CQG, Philip Capital and NinjaTrader, who's my broker?

[merengano]

Hello everyone, I'm confused because I opened my account in NinjaTraders a few days ago, y register with Philip Capital (which I thought was my broker) then I received my credentials from CQG.
So, I'm not following at all, so can you help me understand better? I don't know where should I get my broker statements in the future.

[NinjaTrader_Tyler]

Hello merengano,

Thanks for posting.

CQG is the back-end data provider, and NinjaTrader Brokerage is your broker. For more information, please contact BrokerageSupport[AT]NinjaTrader[DOT]com.

Don't hesitate to reach out if we may be of further assistance.

[bltdavid]

CQG is your data provider, access to which comes as a package typically bundled from your broker, which
is NinjaTrader Brokerage. In everyday conversation, your "broker" is NinjaTrader Brokerage.

Heard of CME, or ICE, or NYMEX? These are exchanges, sure -- but what they really are are data sources,
which CQG aggregates and provides access to as your data provider.

But, yes, the water is a bit muddy in places ...

Rithmic is another data provider, also available from NinjaTrader Brokerage. The data provider you choose
from NinjaTrader Brokerage is a big deal, because your NinjaTrader software license key must be mapped
correctly at the license server to allow you access to CQG or Rithmic, but not both. If you want access
to both data providers, you would purchase a Multi-Broker license from NinjaTrader. Why would you want
access to both? Let's say you also have a TopStepTrader account, they are Rithmic. If you wish to trade
both your NTB and TST accounts from the same PC using NinjaTrader (ie, selecting the account via the
dropdown Account menu in Chart Trader), then you need the Multi-Broker license -- meaning the license
servers will recognize your software license key as allowing NinjaTrader.exe account credential setup for
any data provider, not just the one on file.

It is important to understand the Multi-Broker license really means a Multi-DataProvider license, each
data provider provides an adapter which provides NinjaTrader.exe with the API technology to access
data from the provider. Sooo, the Multi-Broker license is really misnamed, since if you had two accounts
at two different brokers, and they both use CQG, or they both used Rithmic, you would be hosed. Why?
Because each adapter can only connect once to its data provider (though I seem to notice lately Rithmic
allows multiple adapter connections if you have multiple Rithmic accounts).

Interactive Brokers is a brokerage with it's own data servers, so if you wish to trade an NTB account
along with an IB account, you would still need a Multi-Broker license -- this is because two different data
provider adapters need to be employed to trade these two accounts on the same PC. Well, sort of.

IQFeed is also a data provider, and so is Kinetick. These businesses specialize in data only, they are not
brokers. They are separate businesses and their data is not free. If you have special data needs, you
should investigate these, otherwise the data provider bundled with your NinjaTrader Brokerage account
is usually deemed good enough by most traders. You know that NinjaTrader can trade stocks, too, right?
Well, where do you get the data feed for trading stocks? IQFeed or Kinetick (or others), but neither CQG
or Rithmic offer stocks.

I've never used IQFeed or Kinetick, but some traders do. Why? Well, various reasons -- IB had prior
history of data awkwardness (no tick data, I think) so traders usually paired their IB account with Kinetick
or IQFeed -- or just used the free CQG data if they also had an NTB account and a Multi-Broker license.
It gets a bit messy, because even if you don't want IB's data, but wish to use your free CQG data for
trading both accounts, you'd still need that MB license, because, in this case, you really are multi-broker.

[If you've ever studied your NinjaTrader log files, or dealt with Strategies, you might know that the API
provided by the data provider is really 2 different APIs -- one is for the Data feed and one is for the
the Order feed (aka order routing) -- both come from CQG. This is why you can substitute out the
CQG Data feed portion with Kinetick, but still use the CQG Order feed portion. But I digress ...]

Still with me? Let's finish parting the curtains and get straight to the meat ...

To be clear, NinjaTrader Brokerage is your "Introducing Broker". Your IB is whom you call if you have issues
with your orders or connectivity. After your account is funded, you deal with your IB contact for most issues
regarding your account. In everyday conversation, most people talk of their "broker" as the people they
have contact with the most, which is almost always the people at your Introducing Broker.

Phillip Capital is, I suspect, your "Clearing Broker". You submitted a ton of paperwork (as well as blood, saliva,
and bone marrow samples -- just kidding) to get approved for a brokerage account. NinjaTrader Brokerage
folks probably directed you to Phillips Capital (or Dorman Trading) to get your account approved and funded.
Once Phillips Capital approved your account application, you sent money to fund your account to Phillips Capital,
not NinjaTrader Brokerage.

Your account statements should be coming from the Clearing Broker, since they are the ones who are
involved in daily settlements on your account. You should get a Daily Statement email for each day you
trade (or hold a position) as well as Monthly Statement.

My understanding (which is still limited, and may still be wrong ) is that the Clearing Broker handles the
money aspects of your account, while the Introducing Broker handles you, the human.

Make sense?

[merengano]

bltdavid thank you very much for taking the time to develop a detailed answer, it makes sense and now I understand. There are so many entities and at some point I thought I had been scammed. It would be great if they had a more user friendly process to open an account. But anyways, I've received great customer service so far...but now I feel more comfortable. Again, thanks!

[bltdavid]

You're quite welcome!

I saw this post today, a nice tidbit which adds to this discussion.

[bltdavid]

More detail on a Multi-Broker license here and here.

[bltdavid]

Some detail regarding NinjaTrader software vs NinjaTrader brokerage is here.

[balltrader]

Thanks bltdavid David!

It might help to clarify that the reason you need these third parties (data source connection "CQG", broker "Phillips", customer service "NinjaTraderBrokerage"), is because you are not a member of the CBOE Exchange (membership typically costs thousands of dollars and is usually out of the price range of most users).

So to gain access to the Exchange to be able to trade, you open an account with a Broker, then pay a separate firm for a data connection to be able to "see" prices and "send" orders (open/close).

An Introducing Broker usually has lower margin requirements than the actual broker ("Phillip Capital") because they want to have a large number of customers (volume), and they can do this discount because the IB keeps a pile of cash in the back room to "guarantee" their customers will not "RobinHood" themselves into debt which cannot be repaid. However in real-life, if your brokerage trading account balance falls below a minimum required amount, any positions you hold will be liquidated immediately as an insurance policy to limit the amount of the loss to the IB bankroll. However, unexpected emergencies like bombings, pandemics, bad news etc can cause prices to change fast, so there is no guarantee that this will work in real life, which is why as a customer, you need to have the ability to deposit more money into your brokerage account within 1 day, i.e. you need to have $25,000 in liquid cash. This is the reason why you see margin requirements being raised over holiday weekends when risk in increased. And the Introducing Broker agrees to handle all the customer service needs of their customers, so the Clearing Broker's staff (Phillip Capital) is not burdened by low-profit accounts.

During active trading with open positions, your broker (Phillip Capital) will monitor your account balance for this risk, and when a trade is closed, they adjust your balance based on a gain or loss from the position.


So in summary:

Software Platform

Data Connection

Brokerage Account to access the Exchange

Customer Service (brokerage account support and software platform technical support)


Why is it so complicated, compared to other trading companies like ETrade or TDAmeritrade? POWER. The amount of control you have from this software platform is so much better than the "popular" alternatives, and your orders are not delayed / filtered by ETrade etc., or sold to large trading firms like Citadel Securities, who squeeze a trade in micro-seconds before your trade is executed, and they profit from tiny differences in slippage, and also get statistics about how real traders are positions, so they can fool them into triggering stop loss orders, etc.

Nothing good is ever free, or easy.

[ahelton]

So I'm curious, when we pay commissions on every trade. Does that money go to Ninja Trader or Phillip Capital?

[bltdavid]

So I'm curious, when we pay commissions on every trade. Does that money go to Ninja Trader or Phillip Capital?

With the understanding that,

* Phillip Capital is the clearing broker, also known as the Futures Commission Merchant (FCM), and
* NinjaTrader Brokerage is the introducing broker (IB),

In a pure technical business sense, the answer is the FCM. See here,

"The introducing broker and whoever executes a transaction split the fees and commissions
according to some agreed upon arrangement."

Therefore,
we can presume NinjaTrader Brokerage has a business agreement/arrangement with Phillip such
that they receive some percentage of each commission subtracted from your account (which is
being done by Phillip, the FCM, since they handle the money aspects of your account).

So, in reality, the answer is probably both.

[kobieperezd]

Ok so I'm new, and I wanted to know whether I need to do my due diligence with regards to researching the two broker option, Phillip Capital & Dorman Trading, or whether its even necessary considering I'm going through NT if you get what i mean? thanks

[NinjaTrader_Tyler]

Hello kobieperezd,

Thanks for posting.

Please contact brokeragesalesATninjatraderDOTcom for any questions regarding opening a NinjaTrader Brokerage account.

[bltdavid]

Ok so I'm new, and I wanted to know whether I need to do my due diligence with regards to researching the two broker option, Phillip Capital & Dorman Trading, or whether its even necessary considering I'm going through NT if you get what i mean? thanks

"Need" is a matter of opinion, but you definitely "should" do that, since the
whole point of due diligence is to "get comfortable" by becoming knowledgeable.

Google both names, read their websites, google their top executives, etc etc ...

Search for enforcement actions on govt websites and via major media.

Read reviews, talk to NinjaTrader Brokerage, compare & contrast.

Standard stuff ... nothing is ever wrong with due diligence.

[Algodoc]

Assume you have a Phillip Capital account with NT MultiBroker license. Can you use your free data to connect to Interactive Broker and send trade orders to int Broker ?

thanks

[NinjaTrader_Tyler]

Hello Algodoc,

Thanks for posting.

Yes, you may use multiple connections simultaneously to accomplish this. Below is a link with more information:

https://ninjatrader.com/support/helpGuides/nt8/multiple_connections.htm

Please let me know if I may be of further assistance.