MM or ECN brokers?

If you type "forex brokers" on google you can find a lot of small brokers that tell you they can make you rich by trading the currencies. More beginner start theirs trading carrer opening a demo account with such brokers, believing they are the best around...

High equity traders and experienced traders know that there are some "elite" brokers that can offer a saver service: true ECN brokers.

This type of brokers are much more safer than MM because they can offer you the best spreads from central banks, the same that market makers brokers get!

Anyway there are some more reason to choose a ECN, and I'm going now to show you whitch they are and why I prefer them:

1) Market Makers brokers sometimes have interest in make you lose money, with direct or undirect methods. This is not a proof of theirs bad service, but I think that if there's only one single reason to steal your money the system isn't enought save, even if my broker would be regulated by NFA. MM earn money from spreads & market manipulations, and this can really hurt you.

MM make money by:
- Spreads difference from central banks* (see below)
- Internal spreads difference** (see below)
- Interest on client deposit
- Losses on client's trades that were never offset

So MM can manipulate the market you "see" to match theirs spreads difference, or in the best case they can "simply" reject orders, widing spreads or create lags in according to theirs interest.

2) True ECN brokers doesn't have any interest in make you lose money, because they offer you the same spreads that normal MM take from central banks. There are some ECN brokers that doesn't make you pay a spread, but only a commission for evey trade.

They make money from:
- Commissions on every orders
- Interest on client deposits

Those brokers doesn't have any interest in offering a bad service or make you lose money because the more you earn, the more interest they have on your account, and they don't manipulate the market because the do not have any spread commission.
ECN are open only for high equity traders (but now you can get it with just some thousand of dollars...), don't you ever asked why?

True ECN requires higher minimum deposit, but they can offer a save broker system for those that want to sleep good at night. MM sometimes can be happy if you get a "bad service" or if you lose money. ECN are happy only if you keep to pay commission and yes, they are much more happy if you grow your account up... because more equity = more trades or more lots = more commissions every trade.

Don't forget that scalpers can only trade with an ECN broker or a direct and personal central banks connection, because MM are used to offer higher spreads and slower trades exsecutions.

* = The difference between the spread the broker quotes to clients and the spread the broker receives from the banks they offset from. If the broker is unable to match a buyer and seller internally, the broker will, after the positions become sufficiently large, offset with larger banks that quote them cheaper spreads.

** = If the spread is 3 pips, and the broker is able to match a buyer and a seller internally, they collect 3 pips.

Trading setup

Like most of you knows, every trader should find his own preferred trading setup. A trading is the sum of hardware and software configuration used by a trader to reach the highest possible control on the market.

Long term traders needs to minitor multiple markets, on multiple timeframe. High equity traders usually use up to 30 (!!) monitor desk to trade in the best shape:

If you are used to trade with long-term trading systems (an example would be the M5 Trend Following System) you will get only 1-2 good signals every week, so you'll also have to monitor much more markets to get a good number of possibility every week. Stock, option and futures trader usually do the same, trading on high timeframe and following 8-10 and even 30 charts at a time.

Scalpers doesn't need to fill their desk with a lot of monitors, but only two or three medium-size monitor (22-28") is enought.

I personally own only one huge 42" monitor, where I can set my whole setup.

The first chart above is the 1 tick chart with my favourite rainbow tamplate, that I use as main chart.

The others two charts are: On the left a 10 ticks chart and on the right a 1 minute chart. All the charts have the same template, but you can see I use a volume levels indicator in the 10 ticks chart to spot low volume levels, price ranges where price usually breakouts.

I still use two oscillators (a woody CCI trend indicator and a SMA oscillator), but I don't care much about it. They are good to see things in a clearer way, but they don't matter a lot.

My funny motivational posters

More to come...

Free resources

Online there's a lot of free resources, like forums, websites or blogs, like mine, where you can find useful information, knowledge and other traders to talk with.
But there are source made for beginner and source made to help experts or professional traders, and isn't easy to find the right for you.
Fortunately, there are a lot of website and forum around, so everyone can find something at his own level of knowledge.

For example, http://www.babypips.com/ is the one I reccomend for beginner, even if they don't know what forex is yet. His online forex "school" is a very exaustive course for noobs.
When I listen the words "forex forum" I think about Forex Factory (http://www.forexfactory.com/).
Forex Factory is THE forex forum, the biggest forum about forex around. There you can find a lot of traders of every level of experience and almost endless resources.
http://www.forexpros.com/forums/ and http://www.forex-tsd.com/ are two good forum for intermediate but even for advanced trader. The first is absolutely my favourite, because is bigger and full of expert traders always ready to reply to noob's answers.

Recently I found out about a very small forum, http://elitescalper.com/, an advanced and "exclusive" lounge for professional scalper. If you want to learn the secret behind aggressive scalping, you must go there.

http://www.forexforum.net/forex-forum.php is also another good forum I want to suggest for everyone.

And these are only the ones I prefer. There are much more out there!

So, as you can see isn't a problem to find resources and advices. Anyway this have also a negative side, because is very hard to select real and useful tips in this sea of mixed informations. Sometimes you can really lose youself in this sea, and if it will happen, you will feel very confused!

But you know it, sometimes to find what we were looking for, we must lose ourselves...