Is this possible ?

[Truthseeker30]

Hiya fellow traders.

I'm kind of new in posting to this forum, but I have been reading it for years now. What I was wondering today is when a broker is saying that they have an STP technology execution associated with their nano accounts or so called cent accounts instead of a dealing desk or DD. Is this possible and how would it be done in regards to their liquidity providers?

Thank you very much FPA nation.

 

[Pharaoh]

STP and ECN aren't exactly defined by law. The best way to verify is to ask for contact info at their LPs. Then watch and see how many of those unregulated little bucketshops decide that this is some sort of super-secret information.

 

[Truthseeker30]

Hey Pharaoh. That is saying that I should ask for their LP contact numbers and if they refuse to disclose who their LP's are, it is an immediate red flag?
Also, here is a reference to this issue taken directly from one of my brokers websites that offers nano sized lots.

When you trade with us xxxxxx is your counter-party. Your trades are matched and any next exposure above predefined thresholds is hedged with our partner banks (our liquidity providers) at the current market spread.

xxxxxx being the name of the nano lot broker in question. So basically , they are saying here that they are the counter party to all clients trades and that they only hedge some positions with their LP's...
Wouldn't this make huge slippages that I encounter on their platform a artificially manufactured and built in mechanism to keep profits of the clients minimal and losses potentially huge?
When I say huge I mean 50+ pips.
Thx

 

[Pharaoh]

That's a hedged market maker (one step above a pure bucket shop). They accumulate a certain amount of client orders and then hedge themselves every so often. These are easy to spot - 95% of them have some sort of scalping restrictions (the rest will pretend not to, but will nullify all your profitable scalp trades later based on some silly excuse). This means you can't make profit before they've managed to hedge themselves.

Which reminds me - any broker that is truly ECN or STP will not have any restrictions on Scalping or News Trading. They also will never have fixed spread. Be aware, some brokers offer both ECN and Market Making accounts on different servers - make sure you know what server your account is on in this case.

Personally, I feel that all brokers that have LPs should disclose the LPs and provide some method of verification. The verification could be as simple as the LP having a page listing the brokers they provide liquidity for, or could be an email or phone number at the LP. I'd trust an email address more, unless that phone number is listed on the LP's website - otherwise, how do you know your call is really going to the LP?

 

[Truthseeker30]

Thank you for your advice Pharaoh. It really helps to understand these things before signing up with a broker. Brilliant, thank you

 

[george91]

thanks you for information.

 

[ItsToday]

Good information. I always wondered this myself

 

[Spellkiller]

Why do such nonsense, it has no prospects. It's better to immediately tune in to a good broker with solid capital than to do this. Don't waste your time.

 

[Vo32ss]

You should definitely specify all the terms of cooperation.
Because it doesn't look very realistic.

 

[Balladotus]

Oh, well, anything is possible today. The other question is how beneficial it is to you and what prospects it offers for your job and your career. That's why it's so important to collect all the data that directly affects you.