What does this mean?

AngelSpike · #1 05-16-2009, 10:50 PM

Hi guys, I've only dealt with market makers so far and thinking of taking it up with an ECN soon and one of them I've been eying is Nord Markets (don't confuse with nord FX).

I'd just like to know what "placing orders between the spread" means since this seems to be a catchy point with ECNs. Oh, and whats a partial execution? Thanks in advance.

Miksa · #2 05-17-2009, 01:17 AM

Quote:

Originally Posted by AngelSpike

I'd just like to know what "placing orders between the spread" means since this seems to be a catchy point with ECNs. Oh, and whats a partial execution? Thanks in advance.

my understanding is that "between spread" means that on ECN platform Stop Level is 0 pips. and buy price for Limit order (and TP/SL can be equal to Bid and Sell price - equal to Ask.

where on retail platform Stop Level is always greater than 0 (any value from 1 and up to 50 or more pips). and buy price for limit order (and TP/SL) should be (Ask + Stop Level) and for Sell limit = (Bid - Stop Level.)

(Stop Level can be checked by right click on a pair in Market Watch -> Symbols -> select pari -> Properties button)

Partial execution means that an order can be completed for less size depending on available market depth (liquidity) for specific price. For example, if limit order was to by 2.0 lots @ 1.30, but available order size for that price was only 1 lot, than order will be filled for 1 lot.

AngelSpike · #3 05-17-2009, 01:39 AM

Thanks a lot miksa. That was a very helpful reply. Do you have any experience with an ECN?

Miksa · #4 05-17-2009, 10:32 AM

Quote:

Originally Posted by AngelSpike

Thanks a lot miksa. That was a very helpful reply. Do you have any experience with an ECN?

you are welcome, AngelSpike. i've found that some brokers who claim being STP/ECN don't actually have 0 stop levels. for example, CollectiveFX has 0, but GallantFX not.

Also ECN brokers don't have Instant orders where a trader can set "Max Deviation" (i.e. Slippage) in MT4. Such brokers conver Instant orders (used by most EAs) into Market orders where slippage can be unlimited if a broker has low liquidity, for example during Asian session.

It will be possible to mitigate unpredictable slippage for ECN brokers if EA is rewritten on use Limit orders and broker has 0 stop levels.

Happy trading!