can only affect short positions, because you always pay the spread when you buy. So, when you go long, you pay the spread when you enter the market, and it doesn’t affect your position if they increase the spread. But when you have a short position, increasing the spread can prevent it from hitting the TP if it is close to hit the TP, and it can even make the position hit the SL while the market price is too far from the SL. For example when the price is 100 pips below the level that your SL is set, if they increase the spread for 100 pips, your SL will be triggered.
Thanks. All is clear now.
Hi,
Thank you for the article.
If a broker charges a fixed fee for overnight positions and waives swaps, can it still be a true ECN/STP?
Thanks
Hi Mohamad,
No, it cannot be a true ECN/STP.
Hello mr.t, wonderful article. Can you, please, tell me what is a 0.1 micro-lot? Do it mean 0.1 percent of the entire capital? How much big is a full lot? Sorry, I’m newbie and I’m still a complete dummy. Hope you’ll reply me soon.
Hi,
One standard lot is 100,000 unit and so a 0.1 lot is 10,000 unit.
Hi, but what it mean 10.000 or 100.000 unit exactly? I don’t get it. Is it not about percentual? Many brokers don’t talk in terms of unit, but in terms of money. They say “the minumum deposit per trade is 5 bucks” for example. So, how can I know if it is a micro lot or a full lot? I really don’t want to bother you, but I’m so confused right now. Thanks for your help.
One lot or 100,000 EUR/USD means 100,000 Euro against USD.
0.1 lot or 10,000 EUR/USD means 10,000 Euro against USD.
So, the minimum rate is 100,000 bucks, right? So, anyone that offer trades lower than 100 bucks is not a true ECN/STP broker?
The minimum lot size with ECN/STP brokers is 0.1 lot which is 10,000. Lower than this lot size is usually offered by market maker and false ECN/STP brokers.
Thank you. Now it’s all clear.
Do you mean 10 thousand bucks per trade? But that’s a ridicolous amount of money. So, just rich people can trade with ECN brokers? And people that want to open a 1000 thousand account, cause they can afford to invest more, are they forced to trade with market makers brokers?
I didn’t mean that.
0.1 lot is 10,000 units. With the leverage of 100:1 only 1% of this amount will be placed as the used margin from your account. So when EUR/USD price is 1.0772, then a $107.72 margin is required to trade 0.1 lot EUR/USD:
https://www.luckscout.com/leverage-margin-balance-equity-free-margin-and-margin-level-in- -trading/
Thanks for answering me. Your comment makes a lot of sense. But I still don’t understand how brokers and banks can afford to let you trade huge amount of money with little capital. What is it their interested in doing so?
Besides, there is a difference between a lot and a simple trade? You said we can buy or sell rates much lower than 10 or 100 thousand bucks (like 1000 or 500 bucks), since the minumum lot size is 10,000 bucks, so is it mean we can trade without lots? Sorry, as you can tell, I’m new to and I often say nonsense. Your article and posts are really helping me to learn this unknowm field. Thank you very much.
Hi Brandon,
They don’t have to afford. It is the trader who loses if the price goes against him. Banks don’t lose, because they close the losing positions when the trader account runs out of money.
There is no something called simple trade. We buy/sell lots, from 0.1 to 1 and more. This is how online trading is designed.
Don’t worry about these things now. You will learn them when it is the time to. Just start from the basics and don’t rush:
https://www.luckscout.com/become-a-profitable- -trader-in-5-easy-steps/
“They don’t have to afford. It is the trader who loses if the price goes against him. Banks don’t lose, because they close the losing positions when the trader account runs out of money.”
Thanks again for your help. Sorry, I don’t think that’s clear. The money you trade and win, where they come from? Aren’t they from the banks? How is it possibile to trade much more money than what you really have? Can you explain me clearer, please?
Do you think I’ll know what lots are and how much big must be an account, by reading all the post in the article you posted?
Maybe I want to learn too fast, it is just that I’m very confused. That seems so hard to me, even though you said is easy 🙂
Yes, the money come from the banks. Read this:
https://www.luckscout.com/how-liquidity-providers-make-money/
Hi,
Just thinking out loud..
When time comes to open real account, we take our hard earn money and start searching for broker who meets all criteria from this fantastic article, If there are disagreements we keep on searching until we find something what will fulfill our expectation.. Right?
..But.. I noticed that many brokerage firms offer different types of account.We can see Swap free, Spread free, Fixed spread,… Leverage from 50:1 to 2000:1 AND they also have ECN account type with all our requirements and all this under one roof,I mean one brokerage firm works like MM and true ECN/STP at the same time
If we explain what we need(ECN/STP account) and what is our trading style(Swing trading), initial capital(3500$-5000$), level of experience(let them check our demo account which is open on their platform) Is it worth to try with them or this is not the way we should act and try to find broker who is offering ECN/STP service only?
Thank you and sorry for my Tarzan English but I hope you understand the question.
Good luck to all
Regards
Goran
Hi Goran,
Many brokers have both MM and ECN systems because they don’t want to allow the money 95% of the traders lose to go to the liquidity providers pocket.
As there is no guarantee that they don’t put your account on their ECN system, you’d better to go for the brokers that offer ECN service only.
Hi Mentor! I want you to peruse this conversation l had with LMAX rep. and give your opinion. If LMAX is a true ECN/STP broker, is it safe to trade with their introducing brokers as claimed by LMAX?
Me: please what is your minimum deposit to fund an account & what is your minimum lot size ?
LMAX: the minimum lot size to trade on our MT4 is 0.01 which is a micro lot. the minimum lot size on our web platform is 0.1
Me: how about requotes, slippage, execution speed?
LMAX: Since we are set up as MTF (Multilateral trading facility) with no dealing desk and no re-quotes, we do not slip clients and all orders are filled at the best available price at the time.
Me: what is the minimum deposit for your MT4 platform and web platform?
LMAX: if you are a direct client of LMAX, the minimum deposit is $10,000 USD or equivalent.
Me: for both platform?
LMAX: yes.
Me: do you have subclients and how do you manage them?
LMAX: Are you asking about clients following a master? “if you are a direct client of LMAX, the minimum deposit is $10,000 USD or equivalent”.
Me:What qualifies someone as a direct client?
LMAX: that is if you applied directly with LMAX
Me: can you recommend private brokers that are registered with you since i don’t have $10,000 with me currently?
LMAX: We cannot provide you with any private broker. You will have to search for it on google, However we can verify with you whether or not they are our partners.
Me: Kindly verify if these brokers are partnering with you: pro, open, axitrader, pepperstone, avast, XM, CM.
LMAX: avast, XM, CM. There are introducing brokers who will assist you to open an account with LMAX. you can search them via google. The minimum deposit will usually be less when you open an account with our introducing brokers.
Me: i hope those brokers claiming to be partnering with you are verified brokers
LMAX: You are welcome to check with us whether they are introducing brokers of LMAX.
Me: are funds invested with your partnering brokers safe as funds invested directly with you?
LMAX: Basically, the introducing brokers will assist you to open a direct account with LMAX. Therefore, the funds are treated as the same as they would when they come in as a direct client of LMAX. The introducing brokers may charge you on extra commission but that is between you and the introducing broker and we cannot provide more information regarding their commission charges.
Hi Ambrose,
Introducing broker just refers you to the same company. So your account will be with the same broker.
Thanks for your response. Will u consider LMAX as true ECN/STP broker due to the fact that they offer 0.01 lot size on their MT4 platform but 0.1 on their webpage platform with the same minimum $10,000 deposit requirement?
Hi Ambrose,
Their MT4 account can be on market maker system, or if it is ECN, then it is supported by poor liquidity providers.
Can you trade both platforms through one live account, or you have to open either an MT4 or web based platform account?
I will find out and get back to you.
be careful though with introducing broker. Read the policy as sometimes when you go that route, they can charge you an extra mark-up as that charge is paid to the broker, who introduced to you to another broker.
Hi, before read this article, I thought Leverage only related to broker, not with Liqudity provider.
When we close to margin call because of using too high leverage, it’s broker’s job to close our position, not LP.
Another question, why LP can’t offer Leverage more than 100?
Hi KusKas,
It is too risky for them to offer higher leverages. Offering leverage has a lot of risk for true ECN/STP brokers and banks.
Hi. Thanks for always helping us out with your well detailed article. Please, I need your opinion on XM.com, because they claim to be true ECN/STP with some of the following; no commission; Leverage: 1:888; minimum lot size: 0.01; deposit as low as $5. And if it won’t contradict your principle, kindly mail me some true ECN/STP that you know. Thanks a lot.
Hi Yomi,
They look like everything but true ECN/STP.
I am afraid I cannot recommend you any broker via email. I have explained it in the above article.
Thanks a lot
Hi Yomi
Try Dukascopy; read about them. The only bad side is the minimum amt to open acct
Hey bonny,
have you tried the MT4 bridge for Dukascopy?
I looked at the broker too, but I did not like their java platform – very slow 🙁
I tried asking Dukascopy for their liquidity providers, they ignored my question among others in my mail. Might be a coincidence or they’re not a real ECN broker – they seem to offer high leverage too, but maybe it means, if we choose more than 100:1 they put us on a MM platform.
Still unsure about this broker… but I like the idea that they are based in Switzerland and we can choose CHF as account currency too.
I have mailed with them, and they wrote that they trade with more than 20 liquidity providers with minimum ticket size of 100000, 250000, or 1000000. So they don’t even have liquidity providers with minilots.
As far as I can see they have implemented their own ECN instead of using an external one for order matching.
Thanks Bony.
Even though they are MM, you can take advantage of their 30$ No Deposit Bonus. With this you can probably make some money without any deposit. But you have to at least triple it to withdraw the profit. Details here: https://static.xm-cdn.com/assets/pdf/terms/XM_No-Deposit-Bonus-Terms-and-Conditions.pdf
Hi,
What is you opinion of not only MM brokers hunting stop losses, but also hedge fund, big traders and institutions seeking to move and control the market by stop hunting around areas of support and resistance where they expect most traders to place them?
Hi Linz,
This can be done on stock market, but not on currency market. It is only the central banks who can make the currency market move strongly. They do it by changing the interest rates for some special reasons. They don’t do it to hunt the stop losses. They don’t care about it.
I don’t understand, let me make sure I’m getting you right. Are you saying that it is impossible to stop-hunt in the currency market? Is it just a myth?
Hi Muggles,
No. Brokers can hunt the stop losses by increasing the spread:
https://www.luckscout.com/stop-loss-hunting-by- -brokers-what-to-do/
Linz says that hedge funds buy/sell huge amounts to move the price and hit the retail traders stop losses. This is what that looks impossible to me because hedge funds are not strong enough to take the positions that can move the price on currency market. Currency market is larger than to be manipulated like that.
Hi,
I found an interesting addition to this discussion we had earlier on the above subject if I am permitted to quote it on your website? Most other reasons confirm what you teach but this one is another point of view I guess as to why 70-95% of traders fail but it still begs the question as to why would the big boys bother if we, the retail traders are only 2% of the market?
https://www.cashback .com/en-us/school/tabid/426/ID/436368/caution-top-reasons-for-failure#competition
It’s not good reading is it!
Hi Linz,
Sorry that I had to remove that paragraphs you took from that site, because maybe we are not allowed to have their content here. But we can link to it without any problems, so LuckScout users can refer to the site and read it.
If you ask for my opinion, I have to say that I disagree with that article. trading is not like that. market big participants don’t care about us at all. They don’t even know that we exist. They do their own job which is what makes the price move. What we do is that we wait for them to make the price move, and then we follow the price. Not only they are not our enemies, but also we appreciate what they do, because it makes money for us, if we know how to follow the price:
https://www.luckscout.com/who-are-the-major-participants-in- -market/
We are the little fish that sticks under the whale’s belly…going for a free ride.
Exactly!
I replied your email.
Thanks so much for your informative answer and your reference I had not seen before. There is so much conflicting information out there and the article was not encouraging. Yes it did seem strange for the larger market to bother hunting our stops if we’re only 2% of it so there was a contradiction there.
I apologize for direct quoting, I wondered if I had made a mistake as well as taking up too much space with it! Have we a method of editing our postings or does that complicate things?
Thank you for your patience.
Kind regards.
You are welcome Linz.
You don’t have to apologize. I am take care of it here.
Unfortunately this platform doesn’t allow the commenters to edit their comments after they are published. I don’t know why. But you can do that on forums.
Thank you,
My checklist now has new criterion.
Your guidance is priceless.
Hey,
do you use one broker or do you use several brokers to split up your money? If we use MetaTrader with several instances we could easily use e.g. 10 charts in one instance and the other charts on the other instance. Thereby we could split up deposits on two brokers to limit our risk. By risks I mean things like the broker goes bankrupt, makes problems with withdrawals or a stop loss does not get triggered when the market moves strongly. Once everything is configured it doesn’t seem to be more daily work. Do you think it’s useful to do that?
I’ll keep on comparing brokers with your list, thanks very much.
Hi Sebastian,
I trade with two brokers and also through a bank account.
You can have over 30 charts on one MT4 instance.
What you say is a good security strategy.
sorry to bother you, but may I ask one more question :)?
For people in Europe who demo-trade / practice while working another job it’s difficult to check the charts and enter the market when the daily candlestick closes because it’s around midnight for us. I’m unsure if it’s “better” do that in the evening – which means shortly before the candlestick closes or in the morning, which means around 5-6 hours after the candlestick opened.
What’re your thoughts on that? I’m sure it’s best to do it after the sticks close but what would you recommend if we have only those options above?
Thank you so much:)
Hi Sebastian,
Usually there is no strong movement about 2-3 hours before and after the daily candlestick close. So, you can check the daily chart during this period and take your position if a trade setup is formed.
hi
since I come to your site I ave gained a lot and am greatful for the education …..now my question is
u ave reviewed some brokers for us to choose n would love to ask if those u ave reviewed is anyone of them a true ecn according to u .., answer me yes or no
They have both market maker and ECN system.
Hi,
I read on a US broker’s website that due to NFA regulations, any broker that accepts retail clients cannot be deemed an ECN. I don’t really understand this. Does that mean that no US brokers are true ECNs? There are some that claim to be, and indeed they seem to fit all the guidelines for a true ECN, but I’m worried about this comment about NFA rules…
Hi Aliash,
Please share the NFA site link.
Hi Sebastian
How can we find and recommend ECN/STP broker for one another here. PLEASE if any Fxkey follower finds any ECN should recommend it here
Perhaps ATC Brokers Limited (UK). Read this: http:// magnates.com/atc-brokers-steps-up-game-with-launch-of-uk–brokerage-2/
Or Global Prime (Australia).
Still not sure if true ECN, but close.
Check them out.
Thank you.
@bonny: I agree, still looking for suitable Brokers myself.
I can not recommend Dukascopy, I asked again via E-Mail today, there’re definitely market maker, because they told me everybody can be liquidity Provider and participate.
They praise it as “market place bla bla”… 🙁
FxPro has bad Support and a not standardized-platform. I’m looking at 3tg Broker next Weekend, they also offer MetaTrader. I’ll know soon if they’re really ECN or not.
You can read more about Dukacopy liquidity here: https://www.dukascopy.com/swiss/english/ /sw/liquidity_business_model/
You can find liquidity providing at the bottom.
Here is document about it: https://www.dukascopy.com/swiss/docs/SWMarketplace.pdf
3TG seems to be a hybrid one to me. And I think that regulation is not as strict in New Zealand as with FCA or FINMA. And also fund safety is really important.
I don’t think one can find a perfect or ideal broker, we have to make some trade-off anyway.
Otto / Youness
You guys seem to have done considerable work on Brokers and are quite knowledgeable. Are you able to put together a page that can be added to the manual that may include:
– The fullest checklist for analysing a Broker (with link to this article)
– The list of Brokers assessed by (with links to the LuckScout articles)
A power point or word file is best format.
Anyway let me know if you can. Please email direct [email protected] as I found this article very late as it first went to junk mail for some reason. (maybe there was too many Market Makers mentioned)
Hi ,,
I’m really thankful for you to publish this article . I lost 2 times my balance cause of those market makers . now i’m opening demo account in a month with 2 companies :
1st one : I did do 0.03 but i’m not sure if there is less than 0.03 . also they told me to sign a swap free (trying to open a live account) for a condition that not staying for more than 21 days . levarage no more than 100:1 . the broker is a small company with the provider cause they have the same name and I think it’s the only provider he has . Also they have many maturment of spread like less tha 25000$ the spread on EURUSD like 1.4 pip but if you have more than 25000$ is 1.2 or 1.1 pip I think without commission . But the 2nd one is having 12 or 14 provider one of them city bank and Deutsche bank . Take commission also the provider take spread for every trade . no swap . laverage no more than 100:1 and now they give 20:1 if your new . Please tell me what is the best for me and if you have trust broker please share it with us .
Hi Tariq,
They both look market maker to me.
Sorry forgot to tell you that the 2nd company have non dealing desk to offer with a commission as i told you
Thank you this great checklist,!
1. I think any kind of Bonus (like 50% deposit bonus etc) is suspicious.
2. Also “overadvertising” the company makes it more probably that it is market maker.
3. And with MT4 opening a trade with Instant Execution (setting up SL and TP in advance with market order) in an STP/ECN environment is not possible as far as I know.
What do you think?
Hi Otto,
Thanks a lot.
All three items you mentioned have to be added to my list. You are absolutely right, specially about the first and the last item.
I think it’s possible to find true ECN brokers. With article above I can now scan every broker website in 3 minutes and it’s a little bit depressing because 90% of the “ECN brokers” seem to be false ECN.
I have a question:
If a broker in the US or in another country outside of Switzerland says its account currency can be CHF: Is it really CHF in my account or do they just say it / write it on my account, but internally the money is USD?
Transactions in currency market is done based on USD.
Hi,
You can’t recommened any broker to us but may i know which broker you working with??
Hi,
My broker offers:
“Leverage is 1:500 for accounts with equity up to US$ 2K, 1:300 if equity above US$2 K but up to US$5 K and 1:100 if above US$5K”
They advertise they are true ECN/STP with no dealing desk! ??
I remember you saying once LP’s go no higher than 1:100
Hi Linz,
They are market maker definitely.
You said that Micro lot 0.01 is not allow from real ECN market its mean If any broker provide Micro lot 0.01 so It is clear that this broker is market maker , but almost all broker provide micro lot then what you say about this ?
Hi Polarus,
Then they are either market maker, or they are ecn/stp but also have a market maker system for those who want to trade micro-lots.
I am one of your loyal follower. Thanks for your kindness and willingness to share your knowledge and finding about the world of FOREX. Since you are not going to recommend any broker to us, then just want to ask you for the ECN broker who offer leverage up to 1:200, min lot = 0.01, 25 USD as commission per 1 mln usd of trade, minimum deposit required is usd 300. Liquidity provider stated by them is LMAX Exchange, Citi and CM Pro. Can this broker considered as true ecn broker. I am aware that you are saying leverage more than 1:100 and minimum lot less than 0.1 cannot be considered as true ecn broker, but is it possible that these criteria has some degree of tolerance? I am really confusing and disappointed now since I have made a lot of study online, approach the broker through live chat, read the comment from the forum; but until now, I still failed to find any appropriate broker. Thanks.
Hi Tan,
Thank you.
> Can this broker considered as true ecn broker?
No. As you mentioned their liquidity providers are LMAX Exchange and CM Pro. It means their liquidity providers are some other brokers, not banks like the ones I outlined above.
I don’t really how leverege works. If we have to open a 10.000 bucks lot and we have a 1:100 leverage, does it mean we cannot open a position lower than 100 bucks, or am I making confusion?
Hi Henry,
It is necessary to read this to know about leverage, margin and… :
https://www.luckscout.com/leverage-margin-balance-equity-free-margin-and-margin-level-in- -trading/
You say Micro lot 0.01 is not from real ECN market , Its mean all brokers those provide 0.01 volume are just market maker ?
The are either market maker, or have market maker system too.
If a broker says “raw spread” and something like “spreads from 0.1 pips”: is it just marketing and there’re really currency pairs which we can get for that low spread with reputable liquidity providers?
Or is 0.6 pips for the spread really the lowest value and the broker is a false ECN?
From your experience what is the lowest spread possible – can it go to zero/0.1 like in the example above?
If I ask a broker for a list of their liquidity providers and they reply I should explain further what I mean by liquidity provider, does it mean the broker is a false ECN or is my question really too broad in this case?
Hello,
may I ask how do you ask the broker for a proof of the liquidity provider?
Some of them tell me they’re not allowed to do that; seems to be a lie so they’re false ECN broker.
One broker listed some big banks as liquidity provider, which sounds good. But how can I believe it? Which kind of proof would you ask for or how do you make sure they’re telling the truth?
When they have all the signs of a true ecn/stp then no need to ask for liquidity providers, because they can lie to you. I just open a small account with them and check how they deal with positions and profitable traders.
quote “Brokers email us on a daily basis and send tempting offers to refer LuckScout users to them to open live accounts, but we don’t even bother to answer them.”
I just love the way you think, it is just wonderful to think that you are here to help us without any bad thought. You know, I sometimes thinks that human being are just like animals that want to eat each other. They want more money in their pockets no matter where and how it comes from.
BUT, you Guys, you are there to make me believe that a better world is not an illusion.
After few more days on your site I am still amazed of what you’ve done here. No advertising no popup to sell anything, I can’t find the words to express myself.
One more time, Thank you so much.
Keep doing your good work.
With best regards
Thank you TJ 🙂
Is ctrader is an ecn platform? I have demo account with pepperstone and ic markets, both in ctrader platform. Are both broker are ecn ?
Any platform can be connected to a market maker or ECN system. It is not the platform that makes a broker ECN or market maker.
is ctrader an ECN platform ? I have demo trading account with pepperstone and ic markets, both demo trading in ctrader platform. because i have read somewhere that ctrader is an ECN platform. can you tell me that, if i will open account with any one broker in ctrader platform, then my account will be with market maker broker or true ECN broker.
Any platform can be connected to a market maker or ECN system. It is not the platform that makes a broker ECN or market maker.
FxPro also advertise their c-Trader platform as the ‘trusted ECN solution’, but in my experience with them, it is very, very clear that it is on the Market-Making system. I urge no-one to trust FxPro. In my dealings with them they are NOT truthful (and, moreover, they ‘over-advertise’!)…
Hi,
Another give away that the broker isn’t a true ecn/stp broker is restriction on some trading styles, like scalping, hedging, churning…etc
If the broker is true ecn/stp one, then they shouldn’t care about how do we trade.
Another one is the condition most brokers put in their mt4 when entering a limit/stop order, most of them ask you to enter the pending order X pips away from the current market price…if the broker is true ecn/stp, why would they care?!
Hi Youness,
You are absolutely right. A true ECN/STP broker doesn’t care how traders trade and make money, and how long they hold their positions. This also has to be added to my list in the above article.
Hi,
Last night when NFP was released, all currencies spreads became really high (USDJPY up to 5 pips, GBPUSD 6 pips, CHFJPY 15 pips, etc). I’m demo trading with a MM so I assume it’s unreasonably high b/c of MM.
I remember you had mentioned that even a true ECN/STP broker would have higher spreads when there’s a news released. I’m wondering, how many pips increase is reasonable for a true ECN/STP when there’s a news released? Thank you
Maria,
It depends on the news potency, the amount of the money that starts being transferred right when the news is released, and the market liquidity. So it is not possible to say that for example Non-Farm Employment Change should take the USC/CHF spread up for 10 pips for 2 minutes. It depends. I have seen that AUD/NZD spread goes higher for over 50 pips when there is an AUD or NZD related news, because AUD/NZD is not a liquid market compared to USD/CHF or EUR/USD.
Hello,
do you happen to know the Fortress Prime clearing house? Speaking from their website, they claim to be a good liquidity provider that is connected to the big international banks.
I’ve found a broker that offers different types of accounts. Apart from market maker accounts, that are hooked up with other brokers they seem to offer true ECN accounts. They proudly told me I can chose to hook up my account with the Fortress Prime only. Minimum lot size 0.1 – they also proudly told me that less lot size would make them a market maker and they say they’ve no control over the spread – sounds all good to me.
Do you know the liquidity provider above?
Sebastian,
I have heard about them, but I don’t know how good and strong they are. What they have told you look so promising. If I were you, I would open a small account with them and would trade 0.1 lot of a while to see how they treat the winning and losing positions and account. If they let you trade on your own and they don’t interfere, then they are good.
Hey, I’m desperate. It seems impossible to find reliable brokers. Any time I believe I’ve found a good broker, I find a bad review which makes me change my mind. I know that you cannot recommend any broker, but I’ve little money and I can’t risk to waste it for a scam. Can you please tell me how I can find a good broker?
Hi,
Don’t rely on the negative reviews. Most of them are written by losers who even lose with a demo account.
Some of LuckScout users have talked about some good brokers on this page. It means it is not impossible to find a good broker.
Please, LuckScout users and followers, help this gentleman to find a broker. Thank you.
I am using CM. They are really good and transparent. Only concern is at times of news releases, the spreads go very wider and it will hit you SL easily.
One my friends is using xm and it is good so far.
Thanks Phakash, I’ve read about the spread problems of this broker.Can you avoid them with long timeframes?
Hi Prakash,
in your above post you’ve mention that your broker offers:
1) Spreads keeps changing and charge commission with some fixed percentage differs from ccy to ccy pairs.
2) rollover /swap also with some fixed interest rate and differs from ccy to ccy pairs.
3) they give minimum lot 0.1
4) leverage 50:1
5) during market close period(from FRI 5pm EST to SUN 5pm EST), they show price changes in the trading platform but does not allow to entre/exit market
Does CM offer this kind of feature? From it’s website, it still offer 0.0x Lot size and also able to increase Leverage up to 400 after request.
Yes Kukas. Fxcm does these regulations only for USA residents.
So far they are good to me. I used to trade real account with cm and demo with tickmill with same orders. I do not see much difference.
Only big concern is… All of a sudden,cm increases the spreads or increases the high/low price in a flash, so that it will hit your Trailing SL or SL very easily and blame it on market voltality/liquidity providers. But I do not see the same high/low flash increase and spread increase in tickmill at the same chart. I am not sure about tickmill real account.
F which country are you in? Try looking at Hantec Markets. They are registered with FCA, so clients funds are held in segregated account. Not sure about minimum lot size but their customer service is good so you can call and get your questions answered. Their MT4 charts close at midnight UK time so you will need another demo account to locate CS patterns used here that uses New York close time.
I wish you well
Barbara
I’m from Italy. Hantec Markets has too much bad reviews about payment problems. I don’t think I can trust it, but thanks for your help. Are you already trading? Are there some active traders that can tell me what’s the broker they’re using?
hi F,
I believe the brokers listed here are reliable:
m.barrons.com/articles/SB50001424053111904628504579433251867361162?mobile=y
Do not care what the bad reviews say, there’s a high possibility that those reviews writers just didn’t actually know how to trade. InteractiveBrokers has really low spreads, eurusd spread is only 0.2 pips on average. The minimum deposit to open an account there is $3000.
Hi Maria, thank you for your link.
Really good reference. Looking for partially ECN broker than hopefully able to migrate to True ECN broker.
Thanks for your help. I know that there are losers that make bad reviews because they’re not able to trading properly, but many reviews also talk about payment problems. It is no easy to distinguish the true reviews from the fake reviews. Besides, there are also many positive reviews that are made from spammers paid by the brokers. I’ve been very good at demo trading, but I cannot try live trading till I find a good broker. I hope some users can help me.
PS: It’s lady actually, not gentleman 😉
Hi F!
Try ATC. They look good to me.
Thanks Ambrose. They’re good, but their minimum deposit is too high (5000 bucks). Do you know a cheaper broker?
Interactivebrokers ($3000), trademonster($2000), td ameritrade($2000). I bet you didn’t even read the article I posted and do some research about it.
Hi,
Do you know about Nord? Can you analyze them?
I don’t, but maybe other LuckScout users can help. Thanks to them in advance.
Hi,
Wow, It’s not easy to find a good broker. As per my research, based on your above criterias, there is not that many brokers that are true ECN/STP. It seems that they all act as both market maker and ECN.
Only very few like Interactive Broker seems to be a real ECN, but if you take more than 4 positions per week, you need a minimum 25K USD account.
Other than this one, the leverage, lot size or commission suggest that they are not true ECN/STP. However, many of them claim to be.
Friedberg Direct which is a CM Introducing Broker in Canada claim to be a STP…but they don’t meet the above criterias. Dukascopy claim to be a “Pure ECN”, but again leverage and lot size implies that they are probably both. A broker can be a liquidity provider for a broker so an ECN with poor liquidity provider…Is this better than a true market maker?
Please correct me if I’m wrong, but my understanding, so far, this is a trial and error process in order to find the good one! It may take long time if your not Lucky.
The problem is that we cannot trust the information on the net, the brokers hides the thruth, and the reviews are mostly scams or from people that did not read and understood your articles on margin, leverage, spread, Limit and stop order, stoplloss etc… HELP!!! 🙂
Thanks for all
> A broker can be a liquidity provider for a broker so an ECN with poor liquidity provider…Is this better than a true market maker?
When the liquidity provider is a market maker broker, then you are trading with a market maker broker actually.
Indeed, Interactive broker (seems) to be reliable but it will require significant amount of deposit. It is really hard to find single ECN broker. Besides, I just found one company, known as integral, according to the web page, it provides trading network for foreign exchange and the selected liquidity providers are the best such as citi, morgan stanley, HSBC, Barclay… their client are bank, broker, dealer, hedge fund, corporate. In their partners section, there got some recommendation of so called a true ECN brokers., have you came across with this company before? But integral is not a broker for conventional speculators so it doesn’t violate your rule of not recommending any broker to us. Just want to get a feel whether their recommendations is reliable or not.
Hi
Are you able to post your daily chart of GBPAUD so <I can compare – mine has a big lower tailed dragon Fly for the 2015.04.03 candle – I can see no reason for the huge down spike – the news was about US NFP – it was the time that this news released that the sudden variations occurred – Perhaps it was just an excuse to make extreme prices by a MM?
my chart https://charts.mql5.com/7/466/gbpaud-d1-axicorp-financial-services.png
I wasn't in it but I can see that many long positions could easily have been taken out.
Thank you for everything.
Hi Peter,
Here is my GBP/AUD chart:
https://www.luckscout.com/wp-content/uploads/2015/04/GBPAUDDaily-19.png
They don’t look too different.
Hi
Very similar except that the lower shadow of my 2015.04.03 candle breaks well below the BMB. This is what I thought excessive and a manipulation. LOW was 1.91505. Thank you for sharing your chart.
Peter,
What is the low price of 2015.04.03 candlestick on that platform? It is 1.93324 on my platform.
Hi,
My broker informed me that it is usual for them to charge three times the normal swap rate on Wednesdays because they have to take into account the swap for weekends. So if, for example, one takes a long position on CAD/JPY on Wednesday and holds it until Thursday, and the normal swap-rate is 0.13 USD, the broker will charge you, instead, 0.39 USD (0.13 * 3 = 0.39).
Is this normal practice as far as you know? Do true ECN brokers do this sort of thing. Can’t this become an issue where a small retail trader is trading low volumes on currency pairs that have high swap rates?
Cheers.
Muggles,
No, it is not normal and it means you are dealing with a market maker. It can make problems too.
What is the normal behavior? I mean when should the broker charge the weekend swap?
This “Wednesday behavior” is quite frequent. ATC UK does it too: “A swap charge of a credit or debit for each position open at 5 pm EST is applied directly to your trading account balance. To account for Saturday and Sunday, the market books three days of swap rate on Wednesdays, which makes a typical Wednesday rollover three times the amount from another weekday. The Roll Over Swap rates can be viewed from accessing your MyAccount section.” (from their FAQ)
They don’t chart swap on weekends.
Sorry, I don’t understand this. It makes sense to me that interest rate should be paid for every day, be it weekday or weekend, because my position is open. Why shouldn’t we pay it then for weekend days or for days when the market is closed for us?
You are right, but this is how they do it.
Are you talking about AGM markets, right? Damn, I thought they were true ECN, cause they have 1:100 leverage, 10,000 bucks lots and a good spread. It’s really seems impossible to find real ECN brokers.
Hi,
My understanding of Tan’s comment, is that some aggregation engine exist for ECN brokers!
Does that mean, that an this type of aggregation engine would allow a true ECN to offer micro lots?
Thank-you for any clarification.
TJ,
I really don’t if this possible or not.
an anyone tell me about IC MARKETS, PEPPERSTONE and PRO. they are ECN or market maker?
As for FxPro in my opinion only cTrader account CAN be ECN because of the leverage they offer.
Otto,
I have being with PRO on there ctrader platform, and you can use a leverage of up to 1:500. They are a Market-maker, even with there ctrader, and even though they telling you that they pass your orders directfully to the LQ’s. This is lie. Let them not to confuse you!
C.
Thank you Carlos.
When I earlier checked their homepage the offered 500:1 only for MT4. And for cTrader only around 20:1, not even 100:1, but I cannot find that page anymore.
But in pro ctrader platform, i am able trade in micro lot i.e. 0.01 lot. But according to if any broker who provide micro lot trading, they cannot be an true ECN broker. Then how can i judge pro ctrader is ECN or not? Pleaae reply me as soon as possible
That’s why I emphasized “can” in my comment, i’m not sure. But MT4 cannot be ECN/STP because of the high leverage (500), but for cTrader the leverage seems to be lower: http://www.pro.co.uk/trading/products/spreads/ /ctrader
But as Carlos mentioned above, he could use 500:1 leverage even with cTrader. Quite confusing…
I have to say, I haven’t found any broker yet that satisfies all the requirements.
Who ever you end up with as a broker make sure that they cannot send your account into minus zero or negative balance so you end up owing a lot of money to a broker who won’t take responsibility for a tsunami like event we had recently with CHF. They might try to get the debt collectors onto you because they won’t take responsibility for technical glitches that ignore stop losses, but probably won’t succeed, nevertheless to avoid headaches and for your future security I recommend you ask any broker this question in an email so you have their answer as a guarantee should anything untoward happen. Protect yourselves LuckScout members before you give over your hard earned money. The money market is a snake pit. I did read of battles some have had with unscrupulous brokers in this regard. Do you concur with this?
Linz,
All markets are like that (snake). People lose if they don’t be careful.
Regarding negative balance, please read this article:
https://www.luckscout.com/the-swiss-franc-tsunami/
Sir,
IMHO, if you provide us just at least 3 names of the true STP/ECN broker and without any link or referral link and it will be our sole responsibility if we will open an account or not on those 3 list. Having referral link or affiliate link might be consider that you or others will gain something. But considering it was not a referral link and it is just plain list of information of a true STP/ECN broker and coming from a very reliable person will be very much appreciated and will help us a lot in starting our first trading journey.
Thanks a lot and God Bless Us.
B,
We cannot even do that. There are logical reasons for this.
I understandB’s wish, but I fully support your decision as to not mention/recommend a broker for very reasonable and logical reasons. Just look at how many complaints ensued when and his team started providing us with trading signals! I’m glad but sad at the same time that they stopped it.
Back to my original point, I think most retail brokers are trying to capture the widest market possible, so they offer MM and ECN/STP accounts at the same time. If they only offer ECN/STP accounts, many of them won’t be viable businesses, as they will lose 1000’s of traders who want to trade in 0.01 lot increments. As long as there is a huge demand for that lot size, brokers will have to offer that along side ‘professional accounts’.
So my point is, if you are looking for a pure ECN/STP broker, you’ll have hard time in finding one.
I think we rather should focus on becoming super profitable traders first (open an ECN/STP demo account to compare price movement with your trading account, but expect few +/- pips differences). Once that achieved, then we can start to worry about pure ECN/STP brokers.
Cheers.
Thank you Youness.
dear Youness &,
as you know i’ve just joined this site a week ago … and vigorously reading everything …
i have a q here. should we look for a true ECN for a demo account also ??
“(open an ECN/STP demo account to compare price movement with your trading account, but expect few +/- pips differences)”
are both the charts of demo and real act different with the same broker ?
thanks for all the help 🙂
Vijay,
For your demo account you can use any broker. It doesn’t make a big difference. You can use the MQ platform:
https://www.luckscout.com/install-metatrader-4-or-mt4-on-pc-mac-iphone-smartphones-and-tablet-pcs/
My suggestion is that you simply go on reviewing different brokers as you have been doing in the past. So far you have (it seems to me) reviewed brokers who might only be Market-Makers. I don’t see why you don’t review a broker you believe might be a true ECN/STP broker (like one of your brokers; you don’t have to tell us that he is your broker). You don’t even have to tell us that it is a true ECN/STP broker; only just describe the features of that broker and we shall do our homework with the list of criteria you have already given us.
Of course, knowing you and your magnanimity, you might have already done this for us; and all we need to do is go back over the reviews and find a true ECN/STP broker hidden in there somewhere.
But, isn’t this a good idea,, without violating your principles in any way?
cheers,
Muggles,
I still have some more brokers to review. But I didn’t get any chance to focus on them. I will start reviewing again.
Please note that we don’t even refer anybody to a true ECN/STP broker. Over 95% of the traders lose, not because of the broker, but because of their own mistakes. These traders also lose with a true ECN/STP broker. They cannot be even profitable demo traders. So if we introduce a true ECN/STP broker on this site, still 95% of the traders lose with it. Instead of doing this, we prefer to make people focus on learning first (this is what Youness also mentioned on the page). Instead of looking for a broker, 95% of the traders have to become profitable demo traders first. This is the hardest part of trading. If they can do this, they can also find a good broker.
Thanks, very useful reference. Especially the advice to withdraw your money when you have doubled it. Then if you lose you only lose back to the market what you have gained from the market.
But I would still feel more secure if the broker can guarantee me that I can never lose more than my account balance.
Hi Linz,
The following link provides a list of brokers who forgave the negative balance following CHF is. However, please note that they are likely to be market makers…do your own research.
http://www.financemagnates.com/ /brokers/covered-brokers-forgive-negative-balance-following-chf-crisis/
Thanks Youness, good reference buddy
To Prakash,
Appreciate if you can you share and email your brokers name to [email protected]
Thanks a lot and God Bless us
To Mr Prakash,
Please can you share your list of ECN broker. [email protected]
Thanks a lot
Good point Youness, so far, my research showed similarly what you wrote. A pure ECN/STP account is for Professional a retail beginner cannot afford it, until s/he is profitable.
Also, it’s good idea to compare with an ECN demo.
However, just not to close the door, if anybody find something interesting I’m willing to try:)
I found a broker called ATC. It has very good reputation and offers a 1:50 leverage, but that’s just for US citizens. The clients outside the US have a leverage of 1:200. Does it mean the international account is a market maker?
It is either MM or a false ECN.
1:200 is not exactly true. Currently they provide 1:100 (http://www.atcbrokers.co.uk/resources/margins.php), but they mentioned that they may change it to 1:200 in the future.
Another thing is the lot size: min. is 5000.
Swap is a bit high on crosses, as well as the weekend spread.
No negative balance protection.
No swap free accounts, but they have triple Wednesday swap.
They don’t publish their liquidity providers, all I know is that they are connected to Spotex ECN (http://www.financemagnates.com/ /brokers/atc-brokers-steps-up-game-with-launch-of-uk–brokerage-2/)
And, as they say, they have no exposure to the market. STP model. (http://www.atcbrokers.co.uk/aboutus/company.php)
Then what do you think?
It looks far from a true ECN/STP.
So it mean I cannot trust them, even if they’ve a good reputation, right?
To open your live account on their MM system?
They won’t like you to make money.
Hi.
I loved to read your article,, it’s “Mind blowing” article !
since I read it, I’ve been thinking how to check my broker price action..
I tried several way to check it.
I check price action for today pairs what is GBP/USD ( the one that i have position in this live account )
and I compare to yahoo finance data ( is it reliable ? )
what i found is :
1. open price is different 10 pips away
2. high price is different 5 pips away
3. lower price is different 0.8 pips away
How is look like?
is that MM broker?
Thanks for guiding us through this process…
My regards to LuckScout team
Linx,
The price can be different form a data resource to another one. Few pips difference is OK. If you refer to different local banks, you will see that they also offer different prices for different currencies. This is normal.
Hi
What about brokers that offer negative balance protection, are those market makers?
Alex,
Yes, they are. How is that possible to prevent an account from having a negative balance when the price moves like crazy and the order is placed with a liquidity provider? That is possible only when the broker is the market itself (market maker).
So does that mean that if one broker can allow a price to plummet deliberately to take out stop losses and consequently wipe out accounts into negative balances and then chase account holders for the extra $$ is a MM, and another broker who can offer negative balance protection so that does not happen is also a MM ?
True ECN/STP brokers cannot offer negative balance protection. So, if this happens, it is the trader who has to pay it. However, I have never seen that a retail trader to be prosecuted because of a negative balance by a broker. If they do it, then nobody will sign up for an account with any broker, because they not only can lose their trading capital, but also every other thing they have if a huge negative balance happens. It is the broker’s problem to pay the liquidity provider at the end.
Market maker brokers offer negative balance protection just to make traders feel safe to sign up for an account. Even a $1,000,000,000 negative balance means nothing for a market maker broker. It is just a number, like what you see with the demo accounts. It can be turned to zero with a few clicks (whereas true ECN/STP brokers deal with real money). So they either offer negative balance protection, or when a negative balance occurs, they “forgive” the traders because of it to make them appreciate the broker and stay with it longer.
These are all dirty tricks.
Thanks,
Then MM brokers or ECN brokers with MM accounts have huge scope in being able to do whatever they want. But for the sake of micro accounts we have to go with them. Maybe it’s a good idea before going ‘live’to state you are looking for a broker who does not widen their spread to hunt stop losses and at least you have their reply on hard copy (email) as evidence if they say they do not, but in reality is broker policy. It’s good to let them know that you are aware and not too ignorant. It’s hard enough building a positive account balance as it is without competing with the broker as well.
Hi,
I live in India. i am new in trading. i will start my demo trading soon. I have some questions about the daily candlestick. I always wonder what time exactly the candlestick will complete on the daily chart? 1) It would be different from the candlestick shown in those traders’ chart from different timezone, or it would be different from broker server time with EST from broker server time with GMT? If that is the case, then traders from different timezones or broker server time may see different candlestick patterns on their chart? 2) IST(Indian standard timezone) is 9hr 30 min ahead of EST infact EDT and 5hr 30min ahead of GMT so as you say daily candlestick open or close at 5pm EST then it would be 02:30am IST. it means i have to check daily candlestick everyday at 02:30 am if i will practice with broker with EST?? Plz help.
Hi Himanshu,
It depends on the platform you use and the broker settings. We use the platform that the daily candlestick close is at 5pm EST (New York time). You can install such a platform for free:
https://www.luckscout.com/install-metatrader-4-or-mt4-on-pc-mac-iphone-smartphones-and-tablet-pcs/
Himanshu Sahai,
I am also from India. In India daily candlestick closes at 2.30 am IST in DST, and 3.30 am IST when DST ends.
Following table are shows date of DST starts and end in upcoming year.
Year DST begins DST ends
2015 March 8 October 25
2016 March 13 October 30
2017 March 12 October 29
2018 March 11 October 28
can you tell me that, which broker you are used for trading ?
Hi Roy,
If you installed MT4 as suggested, then there is no problem. You are maybe confused by time zones but simplest way to see beginning of new trading day is when Sidney session starts and New York session ends..
BUT, if that don’t help, then use this:
http://www.timeanddate.com/worldclock/converter.html
Hi all
If any one know a true and trusted ECN/STP broker, can you tell me please. Here is my email.
[email protected]
Thank you
Interactive brokers.
Youness I checked their website. I couldn’t see that they have MT4.
Hi Barbara,
They don’t have MT4, but they are true ecn broker.
You can do your analysis in any demo mt4 account, and execute your trades on any platform.
If you like to use one platform for everything, you can try MBTrading, they too are true ecn broker.
Cheers
Disclaimer to anyone reading this post: I don’t trade with either of the above mentioned brokers, but I know they are true ecn brokers. If you choose to use them, you take full responsibility.
🙂
Thank you Youness.
Thanks Youness
Hi Youness,
Today, someone commented and asked about true ECN/STP brokers and whether I could refer her to any or not. I explained that I didn’t do it, but then I created a topic here and asked for LuckScout members to help with if they wanted. I would be thankful if you also participate in that topic and introduce the true ECN/STP brokers that you have found.
Thank you so much in advance.
Hi,
No worries. I’ll do it when I get chance.
Cheers.
Hi,
I apologise for the delay to respond to your request.
I submitted my ECN brokers findings in the forum you mentioned.
Here is the link: https://www.luckscout.com/forums/topic/true-ecnstp- -brokers/page/4/#post-30634
If you agree (don’t need to say it 😉 ), you can refer LuckScout users to it and leave them make up their mind.
Cheers.
Hi Youness,
Thank you.
Yes, I should refer LuckScout users to that thread, so that they can be helped to find a good ECN/STP broker.
thank you Youness their minimum deposit is 5k and no MT4. but they are true ECN thank you for help. I appreciate it.
Hi
brokers if they don’t say ECN/STP or dealing Desk or Non Dealing Desk,they just say “BINARY OPTION BROKER”
what are they?
thank you for your help and all efforts.
Kahsay,
There is no ECN/STP binary option broker. That doesn’t make sense because there is no liquidity provider that supports such actions. It is whole gambling with the broker itself:
http://www.forbes.com/sites/investor/2010/07/27/dont-gamble-on-binary-options/
thank you for your help if you see on the “top 10 Best Binary Brokers” you can find ‘Banc De Binary broker’ I checked them on ‘ EMPIRE’ they are just ‘Binary broker’ they don’t say MAKER OR ECN/STP how they can be on the top 10 and recommended by many?
You are welcome.
What can I say? This is not the first time I see this over the Internet. There are so many sites that publish bad reviews about the other brokers, but they don’t publish your negative review on the brokers they are affiliated with and promote.
thank you I understand now?
Hi,
With these 2 screenshots of Order windows one has ability to control slippage/re-quoting/price deviation and the other simply warns that the price may of considerable variance to what we ask. Can I assume that this can be an indication of an ECN or a MM broker?
http://i57.tinypic.com/2mc5zlk.jpg
http://i61.tinypic.com/2m6x4jl.jpg
Linz,
That option is for the market maker brokers as far as I know.
Sorry wrong code. I can’t put these images on MQL5
ATC BROKERs smallest lot size available is 0.05. does this mean it is not a true ECN broker? other than this everything else seems fine. should i rule it out because of this?
http://www.atcbrokers.co.uk/resources/faqs.php
Juan
Yes smallest lot size should be 0.1
ok Barbara, thanks. can you recommend a broker? i have a 2-3k budget to open an account. there does not seem to be any true ECN.
ic market and pepperstone both are true ECN broker, you can try any one. Both are ASIC regulated
they are not true ecn broker.
This is from IC Markets risk disclosure. No doubt Pepperstone has a similar statement in their’s.
“Trading with IC Markets carries an unavoidable risk of actual conflicts of interests because IC Markets is acting as principal in its CFD and Transactions with you and IC Markets sets the price of the CFDs and Contracts. Also because it may be transacting with other persons, at different prices or rates, or IC Markets will be trading with market participants.
The policy used by IC Markets is that as principal it issues the CFD and Contracts to you based on the price it gives you, not by acting as broker to you. IC Markets obtains its price by dealing with its own Hedge Counterparty.”
Totally bullshit that they say in big letters on their website TRUE ECN.
from this site post.
http://www. factory.com/showthread.php?p=8295077#post8295077
Alpari ECN demo
let me get this straight. so if a broker offers leverage of more than 100:1 and minimum lot size is less than 0.1 they should be ruled out as true ECN/STP broker? the thing is that i have seen 2 really great brokers with excellent reviews but their leverage is greater or the minimum lot size is too small. why is it an issue to offer such a small lot?
Thanks.
Juan,
I have explained the reason. It is because the real liquidity providers don’t support smaller than 0.1 lot and greater than 100:1 leverage.
so you would recommend which one? ALPARI? or any other suggestion?
thanks.
Juan I am inky suggesting as a unlimited demo account. I do not have a live trading account with them.
these are the ones i found and have great reviews online:
http://www.globalprime.com.au/
http://www.intertraderdirect.com/why-intertrader-direct/faqs.html#open-an-account
Hi Juan,
Global prime seems true ecn though their leverage is high 1:200, And minimum lot size is 0.01. The only reason I still think they are true ecn is because they can provide you with a receipt upon request of the liquidity provider who took the other side of your trade.
You need to bear in mind that their spread is a markup in their spread of 0.1 on top of the commission: look under “Commission Structure” http://www.globalprime.com.au/ /clients/accounts/
Cheers
thank you very much youness for your reply. i understand it better now. it seems like a daunting task to find a true ECN.
Hi again,
(I have a question for you at the bottom of this comment)
I had a look at interTraderDirect, and I concluded they are not ECN as such, i.e. Your orders aren’t routed to the open market.
When you open an order, they keep it internally, but they put an equivalent order under their name on the open market, so if you win, they make a loss from their money but their loss gets offset by their win from liquidity provider when they mirrored your trade.
And vice versa, if you make a loss, they make a profit, but that profit is paid to cover the loss with the liquidity provider when they mirrored you trade.
At the end of the day, they are not the typical ecn broker, but at the same time they don’t care if you win or lose, since they always mirror your trades on the open market.
I quote from their site ( http://www.intertraderdirect.com/range-of-markets/market-neutral-broker.html ):
“You trade at our live dealing quote, which is derived from our pool of liquidity providers. You are effectively opening a contract with us, and we will simultaneously offset our exposure to you on that contract by trading with the relevant liquidity provider.”
Now the big question, why they don’t just route your orders directly to liquidity providers instead of running around in circles?
I can only think of maybe the cost of infrastructure required to be a true ecn broker.
If that’s the case will you trade with a broker who doesn’t have enough capital to become a true ecn broker? How will the broker survive if a tsunami hits the market like the 15/01/2015?
I think hedging brokers like this one is better than pure market makers to start trading live with small capital, once the stake is bigger, traders can move to true ecn broker. What do you think? ( no specific broker advice, just general idea about hedging brokers)
I wasn’t expecting my comment to be this long, sorry fellow traders.
Cheers,
Hi Youness,
Thank you for your support.
Indeed, it is not too expensive to be a true ECN/STP broker. It is much easier and it has less headaches. It is just the broker’s greed that causes it to become a market maker, because they want the losses of 95% of the traders to stay in their own pocket.
They don’t mirror all the clients positions with the liquidity providers, because they know that +95% of the account and positions will be losing. They only do it for the winning positions and accounts. They have a dealing desk who are good traders. When they see a client take a position that will be a winning position most probably, then mirror it, not to lose to client. Also when they see an account is profitable, they switch it to ECN/STP system, so that all positions will be routed to the LPs. These are all the dealing desk tasks.
So they are market maker in general, but they follow some strategies to protect themselves. This is what all market makers do. At the same time, if they can do some general tricks to prevent the positions from winning, they do it.
I don’t know about that broker you talked about. I am talking generally.
A true ECN/STP broker routes all positions to LPs automatically and electronically. They make money through commissions. That is all a true ECN/STP broker does. In case of the events like CHF tsunami, they have to take the negative balances from the traders and pay them to LPs, which is what they cannot do. So, they have to pay the losses to LPs. If they can, they survive. If not, they have to shut down the company, and they can get sued by the LPs too.
Thank you for your comprehensive answer.
Cheers.
very thorough analysis. thanks. youness i know doesnt like to recommend any brokers but according to your experience is there any ECN broker you wold recommend? i want to start an account with around 2k but i just do not know whick broker to choose from there are just so many.
Hi Juan, I know about interactive brokers, mbTarding and Fxcm.
Probably cm is what you may consider, as their deposit starts from 2k.
However, you need to ask them will they add a markup to their spreads of the chosen account you want to use, and if that account will be put in their market maker system. The reason is this disclaimer from their site ( http://www. trading.com.au/advantages/spreads-commissions/ ):
“Compensation: When executing customers trades, CM can be compensated in several ways, which include, but are not limited to: charging fixed lot-based commissions at the open and close of a trade, adding a markup to the spreads it receives from its liquidity providers for certain account types, and adding a markup to rollover. Under the Dealing Desk execution model, CM may act as a dealer and may receive additional compensation from trading.”
There is a great article that explains what’s ecn broker and their positives and negatives:
http:// illustrated.com/top-brokers/top-ecn-brokers/
Cheers.
Hi Youness
Thanks you for all your input into the Brokers issue.
One thing to note about Interactive Brokers is that when a currency pair is traded – the amount of win or loss of the trade is held as a virtual amount in the “QUOTE” currency.
So the account can suffer depletion or addition due to the price direction reversing or advancing after the trade has been closed.
The trade proceeds are not converted to the base currency until the account holder does it. When it is done – the money amount (called a virtual position)is converted via an OPPOSITE TRADE in the currency pair. So if the trade was BUY AUDCAD and the profit made was 1000 CAD – this would remain in the account as 1000 CAD – the Account Holder must convert this back and the method used is – A trade is opened in AUDCAD to SELL 1000 AUDCAD – A commission is again charged for this transaction. If it is not done then one must be aware that the account is still trading the CAD. So there are 3 commissions charged by Interactive Brokers – 1 for the original BUY 1 for the SELL and 1 for the CONVERSION.
There may be a way to make the system auto convert at the time of opening the trade – but I don’t know it yet.
Hi Peter,
Thank you for the information. I wasn’t aware of that as I never traded with them.
It’s certainly a broker for experienced professionals. However, I was just showing others that ecn brokers do exist, many of them won’t be suitable for us to trade with as they require higher capital(>5k) then market makers.
Thanks once again for your insight.
Cheers.
Hi Youness
You are welcome – I learnt the hard way – my relationship manager did not explain this side of the deal.
Your work on the Brokers is great – if you would do a summary of it and perhaps do an article for the Forum – I could add a page to the manual- no pressure – just a thought?
cheers
thank you very very much youness your help has been just so great!
You are welcome Juan.
Cheers.
Hi Youness,
Thank you for sharing.. Great job you done..
All the best..
youness.
what are your thoughts on the following broker. it seems like it meets all the criteria for a true ECN.
would you please take a look when you have time?
https://www.s-markets.com/en/company/policy
thanks.
Hi Juan,
I had a quick look at their website and they looked true ecn/stp broker.
My major concern is they are self regulated and apparently self licensed. If you have a dispute with them, you’re at their mercy.
In their dispute resolution pdf, there is no mention of any third party regulator they abide by https://www.s-markets.com/Content/Files/Claims-Regulations-en.pdf
If they are licensed by any financial authority, please let me know.
Cheers.
Hi Youness,
Thank you for reminding me about your research on true ECN/STP brokers (here) and your recommendation about having a posting and referring people to that thread. Unfortunately, I forgot to have a notification in my yesterday’s post about your research, but I just added the notification at the bottom of that post and posted a comment to notify everybody. I will have it on today’s newsletter too. Thank you for your support.
Hi,
No worries at all. You are juggling so many balls at the same time.
Cheers.
Youness,
i found atc brokers just perfect except for the fact that their minimum lot size to trade is 0.05.
http://www.atcbrokers.co.uk/resources/faqs.php
sorry to bother so much.
what do you think?
Hi Juan,
They sound good. they are an IB to CM, and CM is their LP from what I could understand from a reply post by an ATC brokers representative on PeaceArmy (FPA):
“… ATC BROKERS is an IB (introducing broker) to CM. We have connected our MT4 to CM’s institutional price model to obtain competitive spreads and provide straight through processing (STP) order execution. We utilize CM as the counter party and work with both their US and UK division. ”
You can check them out here http://www. peacearmy.com/public/review/www.atcbrokers.com?page=1
Always use FPA before considering signing up with any broker. The complaints don’t interest me much, but more importantly are the brokers’ replies.
Cheers.
thanks. i could not see the brokers replies, only customers replies.
your job here is awesome youness.
Hi Juan,
Broker replies are highlighted by green title in the customer complaint.
Here is one (edited so it’s short): “Added by ATC BROKERS on 2014-09-18 10:58
We did experience technical issues on the 4th of September and we apologize for any inconvenience that you have experienced. During this time, our staff was available for clients that called our trade desk and placed trades. Please understand as we utilize CM as the counter party, we do not control slippage nor do we benefit from it. We want our clients to be successful and make profits, as our company’s livelihood is based on commission generated from client transactions and NOT the losses from client accounts…
As stated on the previous review comments, ATC BROKERS is an IB (introducing broker) to CM. We have connected our MT4 to CM’s institutional price model to obtain competitive spreads and provide straight through processing (STP) order execution. We utilize CM as the counter party and work with both their US and UK division.
We have also recently launched ATC BROKERS (UK) LTD in the United Kingdom and we have a Broker registration status with the Financial Conduct Authority. We are the broker on record and do not utilize CM for the counter party. We have integrated our MT4 with the Spotex aggregation engine to provide even tighter spreads with deep liquidity.
We look forward to hearing from you.
ATC BROKERS
Hope it helps.
Cheers.
Youness,
what are your thoughts on this broker? market maker right?
https://www.activtrades.com/
Thanks.
Barbara,
what is the minimum with ALPARI. is it a true ECN? i see they offer very high leverage.
Thanks!
This was for demo purposes only as their CS close is New York time to charts will look like’.
Hi,
Just occurred to me that you might consider writing an article about the disadvantages of ECN/STP brokers, so LuckScout members have a balanced view of what really they’re getting into if they choose ECN/STP broker.
Many of the traders don’t know that There is no guarantee of stop loss execution and if their trading balance goes into negative, they’ll be chased by their broker…etc.
I know this can be true with market makers too, but it’s less likely, while direct exposure to liquidity providers requires good trading experience and awareness of greater risks.
Just a thought.
Cheers.
Hi Youness,
Thank you for your suggestion.
It is a good idea. Although I have talked about the way the ECN/STP brokers handle the orders, there is no specific article focused on this, and these topics are discussed in different articles.
I will write and publish an article about this at the earliest convenience.
‘Many of the traders don’t know that There is no guarantee of stop loss execution and if their trading balance goes into negative, they’ll be chased by their broker…etc.’
Hi Younes
I remember i read in an article on LuckScout that it’s unlikely that the broker will do anything like that.
can you enlighten us please?
Thank you!
Alex,
This is true. There is no guarantee that brokers execute all orders, including the stop loss and target, under any market condition.
Hi
I meant the part ‘they’ll be chased by their broker’.
Sorry for not being specific before.
Here is the article that talks about this: https://www.luckscout.com/liquidity-providers-and-true-ecnstp-brokers-relationship/
See this text ‘However, traders usually walk away and…’
I found also this. http://www.mt4pamm.com/some- -brokers-prosecute-traders-to-pay-balances-negative-customer-exclusive-leaprate/
Maybe something worth reading, what’s your opinion about this?
That doesn’t make sense for market maker brokers like.com. A negative balance for them is like a million dollar demo account. Both mean nothing. But for ECN/STP brokers it is different as I have already explained here:
https://www.luckscout.com/ -trading-through-real-ecnstp-brokers/
Hi Alex,
I see.
Legally brokers have the right to prosecute the traders, but as I explained in that article, they usually cannot afford to do that.
Pottorff,
Sir can you tell me that which is best news website.
Factory calendar is good enough:
http://www. factory.com/calendar.php
Hello,
Any thoughts on this? Is it a reasonable explanation. Thank you for your time.
“Hi Jason,
Can you answer a question I have on this pair?
In the screenshot I have a short on this pair which never triggered my TP at 1.02387 and the candlestick fell to a Low 1.02261. The difference is .00126.
https://www.mql5.com/en/charts/3355213/audnzd-m15-oanda-division11
Hi Linz,
The MT4 platform candles only show the BID Price (ie. the sell price). So you entered your trade at the sell price.
Therefore, your TP of 1.02387 is based on the ASK price (ie. the buy price).
The ASK candles are not show on the chart, the ASK price never reached 1.02387
Regards
Jason Song”
Hi Linz,
He is right. When you have a short position, the price has to reach your target and goes below it to cover the spread (ASK price). If so, your target will be triggered.
Hi Linz
On MT4, you can add the ‘ASK’ line to the chart by right click on the chart – then click the box ‘Show Ask Line’ then OK
close & then open the platform for the change to take effect.
Cheers for that Peter! It’s all a steep learning curve!
OK great thanks for clearing that up.
For anyone’s interest here is some UTube videos I found of broker software employed to hunt stop losses etc.
https://www.youtube.com/watch?v=bGWAEX5xtpY
or
ECNJEsus.mp4
Linz I watched and was not amused at the dirty tricks used by some brokers. Thanks for posting the link.
Hi Linz,
That was an eye opener to see it in action. Thanks.
Hello,
How about tick size and min. spreadans max. spread offered by brokers. Does it indicate anything about broker ?
Ed,
I have explained about spread above. I don’t know about the other things you have mentioned.
hi, what are your thoughts on the following broker. are they true ecn?
http://www.fsa.gov.uk/register/firmPermissions.do?sid=219898
the fca permission only have dealing in investments as agent, does that mean they are true ecn?
https://www.gomarkets.co.uk/support/general-support/ -leverage-change-request/index.html
why are they having maximum lots restriction on 1:100 leverage above?
http://www.fsa.gov.uk/register/firmPermissions.do?sid=309581
ATC Brokers UK also have dealing in investments as agent, but their maximum leverage only 1:100.
hello, i forgot to mention that atc brokers uk is an independent broker, only atc brokers us ib to cm. are they true ecn, can you reply my question please? thanks
Chia,
I don’t know them and I have never had an account with them.
hi,
i wonder how go markets provide more than 100:1 leverage with agency model.
seem like a lot of broker using hybrid model, do you agree?
can i know your broker regulated by which regulatory?
if fca, does it have dealing in investments as principal?
hi,
why all of my comments go to the top?
hi,
can reply my question please thanks?
Comments go up and down based on the votes they get.
i mean previous question, do you agree too?
Chia,
Yes, so many brokers have both MM and ECN systems.
Unfortunately I do not disclose anything about my brokers here on this site. Regulation means nothing to me, because as far as I can see, the highly regulated brokers steal more from their clients.
oanda is a well known market maker, oanda europe only show dealing in investments as principal.
http://www.fsa.gov.uk/register/firmPermissions.do?sid=261019
maybe this is the way to know if that broker really a true ecn or fake, but i think most brokers use stp to a book and b book client.
Dear,
You said, “Unfortunately I do not disclose anything about my brokers here on this site”.
If you can’t disclose a reliable broker in this site, at least please try to share it in some other ways.
Since we (LuckScout members) are not confident in finding a reliable broker, we need your help on this.
Definitely you would have done lot of research before picking your broker. If possible, please tell us,
* what made you to pick your broker?
* Do you have more than one broker? if yes, why more than one?
thanks,
Prakash.R
Prakash,
I am sorry that I cannot share our brokers names. I know you have been following us since long time ago, and so you have already seen the answers I give to those who ask about our brokers. You know how some people think and how they are waiting for a chance to accuse us for something. When I published the CM review, someone accused me that I work for CM and I am promoting it on the site, whereas that was just a unbiased review. This proves that some people are always looking for a reason to attack us.
I know that If I disclose what brokers I use, LuckScout members will rush to open an account with them. This is something that can potentially make thousands of dollars for me, but I ignore this money not to be accused for something. Even talking about our brokers without referring people to them through affiliate links, can make some people think that we are working for those brokers and they pay us through a different way.
I have published several articles on this site that help traders to do their own research and due diligence to choose a broker. I don’t think it is that hard to find a broker.
So the question that “what made you to pick your broker?” is already answered.
> Do you have more than one broker? if yes, why more than one?
Yes, I do, because I don’t want to make one account too big. I just do it not to put all eggs in one basket. But it doesn’t mean that everybody has to do it. If a trader is going to start with a small account, he can work with one broker as long as his account has not become too big.
Prakash, I hope that answers your questions. Once again I am sorry that I cannot go beyond what I answered above. I prefer to keep this site for the educational purposes only, and not to contaminate it with the things that prevent us from focusing on our jobs.
Thank you for your understanding.
The CHF currency pairs have, sometimes, a spread of 4 or more pips. Is this normal for a ECN broker?
If that is during the news release time, it is normal.
Thanks for answering me,. Can you,please, tell me when is the news release time?
which news you are talking about?
Hi titanium,
meant when there is news release that affects CHF currency, the spread will widen as volatility increases.
Keep an eye on the Economic calendar, especially the high impact news.
http://www. factory.com/calendar.php
Cheers.
please I have a broker who does not have instant excution on their Mt4 platform. will that be a bad sign? Thanks again for your article.
So, what does it have instead? Market execution?
🙂
Yes.
So they should be ECN/STP.
Hello,
There is a broker who I’m thinking of using (IC Markets)who claims to be a true ECN broker. I am using their demo platform right now and when you execute trades it gives you the option of “market execution”. However somebody on one of the forums here (The Difference between True and False ECN) has just posted how this broker widens spreads at any time for no reason and is fond of reducing his leverage and increasing his margin requirements.
Can I ignore these ‘signs’ and simply trust that he is a true ECN broker because he offers ‘market execution’ orders? I ask this because your response to ‘smart guy’ above seems to be pretty final and conclusive on that score.
Thanks
Mahalaleel,
The best thing you can do is that you try the broker with a small live account for a while. Then you can decide.
Thanks for your timely response.
Hi,
Today I was find out that True ECN broker allow us to take any price betwen Bid and Ask price.
Is it true and how is this technicly posibble from our trading platform?
Goran,
I don’t know how that it possible. Maybe there are some new features supported by liquidity providers that I am not aware of.
It is post number 225
Hi,
Thank you for the insightful article and great knowledge you provide us.
I took notes about broker so I could know how to choose a broker as I will be going live soon and I choose MB Trading because they offer 1:50 leverage, you could trade Stocks, Futures and with them and TradeKing is acquiring MB Trading, not sure if this is good or not. Spreads are low as 1.2 on Eur/Usd.
What I don’t understand is their spread plans, one called EXN spread wich is commission free plan which means that MB Trading receives a markup embedded in the spread as compensation. Can an ECN us markup?
The other one called EXN Limits Plan MB Trading charges a competitive routing fee of 2.50 per 100,000 of base currency for executing stop and market orders. Also pays clients for placing limit orders. Do this seem like a ECN or MM? How can an ECN pay clients for limit orders?
Thanks
Mark,
Thank you too.
> Can an ECN use markup?
Yes, they can. But this is illegal specially when they don’t let their clients know about it.
> Do this seem like a ECN or MM? How can an ECN pay clients for limit orders?
I don’t think we can see this from a true ECN broker who is connected to true liquidity providers. It doesn’t make sense that such a broker pays the clients.
Nice article, its so hard on these markets to find the right brokers and thats really important to trade confortabel. also i found a nice video explaint about the ecn / stp brokers
https://www.youtube.com/watch?v=dEMqX5z9WD4
I checked Pepperstone: They offer 500:1 leverage and mirco lots .01 – everything else is fine. what do you mean? i believe Pepperstone is a “true ECN”.
You are nuts if you think that Pepperstone is a True ECN broker. They are a market maker hands down. I personally only know of one Ture ECN broker, that is IC Markets but I have also had good experiences with FxPro.
Hi, i ask global prime about this:
Can i know the list of your LP ?
I have never seen a real, well-known and strong liquidity provider like Bank of America, Nomura, Goldman Sachs, Deutsche Bank, Citi Bank, JP Morgan, Royal Bank, HSBC and… that supports micro-lots (0.01). Therefore, brokers that offer micro-lots are either market maker, or false ECN/STP.
An then the answer is :
It’s a common misconception. Our Prime Broker is BNP Paribas and they clear the tickets with the LPs. our tier 1 bank LPs definitely take micro lot positions of 1k. Out of interest where did you get this idea? Let me know and then I’ll show you sone trade receipts showing banks taking 1k tickets.
Can i use this broker? Thanks..
You can try them with a small live account to see how they handle the positions, stop loss and target orders.
Hi, LuckScout Team thanks for the reply I’m very appreciate it.
i have another question again about deposit method.. please give me some advice…
Does the deposit method and payment method also affect the quality of a broker ..? If according to my assumption that the correct broker must do the method of deposit and legal payment like bank wire, credit card, paypal, skrill etc, what if a broker accept payment such as fasapay, exchanger and some other payment gateway ..? Whether it can be categorized a good broker ..? Thank you very much
It is also a red flag if a broker offers unusual deposit/withdrawal methods.
However, as the banks and famous companies like PayPal, Skrill and… want them broker to be fully registered an regulated, otherwise they don’t offer any service to it, then a non-regulated brokers has to use the unusual deposit/withdrawal methods.
Greetings from the good old Germany.
I learned a lot from you.
Unfortunately I did not find like so many a single true ECN broker.
I would be very grateful for a link or list of true ECN brokers.
Many thanks 🙂
Hi Bernd,
Thank you for your comment.
Unfortunately we can’t recommend any broker.
We just educate people here.
What are your thoughts about LMAX as they define themselves as a Multilateral trading facility? Or your thoughts about MTFs?
I trade using Sierra Chart and I could not find an ECN/STP to trade via this platform which is irreplaceable for me.
Thanks.
We don’t know them.