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FXCM Discussion

  • #6,121
  • Jan 17, 2015 8:27pm Jan 17, 2015 8:27pm
Quoting traderathome
Support Your USA Forex Broker! To Retail Traders, FXCM and all Other USA Brokers, Well, if FXCM had a Dealing Desk operation taking the counter-party side of all the retail trades, they would have ended up making a small fortune! Retail traders should not be concerned who is the counter-party to their trades. There always has to be one, no matter who it is. In the case of FXCM, apparently the counter-party was the market makers themselves. And so once again these bastard Robber Bank MMs ripped off a bunch of people, including the "no dealing desk"...
On the one hand, I fail to see how FXCM or any other broker can be responsible for people losing money as a result of the SNB's policy change. Stop losses and margin calls that are designed to close out positions automatically when certain prices are hit or one's equity drops below a certain point only work if there are traders in the market willing to execute a trade at the level at which the SL is placed or at which the margin call is triggered. In this particular case, there were simply no buyers (in the case of EUR/CHF) or, at the very least, an insufficient number of buyers in the market at the time of the announcement to trigger specified SL's or to close out all positions at the time of margin calls. A broker such as FXCM does not control how many willing buyers and sellers there are in the market at any given time, and any trader with any understanding of markets should understand that this is the case; anyone who has ever experienced a gap beyond their SL knows this to be true. It happens, and it sucks, but that is the way markets work, regardless of whether you're trading the Swissie, gold, oil, equities, or soybeans.

On the other hand, I find it somewhat unfathomable that these brokerage houses were unable to see the writing on the wall with respect to the Swissie, or, just as a general theme, were blindly willing to accept the notion that a given Central Bank will continue to adhere to a particular policy in light of changing economic circumstances. Late in 2014, after all, FXCM, as well as other brokers first increased margin requirements on Ruble pairs and then stopped offering them altogether after the Russian Central Bank discontinued its "trading band" policy and then ceased to intervene in the currency virtually altogether, both of which it had been historically doing several months, if not years, beforehand. Naturally, the SNB is not the RCB, but is everyone's memory that particularly short?

Even assuming that brokers had learned little, if anything, from the Ruble lesson, is the fact that these various financial institutions are or, at least, should be equipped with top-notch quants and other analysts who could have easily foretold that the SNB's continuing to hold the peg was not a "zero risk" proposition by any stretch of the imagination. The Euro was tanking; what genius at these brokers was advising them that the peg would still, with certainty, hold or that, if it did give way, that the move would not be damaging in light of, for example, COT positioning, which -- in the case of EUR/CHF -- showed that the vast majority of traders were long.

Ultimately, however, I don't think it's my broker's job to cover my stupid ass if I did something stupid; what I do think is that it is my broker's job to make sure that my funds are protected from their doing something stupid. FXCM can claim all day long that there was never any danger that I would not get my money out, but the fact is that they were short $225 million; if everyone with positive equity balances had wanted to get their money out at the same time, they could not have have satisfied their requests; it's as simple as that.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #6,122
  • Jan 17, 2015 8:49pm Jan 17, 2015 8:49pm
Quoting damson122
{quote} The loan at least get FXCM back to business, and could resume their stock trading. Indeed they bought some time to get the problem fixed, but it won't be easy. I just wonder if they would make any change towards policies/ terms and condition to customers after this incident.
I requested a withdrawal of all my FXCM funds on Friday, before the bail out announcement. However, I've been through more than a couple of stock market bubbles and gyrations and frankly can't tolerate even the remotest possibility of my being unable to get my money back from a broker under any circumstances. I understand that the SNB announcement is rather historic and unlikely to be repeated (no other "major" currency Central Bank pegs their currency to anything at this point in time).

However, FXCM continues to offer pegged currencies such as the Yuan, so there is a risk of a minor repeat of this situation going forward (albeit on a smaller scale; doubt there are many traders in the Yuan). Moreover, I have little interest in continuing to trade with a broker whose future is uncertain and who will deal me additional inconvenience should they eventually be sold, especially after the minor heart attack they gave me this past week when they announced a shortfall that was nearly half their market capitalization (before their stock price tanked).

Good platform, good web site (DailyFx), but too much risk for me. When you feel as confident about your U.S., publicly traded, SEC-regulated broker as you did about your Binary Options broker located in Cyprus, well, then, it's time to move on ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #6,123
  • Jan 17, 2015 9:02pm Jan 17, 2015 9:02pm
Quoting ZebraSquirl
{quote} I kind of agree with that ... . When these sort of things occur, the Legal Department generally takes over and tells everyone to shut up and let the Public Relations Department do the talking (after, of course, running any statement through Legal) ... . That being said, I think what we got beyond the $225 million short fall press release was virtual silence until the press release about their being in talks to obtain funding through Leucadia; that was an awfully long and uncomfortable time for concerned clients who were thinking in the back...

Agree. FXCM’s business is 100% concentrated in the forex business unlike other bigger diversified groups. This means with the number of client’s flight out expected in the comings weeks and months. To pay back 300 million in two years’ time is impossible. And when their business shrinks considerably in the foreseeable future, who will be the next rescuer? I recommend all traders withdraw their funds from FXCM.
  • #6,124
  • Jan 17, 2015 9:18pm Jan 17, 2015 9:18pm
Quoting tim10167
{quote} Agree. FXCM’s business is 100% concentrated in the forex business unlike other bigger diversified groups. This means with the number of client’s flight out expected in the comings weeks and months. To pay back 300 million in two years’ time is impossible. And when their business shrinks considerably in the foreseeable future, who will be the next rescuer? I recommend all traders withdraw their funds from FXCM.
I doubt any business can payback the $300 mill in 2 years. Likely, they will have to restructure their business, cost cutting to save money to pay off the loan. It is likely they will have to re-roll the loan with another loan in the next 2 years, if their business gets better I'm sure they can better terms as 10% coupon is extremely high when interest rates are at rock bottom. Obviously, Jefferies got the better of the deal, they will get paid handsomely on their investment. Question is, how will their business change and how it will affects its clients. It is a shame, I really like FXCM's platform, so easy to use compared to other platforms out their, but this has hurt their reputation in the field.
Trade what you see, not what you think!
  • #6,125
  • Jan 17, 2015 9:26pm Jan 17, 2015 9:26pm
[quote=ZebraSquirl;8003429]{quote} as well as to more diversified brokers such as CitiFx and E*Trade, whose enterprises encompass a wide variety of asset classes beyond forex, whose market capitalization makes FXCM's look like peanuts (CitiGroup, 144.23B; E*Trade, 6.41B; FXCM, 595.64M), and who were therefore able to easily withstand the hits dealt them by the SNB's decision.

although they are diversified brokers, they are still part of a parent company. As we all know Citigroup was close to bankruptcy during the financial crisis, as well as E-trade from the subprime debacle.. Their issues were from an black swan event, but more reckless financial decisions in taking on risk. I doubt any brokers are totally safe no matter how much capitalization they claim they have. We all need to protect our own interest and spread our funds between brokers. If all the brokers goes bust at the same time, then SHIT, fuck it end of the world.... LOL.. At least we tried..
Trade what you see, not what you think!
  • #6,126
  • Jan 17, 2015 10:38pm Jan 17, 2015 10:38pm
Quoting OMGtrader
{quote} I doubt any business can payback the $300 mill in 2 years. Likely, they will have to restructure their business, cost cutting to save money to pay off the loan. ...
This I totally agree with, and really think a LOT more is going to come out about this deal and how they are going to payoff the loan.

We already know they are owed 225M from clients, that will go a long way to paying off the loan, if/when they get that money. I seriously doubt they are going to zero out all of those negative accounts. They are going to want the money back they think is owed them.
  • #6,127
  • Jan 17, 2015 11:43pm Jan 17, 2015 11:43pm
Usually saturday and sunday, FXCM trading station would be close for maintenance. I've been login and logout the platform all day and I don't see ane maintenance mode in their platform.

Guess this case really screw up FXCM office huh...
  • #6,128
  • Jan 18, 2015 12:35am Jan 18, 2015 12:35am
Quoting TheGrind
{quote} This I totally agree with, and really think a LOT more is going to come out about this deal and how they are going to payoff the loan. We already know they are owed 225M from clients, that will go a long way to paying off the loan, if/when they get that money. I seriously doubt they are going to zero out all of those negative accounts. They are going to want the money back they think is owed them.
they may think clients owe them money. It is now all legal battles if they try to approach that route. Would be problem if their legal bills total more than what is owed... LOL.. I very much doubt they will be successful with that choice.
Trade what you see, not what you think!
  • #6,129
  • Jan 18, 2015 3:20am Jan 18, 2015 3:20am
How many of you guys have already withdraw all your money from FXCM or are considering doing so? Even though they have been rescued for now, I'm not sure how safe are your funds with them.


The panic has already started so I'm sure many have considered pulling out all their money, but I'm not sure now if they are back in business maybe people have changed their mind now and maybe some are reconsidering their position and decide to continue with them.


If a lot of traders pull out all their money than FXCM are screwed.
  • #6,130
  • Jan 18, 2015 6:34am Jan 18, 2015 6:34am
You should also take account that those who made the negative balance were trading and providing income to FXCM. Now they are gone and maybe totally bankrupt with no way to return to trading... That is one less income to FXCM.
  • #6,131
  • Jan 18, 2015 6:39am Jan 18, 2015 6:39am
Quoting OMGtrader
{quote} they may think clients owe them money. It is now all legal battles if they try to approach that route. Would be problem if their legal bills total more than what is owed... LOL.. I very much doubt they will be successful with that choice.
I am pretty sure it takes forever for FXCM to get back all the money from her clients while the lawsuit would cost her more than she lost last week (well diversified customers from all around the world living in different legal system)

I really appreciate FXCM's trading platform and esp. what DailyFX provided, however, I am not really confident atm to deposit fund to them. I had requested withdrawal from them last week. After this tsunami, I shall sit back and see what would happen in financial market for a few weeks. I am pretty sure more problem related to SNB decision would surface in near future.

It is lucky that I did not traded CHF related pairs, though once I thought starting EURCHF long position is a must win strategy, somehow I dumped the idea.
  • #6,132
  • Jan 18, 2015 7:43am Jan 18, 2015 7:43am
Quoting TheGrind
{quote} I seriously doubt they are going to zero out all of those negative accounts. They are going to want the money back they think is owed them.
They are going to want the money back but they won't win anything because of their stupidity to write on their site that traders will not be responsible for deficit balances. Other brokers also reset in practice the negative account but they don't write this in the risk warning. Just in case they will later change their mind.
Furthermore if they won't zero out those accounts it means they are a scammer so a lot of traders probably will close their accounts.
  • #6,133
  • Jan 18, 2015 8:10am Jan 18, 2015 8:10am
Quoting str8
{quote} They are going to want the money back but they won't win anything because of their stupidity to write on their site that traders will not be responsible for deficit balances. Other brokers also reset in practice the negative account but they don't write this in the risk warning. Just in case they will later change their mind. Furthermore if they won't zero out those accounts it means they are a scammer so a lot of traders probably will close their accounts.
The non-negative balance policy is one of the many reasons they have so many clients all over the world, it is in my opinion a great policy that show their good faith in the business.
Time ago i had a gbpaud trade that spiked badly and gave me a bad stop-fill of around 100pips (with some aud pairs it can happen), well i remember they gave me back 50% of the "bad loss" in a show of good faith, i really think they are a good broker after all.

Of course they can do better in choosing their liquidity providers, or maybe just add new ones to their pool, because from time to time there is some liquidity problem here and there, so improvements can always be made.
And i hope now they take this chance to make some improvements.

I was not in any chf trade so totally unaffected from this snb mess, however i keep my account with fxcm, they have still my total trust, the one of last week was a very exceptional event like a devastating earthquake, they don't happen often but when they happen the damage is big.

Was fxcm underestimating the chf snb risk? Surely.
On this side i was a little bit disappointed by their lack of reliability in manage the risk, really not professional.

So, a good broker, with good technology, very good faith, honest, transparent, big, relatively safe, but somehow naive.
Hopefully they are a little bit less naive now.
  • #6,134
  • Jan 18, 2015 8:34am Jan 18, 2015 8:34am
Quoting spaceduck
{quote} The non-negative balance policy is one of the many reasons they have so many clients all over the world, it is in my opinion a great policy that show their good faith in the business. Time ago i had a gbpaud trade that spiked badly and gave me a bad stop-fill of around 100pips (with some aud pairs it can happen), well i remember they gave me back 50% of the "bad loss" in a show of good faith, i really think they are a good broker after all. Of course they can do better in choosing their liquidity providers, or maybe just add new ones to...
I put in a withdrawal last week. Just got word that they processed it and I will have a chunk of my money back into my bank as they will promised. I will still leave money with them but now I will have to spread between at least 2 brokers. This is not exactly a knock on FXCM because I really like them, their platform & service but it is just the reality that NO BROKER is totally safe doesn't matter how larger or how small they are. FXCM is somewhat in the middle as they aren't so small of a broker and too larger to not care about their clients. Although these events are pretty much once in a generation period, it is better to be safe than sorry.
Trade what you see, not what you think!
  • #6,135
  • Jan 18, 2015 8:48am Jan 18, 2015 8:48am
How many people are planning to keep their account with FXCM?
  • #6,136
  • Jan 18, 2015 8:59am Jan 18, 2015 8:59am
Not impressed with customer service or lack thereof when I contacted fxcm. I was surprised that Jason Rogers vanished from the thread when customers needed his assistance-but maybe I shouldn't be so naive. It's just business, nobody gives a shit about your account or well being. I am glad fxcm survived, last thing US fx traders need is fxcm going under. it is a shame that they butt slammed themselves in such a huge spotlight. I'm sure this will further ream US traders and leverage will be reduced to 2 to 1 or something asinine like that. Oh boy I can't wait for the nanny state to step in again.

I am also in agreement that the risk management team needs to be shown the door or take a lesson from Global Prime, Gain, Oanda etc. WTH was the fxcm crew doing? Blondes?????

It is very difficult to find a solid broker....always liked trading my fxcm account but your service dept has struck a sour note with me.....

Best of luck.
  • #6,137
  • Jan 18, 2015 10:27am Jan 18, 2015 10:27am
Say what? Now FXCM is buying Alpari?............................... FXCM Emerges as Potential Buyer for the Business of Alpari UK http://forexmagnates.com/fxcm-emerge...ess-alpari-uk/
  • #6,138
  • Jan 18, 2015 10:49am Jan 18, 2015 10:49am
Quoting triger88990
Say what? Now FXCM is buying Alpari?............................... FXCM Emerges as Potential Buyer for the Business of Alpari UK http://forexmagnates.com/fxcm-emerge...ess-alpari-uk/
A stroke of marketing genius, what better way to show they're back to normal...
  • #6,139
  • Jan 18, 2015 11:03am Jan 18, 2015 11:03am
Even if they're just putting their name out there with no intention of buying, doesn't it immediately change your opinion? What a way to push the share price back up....
  • #6,140
  • Jan 18, 2015 11:21am Jan 18, 2015 11:21am
Okay, this is a gigantic WTF moment right now:

Attached Image


http://forexmagnates.com/fxcm-emerge...ess-alpari-uk/
Fireworks are fun ... as long as you don't blow your fingers off.
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