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Is FXCM really that bad? Trying to find a broker...

  • Post #1
  • Quote
  • First Post: Aug 2, 2016 5:37pm Aug 2, 2016 5:37pm
Hi all,

I'm currently trying to find a broker to trade with. I hear all kinds of horror stories on this forum and that every broker is out to get you in some way. I have heard trading with an ECN broker is advantageous over a MM.

I was just wondering which broker people actually recommend. I'm not looking for a long discussion that every thread seems to turn into, just the general consensus of trusted brokers to trade with.
Thanks,
  •  Soros
  • Joined Sep 2012 | Status: Edge,Phsycology And Money Managemen | 951 Posts
They are worse than anything you can ever imagine, what they did to ATC Broker was wrong, unethical and disloyal, these guys are money hungry wolfs that dont care about you or ur acc.
I am what Many Dream to be but only a few can achieve, im a part of the 1%
  •  Soros
  • Joined Sep 2012 | Status: Edge,Phsycology And Money Managemen | 951 Posts
Jason Rogers is definitely gonna come here and defend them, you know why?? HE GETS PAID TO DO THAT, IF HE DOESN'T HE WONT GET A CHEQUE.
I am what Many Dream to be but only a few can achieve, im a part of the 1%
Please, please, I recommend you NOT to enter this ''business'. It's full of... you know. It's just absolute horror, like you said. Although if you don't want to listen, then that's your choice. But you know what I'm talking about.

PLEASE just listen to me. Save your grands, and put it somewhere where you can ACTUALLY put your hands on it. ANYTHING but Forex.
Quoting flinx
Hi all, I'm currently trying to find a broker to trade with. I hear all kinds of horror stories on this forum and that every broker is out to get you in some way. I have heard trading with an ECN broker is advantageous over a MM. I was just wondering which broker people actually recommend. I'm not looking for a long discussion that every thread seems to turn into, just the general consensus of trusted brokers to trade with. Thanks,
Hi Flinx,

As you noted, there are many differing views. Some speak for one broker. Some speak against another. Some tell you not to trade forex at all. It can all become overwhelming, so I'll keep my post brief. If you have any follow up questions, please let me know.

Regarding the general consensus, I notice your forum profile mentions you live in the UK. The FCA regulates forex trading where you live, but they do not list financial data for forex brokers they regulate as the CFTC does in the US. Below are the latest financial data from the CFTC listing US-regulated forex brokers by the amount of money on deposit with each. Most of them are also regulated in the UK.

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FXCM is regulated by the FCA and has an office in London. We offer you the choice of either No Dealing Desk (NDD) forex execution (for Standard and Active Trader accounts) or DD execution for Mini accounts. On our website, we explain the differences between these trade execution options.
Jason

What is going to happen when Leucadia divests itself from FXCM and FXCM's stock price plunges? How is that going to affect all the retail clients? Another related question: Do you foresee FXCM surviving it's current precarious financial situation?

These are the questions I am asking myself and which are preventing me atm to become an FXCM client.

Thanks for taking the time to respond.

Quoting Jason Rogers
{quote} Hi Flinx, As you noted, there are many differing views. Some speak for one broker. Some speak against another. Some tell you not to trade forex at all. It can all become overwhelming, so I'll keep my post brief. If you have any follow up questions, please let me know. Regarding the general consensus, I notice your forum profile mentions you live in the UK. The FCA regulates forex trading where you live, but they do not list financial data for forex brokers they regulate as the CFTC does in the US. Below are the latest financial data from...
Quoting sharlto
Jason What is going to happen when Leucadia divests itself from FXCM and FXCM's stock price plunges? How is that going to affect all the retail clients? Another related question: Do you foresee FXCM surviving it's current precarious financial situation? These are the questions I am asking myself and which are preventing me atm to become an FXCM client. Thanks for taking the time to respond. {quote}
Those are good questions. You might also ask what internal processes and procedures FXCM has implemented since the CHF indecent to ensure that they never experience another business crash like that one. If they can't prove they have greatly improved their internal controls, avoid them. FYI...I moved from FXCM to Oanda and Forex.com after the big FXCM debacle.
If you don't trade more than 1 standard lot, then I can understand choosing Forex.com or Oanda. But personally, I would not trade with a MM for anything more than 1 lot (100K notional), and not just because of the potential for conflict of interest, but mostly because if you know what you are doing, you will find yourself quickly trading 10, 20, 50+ lots and that's when you DMA gives you a whole new and better experience.
Welcome to the forum, Sharlto


Quoting sharlto
Jason What is going to happen when Leucadia divests itself from FXCM and FXCM's stock price plunges?

While I'm not authorized to comment on our stock personally, I can refer you to comments from our CEO Drew Niv in an interview with Profit & Loss Magazine:

"Financially, we lost $300 million and then we got $300 million from Leucadia, so by Monday 19th of January, the company was fine in terms of balance sheet. Yes, because were a public venue you can see that our stock is a fraction of what it was, but people need to understand that the size of the pie hasnt changed, its just that the ownership of that pie has. So the stock implies that the legacy shareholders of FXCM only own a small piece of the firm and Leucadia owns a much bigger piece, although the final determination on that will be made later this year once weve divested the assets were selling. This is about the economics to the owners of the firm, it has nothing to do with customers."




Quoting sharlto
How is that going to affect all the retail clients?

The terms of the Leucadia loan impact FXCM shareholders, not FXCM account holders. Despite the events of 15 January 2015, FXCM's capitalization remains at levels similar to before the SNB flash crash. Our clients appreciate this fact, which is why the latest financial data from the CFTC show traders continue to have more money on deposit with FXCM than any other US-regulated forex broker.

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Quoting sharlto
Another related question: Do you foresee FXCM surviving it's current precarious financial situation? These are the questions I am asking myself and which are preventing me atm to become an FXCM client. Thanks for taking the time to respond. {quote}

Regarding this question, I can also refer you to recent comments from our CEO:

"FXCM together with discontinued operations, had $236 million in operating cash as of 3/31/16. We currently believe in the strategy we have laid out regarding asset sales to pay off our debt. Customers of FXCM are safe and should know that we are financially secure and remain a market leader with some of the best execution and technology in our industry. We generate enough cash to make our interest payments and all client money is secure. As we have stated publicly before it will take years for shareholders to see any returns. Our priority is to repay our debt."



Furthermore, when Leucadia announced their own second quarter 2016 results last week, they had this to say about FXCM:

"We anticipate full repayment of our loan during 2017, as FXCM continues its sale of noncore assets and generates operating cash flow."

Quoting GEfx
{quote} Those are good questions. You might also ask what internal processes and procedures FXCM has implemented since the CHF indecent to ensure that they never experience another business crash like that one. If they can't prove they have greatly improved their internal controls, avoid them.
Hi GEfx,

Our CEO Drew Niv addressed this question in a recent interview with LeapRate:

"FXCM has eliminated many of its less liquid currency pairs specifically those that carry a large government 'active management' of some sort of an artificial structure be it a peg or managed float of some kind. We have also reduced leverage for our largest clients and have purposefully turned away business we deem to be too capital intensive. Our current exposure to any market spike is a tiny fraction of what it used to be."



Quoting GEfx
FYI...I moved from FXCM to Oanda and Forex.com after the big FXCM debacle.

It's important to understand why FXCM and other STP brokers had much bigger exposure to the SNB flash crash last year than dealing desk brokers (AKA market makers). For all forex trades placed by our clients on standard FXCM accounts, we are a no dealing-desk broker and offset each trade one-for-one with our liquidity providers, and only make money on trades not customer losses.

Obviously many of our competitors who are on the opposite side of their clients trades did not find the EUR/CHF trade to be helpful to their bottom line, as they lose money when traders profit. We saw many of the dealing desk firms begin to increase overnight rollover cost as well as raise margin requirements to get these trades off their system.

At the time of the SNB announcement over 3,000 FXCM clients held slightly over $1 billion in open positions on EUR/CHF. Those same clients held approximately $80 million of collateral in their accounts. As you know this was the largest move of a major currency since currencies started floating 1971.

The EUR/CHF move was 44 standard deviation moves, while most risk management systems only contemplate 3-6 standard deviations. The move wiped out those clients account equity as well as generated negative equity balances owed to FXCM of over $225 million. We believe that the FXCM system operated properly during this event.

The caveat of our no dealing-desk execution system is that traders are offset one for one with a liquidity provider. When a client entered a EUR/CHF trade with FXCM, FXCM Inc. had an identical trade with our liquidity providers. During the historic move, liquidity became extremely scarce and shallow, which affected execution prices. This liquidity issue resulted in some clients having a negative balance.

While clients could not cover their margin call with us we still had to cover the same margin call with our banks. When a client profits in the trade FXCM gives the profits to the customer, however, when the client is not profitable on that trade FXCM Inc. ends up having to pay the liquidity provider. For anyone that still thinks FXCM is running an FX dealing desk despite stating that we provide No Dealing Desk (NDD) forex execution to all our standard accounts, we have now demonstrated that such is not the case.

Incidentally, for those of you trading with dealing desk brokers, have you ever considered what would have happened on January 15th 2015, if the market had moved 44 standard deviations in favor of your trade (and the trades of everyone else in the same position) and against your broker? Would they have had enough money to pay you and everyone else out on such a massive market move? Would they have wanted to even if they could?

On FXCM's NDD model, we don't trade against our clients, so we don't profit from your losses or lose from your profits. Instead we profit from your trading volume. That means we want you to be profitable. Can your broker say the same?
FXCM, is a very good solid broker
Quoting sharlto
If you don't trade more than 1 standard lot, then I can understand choosing Forex.com or Oanda. But personally, I would not trade with a MM for anything more than 1 lot (100K notional), and not just because of the potential for conflict of interest, but mostly because if you know what you are doing, you will find yourself quickly trading 10, 20, 50+ lots and that's when you DMA gives you a whole new and better experience.
I'm sorry, but I must call bullshit on your comments. I trade many more that a single standard lot per trade and have no issues with either of my brokers.
"So far FXCM Inc (NYSE:FXCM) has managed to return a total of $160.9 million, with the remainder of the principal balance of the loan to the online brokerage standing at $192.5 million."


"Nonetheless, most of the money it is making serve to cover its unfavorable debt, the interest for which will rise to 19% per annum in the third quarter of the year."


60-70 million per quarter. At 19% by the end of next year the load should be repaid. ( 192.5*.19% = 228 Million Annually)


And if it doesnt I would see, Leucadia giving an extensions. I mean seriously where can you get 19%. Lmao win, win for Leucadia, and the extensions would only mean a higher return and for FXCM, so FXCM will try to maintain its market share. And when it has the SEC/CFTC working for it to restrict other forex brokers in the US, it cant really be all that bad.





http://www.financemagnates.com/forex...ing-192-5-mln/

http://www.forexbrokerz.com/news/fxc...loan-repayment
Learn, a forex trader must, unlearn and relearn he will.
Quoting Jason Rogers
It's important to understand why FXCM and other STP brokers had much bigger exposure to the SNB flash crash last year than dealing desk brokers (AKA market makers).
wasn't that disastrous event foreseeable?... i mean that there has never been a single case in FX history when a CB would have had been able to defend some "red line" indefinitely... the longer they try - the greater are the negative consequences after the eventual and imminent breakout... it's just a piece of common knowledge, which does not require any special analytical skills... in this case they kept the line out of touch for years... no wonder it ended up in such a tremendous move... don't you have any own analytical team to alert your company's management about such an obvious danger well in advance?...
Quoting GEfx
{quote} I'm sorry, but I must call bullshit on your comments. I trade many more that a single standard lot per trade and have no issues with either of my brokers.
who do you use?
I traded with FXCM on their NDD and I can't say anything bad about them.

Their DD may be just like any other bucketshops out there but again I never traded on it.

If I can give you an advice, it will be to stay away from Oanda.

By experience I know Oanda freezes the platform, hunt your stops, slippage is common etc...etc ...etc.

I heard Forex.com is even worst than Oanda.

So....basically there is not many options here in the USA
So, you think you have rights? LOL
  • Post #17
  • Quote
  • Last Post: Oct 3, 2016 5:56am Oct 3, 2016 5:56am
More news regarding FXCM's debt to Leucadia - FXCM has decided sell its DailyFX service to IG Group for $40 million in order to pay off part of its debt to Leucadia. The deal is expected to be closed by the end of October as it is subject to closing conditions and final approval by the buyer. In a separate statement, IG Group said it has “struck a $40.0 million deal to acquire” DailyFX.
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