Forex Broker With Flat Commission

February 4, 2007 by Trader Rich

I received an email from a visitor this morning who had this to report.

I have been following your blog for a while. I enjoy your posts.
Interesting and informative. I just came across a forex broker - no
spread (practically) and $5 per lot commission. This beats the 3-5 pip
spread for most pairs (i.e. $30 - 50). Please check out Mbtrading.com at tell me what you think.

I don't know if he/she is affiliated with MBTrading but nevertheless, I looked at the site and responded back with the following email:

It
seems like it's a flat $5 USD for every $100,000 traded. So if you
trade 10 mini-lots (for a total of 100K), the total commission is only $5. The only thing is
3DForex, which is MBTrading's forex incorporation doesn't have a lot of excess
capital. Neither does MB Trading… I tend to want to put my money
into Forex brokers who have at least over 20 million. 3DForex has an
adjusted net capital of $544,000 with an excess of only $44,000 as of
November 2006. This makes it difficult to want to deposit money
there.

Are the reports that Forex brokers (FCM's) are required to submit to the CFTC any indication of financial health? I've talked about this in the past and the CFTC states that they are meaningful to a certain degree. If a broker reports month over month of declining Net Capital, does it mean anything? I don't know. It could be meaningful or it could just be their process of accounting. For instance, should we be concerned about Oanda's reported net capital for the last 5 months?

July 2006 - 38 Million
August 2006 - 31 Million
September 2006 - 29 Million
October 2006 - 32 Million
November 2006 - 19 Million

I doubt it even though Oanda was pretty steady at 30 million the latter part of 2005. I'm just using Oanda as an example here. There are other brokers that show the same type of trend.

Popularity: 1%