ECN, order execution, aggregators, liquidity. - page 17
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Oh, already a gang.
And you seemed like a smart man...
I would gladly do so if it were close to the market standard, but unfortunately, the market standard now is that it's all about the woods and all about the woods. If you move everything to the spread, you will be scolded for large spreads; if you move everything to commission, you will be scolded for large commissions. But when you move some of them to spread and some to commission, no one swears because the commission is not bigger than the others and so is the spread. This is where marketing takes over.
Usually they blame not for the spread or the commission, but for the lack of transparency, which automatically raises suspicions. If a company shows spread that is several times wider than it should be in the interbank market while the commission is always slightly below the average, it means that this company cheats a lot with spread in the hope to take pips from the clients. It is also possible that sooner or later the market regulators will get to this kind of activity because it is clearly a game against clients and a conflict of interest.
Honest companies do the opposite, like RVD and others, show their real low spreads from suppliers and honestly say their fixed commission. In doing so they have no initial headache (and associated costs and risks) with cooking marcamps against their clients due to a complete lack of marcamps. This is the true ECN model.
It is not the spread or commission that is usually criticised, but the lack of transparency, which automatically arouses suspicion.
The scolding is usually for the discrepancy between declared and actual conditions.
PS. Do you really come into a bakery and to buy bread you need to know who the flour supplier is and at what price the salt was purchased?
I laughed too (. I didn't think a person setting up a new business would think so primitively. (No offence. It's me who's wrong).
I'll come at it from the other side:
Please answer a few questions: How will a trader be able to determine
- That the other party to his transaction is not your company? (apart from your word of honour).
- That his order is sent to the supplier with the best offer and not the supplier with whom you are aligning the aggregate position? (other than your word of honour.)
- That the slippage occurred at the supplier and not at your company? (other than your honest word).
- that the execution of the order slowed down not on your company's side but on the supplier's? (other than your word of honour.)
I could go on and on, but that's enough. I personally take your word for it. But I want to "touch with my hands" the differences between your company and the "kitchens".
The answer from your side: "And how do you imagine these answers?" is not acceptable, because it is you who organize it, not me.
Unfortunately, you do not. All the tools that a trader has are indirect. I have written about it many times (I will have to write an FAC somewhere, not to write the same thing).
I personally don't know of any company where you can check this. And knowing the way the industry is set up, I don't think there is any chance of this happening any time soon.
Only circumstantial signs. Among them:
1. If once in a while your stops are executed at the price of spikes, it means with high probability you will not be taken out anywhere. If you are being taken out, then most spike activations are not executed at the spike price, but at the current market price, because it is not the MT, but the vendor who is executing.
2. If your trade doesn't start to feel a deterioration in execution after going into serious plus, then there's a good chance that the broker isn't interested in you being drained.
3. For you, the best provider is the one that is first in the stack. If most of the time (on a calm market) orders do not slide, then there is no reason to worry.
4. You can also find out that the supplier has slipped, and we have not added anything, only indirectly, by comparing slippages with other companies.
5. It is the same with the execution time. All that can only be analyzed by collecting statistics on slippage.
I understand the traders' desire to know everything thoroughly, but it is impossible. What amazes me is how mice prick themselves, cry, but keep on eating cactus, when all that I have listed above is felt in full force, but they do nothing at all. I am more and more convinced that traders in their overwhelming majority want to be cheated, they just crave it.
Usually they blame not for the spread or commission, but for the lack of transparency, which automatically arouses suspicion. If a company shows a spread several times larger than it should be logically on the interbank market with a constant commission slightly below the average, then this indicates that this company cheats a lot with the spread in the hope of taking pips from the clients. It is also possible that sooner or later the market regulators will get to this kind of activity because it is clearly a game against clients and a conflict of interest.
Honest companies do the opposite, like RVD and others, show their real low spreads from suppliers and honestly say their fixed commission. In doing so they have no initial headache (and associated costs and risks) with cooking marcamps against their clients due to a complete lack of marcamps. This is the true ECN model.
Where have you seen transparent companies? What is transparency about?
Where have you seen interbank spreads? Where have you seen interbank? And what makes you think it is interbank at all? Pronin from VTB showed a picture of the interbank, the Eurodollar has a spread of 3 pips in the 4th digit.
Why have you decided that if the commission is lower than the average, it means that the company does not make a mess, not that its costs are lower? That it has a small IT team, for example? Don't you know that any product in major shops with sales areas is always more expensive than in some shady company that sells from a warehouse only through the Internet?
You are wrong about the regulators. They will never force companies to lower commissions or marcamps. The US is one of the most regulated markets, but that is where companies like FXCM, which has some of the biggest marcaps in the world, operate.
No, that's not what honest companies do. Honest companies should take everything and divide it. (c) A dog's heart. That's how you reason, having no idea how a business is built.
I am more and more convinced that traders overwhelmingly want to be cheated, they just crave it.
It's really true, it's very hard for people to give up their illusions.
It is usually criticised for the discrepancy between declared and actual conditions.
PS. Do you really come into a bakery and need to know who the flour supplier is and at what price the salt was purchased?
Where have you seen transparent companies? What is transparency about? Where have you seen interbank spreads? Where have you seen interbank? And what makes you think it is interbank at all? Pronin from VTB showed a picture of the interbank, the Eurodollar has a spread of 3 pips in the 4th digit.
Why have you decided that if the commission is lower than the average, it means that the company does not make a mess, not that its costs are lower? That it has a small IT team, for example? Don't you know that any product in major shops with sales areas is always more expensive than in some shady company that sells from a warehouse only through the Internet?
You are wrong about the regulators. They will never force companies to lower commissions or marcamps. The US is one of the most regulated markets, but that is where companies like FXCM, which has some of the biggest marcaps in the world, operate.
The example of transparent RVD company I gave you earlier, take DuCapi there too the interbank spread is well visible for comparison. Their performance is good enough because it cannot be otherwise with this business model. Therefore, all the others cheat with marcaps that increases the spread several times.
Here you say that someone has a lot of costs, I'm not denying it. The costs are a direct consequence of the chosen business model because you have to consider that the play with marcap is ultimately the game against their business in all directions because there are large costs for staff and advertising, although traders are not all the same fools, the sum of two components are sometimes able to calculate and understand that the opacity of marcap is always directed against them. As for the legal side, we have already analyzed - this is a typical commission of the company, moreover, hidden and hidden from the customers and the contract with them and I think to prove it in court would not be very difficult, if desired.
FXCM was fined earlier for slippage and markup is also a kind of price slippage against the client, but it is provided to clients with a different logic. The purpose and result is the same.
For them, the transparency is that the shop owner sells the cheapest bread (probably because the raw material is of poor quality or because he uses slave labour) and has written on the shop door that he sells bread at cost price, taking nothing for himself.
It's just that traders are surrounded overwhelmingly by deception.