# Fixed versus variable spreads



## Cam1975 (28 March 2009)

Hi,

I have noticed with a number of the big banks pulling out of the FOREX market, a number of CFD providers are moving from a fixed spread on the AUD/USD of 2 pips to a variable spread that widens to 4 pips.  From what I see the spread is now 4 pips at all times.  This becomes a pretty expensive trade and erodes the trading profits by a great deal.  I was wondering if anyone knows of a CFD provider who offers a fixed 2 pip spread on the AUD/USD and who allows you to hold your account funds in AUD ?

Thanks in advance to anyone who has some thoughts or ideas on this.

Cam


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## Stormin_Norman (28 March 2009)

http://www.igmarkets.com.au/

try there.


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## Cam1975 (28 March 2009)

Thanks Stormin Norman.


IG is my cuurent provider but this week they increased their fixed spreads. On the AUD/USD they used to have a maximum cap of 2 pips but it has now moved to 4. 

I have found a number of overseas providers who offer the 2 point fixed spread on the AUD/USD but none that will allow me to hold my funds in AUD.

Thanks

Cam


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## tayser (28 March 2009)

Your problem is you're looking at CFD providers......

FXCM just announced they've set up an Australian subsidiary which is regulated under ASIC rules - Micro, Standard and Active Trader are all variable spreads and for instance you can get 1-1.2 pips spread on EUR/JPY and 0.8-1.2 on EUR/USD.  AUD/USD 1.5-2.5 in liquid times.


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## Stormin_Norman (28 March 2009)

have they decided to allow mt4, do u know?

i called them a while ago and the set up wasnt using mt4 in australia, which i thought was strange, although i had no idea why not.


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## Cam1975 (28 March 2009)

Thanks for that.  Do you know what the average spread is on the AUD/USD with FXCM ?  I was told the reason the spreads moved was because the bank spread had moved to 4 pips due to a number of them pulling out of the FOREX market.  IG used to cap its spread until last week at 2 so it created a profitable system. 


Thanks


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## derty (28 March 2009)

tayser said:


> Your problem is you're looking at CFD providers......
> 
> FXCM just announced they've set up an Australian subsidiary which is regulated under ASIC rules - Micro, Standard and Active Trader are all variable spreads and for instance you can get 1-1.2 pips spread on EUR/JPY and 0.8-1.2 on EUR/USD.  AUD/USD 1.5-2.5 in liquid times.




and FXCM are fine with scalpers?


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## pilbara (28 March 2009)

Stormin_Norman said:


> i called them a while ago and the set up wasnt using mt4 in australia, which i thought was strange, although i had no idea why not.



I think it's because they have segregated their servers by contract type, so they've set up servers for the AUD denominated accounts for their proprietary platforms but not yet set up the MT4 servers.  Maybe just a question of priorities.


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## tayser (28 March 2009)

derty said:


> and FXCM are fine with scalpers?




I've had no problems after 4-5 months.  Bit of slippage, but meh, it's manageable.


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## >Apocalypto< (28 March 2009)

tayser said:


> Your problem is you're looking at CFD providers......
> 
> FXCM just announced they've set up an Australian subsidiary which is regulated under ASIC rules - Micro, Standard and Active Trader are all variable spreads and for instance you can get 1-1.2 pips spread on EUR/JPY and 0.8-1.2 on EUR/USD.  AUD/USD 1.5-2.5 in liquid times.




they will be a CFD provider in Aust!


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## >Apocalypto< (28 March 2009)

Cam1975 said:


> Hi,
> 
> I have noticed with a number of the big banks pulling out of the FOREX market, a number of CFD providers are moving from a fixed spread on the AUD/USD of 2 pips to a variable spread that widens to 4 pips.  From what I see the spread is now 4 pips at all times.  This becomes a pretty expensive trade and erodes the trading profits by a great deal.  I was wondering if anyone knows of a CFD provider who offers a fixed 2 pip spread on the AUD/USD and who allows you to hold your account funds in AUD ?
> 
> ...




Due to current liquidity on the interbank at the moment it's to expensive to hold fixed spreads.....


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## sinner (28 March 2009)

Yeah the new spread sucks buckets.

I took a short on A/U yesterday during Sydney session hoping for tight spread but that will be my last one, combined with interest charged on all shorts held after close again it is a bit of a bitch. Considering the trade only ended up +22.8 pips, interest charged + spread cost me almost 25% profit! Happy to stick with G/U and E/U anywhere between  5-10pmish but taking a pair out my list will reduce the total number of signals I get.

Did you notice how the only forex pair that was always in the IG "Popular Markets" watchlist was A/U and as soon as they changed their spreads this dropped off? Now there is no forex (unless you count gold) on the popular markets list.

Pretty funny because IG won best CFD broker of the year for 08 based on their excellent spreads!


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## >Apocalypto< (28 March 2009)

sinner said:


> Yeah the new spread sucks buckets.
> 
> I took a short on A/U yesterday during Sydney session hoping for tight spread but that will be my last one, combined with interest charged on all shorts held after close again it is a bit of a bitch. Considering the trade only ended up +22.8 pips, interest charged + spread cost me almost 25% profit! Happy to stick with G/U and E/U anywhere between  5-10pmish but taking a pair out my list will reduce the total number of signals I get.
> 
> ...






Hey Sinner,

You can't hammer IG to much mate as they held a 2 pip spread I hear till recently. I have been watching the Interbank spread on the AUD/USD and in the morning its never less then 4-6 pips. 

So think about it IG hedge the trades paying a 4-6 pip sprread on the interbank and give you 2 pips. That's at a loss to them so you can have a better spread!

I heard CMC had 8 pips on the aud/usd at times this year! So sure they have moved out and its higher but mate I have not seen a locked two pip spread on the aud/usd before..... 

Cheers,


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## white_goodman (29 March 2009)

trade longer term charts...


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## CFD (29 March 2009)

GoMarkets are doing 4 pips fixed on A/U with MT4.


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## >Apocalypto< (29 March 2009)

CFD said:


> GoMarkets are doing 4 pips fixed on A/U with MT4.




that's the going rate on the A/$. When is their change to ECN type spreads coming about?


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## pilbara (29 March 2009)

tayser said:


> Bit of slippage, but meh, it's manageable.



using an EA on 500 trades on FXCM AUD Demo server last week I measured 1.7 pips slippage per trade (round trip).


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## >Apocalypto< (29 March 2009)

pilbara said:


> using an EA on 500 trades on FXCM AUD Demo server last week I measured 1.7 pips slippage per trade (round trip).




That's bloody expensive!


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## pilbara (29 March 2009)

This week I'll make some tests which can measure the slippage more accurately, admittedly I was using market orders because the API makes that a lot easier.  FXCM are a "Straight Through Processing" (STP) broker, where a published price won't be executed until they get their order filled with a liquidity provider, and I need to see whether they are systematically shading the price with market orders, or whether it's more due to slippage at stop losses.  When the EA is using a fading strategy there shouldn't be significant slippage on entry but I'd expect there to be slippage when trend following.


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## Cam1975 (30 March 2009)

I have found these guys who offer a fixed 2 pip spread on the AUD/USD. I need to do some due dilligence on them though.  Has anyone used / heard of them before ?

emp.fx



Cam


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## Stormin_Norman (30 March 2009)

no i havent heard of them before.

they look like ava in disguise. http://www.avafx.com

why is your trading method so needing 2 pip spreads that youre prepared to risk more dodgy brokers to get it?


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## Cam1975 (30 March 2009)

Thanks for that.


I don't really require a two point spread but I am not happy with the disclosue of the change provided by IG Markets.  I believe they intentionally mislead customers under the guise of tighter spreads so I am in the process of looking for a new provider.

I respect the commerial realites of the world and can understand why you wouldn't keep a fixed spread but I want to see if I can get a better deal elsewhere. 

Re the pips, it makes a pretty big differance to my bottom line.  I did the math and it costs me and additional $5k per week.  With those costs its in my interest to do my homework is all.

Re avafx ? Have you heard any bad news on them ?


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## Stormin_Norman (30 March 2009)

if your account is that big (to have 2 pip wider spread cost you $5k a week) then you should be looking at a larger broker like interactive brokers.

if youre keeping at a retail level, check out OandA or FXCM.


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## Cam1975 (30 March 2009)

Thanks for that,

I have used interactive in the past as I trade for others and the set up for fee management was pretty good. I will have a look at the others. Thanks for your help.


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## sinner (31 March 2009)

>Apocalypto< said:


> Hey Sinner,
> 
> You can't hammer IG to much mate as they held a 2 pip spread I hear till recently. I have been watching the Interbank spread on the AUD/USD and in the morning its never less then 4-6 pips.
> 
> ...




Hi Apoc again,

Sorry if I gave the wrong impression. I am happy enough with IG. Like mentioned before, they are quick and dirty and I like that.

Only makes me a bit sad that I have to remove one of the pairs from my list of tradeables. A/U was a fun pair to trade and it will be harder to scalp without being able to set tight stops.

But today is a perfect example of still being able to operate nicely in a low liquidity environment. Just took 10 pips off G/U (opened on a 3 pip spread and closed on 2), during the trade I saw the spread anywhere between 2 and 6 pips!


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## >Apocalypto< (1 April 2009)

sinner said:


> Hi Apoc again,
> 
> Sorry if I gave the wrong impression. I am happy enough with IG. Like mentioned before, they are quick and dirty and I like that.
> 
> ...




Buddy you should try trading on and ECN like I am. you just forget trading the morning session unless you trade the eur/usd only! even the e/$ gets to 3 pips plus 8$ comm.

spreads can get very wide!


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