Depth of liquidity pool in Forex? - page 2

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I personally evaluate brokers based on multiple factors.

First they need to be under respectful Authority, liable to judicial of location.

Then I want to know what type of accounts they offer. I do not use dealing desk brokers, nor hybrid. Only STP and ECN.

Then I take a look at their Commission price list and their spread. I calculate the costs for a round trip and compare them to the "symbols industry standard", meaning the most likely price range.

I do not evaluate Demo accounts, they are not showing reality.

Then I look at time and price gaps in M1. I also check how their nightly spread, when liquidity pools get equalized, looks like. As far as I have observed, the more ticks in that time, the more pools they have. - Not sure if that's right but it gives some indication. Usually more ticks within this time, shows also a more reliable execution of orders.

I also take a look at the data feed from "black swan events" like EURCHF in 2015. Especially how large are the jumps in price at that time. Although it's old data and has not much to say for today, it does show if their user base and liquidity providers are large enough so that I myself get my orders executed.

If they pass all that, I take some test trades, mostly at asian session and while news events to check their slippage on a small order. Also I check their execution speeds.

Also I check their freeze levels, and their SO policy, as these are criteria for good brokers.

From here on it goes into the strategy, you would want to trade with them. Factors are so tight now, ie if scalping with lot sizes above 100.0 std lots, you need to see if they really can handle these orders.

It depends much on what you expect.

But, for sure, most crappy brokers are out of the game at this point already. Which is most probably what you want.

I would make the claim not even 10% of brokers comply with that.

You surely do not want market makers/dealing desks, or unregulated brokers for your usage.
 
Dominik Christian Egert #:
I personally evaluate brokers based on multiple factors.

First they need to be under respectful Authority, liable to judicial of location.

Then I want to know what type of accounts they offer. I do not use dealing desk brokers, nor hybrid. Only STP and ECN.

Then I take a look at their Commission price list and their spread. I calculate the costs for a round trip and compare them to the "symbols industry standard", meaning the most likely price range.

I do not evaluate Demo accounts, they are not showing reality.

Then I look at time and price gaps in M1. I also check how their nightly spread, when liquidity pools get equalized, looks like. As far as I have observed, the more ticks in that time, the more pools they have. - Not sure if that's right but it gives some indication. Usually more ticks within this time, shows also a more reliable execution of orders.

I also take a look at the data feed from "black swan events" like EURCHF in 2015. Especially how large are the jumps in price at that time. Although it's old data and has not much to say for today, it does show if their user base and liquidity providers are large enough so that I myself get my orders executed.

If they pass all that, I take some test trades, mostly at asian session and while news events to check their slippage on a small order. Also I check their execution speeds.

Also I check their freeze levels, and their SO policy, as these are criteria for good brokers.

From here on it goes into the strategy, you would want to trade with them. Factors are so tight now, ie if scalping with lot sizes above 100.0 std lots, you need to see if they really can handle these orders.

It depends much on what you expect.

But, for sure, most crappy brokers are out of the game at this point already. Which is most probably what you want.

I would make the claim not even 10% of brokers comply with that.

You surely do not want market makers/dealing desks, or unregulated brokers for your usage.
These are all very good points, I'll keep all of this info bookmarked, thanks!

So as you say the higher the tick count, the more likely they have a larger pool, probably, but I also like all you other ideas.

What do you mean by nightly time when liquidity pools get equalized, do you mean the hour where the spreads all get really wide when they reset the server and start a new daily bar?
 
Yes, that's what I mean.

They don't reset the servers. The spread is due to pools being equalized. It's the process of national banks executing their money transfers with their private banks. IE when Deutsche bank, HSBC and so on deposit or withdraw their holdings into ECB. Also the international transfers get executed, like SEPA and SWIFT.

Also the connected private pools replenish or withdraw from their accounts.

The more ticks you see, the more connections the broker has.

At least that's what I understand so far.
 
Dominik Christian Egert #:
Yes, that's what I mean.

They don't reset the servers. The spread is due to pools being equalized. It's the process of national banks executing their money transfers with their private banks. IE when Deutsche bank, HSBC and so on deposit or withdraw their holdings into ECB. Also the international transfers get executed, like SEPA and SWIFT.

Also the connected private pools replenish or withdraw from their accounts.

The more ticks you see, the more connections the broker has.

At least that's what I understand so far.

That's great, thanks for the tip!

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