Hey peeps, I am working with a friend who is looking for a broker, and I gave him a little guidance but dint want to help him to much cause I figure that the time he take to search he will learn more than me just suggesting to him... EITHER-WAY he received this email in response to another email, is what I am wondering is what he is saying all true? He is trying to convince my friends that everyone is a MM and that a dealing desk is better.. its quit funny! what do you guys think?
"Well here is the down and dirty...
Just remember, when firms tell you they are not a market maker or they have no dealing desk... ask them how they place you trade then. Because if they don't have a dealing desk, they are using someone's to make your trade... it's just not theirs... which is a huge disadvantage to you.
An ECN puts together buyers and sellers. This begs the question who is providing the liquidity? specualting actually takes out the liquidity from the market. The liquidity is the biggest advantage in this market. Those who provide the liquidity are companies like Mercedes Benz that has a contract due in Japan and changes Euros to Yen. An ECN actually takes out the biggest advantage to the forex market... Liquidity.
Furthermore, (remember the Bear-Sterns fiasco) Interactive Broker decided that it was going to shut down that Friday and not let any of it's traders trade. No warning, no explanation, just sorry you can't trade. I don't know about you... but that sucks!
As far as a dealing desk... They have to have a dealing desk in order to make a trade. The biggest banks in the world have dealing desks. It is a necessity for this market to exist. And there is no way any consumer is going to trade directly with a bank. That's not going to happen.
Forget your computer going down. What if you don't get a fill on one of your orders, or if it blows through a stop or limit... What do you plan on doing? Without a dealing desk it is impossible to get that resolved.
Also, as far as trading with other traders. We have a function on our dealbook called ITX (top left corner of dealbook) that allows you to trade with other traders. The problem with the ITX and interactive broker is that you do pay a comission and the spread is not any better than just placing a trade through GFT. (Most of the time you are paying more... I know from experience)
I just think that you would be making a mistake not trading with GFT... but that's my opinion."
"Well here is the down and dirty...
Just remember, when firms tell you they are not a market maker or they have no dealing desk... ask them how they place you trade then. Because if they don't have a dealing desk, they are using someone's to make your trade... it's just not theirs... which is a huge disadvantage to you.
An ECN puts together buyers and sellers. This begs the question who is providing the liquidity? specualting actually takes out the liquidity from the market. The liquidity is the biggest advantage in this market. Those who provide the liquidity are companies like Mercedes Benz that has a contract due in Japan and changes Euros to Yen. An ECN actually takes out the biggest advantage to the forex market... Liquidity.
Furthermore, (remember the Bear-Sterns fiasco) Interactive Broker decided that it was going to shut down that Friday and not let any of it's traders trade. No warning, no explanation, just sorry you can't trade. I don't know about you... but that sucks!
As far as a dealing desk... They have to have a dealing desk in order to make a trade. The biggest banks in the world have dealing desks. It is a necessity for this market to exist. And there is no way any consumer is going to trade directly with a bank. That's not going to happen.
Forget your computer going down. What if you don't get a fill on one of your orders, or if it blows through a stop or limit... What do you plan on doing? Without a dealing desk it is impossible to get that resolved.
Also, as far as trading with other traders. We have a function on our dealbook called ITX (top left corner of dealbook) that allows you to trade with other traders. The problem with the ITX and interactive broker is that you do pay a comission and the spread is not any better than just placing a trade through GFT. (Most of the time you are paying more... I know from experience)
I just think that you would be making a mistake not trading with GFT... but that's my opinion."