MetaTrader Micro-Lots go STP


Thanks to yesterday's disappointing Non-farm Payroll numbers the greenback fell and my troublesome sell limit order at European broker ActivTrades finally got filled.  Consequently my new Interbank MetaTrader 4 micro-lot account with them is now fully funded, and open for business.  As you can imagine, I have had one or two long discussions with ActivTrades over the last couple of days. During the course of those they pointed out to me that enough of their liquidity providers are now willing to quote and fill a 1K trade that it had now proved possible for them to introduce micro-lots on their "Straight Through Processing" (STP for short) MetaTrader Interbank accounts. When I enquired what "enough" meant in this context, the number three was mentioned. Unlike their Standard account, there is no "averaging algorithm" inserted by ActivTrades between you and the banks on their Interbank account. Instead they just add a bit to the spreads they are quoted, since they have to earn a crust somehow just like the rest of us.

Swiss bank Dukascopy have been providing ECN micro-lots direct to retail clients since the start of this year, although they don't call them that, and what's more they don't provide them via MetaTrader either. ECN stands for "Electronic Communication Network", and such an account allows you to place your orders inside the currently quoted spread, if you so wish.

Big US broker FXCM announced back in March that they were intending to provide their own flavour of STP, which they call "No Dealing Desk execution" (NDD for short) on their micro-lot accounts, and once again their micro-lot platform is their own Trading Station II rather than MT4. In the same announcement FXCM pointed out that their micro spreads would be increasing! I've just discovered that (with a strange lack of fanfare) FXCM micro-lot accounts have recently been enabled for NDD execution.

Since FXCM seem to think moving to STP on micro accounts involves increasing spreads, we thought we'd try and find out if the same thing applied at ActivTrades.  We kept a very close watch on their EUR/USD spreads at around the time of the NFP announcement yesterday. On their "STP" Interbank account the minimum spread was 1.6 pips, and the maximum was 12.1 pips. On their "averaged" Standard account the minimum spread was 2.0 pips, and the maximum was 2.0 pips.

Unlike MetaTrader brokers, Dukascopy provide historical tick data and so you don't need to keep a close watch the whole time. According to that information their EUR/USD spreads varied between 0.5 pips and 11.5 pips around NFP time yesterday. If those spreads look superficially attractive, don't forget that unlike the other brokers mentioned, Dukascopy add commission on top.

FXCM also provide historical tick data via their recently announced Strategy Trader platform. I don't have an NDD micro account with them, because I didn't discover that such a thing existed until after the event. However I do have an NDD spreadbetting account with them, which according to FXCM receives identical prices. As soon as their servers stop undergoing maintenance, I'll let you know what they reveal too.

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August 7, 2010
August 8, 2010

Matt @ 4:59 pm #


Very interesting Jim thanks.

Any idea what exactly Activ consider a "scalper" to be? I looked at opening a standard account with them a while ago, but I often look to take between 5-10 pips per trade. Would this be worthy of an Interbank account do you think?

Matt @ 10:51 pm #

Thanks Jim – will certainly pass on my feedback if I choose to go with Activ.

I've opened a small spreadbetting account with SML also recently (although yet to utilise it), but suspect I'd have far more trouble with them based on my style. As you pointed out in another article; they don't seem to want to appeal to scalpers, but they don't state what they believe scalping to be either. Another 'suck it and see' I guess

Fantastic site by the way.


August 9, 2010

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