ECN VS MM
I have been doing a lot of research on the best place to open a trading account and have learned a lot along the way. I need an account which is friendly to scalpers, offers very low pip spreads, and supports both MetaTrader and has an open API.
What I discovered along the way is why MetaTrader is for free - they charge the MM (Market Maker) Brokers. Why is that? Because the MetaTrader backend hosted by the broker allows the broker to manipulate spreads, and do a lot of other mischievous activity to take your money. Believe it or not Market Makers actually trade against you, a topic I will cover later.
Along comes ECN’s, or Electronic Communications Networks. These type of brokers do not trade against you, offer incredibly low PIP spread rates - they actually allow you to post your own bid/ask rate! The problem? Most of them do not offer MetaTrader support - there are workarounds available, but who knows how stable they are.
Well this works out well for me anyway - I was planning on building my own trading platform for Linux anyway. Most of the ECN’s have an API called the FIX protocol, and there are some tools available that handle the protocol level connection stability, allowing me to concentrate on the strategy and dealing with incoming pricing.
For the interim, until I get my own custom platform together, I would like to connect MT4 to an ECN with low spread rates. Anyone know a good one? For my custom platform I was planning on testing with EFX - anyone have experience with them, or the FIX protocol in general?
3 Responses to “ECN VS MM”
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imatache on 09 Dec 2007 at 1:53 pm #
FXLQ (Forex Liquidity LLQ) used to offer MT4 with ECN feed until they got into trouble with NFA this week.
One problem regarding this integration is the fact that ECN feed allows halfpips that MT4 does not yet handle.
Some companies offer this integration only for accounts with opening balance greater than a specific threshold which few customers are willing/capable to meet.
Cheers,
Iulian
admin on 10 Dec 2007 at 6:41 pm #
Iulian,
Do you have any experience using the third party connectors out there that connect MT4 to ECN’s?
Brian
zazaza on 22 Jul 2008 at 10:59 pm #
I also want write platform for Linux. I don’t know why FIX protocol is not recommended by brokers. It’s very hard to get it. Also FIX protocol will usually cause additional fee or demand. So I have to give up. Do you have these problems?