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Hi jdfo,
I have been trading with CMC (one of the online organizations) and have been
impressed with them. Yes they are a market maker but I have found them to be
very fair. In the past someone asked me about being ripped off by unfair
quotes, so I've added my response to that below.
As for 5 pip spreads, I'm not sure what you mean by unrealistic. The only
time I have ever seen CMC's spreads larger than 5 pips (for the major
currencies) was one very volatile night - and it increased to only 10 pips
for a few hours.
With regards to manipulating prices, I think that my reply below will answer
that.
Regards
Simon Trevor
CMC act as a market maker, and I believe the other online companies do too.
Initially our 2 main concerns about trading with cmc was as you mentioned -
they can skew the price against you knowing what you want to do and that
they could unfairly take your stops out. Having traded with them for a while
now, I don't think they do this however.
For the major rates(USDM etc), cmc provide their dealing price along with
the market feed. cmc's dealing prices that you recieve are identical to
those that everyone gets. If you want to buy, and the market has moved above
cmc's last quote, they will move there quote up, but everyone gets this
quote not just you. This also is the case for stops - I know that I wont be
stopped out until cmc's dealing price moves to my stop.
This does not mean that cmc cannot deliberately take your stops out(or skew
your quote), but if they do it gives someone else the opportunity to get in
at an excellent price. For market orders, there have been times when I have
thought that they may have taken a few points from me(skewed the price), but
there have been others(just as many) when the opposite occured. I think that
there have been more times that I have been able to buy below the market and
sell above the market than the other way around. Most of the time you just
get to deal at the current market price however.
For the less common rates(such as $A, $NZ $CD and crosses), you just get the
market feed and you ask for a two way quote from cmc when you want to deal.
> I, also, was taken in with these organizations "Money Garden", etc.
>(there are several of them.) After further investigation and reading
>several comments on this forum, it seems these guys are making their own
>market; your trading against them. Thus, you have no idea what the real
>market (Forex) is doing and they can
>manipulate as they see fit, an impossible situation. Also, their spreads of
>5 to 8 pips is, I believe, unrealistic.
> My associate and I used two computers at the same time and compared
>Money Garden's quotes (bid/asked) with another firm, trading the same
>market.
>It was like we were trading completely different commodities. The quotes
>were
>10 to 15 pipes different from each other. We wondered what the "REAL" forex
>pricing was during that time.
> It seems trading with these organizations is ill advised. I woud
>appreciate any further comment on my remarks from some who might be more
>knowledgeable.
>Regards,
>jdfo
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