Depth of liquidity pool in Forex?
I don't have an answer for you, but instead a question — why do you have a need for that?
Since most retail traders don't have the "weight" to be able to influence the market with their trading, what would the benefit be of knowing this metric have on one's trading?
I don't have an answer for you, but instead a question — why do you have a need for that?
Since most retail traders don't have the "weight" to be able to influence the market with their trading, what would the benefit be of knowing this metric have on one's trading?
Hi Fernando, I'm comparing tick volume data between brokers and finding many discrepencies so I did some research and read somewhere that the key to getting good tick volume data is to use a broker with a deep enough liquidity pool but I don't know exactly what that means or what to look for.
Brokers can filter ticks. Some brokers can use thier own clients as LQ pool matching one client with another client order (you do not want a new tick for such a deal). So looking at ticks is pointless comparing brokers.
Unless the broker is transparant about the pool, you will never know. You can find out by trading a little info. Less slippage means better pool. IE there are more offers within the spread vs 1 counterparty pool, in that case its their way or no deal. This means a reject on a limit order or worse price for market order. This is mostly noticable in low liquid market hours.
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What do you mean by "discrepancies"?
Forex is a decentralised system. No two brokers will be the same, neither in quote price nor in tick volume, especially for those brokers that are Dealing Desk/Market Makers that trade against their own customers.
Brokers that are Non-Dealing Desk types and share a similar list of liquidity providers will have more similarities, but there will still be differences if they have a different list of liquidity providers.
The key here, may be to choose brokers that are truely NDD/STP/ECN instead.
Interesting, I assume if the price feed is updated more often that should help with reducing slippage, so maybe making sure I use the broker with the highest amount of tick volume would help
What do you mean by "discrepancies"?
Forex is a decentralised system. No two brokers will be the same, neither in quote price nor in tick volume, especially for those brokers that are Dealing Desk/Market Makers that trade against their own customers.
Brokers that are Non-Dealing Desk types and share a similar list of liquidity providers will have more similarities, but there will still be differences if they have a different list of liquidity providers.
The key here, may be to choose brokers that are truely NDD/STP/ECN instead.
I mean discrepencies that are too large to dismiss as simple differences between brokers but most likely caused by one broker having a really bad feed compared to others.
For example, I compared two demo accounts from two different brokers, and on EURUSD, last friday, one had 89716 price updates on the feed (tick volume) and the other had only 46970. To me this tells me the later is probably much less reliable if I am going to use tick volume.
What do you think of just using brokers with the highest amount of tick volume? Should that be an indication that their feed is more reliable and that tick volume would correlate better with real volume?
I've never evaluated brokers based on that. However, I have a feeling that it may be over simplifying it.
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What is a good way to measure the depth of a Forex liquidity pool? Any metrics correlate well with that and are easy to measure in your MT5 platform or when looking at broker stats online? Like execution delay? Depth of market? The amount of tick volume? Thanks in advance!
edit: I just edited the post to make to make sure it was clear that I don't want to discuss brokers, please don't discuss brokers as it apparently can get you banned from the forum