After a disastrous start with optionsxpress, I wonder if there are Forex brokerages which are better/more amenable for autotrading on Collective2? Otherwise I’m trying MB.[LINKSYSTEM_56830503]
Just to be clear, James, when you write about a "disastrous start" to using optionsXpress, you presumably mean that you were unable to trade forex there, but you did not know this before opening the account. (As I write this, optionsXpress does not offer forex trading to the public.)
For this I am sorry, but I did want to post this message right below yours, because otherwise people might get the impression that optionsXpress performed badly when you traded, which as far as I am aware, was not actually the case.
Regardless, we have several Gen3-compatible brokers that trade forex. These include: FXCM, OEC Forex, Gain, and MBTrading.
We will add optionsXpress forex trading as soon as it is available. I reached out to OX and they have told me that forex is currently in beta testing there, and is not yet available for automation.
I have been with optionsxpess for a decade and they are hands down my favorite broker, and I do recommend them. But they claim to be offering Forex trading (requiring Forex trading setup); but as was explained in another post, and I understand now, this is not at all “OTC” Forex, and OX Forex orders can be placed manually but not autotraded. (I had opened a dedicated OX Forex account, funded it, thinking it would autotrade which it didn’t. I was mislead by the link on the OX site that points to autotrading sites. The Collective2 wizard let me set this up.) I will consider using them if they enable FX autotrading.
I just completed a brief direct comparison of how C2 Autotrading behaves with live FX accounts at MB Trading and Open Ecry (OEC). MB Trading is non-dealing desk, so, ostensibly, you get real-time interbank bid/asks, but you pay explicit commissions to MB Trading. OEC uses Forex dot com, a dealing desk, so you pay no explicit commissions, but they earn their money by padding the bid/ask spread. For the few trades that I compared, I found that the round trip transaction costs with MB Trading (including commissions) were consistently about $10.00 per standard lot less than the transaction costs of OEC. So on a straight pricing basis, I prefer MB Trading.
However, in exchange for the pricing edge, MB Trading controls its risk more tightly than OEC. For example, say you have a position with a stop loss in place, and try to close the position at market without explicitly and separately canceling the stop loss first. OEC just takes care of you without a fuss, canceling the stop loss and closing the position simultaneously. MB Trading, however, won’t release the margin used by the stop loss until after the stop loss is explicitly and separately canceled. That means that, with MB Trading, if you don’t have enough margin to cover a theoretical position of twice the size of the actual position, your order to close the position will be rejected until you have explicitly canceled the stop loss order. This causes problems with autotrading unless you keep enough margin on hand to cover at least twice the sum of all expected concurrent positions (which many would say is prudent risk management anyway).
Have you tested FXCM?
No, but when I compare FXCM’s spreads vs MB Trading’s using C2’s “realtime brokerage data”, I find MB Trading’s spreads to be better (i.e., more profitable round-trip for the same transaction) but without figuring in MBT’s commission.
Also, from FXCM’s web site (small print): "FXCM is compensated by a mark-up, which is automatically added to the spreads it receives from its liquidity providers, FXCM may also receive compensation for order flow from its liquidity providers. FXCM does not charge commissions on standard accounts, however, commission charges may apply for certain classes of non-standard accounts such as Active Trader."
So it would probably be a worthwhile test (MB Trading vs FXCM), but I don’t have time to do it myself.
any of these shops subject to MF Global type risks?
MB Trading is based in California, and FXCM accounts for US customers are managed by a New York-based affiliate of FXCM UK. So both are subject to full US regulatory oversight, for whatever that’s worth.
FYI: Narrative for NFA Complaint 0308179 - FOREX CAPITAL MARKETS LLC
On August 12, 2011, NFA issued a Complaint charging FXCM with retaining gains derived from positive price slippage; failing to adopt or carry out adequate procedures to ensure the efficient execution of all customer orders; failing to treat all customers equally when giving price adjustments; and failing to adequately investigate suspicious activity in all customers’ accounts. The Complaint charged FXCM and Niv with failing to supervise.
On August 12, 2011, pursuant to a settlement offer submitted by FXCM and Niv, FXCM was ordered, within 30 days of the effective date of the Decision, to make a good faith effort to credit the accounts of its customers the amount of positive slippage which its customers experienced on their trades from and after June 18, 2008. FXCM shall provide verification to NFA of these credits. In addition, FXCM was ordered to pay $2,000,000 to NFA as a monetary sanction. In the future, FXCM will not engage in price slippage or margin liquidation practices; and, in the future, when FXCM voluntarily gives a customer a price adjustment, it shall also determine whether or not it is appropriate to make the same price adjustment for other similarly situated customers.
Finally, within 30 days of the effective date of the Decision, FXCM was ordered to adopt and implement adequate procedures - or enhance existing procedures - to ensure the efficient execution of customer orders and to ensure compliance with NFA’s AML requirements.
Of course, other brokers are alleged to have engaged in similar shenanigans. See, i.e.,
Best FX broker around is Dukascopy in Switzerland, very tight spreads, very technically advanced, true ECN broker, plus they are a Swiss bank regulated under that nation’s strict banking laws. Unfortunately the Patriot Act has meant that Swiss banks are now unwilling to open accounts for any U.S. Citizens.
For the record, it isn’t the Patriot act they’re worried about, it’s the nanny state provisions of the Dodd-Frank Act.