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Service, innovation and security: taking key steps to improve the Retail FX trading experience
we also have different platforms with different
benefits and costs,” he notes.
According to Michalowski, the main trading platform
for retail traders is MetaTrader 4. “This platform is our
most popular platform because it is stable, has excellent
charting capabilities and a programmable scripting
language. An alternative to MetaTrader 4 is the
MTXtreme platform. This option has all the benefits of
the Metatrader 4 platform, with the benefit of access to
the best bid/ask price from the pool of FXDD
interbank liquidity providers. The minimum account
size is $10,000 for this particular account, as well as a
small commission. The spreads on pairs is often more
narrow.” However, Michalowski believes that they can
have a tendency of fluctuating and being wider at times.
While Persichino states: “There are many types of
account offered to all kind of trader; from accounts
with little cash required to enter that use a great
leverage, to accounts with little leverage that require a
larger amount of money to start. For example, Cfx
Intermediazioni offers a retail account that uses a
leverage of 500 and requires just €200 to start. This
particular kind of account is similar to a demo
account and offers to every kind of user the possibility
to try the market with a minimum amount.
Traditional accounts let users have a maximum
leverage of 200, but require at least €1000 to start.”
Hayel Abu-Hamdan
“The FX market is such a congested, competitive
market place. Spreads and account offerings are
practically the same at all houses. It is the trading
experience that is the critical success factor.”
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On flexible account
types, Meier comments
that it is possible even for the
small or novice investor to trade
on interbank liquidity through an
electronic network (ECN). He says
this will provide a more level, uniform
playing field for all. “It will also serve to
reduce many common problems the small
investor sometimes has to deal with,” Meier
adds. “Order stipulation possibilities have
become broader, and are offering more
choices to the trader. It’s possible to set
multiple various dormant open orders in order
to enter and exit the markets under various
conditions. The largest ECN’s that provide the
possibility to absorb hundreds of millions per ticket
with low latency, and find ways to allow the smaller
trader also to benefit from their network, might
benefit from a general trend toward ECN trading.”
With the ascent in popularity of automated trading,
which is predominantly based on technical parameters,
the provision of quality historical data is becoming
more important than ever, claims Meier. Such data is
often not complete and mediocre, however, he warns.
“Some brokers offer tick-by-tick data for free to
anyone interested. Without complete data it is not
possible to back test efficiently nor to develop strategy
which can be used under real market conditions.”
Differentiate or die
Brokers looking to differentiate their offerings and
strengthen their value proposition must focus on the
idea that everything has to fit, claims Meier. Brokers
who provide a good price feed but lack in liquidity
will be surpassed by the ones who provide both, he
says. A front end platform which is designed well and
is practical, but is not connected to an ECN, will be
limited, he adds. “The customer has become much
more informed and demanding over the years. Today
it’s a much more crowded space than, let’s say three to
four years ago. Brokers must provide good trading
technology, much more liquidity, more transparency,
and again more client focused solutions in general.”
The retail FX industry is starting to mature, states
McDonald. “In my mind, this means that there is a
tier of brokers at the top. These brokers all offer
basically the same products at the same ‘price’. When
an industry reaches this point in its lifecycle the
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