Brokers - Why do we still pay spreads?

Thalantas posted:
What I would be the most worried about are the necessary licences/regulations which needs a solid legal service :S

It's what I said. We don't have to worry about regulation because our first goal isn't to prove clients that we are reliable broker.

We will apply for this... once our business would have run for a year and we want to attract more traders... because we can grow up.

Our first goal is too trade 'free'... no commission can be an extra bonus of $2 000 / years. (that's 100% performance for an account of the same deposit) Lol

FxMasterGuru posted:
You can count on me as one. I am interested. Are you willing to draft a business plan?

We are officially 2 : )... that's the begining.

I'm not really good for Business Plan... but our business won't have anything special. It's like any broker.

The main problem will be the first investment required to start the busniess. (no idea)

Investors can also get back their money while we are trading (we can still apply commissions 'normal spread' until investors are totally refund.

So what we really need its a guaranted volume traded monthly. (A strong committment of 20 - 50 traders)

Option 1:
To avoid investors and make sure traders will stay with us... Each one of us could invest $ 500.

So we will collect the capital to launch the business... and everyone will get back his investment when he will reach the volume traded required.

What about this idea.... So collaborative network.

Imagine a trader blow his account of $ 1 000.

As we are 100 to use our brokerage... We could all lend him € 10... So He has a brand new account !

He will keep trading and he will pay commission as in the fx industry until his volume traded can generate $ 1 000 so we all get back our money.

This system is so powerfull... if it's well managed.

Obviously we will set up rules... to be able to get such a deal:
Don't play casino with the account... If a trader loose it because it took a huge position.
Impossible to withdraw money with the account offered until $ 1 000 has been made.
Only 1 account offered by trader.
...

The establish a brokerage would need more substantial funds than 10k. As far as I know the start-up cost is around 50k USD.

Boston Technologies offers all the logistics and has a pre-made Business Plan, too: https://www.bostontechnologies.com/solutions/solutions-to-start-your-own-brokerage/

Another similar professional service to take care of the details: https://www.yourownbrokerage.com/start-your-own-online-forex-brokerage-firm/

And one more: https://www.piplinx.com/complete-broker-solution/broker-in-a-box/

It seems that there are many firms specializing in serving clients with the idea of own Fx brokerage. So 5-10 interested private investors could easily make it happen with 5-10k initial investment and 1-2k monthly cost.

I knew about Boston technologies... but it's quite expensive.

I have tried to contact the last link provided just to find out more about the cost (Capital deposit + Monthly fees) to cover our activities.

also dont forget, that liquidity providers do not like to be stuck with only winners, if you do that, they will start hedging your execution. and as a result it will widen your spread.
also if you dont have enough volume, meaning pushing at least a B a day, then you have to go to a sub Liquidity guys, and they take a fee as well...
You will need to hire a staff to be customer service to your co-op, also a Tech guy x2 as you need 24/5 coverage.
and oh yeah, banks ( the reputable) wont talk to you unless you got regulation, and not BVI bullshit either...
otherwise your stuck with banking in Latvia

guys unless your managing 100 million, and doing high volume, the extra headache is not worth it.
Plus, MT4 PAMM has an extra cost, and doesnt allow EAs, if you go with a commercial PAMM, there is a cost of about 15 per 1,000,000 volume.

it all adds up.

also ad leverate to the list.

but the monthly costs are 10k minimum but based on volume. both BT and leverate force you to use their own liquidity.

TheSmokedAce posted:
also ad leverate to the list.

but the monthly costs are 10k minimum but based on volume. both BT and leverate force you to use their own liquidity.

Thank you for all the details you can provide as there is so many expenses we do not suspect at this stage.

I let you know I have already found out about 'WL' White Label which the cost is $2 000/month (minimum whatever volume traded as been done) + $750/monthly fees for maintenance.

Using this WL is not suitable as we still own commissions to 1 broker even if we are broker.

CrazyTrader posted:
The very bad ones: Like InstaForex for example (Im sorry to pick up this one... The first one to come into my mind)
They provide to their clients a huge spread. (over 10 pips for some pairs). Then they pretend to provide a big cashback on each trade.

1) First of all, I want to say InstaForex is a great broker, this is my third year with them and I'm so satisfied all sides.
Spreads in InstaForex? I pay fixed spreads 3 pips on major pairs and I get 1.7 pips rebate,, the largest spread with Instaforex is on gbp/nzd = 12 pips fixed and I get 5 pips rebate, so I don't think it's terrible compared to other brokers!

2) A good trader with a good strategy don't give much importance to spreads offered by his broker to succeed and make money in forex.

3) For scalper, there're many good brokers with low spreads that allows scalper to apply their stratigies successfully!

BTW, the idea is great, and I'm 100% with you. Let's go ahead! :)

I'm writing a diploma and would ask for just 1 minute of your time, if you could fill out the survey for the research:
https://www.mojaanketa.si/anketa/367461539/

Thanks!

ncpmt posted:
I'm writing a diploma and would ask for just 1 minute of your time, if you could fill out the survey for the research:
https://www.mojaanketa.si/anketa/367461539/

Thanks!

I have replied... Please provide me a pool to know who wants to join us into our 'retail programm broker' : )

FxProdz posted:
BTW, the idea is great, and I'm 100% with you. Let's go ahead! :)

Ok my friend... we are 3!

Ps: Instaforex... Noobest broker I have never known.

ncpmt posted:
I'm writing a diploma and would ask for just 1 minute of your time, if you could fill out the survey for the research:
Thanks!

+1. You are welcome!

What do you think it happens if everybody takes a big buy or sell on low liquidity currency in same time ? Do you think you can move the market ?

Imagine 10000 trader put a buy or sell on NZDJPY at 13:00 GMT ? I think we can to make to move the market a little bit.

SwissManagement posted:
What do you think it happens if everybody takes a big buy or sell on low liquidity currency in same time ? Do you think you can move the market ?

Imagine 10000 trader put a buy or sell on NZDJPY at 13:00 GMT ? I think we can to make to move the market a little bit.

This is not our point.

Ps: 10 000 or 100 000 traders don't mean anything... Only Lotsize is relevant.

If you have calculated what you pay per year to your broker and if this amout makes you mad... let's join us.

Friends, You will never avoid spread on the market. First of all, it's an auction. Second, the nature of the original price creation on the FX market is following. In general is looks like one bank indicates in The System (Reuters3000, Bloomberg and other terminals) the intention to make a trade with specific size and currency pair. It doesn't reflect it's intention to buy or sell. Then those banks who agree to make a deal with the counterpart according reflected size and pair give the answer as quote with bid and ask. And bank which originated the deal then choose with whom to make a trade. Please, notice that You will never have an information on the market was the trade done or not, exact price by which the trade has been done (it's business only of two counterparts) and the exact name of the Bank who took another side of the trade.

CrazyTrader posted:

FxProdz posted:
BTW, the idea is great, and I'm 100% with you. Let's go ahead! :)

Ok my friend... we are 3!

Ps: Instaforex... Noobest broker I have never known.

I love Instaforex, they're a honest and a good broker. About spread, I prefer large fixed spread than a tight spread with slippage and commission, other brokers steal your money when you open a trade and when you close it as well! 1.3 pips as a fixed spread, for me is a very good one anyway.

But as I told you, I'm with you in this project.

uascalper posted:
Friends, You will never avoid spread on the market. First of all, it's an auction. Second, the nature of the original price creation on the FX market is following. In general is looks like one bank indicates in The System (Reuters3000, Bloomberg and other terminals) the intention to make a trade with specific size and currency pair. It doesn't reflect it's intention to buy or sell. Then those banks who agree to make a deal with the counterpart according reflected size and pair give the answer as quote with bid and ask. And bank which originated the deal then choose with whom to make a trade. Please, notice that You will never have an information on the market was the trade done or not, exact price by which the trade has been done (it's business only of two counterparts) and the exact name of the Bank who took another side of the trade.

I also think so,, there's no free service in the world of capitalism! But we can reduce the fees, so why not to try it?

Hello all!

The motivation of this discussion seems to be profits (through cost-cutting), so the problem is mainly practical not academic ;)

So in practise:

1. What spreads you're getting now?

2. How low-spreads would make you change broker (assuming slippage/other factors equal)

Please state the pairs you trade and their spreads including commissions.

Regards,
-Mika