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Deltastock L2 ECN forex platform - My personal experiece

Mar 02 2012

I’ve been trading with Deltastock for a month now and I’d like to share my experience with their ECN forex platform .  As most of you know, ECN stands for Electronic Communication Network. In order to make clear ECN forex brokers’ advantages and disadvantages it’s a good idea to compare them to the traditional forex brokers.


Traditional forex brokers, also known as “market-makers” and “bucket shops”, actually are not exactly “brokers”. They do not act as a middle man between buyer and seller; instead they act as counterparty to all trades. They buy when a trader wants to sell and sell when a trader wants to buy.  Market makers don’t offset their clients’ positions. They trade against traders and make money on their losses, thus getting involved in conflict of interest. 
Unlike market makers, ECN forex brokers never take other side of the trade and couldn’t get involved in conflict of interest. They just provide a trading platform, which allows traders to interact with other traders and liquidity providers. The ECN forex brokers make their profit on commissions, so they need profitable high volume traders.
Is Deltastock a real ECN broker?
In the last few years many forex brokers released fake ECN accounts in order to attract more clients. Deltastock , fortunately, is not among them. 
When choosing an ECN forex broker, make sure that you can place limit orders inside the spread. If the broker allows you to do that and your limit order appears as bid/ask price, you’ve found a real ECN broker. Here is what I mean:
Notice that the sell limit order I’ve placed @ 8.7600 appears as ask price in Deltastock’s L2 platform.  If hit the buy button you and go long on EUR/USD, I’ll get my sell limit order executed and Deltastock will charge us both. That’s where ECN forex brokers profit comes from.
In the screenshot you can see a buy limit I’ve placed @ 8.7500. It’s outside the spread and doesn’t appear as bid price, but you can still see it in the order book. 
The spread on Deltastock’s ECN L2 platform is very tight. Most of the time it fluctuates between 0.1 and 0.5 pips; furthermore I witnessed a negative spread (bid price > ask price) a couple of times.  I tried to take advantage of the free lunch, but it turned out to be a bug, caused by a price lag. My market orders were executed at the real price and I had to get out of the market immediately with a small loss. 
Deltastock’s commissions are pretty low. They charge you just 0.003% of the base currency (approximately 0.2 pips on EUR/USD) for orders greater than 10,000 units (10 micro lots) and 0.003% of the base currency for orders below this limit. Unlike other ECN brokers (e.g. Interactive brokers), Deltastock does not have minimum commission per order, thus allowing even small lot traders to take advantage of its L2 ECN platform.
Max leverage and Minimum deposit
Deltastock offers max leverage of 1:200, a way higher than the leverage all other ECN forex brokers have to offer. Interactive Brokers offers leverage of 1:50 for majors and 1:25 for crosses; Citi Bank offers 1:50; Dukascopy offers 1:100, 
The minimum initial deposit with Deltastock is only 100 EUR, compared to $10 000 initial deposit with Interactive Brokers and Citi. You can fund your account via Wire transfer, Credit Card and Skrill (MoneyBookers).
So an ECN account with Deltastock turns out to be a flexible solution for trading with world’s largest banks and brokers without the need to take into consideration their high margin and initial deposit requirements .
Liquidity providers and minimum trade size
Deltastock’s L2 ECN platform aggregates liquidity from four of the world’s largest forex brokers – Interactive Brokers, FXCM, Dukascopy and Citibank + the liquidity provided by Deltastock and their clients.
Each of these brokers has its own minimum trade size requirement.  Your market order must be at least 20 000 units (20 micro lots) in order to be executed by FXCM, Dukascopy and Citibank and at least 40 000 units (40 micro lots) in order to be executed by Interactive brokers. 
So if you trade lots smaller the 20k, you are not able to access the liquidity provided by FXCM, Dukascopy, Interactive brokers and Citibank. In that case Deltastock acts as a market maker and spread may widen up to 2 pips.
Things get even worse if you trade lots smaller then 10k. You not only you can’t access the deep liquidity and tight spread, but you have to pay higher commission of 0.005% (about 0.3 pips on EUR/USD).
Trading platform
Deltastock’s trading platform offers all the necessary tools for technical analysis and wide variety of trading orders. I especially like the one-click-dealing in the L2 module.
Another interesting feature is that in the L2 module is that you can choose a specific Liquidity Provider as counterparty to your trades.
However there are three things that I don’t like about Deltstock’s trading platform.
             1. Too many windows. Quotes, charts, executed orders, pending order – each of these things has its own detached windows. Someone may find it flexible, but I feel uncomfortable with all these windows.  Fortunately in the upcoming update of the platform this is about to change.
             2. Different prices in the different windows. Take a look at the screenshot below – there is one price in the quotes window, another one on the chart and third one in the open positions window. The difference is small and inessential, but irritative.
             3. Tricky position closing. To close a position you should click the “X”, hold  the mouse over the drop down menu and finally to choose between three options: “Through new order”, “Click and Deal” or “Through L2”. I solved the problem just by opening a position in the opposite direction via the one-click-dealing in the L2 module.
Order Execution
I enjoyed instant order execution with no requotes or delays on Deltastocks L2 platform. However depending on the liquidity provider taking the other side of the trade, slippage may occur. Most of the time it’s about 0.1-0.2 pips, but during volatile market you market order may be slipped pip or two. 
By the way Dukascopy is one of the brokers known for its extensive slippage on market orders, so if you are concerned about slippage you can use the liquidity provider manager to delete it from the liquidity providers list. 
Bottom line
I sincerely recommend Deltastock to everyone who trades more than 20 micro lots (0.2 standard lots) per click and is looking for the best possible spread.  Deltastock’s L2 ECN platform allows you to have an idea how the real interbank fx market works and enables you to trade in conflict-of-interest-free environment.  Register Deltastock L2 demo and try it for yourself.
TAGS: deltastock  deltastock ecn  forex ecn  forex ecn platform  ecn platform  ecn review  l2  l2 forex 

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