Something Interesting in Financial Video - page 5
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Just to remind about the brokers -
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An Introduction to ECNs
This video provides an introduction to electronic communications networks (ECNs), systems that allow buyers and sellers of stocks to trade directly without an intermediary.
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Most forex traders participate in the forex market with forex brokers. There are mainly two types of forex brokers: market makers and electronic communications networks (ECNs). In this article we want to introduce the latter type of brokers, the ecn forex broker.
What is an ECN forex broker?
ECN forex broker is a financial expert that provides the clients with direct access to other forex participants in the currency market by using electronic communications networks (ECNs). Unlike market makers, which always trade against their clients to make profit, an ECN forex broker only creates opportunities of trading between forex traders.
How does an ECN forex broker work?
The ECN forex brokers provide a medium by passing on the prices for different market participants such as banks, market makers and other traders in the market. Then the best bid/ask quotes will be displayed on the trading platforms based on these prices. ECN forex brokers also serve as counterparties to forex transactions, but it is a settlement that they operate on instead of pricing basis. While fixed spreads are offered by some market makers, spreads of currency pairs can be very different, determined by the trading activities of the currency pair. In active trading periods, sometimes you cannot get ECN spread at all, especially in those very liquid currency pairs such as the majors (EUR/USD, GBP/USD, USD/JPY, USD/CHF) and some currency crosses.
Pros and cons of the ECN forex broker
The ECN forex broker has both advantages and disadvantages. The pros and cons of the ECN forex broker are as follows.
The pros of the ECN forex broker can be presented in following aspects.
Traders can usually get better bid/ask prices for they are derived from multiple sources.
At certain time traders may trade on prices with no spread or with only very little spread.
Genuine ECN forex broker will pass on the orders to a bank or other trading participants on the opposite side of the transaction instead of trading against the traders.
It is very likely that the prices on the ECN forex broker are more volatile.
Traders can take on the role of market traders to other traders on the ECNs since they can offer a price between bid and ask.
The cons of the ECN forex broker can be presented in following aspects.
Many ECN forex brokers do not provide integrated charting or new feeds.
Some trading platforms are not so easy for traders to use or operate.
Since there are variable spreads between the bid and the ask prices, it may be difficult to calculate stop-loss and breakeven points in pips in advance.
Forex traders are obligated to pay commissions for each transaction.
It is obvious that there are both pros and cons of an ECN forex broker. Traders have to take many factors into consideration when choosing a forex broker.
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How does a broker work?
Sergey Golubev, 2017.11.04 06:39
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Trading with inside bars is a very popular trading method because it is believed to a be an excellent way to find high reward, low-risk trade entries. Yet many traders find they fail with this method. Does it really work well, and are there any ways to make it work better?
"The traditional trading method of using inside bars to find trade entries is quite simple. In the first step, you wait for an inside bar (or candlestick if you prefer, they are the same thing) to form. What is an inside bar? An inside bar is a bar with a lower high and a higher low than the immediately preceding bar. It is called an “inside bar” because its range is “inside” the previous bar. An example of an inside bar formation is shown below."
"Once the bar has formed, it is time for the second step. A buy stop order (a long trade entry) is placed just a fraction (let’s say one pip) above the high of the inside bar, with the stop loss placed just a fraction (again let’s say one pip) below the low of the inside bar. An opposite order is placed at the same time: a sell stop order (a short trade entry) is placed just a fraction (let’s say one pip) below the low of the inside bar, with the stop loss placed just a fraction (again let’s say one pip) above the high of the inside bar. Then, price movement will eventually trigger one of the entry orders, at which point the opposite reverse trade should be cancelled. For example, if the price goes at least one pip above the high of the inside bar, a long trade is entered, with the stop just below the inside bar, and the short trade entry is cancelled. To be valid, an entry must be triggered on the very next candle. In the diagram above, a short trade entry would have been triggered, as the price broke below the low of the inside bar, and the high of the inside bar was never broken."
"A slight variation on this method which is also popular, is to place the stop loss on the other side of the “mother” bar (the bar just before the inside bar). This means that the entry is the same, but the stop loss is always wider. We will look later at whether this is a good idea, but we will stick with the method as originally described for the time being."
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