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Zero Spread Option

Ever felt that slippage and the spread masks your true potential?

Have you ever thought about how pivotal trade-offs are?

In every situation, traders need to make a choice about which set of FX pairs to trade and forgo others that they deem less attractive, less liquid, less conforming to the trader’s strategy, too volatile to make money, not volatile enough to be consistently up, etc.  Choosing a currency pair to trade must be borne out of one crucial test: the price pattern, research of that currency pair(s) fits most congruently with the said currency pair’s price behaviour.  It is amateurish choosing a currency pair to trade because it is the country of your residence, or any other impulsive selection that is borne out superficiality and emotive personal preference.

Have you ever thought about how you may not be doing yourself any favours by going live too quickly?  What is the alternative forgone?  Remember that in order to master any given vocation, a total of 10,000 hours have to be invested in the venture? The principle is that it will require a great deal of investment in time and effort and with a set monthly subscription fee.  Going big (high leverage) too quickly with real money means that you risk exhausting mental and physical capital. Going big without the requisite experience means you’ll swim with sharks as a foetal tadpole. Chances are, the big sharks won’t even bother with you- you’ll be b(eaten) instead by a catfish or stung to death never to return to the markets by an electric eel.

Here at Liquid Markets, experience teaches that novice traders are often convinced that they are stopped out and are adversely affected by price slippages.  These suspicious often cloud their judgements. It is possible for instance that novice traders do not realise the importance of staying out of volatile, event-led market movements. It is possible for novice traders to be indifferent to just how unprepared they are at being successful in the live markets and how psychologically unprepared they are for the swings in FX prices and by derivation, their profit and loss accounts.  Hence the need for 5x leverage until a winning system is evident. 

Nevertheless, we at Liquid Markets have realised that proprietary trading houses haven’t traditionally given novice traders and traders with intermediate experience the product and training flexibility that they have sought.  The so called prop firms (which in small print admit that they have no market exposure and are essentially a gaming platform) either offer high leverage ‘crack cocaine’ demos with the fee as the business objective, or provide  B Book accounts and introduce ‘high caffeine laced energy drinks’ However with Liquids history of futures prop desk facilitation, it’s subscriber traders are placed in a culture of obtaining satisfaction via mental mastery of the senses resulting in the ability to achieve without stimulants.

That’s why we provide the zero spread facility to the Blulive subscriptions for you. 

That’s right, no broker marked up spread whatsoever, otherwise known as a RAW spread. This has been done to introduce greater trader transparency and secondly, it has been introduced to help us at Liquid Markets have clear metrics and statistical parameters, calibrated with sensitive algorithmic tools that will track and validate your trading prowess and discipline, map your progress (or lack of it) and help support you financially with the most appropriate tool to equip you on board the train of trading success. Remember, it is in our interests that you are successful. If the competence of your self-belief matches the competence of your trading metrics, then success beckons. Success means that your trades are what you had in mind and are placed without the middle-men slippage. We can see your trading ability without the FOMO that often results in chasing market entry at much worse prices that the original intent. Because the excessive spread clouds the trade in mind, traders accept the noise of instant loss upon entry, stop running and spread widening  aimed at causing premature exit from the position.

Therefore, the zero spread product is an attempt to judge traders by the Profit Factor Metric where; Profit factor = (gross profits) / (gross loss) 

The following is a rough guide to which traders at which stage will benefit mostly from the zero spread. Look at your current trading stats and divide your gross profits (without the marked up spread and with a FIXED commission). Then look at the table below.

Profit factor  Performance   Description 
Below 1  Bad  You were losing money 
1.0   Bad  You were breakeven, but still losing money when taking fees into account 
1.10-1.140  Average   You were making money but your strategy is not very consistent and small changes in the market conditions hugely affected your results. 
1.41 -2.0  Good  You were profitable and can adapt to more than one type of market condition. 
Above 2.0   Excellent  You are likely to have been promoted to UTC4 

As the fees are the spread, then the only result required is profitable trading and target completion. Therefore the zero spread product will be a boost for those traders with Profit factor of 1 – 2 in a normal account. 

This product is made possible by demanding the brokers VIP treatment for our traders. However the Super Lite and Super Pro are more in line with retail experience ‘commission free’, yet with a fixed broker charge wrapped around the raw Liquidity provider bid/ask spread. Our accounts are STP and are therefore subject to a variable Liquidity provider Bid/ask spread. The zero spread is therefore zero broker markup. Yet the others have a fixed broker markup, denying the broker dealer desk variability that often gets exaggerated at certain points.

So 2 options both with raw spread, plus fixed extra spread charge or a separate fixed commission.  It appears to be a binary choice, yet a clue can be gleaned from the fact that brokers will generally offer the latter option only to the VIP or non retail accounts. The UTC uses the zero spread facility.

Lets look closely at how a RAW spread plus a commission, obtained by your prop firm who want to quantify your actual real ability at the post beginner level compares to the ‘commission free’ marked up + variable extra broker spread offered by the broker with only 1 liquidity provider. Would that surprise widening at New York/Asia handover period disappear enough for you to leave stops in? Would you be able to take the first choice signal at the choice price or expect to chase the price around 10 pips assuming your FOMO was justified?

Lets start with your broker who generally prefers not to offer this zero spread to retail.

Remember with Liquids Blulive or UTC you can pay $100 for control of a VIP professional zero spread account, you receive zero markup and $8-$10 commission per 100,000 lot.

A zero pip spread that is fixed, and doesn’t vary, will likely either include a commission, or the broker will be operating a dealing desk to attempt to make money when you trade, by being on the opposite side of each trade.

Depending on which broker will accept the $100 that is all you need to risk at Liquid, they will ultimately do one or more of the following:

  • Add a spread markup or earn a rebate (agency broker) when you trade with them as they route your order to a third-party market-maker in return for compensation.
  • Charge a commission (agency broker) in lieu of any spreads when routing your order.
  • Manage risk as a dealer (agency broker) (market maker) on zero spread accounts.

A standard account refers to the smallest trade size of 100,000 units of currency, which is also known as a standard lot size. A raw spread refers to the cost of trading reflected in the bid/ask price, where the broker is not adding any markup but instead provides the price as is (i.e., raw spread) straight from their liquidity providers.

Therefore a standard STP account may cost you much more than the $10 maximum charged by Liquids brokers. The markup that can vary at anytime with your full blessing will not be $10 and could be $100 is surely a way to stop you from following your real trading idea and instead chasing the market and building FOMO syndrome.

  • Average broker EUR/USD spread 10 years ago: 3 pips
  • Average broker EUR/USD spread today: 0.8 pips
  • Average Liquid broker EUR/USD spread today: 0.1 pips

In the interbank market, where prices originate from major dealers, spreads are quoted in fractions of a pip, also known as fractional-pips. A zero pip spread may range from 0 to several fractions of a pip, or even more during volatile market conditions.

Give yourself a real chance from only $100

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