What is an ECN / STP transaction?

This is a broker's business model (which generally shows the difference between a broker and a "market maker"), where the customer's order is sent directly to one or more liquidity provider. There may be an unlimited number of liquidity providers (i.e. banks, RFQ brokers, other financial institutions). Brokers with more liquidity providers can provide customers with better transaction execution (more liquidity, less slippage). How to be considered as a real STP broker - it does not pass orders, but sends them to liquidity providers, acting as an intermediary between customers and the real market.

ECN – Electronic Communication Network
STP – Straight Through Processing

Have you ever experienced requotes?

No, we don't. Any broker who re-quotes your order is definitely a ‘dealing desk’. As a counterparty to the transaction (whether done manually by the broker or automatically through system), the broker sets a delayed execution during the price change, so that a requote occurs. Therefore the broker cannot execute your order and will send a message notifying you that the price has changed. This is a requote. You usually get a new price, which is obviously different from the price you requested (especially when the market is volatile). In most cases, it is bad for traders and good for brokers. MaxxEmpire will not have any requote, simply because we do not do dealing desk, whether it is artificial or automatic (software that is often called a virtual broker, automatic trading, etc.)

Can I do scalping? Can I trade information?

Yes, you can. Unlike most brokers who either directly prohibit or indirectly prevent scalping, we welcome scalping. Why? A ‘market maker’ is your counterparty. That is, they expect the market trend to develop in the opposite direction and that you will lose money. Scalpers take advantage of short orders, which means they stay in the market for a short time, during which time the market trend direction does not change.

Another problem with a trader platform is that scalping generates a lot of transactions or simultaneous order requests (for example, when important news is released), which makes it difficult for the back office to deal with them.
MaxxEmpire transfers all transactions to liquidity providers for commission only. As a result, our interest is in high volume of transactions (the higher the volume, the more commission we get), which is usually driven by scalping.

How do I know if my broker is a dealing desk broker?

There are some rules and regulations generally applicable to dealing desk broker:

  • Direct or indirect prohibition of scalping, trading news, other strategies
  • Fixed spread
  • So called “affirming” stop-loss orders
  • May requote

If you encounter any of these situations, your broker undoubtedly is a dealing desk broker. Dealing desk brokers (in actuality called ‘market makers’) create their own markets for you with their own rules (as described above). Needless to say, these rules do not serve you; they are designed by them and generally applicable to them only. NDD (No Dealing Desk) brokers such as MaxxEmpire, as intermediaries between traders and real markets, accept strictly regulated and transparent commissions.

How market makers operate?

Generally speaking, they do not trade in the market, but conduct internal hedging. What you see on the chart are market makers' quotations, which may look real, but in fact they are made by market makers.

So in this case, if you buy at a certain price, say, Euro against Dollar, they will conduct your order, but doesn't charge it, because they think Euro will fall in price. If Euro falls, you will lose your savings and the market maker will get it. In contrast, if you win, they will pay you their own money. Of course, any market maker will do everything possible to prevent you from winning. Whether it's legal or illegal, it's all about money. At this time, you will encounter requotes, sliding point, etc.

How MaxxEmpire earns money? Does MaxxEmpire need a profitable trader? Why?

MaxxEmpire will receive a certain commission from the liquidity provider for each transaction. We add it to the spread as profit, which you can see on the chart (notes that it includes commission, regardless of your profit or loss).

Many liquidity providers around the world provide us with liquidity. The system we designed can provide the best quotation for our clients all the time. When you initiate a new order, you get the best offer (or ask price), which has already included our commission, directly from the liquidity provider. So we hope you have more deals. The best way to do this is to make profits, not losses. That means we want your deal to be as profitable as possible.

Why you would not do requotes?

In short, we do not requote because we have nothing to do with the quotes (the price you see in your trading software). If one of our liquidity providers provides a price, the order will be filled. It is important to understand that we cannot guarantee that your order will be filled at the price you requested; our system will automatically choose a more favourable price provided by another liquidity provider. However, once again, your order will not be requoted because we are more interested in your profitable transaction.

Can the liquidity providers see my order?

No, they can't see it. From their point of view, they can only view one customer, and that is MaxxEmpire. In all cases, you remain anonymous.

The price on the chart reaches the pending order price, but my order is not filled. What is going on?

This is a possible situation and it usually happens within a certain time due to lack of liquidity. For example, some customers placed short orders before a major news release, for a total of 1,000 lots. When the news was released, it boosted the market by 50 points. Therefore, the prices on the chart have reached the prices of these pending orders, and a total of 1,000 lots need to be filled. It may be that at this moment at this price, the liquidity provider may have only 200 lots of liquidity. In this case the first 200 lots of 1000 lots will be filled, while the remaining 800 lots will not be filled (no liquidity is available) and will continue to wait until the price reaches the pending order price again.

Is smart bond allowed?

Yes, no doubt. We welcome any smart contract.

Which spread is better, fixed spread or floating spread?

Floating spreads are better because it is real. There are no fixed spreads in the interbank market. When a bank or other financial institution wants to buy or sell currency, it sets the bid/ask price it needs. That is, the price is what they want at the moment. In the real world, the spread between bid and ask prices cannot be fixed.

So every dealing desk broker that offers fixed spreads manipulates prices to make the spreads fixed. In most cases, these manipulations are bad for traders.
For example, the euro offered by your broker is a fixed spread of 2 points against the US dollar. During the day, the difference is usually 1 or 1.2. This means that you lose 0.8 points per transaction, which your broker is happy to see.

On the other hand, before any important news releases (such as Non-Farm Payrolls (NFP)), the same EURUSD spread may widen to 5-6 points. If your broker wants to maintain 2 fixed spreads, it either pays you a spread of 4 points or requotes you. Requotes are most likely to occur, as they do not want to lose those 4 points.

What is slippage and why does it happen?

Slippage is a small shift in the opening price due to a lack of liquidity (when it has been acquired by another trader's order). It may also occur in a market gap.
It is important to understand that we cannot guarantee that your order will be filled at the price you requested; our system will automatically select a more favourable price offered by another liquidity provider.

So in some news release periods, it is likely that the price you requested will not have any liquidity. For example, you want to open a 5 lot long EURUSD at 1.30000. Now, in this case we can see the following liquidity:

  • Provider 1: Price 1.30010, 20 lots
  • Provider 2: Price 1.30005, 5 lots
  • Provider 3: Price 1.30000, 1 lot

In this case, your order will be filled with Provider 2 because he has the best price and sufficient liquidity to meet your requirements. The transaction price is 1.30005, which is 0.5 points away from the price you want. However, again, your order will not be requoted because we are more interested in your profitable trading.

Why can't stop-loss orders be guaranteed?

To reiterate, there is no such thing as "definite stop loss" in the real market, it is only provided by dealing desk broker. As mentioned above, market makers do not trade in the market, but instead conduct internal hedging. So when your "definite" stop loss is triggered, it means that your entire loss amount has fallen into the pocket of the market maker.

This can lead to so-called "stop loss hunting" practices. There is a platform for dealing desk brokers to see where your stops are, so they can easily manipulate prices to make them hit stops.

In the real market, any stop-loss order is considered pending until its price is hit. After that, order and liquidity providers would hedge it (again, slippage may or may not be involved, depending on available liquidity). Therefore, it is impossible to "guaranteed" or "hunt" your stop-loss order.