Pro.ECN accounts - revolution or the same ECN in a beautiful wrapper?
Hello friends forex traders! At the request of readers, we decided to review account type Pro.Ecn, which has long appeared in the Alpari company, has been declared as revolutionary, but nevertheless has conflicting reviews.
We tested the execution of orders, measured the spreads on the main currency pairs during different trading sessions, tried to trade on the news, and also tried to figure out if there was any use for additional, exclusive for this type of account, execution settings.
What is it about Pro.Ecn?
Until recently, the forex market was associated only with the work of market makers, known in our area as DCs (Dilling Centers). Such a broker acts as an intermediary between the trader and the bank, and independently sets the prices for the purchase and sale. The main earnings of DCs are plums of its customers. Suppose a client wants to open a buy order in EURUSD, then the broker opens a sell order at the counterparty, and takes the difference between the two positions in his pocket. Obviously, such a scheme with isolation from the external market is far from the concept of “transparent”. In addition, there is a direct conflict of interest. For a broker, this is the most profitable scheme possible, but not the most stable - sometimes clients earn money.
A more advanced MM algorithm, in addition to internal dilling, uses external hedging. That is, the aggregate position of customers is completely blocked by external counterparties. But the broker will not earn on one hedge, so the client does not receive the best prices and not the fastest execution. You send the application to the broker, and the broker sends this application to the bank, which causes a significant delay in execution and requotes.
Over time, the NDD system appeared - the same process, but fully automated. More modern STP technology completely eliminates the intermediary broker from the chain by performing end-to-end order processing - the client trades directly with the counterparty. Such a broker earns exclusively on commissions from transactions. STP can also connect to ECN sites. The ECN system automatically selects and executes matching customer counter orders. That is, traders have the opportunity to trade directly with each other and see a glass of orders.
Some time ago, Alpari, in collaboration with Dmitry Rannev, announced a new type of real account - pro.ecn. As stated in a press release, the fundamentally updated ECN technology is required to bring forex trading to a whole new level.
“Our software controls all the execution, from beginning to end. For each slippage point, we know exactly where it came from.
The broker can only connect or disconnect suppliers, set commissions, swaps, and determine the size of contracts, leverage, etc. The broker cannot intervene in the execution process. ”
What immediately pleases is the rather low commission of $ 16 per million one way. This is already below many of the initial plans of other brokers. The objective of our test is to determine the dynamics of spreads, the quality and speed of order execution.
The minimum deposit is $ 500. Those. For beginner forex traders, this type of account is unlikely to work.
In isolation from the trading system, the average spread for the period does not carry particularly important information. There are already many brokers on the market with fairly low and competitive prices. Therefore, I tried to cluster the results as much as possible so that the graphs showed a difference in dynamics over a different period of time, and extreme values of the sample were visible. Indeed, in fact, it is the peak and minimum values of the spread that can speak of special trading opportunities.
The spread was measured during the week (Monday through Friday) for the main currency pairs (majors): EURUSD, GBPUSD, AUDUSD, NZDUSD, USDJPY, USDCHF, USDCAD. The measurement period is divided into sessions: from 10 to 19 for Europe, from 16 to 1 for America and from 3 to 12 for Asia.
* The blue dots indicate the real value of the spread, the orange line indicates the average. The ordinate axis is 4-digit items.
Peaks are the maximum spread spreads during a session. Visually, you can see that Asia fully justifies the reputation of a calm market - during this period, the spread is most stable. During the European session, the largest expansions are possible, but the spread most of the time is as low as during the Asian session (especially for popular pairs). Perhaps this is due to the period of the news release, but during the American session the largest spread was obtained, which is expanded with sufficient regularity to large values.
Trading on the news
The test was conducted during one of the most volatile news - Nonfarm payrolls. Unfortunately, the order was not completely successful and was executed twice at the top of the bar. The first order triggered from the first hesitation and closed in the stop.
After a primitive calculation, we can find out that at the time of placing the second order (1200 ms before the news), the spread was at least 160 points (fifth digit), and at the time of execution (almost 3 seconds after the news) it narrowed to 110. This information is confirmed by myfxbook statistics :
Ping before the broker in this case was 50 ms, but it is unlikely that reducing this value would greatly affect the result.
But, according to the comments of Dmitry Rannev, it can be judged that performance without slippage is not guaranteed even in a calm market:
“This is a market, there can be no guarantees.
I have repeatedly written that periodically there may be (and there are) runtimes and slippages more than usual.
There are two main options:
1. The supplier performed longer than usual.
2. The supplier redirected, it was necessary to send again to another supplier, which takes time. ”
Well, to summarize what was said earlier:
“Who said this is an account for newsletters?
I’ll tell you a secret, for newsmen there is nothing but random temporary luck.
This is an account for those who do not want to receive an unexpected huge slippage. ”
In other words, news is to pass by.
A modern ECN / STP system, in theory, provides prices better than a simple STP. However, the availability of the best prices does not guarantee performance on them. Liquidity at these prices may be scanty or absent altogether. But, even the very availability of better prices can mean better performance overall. To do this, it is enough to indicate the price in the application a little worse than desired, then the probability of execution increases significantly.
For the test, a server was rented with a minimum ping (<8 ms).
A small script was also written to measure the time required to open a packet of orders.
Since we use small volumes, we are primarily interested in speed. Some individual orders are executed quickly. When sending 10 consecutive requests, at best, it was possible to achieve the execution of the order in 80 ms.
On the chart you can see the speed of order execution in the opening order. I can assume that the fluctuations are associated with a switch between liquidity providers - the process of selecting the best price by the aggregator.
For example, you can compare the execution of a pack of orders with lot 0.01 and one request with lot 0.1. The comparison, however, is not entirely honest, since in the first case there are synchronous requests. That is, the function waits for a response from the server, and only then sends the next request. But you can roughly estimate how much time is wasted when sending an order. Vertical values in microseconds.
This practice was developed on the services of GKFX and by inheritance passed to Alpari. You can say - this is one of the most useful innovations, it allows you to customize the performance for yourself.
You can change the account settings in your account:
- Click on the account number, select Account card
- Further Trading Settings.
- Change the settings, click Save changes.
Slips in comments on orders
Slippage occurs when the actual order execution price differs from the requested one. That is, the field indicates the difference between the price that entered the server and the real price at which the order was executed. Useful feature for tracking performance.
Partial execution of limits
Usually, limit orders are executed either completely at the indicated price, or with positive slippage. This function allows you to set an order with a fixed price and not guaranteed execution. When the order is partially executed, the remaining volume is set back at the same price. If liquidity does not appear at the indicated price, the order can be deleted manually.
Fulfillment of market limits
The function, in fact, at the time of execution replaces the limit order with the usual market one. Since the order is executed at current prices, negative slippage is possible during execution (not in favor of the trader).
Cancellation of orders in the gap
If a pending order and a stop / profit level simultaneously fall into the space between two quotes, the pending order is canceled. This is done in order to avoid opening a knowingly unprofitable position.
The same goes for stop orders. If the difference between the first quote price is greater than the order price by a certain number of points, the order will be canceled.
The function replaces the deposits and stop levels with limit orders, with the price worse by the size of the maximum slippage. In this case, the order is executed only with positive slippage. If there is no liquidity on the market at the price of an order or better, the order is canceled.
Reverse order activation
If the option is enabled, then stop orders will be activated and sent for execution according to the following principle:
- Buy Stop is sent for execution when the Bid price crosses the order price;
- Sell Stop is sent for execution when the Ask price crosses the order price;
- Stop Loss is activated when the Ask (for Buy) / Bid (for Sell) price crosses the Stop Loss level.
Thus, this option can prevent the activation of stop orders in case of spread expansion, which is especially important at the time of economic news or during low liquidity.
Pros and Cons of Pro.Ecn Account
- At times, very fast execution. For maximum effect, you should get a virtual server with a minimum delay;
- The presence of advanced trading settings.
- Execution is fast, but unstable - it all depends on the availability of liquidity at the supplier. In this regard, it is difficult to predict whether the order will be executed in 0.1 s or it will take an order of magnitude more;
- Significant spread and slippage extensions on the news. In this regard, the bill does not bring anything new. AMTS Solutions has improved aggregation algorithms, but the supplier will still not execute the order at a price that is no longer there.
- The minimum deposit is $ 500, which is not suitable for everyone.