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Thalantas
Jan 16 2014 at 12:56
192 posts
This is a question I was wondering about the current business model of brokers. I understand that brokers need to be remunerated for their service but I don't understand why nobody ever came up with an alternative such as a broker that would ask for a monthly subscription with only the LP's spread instead of always adding an extra fee? Is it even possible?

Do you know what brokers pay to LPs in order to propose their feed to the customers?

Just some thoughts ;-)

A smooth sea never made a skillful sailor.
Swiss Management (SwissManagement)
Jan 16 2014 at 20:48
110 posts
I think because it's about liquidity and arbitrage trade

Thalantas
Jan 16 2014 at 20:58
192 posts
SwissManagement posted:
I think because it's about liquidity and arbitrage trade


Could you develop a bit more?

A smooth sea never made a skillful sailor.
PipGnostic (TheCyclist)
Jan 17 2014 at 06:36
724 posts
There are fixed cost brokers. Some have spreads minimal spreads of 0.5 pips. Just have to look around a bit.

ma2000
Jan 18 2014 at 10:47
22 posts
ma2000
Jan 18 2014 at 10:47
22 posts
@Thalantas @TheCyclist

1. Would still be volume based (as fixed fee would be unfair to smaller accounts)

2. Different pairs have different liquidity, so spreads would still exist.

Thalantas
Jan 18 2014 at 13:06
192 posts
ma2000 posted:
@Thalantas @TheCyclist

1. Would still be volume based (as fixed fee would be unfair to smaller accounts)

2. Different pairs have different liquidity, so spreads would still exist.


I am not saying that we can trade at zero spread as you'll always have the liquidity provider's spread but still you could pay a subscription and not a spread to the broker on top of the LP's spread? Whatever the amount on the account, anyone would have to pay, say 30 or 40$ (like a VPS price) and wouldn't suffer any spread beside the LP's.
The 'mass' of client would overcome the fixed expenses.

A smooth sea never made a skillful sailor.
MyFxTrader
Jan 20 2014 at 19:03
170 posts
Thalantas posted:
ma2000 posted:
@Thalantas @TheCyclist

1. Would still be volume based (as fixed fee would be unfair to smaller accounts)

2. Different pairs have different liquidity, so spreads would still exist.


I am not saying that we can trade at zero spread as you'll always have the liquidity provider's spread but still you could pay a subscription and not a spread to the broker on top of the LP's spread? Whatever the amount on the account, anyone would have to pay, say 30 or 40$ (like a VPS price) and wouldn't suffer any spread beside the LP's.
The 'mass' of client would overcome the fixed expenses.


Trader A does 5 trades a month on $100 account. Trader B does 500 trades a month on $10000 account. Trader A should pay same monthly subscription as Trader B? Is that what you want to say?

Thalantas
Jan 20 2014 at 19:23
192 posts
MyFxTrader posted:
Thalantas posted:
ma2000 posted:
@Thalantas @TheCyclist

1. Would still be volume based (as fixed fee would be unfair to smaller accounts)

2. Different pairs have different liquidity, so spreads would still exist.


I am not saying that we can trade at zero spread as you'll always have the liquidity provider's spread but still you could pay a subscription and not a spread to the broker on top of the LP's spread? Whatever the amount on the account, anyone would have to pay, say 30 or 40$ (like a VPS price) and wouldn't suffer any spread beside the LP's.
The 'mass' of client would overcome the fixed expenses.


Trader A does 5 trades a month on $100 account. Trader B does 500 trades a month on $10000 account. Trader A should pay same monthly subscription as Trader B? Is that what you want to say?


Yes.

It would obviously not be of interest for accounts lower than 5-10k$. Which is for the good I guess, as liquidity provider doesn't accept micro lots. Very frequent from small accounts.

A smooth sea never made a skillful sailor.
MyFxTrader
Jan 21 2014 at 07:26
170 posts
Thalantas posted:
MyFxTrader posted:
Thalantas posted:
ma2000 posted:
@Thalantas @TheCyclist

1. Would still be volume based (as fixed fee would be unfair to smaller accounts)

2. Different pairs have different liquidity, so spreads would still exist.


I am not saying that we can trade at zero spread as you'll always have the liquidity provider's spread but still you could pay a subscription and not a spread to the broker on top of the LP's spread? Whatever the amount on the account, anyone would have to pay, say 30 or 40$ (like a VPS price) and wouldn't suffer any spread beside the LP's.
The 'mass' of client would overcome the fixed expenses.


Trader A does 5 trades a month on $100 account. Trader B does 500 trades a month on $10000 account. Trader A should pay same monthly subscription as Trader B? Is that what you want to say?


Yes.

It would obviously not be of interest for accounts lower than 5-10k$. Which is for the good I guess, as liquidity provider doesn't accept micro lots. Very frequent from small accounts.


I believe the current spread system is much better than what you proposed. Spread allows the flexibility to pay per trade. A fixed monthly subscription fee would only accrue to the benefit of high frequency traders at the expanse of traders who trade less frequently. Lots sizes for every position entered need to be dealt with individually and it's insurmountable if a predefined fixed monthly subscription fee is being used.

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