Is The Recent Market Consolidation About to End?

March Madness, are Markets on the Verge of Breaking?

Why Most Traders Lose and How you can Avoid this

Is Bitcoin Heading for its Fifth January Decline in a Row?

Why Most Traders Lose and How you can Avoid this

Today we are going to discuss one of the most controversial topics in the world of online trading:STPor Market Maker Broker.

The general Idea in the business isSTPis good and Market Maker is bad. Lets see why, and lets see why sometimes is not actually like this.

First we should have a look on meaning of both.STPmeans Straight through Processing, so all orders are sent to the Liquidity Provider without any intervention by the Broker. Here the broker has no conflict of interest with clients and with his LP and the only profit is generated on Spread mark up (if any) and commission mark up.

TheECN(Electronic Comunication Network) Broker is quite similar toSTP, they both dont have any conflict of interest with client, but the main different is that theECNconsolidate price quotations from several market participants. The advatage is that the Broker can usually provide a better spread to their clients.

So how can I understand if a broker isSTP/ECNor MM?

Can I undestand from spread or commissions? No I cannot, because there are

that apply mark up on spread without any commissions but they are really

and there are bridge that allow them to add mark up without any interference with client trading. And there are MM that put commissions and Raw spread just to look like a

a good indicator is the leverage. If the leverage is too high probably the broker is a MM, usually if the broker takes liquidity from a Prime Broker or from a Prime of Prime the leverage is never over 1:100. So the broker can decide to increase the leverage to retail clients with low balance up to 1:400 to finance the trading, but if the leverage is too high (like 1:500 or 1:1000) propably you are in a MM Broker.

if you have Instant Execution on your MT4 instead than Market Execution most likely you are with a MM Broker. Instant Execution in when your order is executed at the price that you see in that moment (bid/ask) if the price is changed you will have window with a requote asking if you want execute the order with the new price. The real OTC

doesnt have this type of order, the order is market so is executed at the best price, you could have slippage but not requote.

if you have 4 digits on all currency and 2 digits on JPY currency most likely your are with a MM Broker, the OTC market is with 5 and 3 digits, so if you have 4 and 2 your broker is alterating the price feed that he receive from his LP.

Pending orders limit: if your broker has pending orders and SL/TP limit probably is a MM, is an usual policy that MM Brokers use to try to avoid scalping trading or some kind of trading strategy. If your broker is a STP/

doesnt care about your trading strategy (generally) cares about how many commissions you generate.

if your stop out or margin call is too close to zero (like 20%) probably you are with a MM Broker, the LP usually set up a Stop out that is never less that 100% .

if you start to trade with your broker and after a while that you trade and you earn you see some different in spread (became bigger), execution speed (became slower), slippage that in average grow they are all signs that your broker is a MM Broker and is trying to reverse your profit trades in loss trades.

After all even if the Broker advert that is realSTP/ECNand its regulated, so the Autority check if its reallySTP/ECNthere are ways to hide it. Some brokers open an offshore company that became their Liquidity Provider, so the Regulated Broker is realSTP/ECN that takes Liquidity from the offshore company that do Market Maker for them. Another way to do it is to declare that they areSTP/ECNand agree with the LP to share the losses of the clients.

So the only way to understand if your broker is a realSTP/ECNis to try, test it and check constantly the trading conditions dont change during the trading life. Doesnt matter how is the execution or how are conditions in demo account, the real account will be different. So try and compare. You will find out.

Why Most Traders Lose and How you can Avoid this

Why Choosing a Broker Committed to Technology is a Good Signal

The Trading Opportunities After the Vote of the Brexit Agreement

What aspects must I consider before take an investment decision?

The Rhino Report is written by a Trader who writes with singleness of purpose. To Charge full speed, not holding back, and get to the Real Story.

– The opinions expressed are written by a Three-ton Rhinoceros who is irritable, disgusted and angry about the Economy. The Reports are AS Real as it Gets So, be alert for opportunities, however read at your own risk. All content provided Rhino Report is for informational purpose only. The owner of this blog makes no representation as to the accuracy or completeness of any information on this site or found by following any link on this site.

Is The Recent Market Consolidation About to End?

March Madness, are Markets on the Verge of Breaking?