FXCM Discussion

This is a discussion on FXCM Discussion within the Forex Brokers forums, part of the Commercial category; Originally Posted by Jason Rogers Hi Roger, It will vary throughout the day. I would recommend opening a demo on ...

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Old Mar 17, 2010, 10:19pm   #25
 
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Joined Jan 2010
Re: FXCM Discussion

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Originally Posted by Jason Rogers View Post
Hi Roger,

It will vary throughout the day. I would recommend opening a demo on the Active Trader platform and it will show the liquidity being made available. The active trader platform is found here http://www.fxcm.co.uk/active-trader.jsp

-Jason

No it won't. It will show you the liquidity of the 10 institutions that FXCM has in its own Bucket-Back-End but most definitely NOT a truer representation of what the real Interbank market looks like in-terms of its real size, depth and breadth of liquidity.

Here's what you do:

You go out and get yourself ProTrader's MS platform. Flood their developer's email inbox with requests to add FX Intermediaries like: Divisa Capital, PFGBest Direct, London Capital Group, City Credit Capital, etc., learn the platform (it is truly fully featured), diversify your account (margin) risk, create your own Currency Instruments using weighted ratios (see users manual for instructions) and then start beating these Bucket Shops at their own game.

Here's the link: http://profstation.com/

Get them to add more vendors for you! They need more vendors! I wish this was around when I started trading FX.

Here's their forum: http://www.protrader.org/

This kind of technology is the wave of the future for FX Retail. In fact, as an Institutional Trader, I would want this kind of trading technology enabling me to access the liquidity through several Prime Brokers, instead of just one - and - instead of having to deal with the restrictive nature and all the legal issues involving the set-up of an institutional account with certain large scale banks - only to have your leverage stripped down when you need it the most.

A Multi-Point-Access trading platform through multiple Prime Broker accounts, providing a single, integrated user interface to each of their liquidity pools, would be the best of all worlds. You would have STP through a multi-intermediary ECN 'type' framework to an aggregate pool of liquidity with depth and breadth, while never losing an adequate aggregate degree of leverage that makes it all worthwhile.

This kind of technology needs to be promoted and grown into the rule rather than the exception. FXCM can't touch this because it would put them into even more direct competition - which is not what they want.

Traders need:

Broker and/or Intermediary Independence
Full Transparency (Price & Execution)
The Choice of Being Anonymous
STP/ECN/Matching/Hub Direct Un-Molested Access
True Competitive Interbank Pricing to the Deepest End of the Pool
Straightforward Competitive Flat Commissions
Zero Bid/Ask Manipulation by Intermediaries
Direct Best Bid/Ask Appearance at Time of Execution
Fault Tolerant Back-Office Technology
High Back-Office Availability
Zero Single Point of Failure Back-Office Strategic Design & Implementation
Customer Service with Respect for the Customer
Customer Service with KNOWLEDGE about the Trading Environment
A Nice Christmas Card would be appreciated sometimes, too! (Duh)


These people at FXCM just don't get it.
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Old Mar 18, 2010, 5:14pm   #26
 
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Re: FXCM Discussion

Jason Rogers started this thread
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Originally Posted by TraderNumber7 View Post
Jason,

How long have you been in this business? And, when did you graduate from College? Go back and re-read what I typed in context and in direct response to what YOU typed and then come back here and try to remind me about what I don't know about FXCM.

I have most likely forgotten more than you will ever know about this business. I was in this business long before your firm ever had a website and before your firm lived at Old Slip Road, Jason. So, sell the Neophyte gig somewhere else and stop taking my words out of proper context.

FXCM is a Bucket Shop and 0.000025% -vs- a lousy $50MM max notional value policy, proves it beyond any shadow of a doubt. You still have failed to respond to the depth, breadth and liquidity mathematics that I put forth inside this thread. And, until you come clean with a solid response as to why 0.000025% limitations makes FXCM anything more than a Retail Bucket Shop, then you won't put a dent in my claims about FXCM - period.

Now, get back on subject and deal with the tough questions, Jason.
Hi TN7,

I’m well past being insulted by something someone says on the forum in terms of me personally .

You may have extensive knowledge about how the institutional side of the forex market and maybe even retail trading when FXCM first started operations. FXCM's execution acted almost exclusively as a market maker up until 2006. However, your knowledge of FXCM's execution on NDD introduced to accounts in 2006 is incorrect.

Our NDD system doesn’t have a Dealing Desk that trades against you, plain and simple. Even on Micro, which is not currently NDD, we offer trading without re-quotes and intervention. And that will be NDD soon as well. This is what we offer to traders.

Quote:
But, seriously, don't sell me on the idea that "NDD" is real to the Interbank level through FXCM Trade Station II! I'm sorry, FXCM does not have arms that reach that high, Jason.
As stated before, we don’t state that we offer interbank access. Take a look at www.fxcm.com, www.fxcm.co.uk, or any other of our marketing websites. A Google search of www.fxcm.com or www.fxcm.co.uk for the term “interbank” comes up with only 3 to 5 entries, and none of these references any claim that NDD offers “Interbank” pricing, liquidity, or execution in any way. What we claim is that FXCM’s No Dealing Desk Execution offers traders a trading system where “10 banks compete to provide tight spreads”. That’s what it says right on www.fxcm.com, front and center (and a little to the right).

It’s pretty simple, either your broker has a bunch of dealers trading against you – possibly hunting stops, rejecting trades, and or requoting - or they don’t. If you trade on NDD, your broker won’t be trading against you. Trade with a Dealing Desk, and they might be.

Quote:
Originally Posted by TraderNumber7 View Post
Well, maybe should have used it in your explanation, because FXCM most certainly uses the term "Interbank" the same way I do here (Paragraph 2, Sentence 3): http://support.fxcm.com/fxts/user-guide. It reads: Size and Sophistication dictate a Market Maker's access to Interbank prices.
That’s a good point. I’ll have that page changed. However, I'll point out that this reference is buried in the middle of an enormous block of text on a page that, in the past 12 months, has gotten between 5 and 38 page views per week. www.fxcm.com gets about 20,000 to 45,000 page views per day. www.fxcm.co.uk gets another 10,000 to 25,000 per day. So, this citation is hardly representative of FXCM’s marketing material. Regardless, I’ll get it changed.

Quote:
Originally Posted by TraderNumber7 View Post
Do you think that I can enter a trade on Deutsche Bank's Autobahn FX platform, or the UBS FX Trade platform, or the Barclays BARX platform, or the HSBCnet FX Network platform, or the Standard Chartered CT platform; in fractional, so-called "Mini Lots?"
It’s true, FXCM’s NDD system is not Autobahn or BARX or HSBCnet. We never claimed it was. NDD is a retail product for individuals. Most individuals don’t have a spare $25M lying around for FX trading. Even fewer would be able to pass these banks’ Compliance Departments’ intense scrutiny in order to get a credit line. Even those who can make it through that often don’t want to deal with waiting months for approval and setup. With FXCM, you can be trading with amounts in the thousands, not the millions, and most anyone can sign up within a couple business day. And by trading on NDD execution, even in lot sizes as small as 10k, the conflict of interest between trader and broker is eliminated.

Quote:
FXCM is a Bucket Shop and 0.000025% -vs- a lousy $50MM max notional value policy, proves it beyond any shadow of a doubt.
Do Dealing Desk brokers have ticket volume limits because they’re taking the other side and can’t handle anything too big? Yes. Is that the only reason to have ticket volume limits? No. That’s a leap of logic that doesn’t hold up. We have ticket volume limits for a variety of reasons that enhance our product, not because we’re trading against you.

Convoys move at the speed of its slowest ship, so our blanket $50M per ticket limit applies to EUR/USD at London Open (which typically has massive liquidity) just as equally as it applies to GBP/NZD at Friday US Close (where it’s a surprise if anyone’s still even trading). The EUR/USD is not the reason for the limit, the GBP/NZD is. We could talk about the average ticket size of retail traders; We could mention how you can call in for a bigger order; We could even get into conversations bank “industrial” feeds (which have a lot more liquidity, but speculators get quickly banned from) are like comparing apples to oranges, or talk about the volume levels that people typically still use phones to execute. We could talk about how this is the maximum amount available per click, and that you can click through several $50M trades very rapidly if you choose. If you want to put through trades of this size, it's best for you to view the market depth, whether EUR/USD or GBP/NZD, and the Active Trader platform is more suitable.

On your statement that...

Quote:
Originally Posted by TraderNumber7 View Post
FXCM manipulates the inbound Bid/Ask to fuel its revenue model.
Again, from our website “When a customer clicks on a price, they are actually clicking on a price from the bank that currently has the best bid or offer, plus our markup.” We run standard markups, usually a pip for most pairs. If you want to call that “manipulating the price”, then we’re just playing semantics. The key here is that the markups are consistent. This is very different from trading with a dealing desk where your broker has a dealer moving the prices to suit his needs or whims.

Quote:
Yeah, well - I don't buy the "Fixed Pip" argument - not for one millisecond. Where is it fixed? How does FXCM determine what the "Fix" should be? And, define "Fixed" anyway, Jason? I mean, is it fixed for "today" but not "tomorrow?" Is it fixed for "this week" but not "next week?" Is it fixed for "this hour" but not during the news driven hour? Who fixes the "mark-up" at FXCM, exactly?
I’m sorry if you don’t buy it, but it’s true. Many people didn’t believe that earth revolved around the sun, but that didn’t mean that Galileo was making things up. The markup stays fixed throughout the trading day, every trading day. It’s consistent. We can change it if we want to, of course. That is taken as a business decision in terms of our product vs. the competition, etc. Changes are made to the markup, they are across the board for that currency pair, 24 hours per day. The markup doesn’t change during news time, or week-to-week. There is no algorithm that alters the prices we send to our clients based on their positions or waiting orders. There would be no point in doing so, since FXCM isn’t trading against them. Our liquidity providers (i.e. “the banks”) give us prices, we take the best Bid and Ask, add the consistent markup, and spit it out as our platform’s price. Simple as that. Any suppositions to the contrary are simply wrong. The very language on our websites is monitored by our regulators through audits to make sure it is truthful and clear.

Quote:
Originally Posted by TraderNumber7 View Post
High Retail Mark-Up, Lots of Scams with Little Pass Through to Interbank, if at all (Tiny Town).
That’s a bit misleading. There are a lot of scams out there. Some brokers pass little or nothing to the big boys. They are indeed “Tiny Town” and start-up. FXCM NDD is different. Every single Forex trade a client makes on NDD is matched (in the exact same size) back-to-back with a market order from FXCM to one of our liquidity providers, which include 10 of the world’s largest banks. That’s 100%. All of them. And they’re not bucketed, batched, or amalgamated. We have created a retail platform that goes beyond old Retail market as you describe. Call it a “mid-sized regional hub city”.

So who are these “banks” that are on our system? I can’t disclose them because of NDA’s. I wish I could, but I simply can’t. Suffice it to say, however, that all 10 banks are pretty much household names. If you’ve spent more than 10 minutes of your life reading the financial press, you’d know all of them. I think that all of them could be called “large scale Interbank players” who can measure their spot forex market share in percentage points of global volume.

As for the claim

Quote:
Originally Posted by TraderNumber7 View Post
I'm sorry, but 10 banks does not make-up even the tiniest of majority of the Interbank pool of liquidity.
That’s just not true. Page 9 of the BIS Trienniel survey http://www.bis.org/publ/rpfxf07t.pdf?noframes=1 (table B.4) points out that only 12 banks in 2007 held 75% of UK FX volume (estimated to be 34% of the global total), and 10 banks held 75% of US total volume. You and I both know a lot of the same banks appear in both those lists. A lot of them are also providing us with liquidity.

Quote:
Originally Posted by TraderNumber7 View Post
I never replied that FXCM did not have an office in the U.K.
I will take this back since you did not explicitly state that FXCM does not have an office in the UK. However, I ask that you please provide the link to the webpage when you reference a statement on our website and I will do the same so there is no confusion.

FXCM is headquartered in New York City, and has offices located throughout the world New York, London, Hong Kong, Paris, Dubai, San Francisco, and Dallas, and we have specific websites for each entity. The office or entity you opened your account through will determine which regulatory rules it is governed by. If you open your account through FXCM US (fxcm.com) then the account is falls under CFTC and NFA regulation. If the account is opened through FXCM UK (fxcm.co.uk), then the account falls under FSA regulation.

Quote:
Originally Posted by TraderNumber7 View Post

I also never said that FXCM had "fixed spreads." I specifically stated that FXCM FIXES the Spread - and that FXCM MANIPULATES the Spread and that "fixing" the spread through Algo manipulation was just one clear sign that you are dealing expressly with a Bucket Shop.
This is the quote from the post…
Better yet, why not just have Niv stand-up and tell the Newbie Arrivals into McCarran International Airport, that the reason the FXCM Trading Platform has fixed spreads to begin with, is precisely because the data feed containing the deal-able prices, is being manipulated by FXCM and it not representative of actual (wholesale) Interbank dealing rates? http://www.trade2win.com/boards/fore...ml#post1069690
I stand by my post that you said we have fixed spreads and this is not true. Neither are FXCM’s spreads “manipulated” by an algorithim for FXCM’s benefit. Our website explains how the NDD Price feed works: “When a customer clicks on a price, they are actually clicking on a price from the bank that currently has the best bid or offer, plus our markup.” http://www.fxcm.com/fxcm-forex-execution.html . Whether we choose to use a fixed pip mark-up or charge a commission as with FXCM Active Trader, NDD straight through processing is operating the same. You see the best bid or offer which is determined by the 10 banks quoting on our platform.

-Jason
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Old Mar 18, 2010, 9:31pm   #27
Joined Jan 2010
Re: FXCM Discussion

Phew!
This lots blown me away. I am still trading demo, not doing too badly so far, what really scares me is who do you trade with, as a newbie I'll get burnt alive even if I'm on the up!

Who are the reasonable brokers??? I honestly don't know who I should start with now, there are soooooo many for and against on many brokers including FXCM. Whats IG Index like?

Any advice....

Thanks
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Old Mar 18, 2010, 9:53pm   #28
 
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Re: FXCM Discussion

Jason Rogers started this thread
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Originally Posted by morfisher View Post
Phew!
This lots blown me away. I am still trading demo, not doing too badly so far, what really scares me is who do you trade with, as a newbie I'll get burnt alive even if I'm on the up!

Who are the reasonable brokers??? I honestly don't know who I should start with now, there are soooooo many for and against on many brokers including FXCM. Whats IG Index like?

Any advice....

Thanks
Hi morfisher,

Thanks for the post.

The main difference between many retail brokers is the type of execution. My suggestion is to ask each broker what type of execution they use: Market Maker (dealing desk) or NDD/STP (You may also hear it referred to ask Direct Market Access in the UK).

With a market maker,the broker is acting as your liquidity provider. The broker will also create the prices being fed into the platform and control the spread amount. In short they make the market. This also means they can control the market movement you are trading on if they wanted to. When you place a trade, a market maker can take on the risk for your trade. Meaning if you go long EUR/USD they take the opposite side betting the EUR/USD will go down. It's then the brokers responsibility to then manage that risk. If the broker hedges the trade, then the risk is mitigated. If the broker keeps the trade, then any losses on your trade will be a profit for the broker. This creates a conflict of interest because it's then in your brokers best interest for you to lose.

With NDD/STP, every trade you placed is immediately hedged with another bank or financial institution so that the conflict of interest is eliminated. We have put together a video that gives you an overview of NDD execution http://blip.tv/file/3294797

Of course FXCM uses NDD execution, and we feel it is a better setup since it eliminates the conflict of interest between a market maker and it's traders.

Feel free to post any questions.

Jason
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Old Mar 19, 2010, 6:54am   #29
Joined Jan 2010
Re: FXCM Discussion

Hi Jason
Many thanks. I have for now opened a demo on FXCM.

To our mutual friend, Tradernumber7, truly fantastic reading your comments, not that I understand all of it!! I am completely new to all of this and terrified of loosing my shirt, so it's great to know there are people like you around to fight our corner, I look forward to following this with you and hopefully a greater understanding on my part will start to take shape.

Do you trade forex? Who with? Have you any advice for a complete novice apart from run a mile!

Regards.
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Old Mar 19, 2010, 9:20am   #30
 
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Re: FXCM Discussion

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Originally Posted by Jason Rogers View Post
Hi morfisher,

Thanks for the post.

The main difference between many retail brokers is the type of execution. My suggestion is to ask each broker what type of execution they use: Market Maker (dealing desk) or NDD/STP (You may also hear it referred to ask Direct Market Access in the UK).

With a market maker,the broker is acting as your liquidity provider. The broker will also create the prices being fed into the platform and control the spread amount. In short they make the market. This also means they can control the market movement you are trading on if they wanted to. When you place a trade, a market maker can take on the risk for your trade. Meaning if you go long EUR/USD they take the opposite side betting the EUR/USD will go down. It's then the brokers responsibility to then manage that risk. If the broker hedges the trade, then the risk is mitigated. If the broker keeps the trade, then any losses on your trade will be a profit for the broker. This creates a conflict of interest because it's then in your brokers best interest for you to lose.

With NDD/STP, every trade you placed is immediately hedged with another bank or financial institution so that the conflict of interest is eliminated. We have put together a video that gives you an overview of NDD execution http://blip.tv/file/3294797

Of course FXCM uses NDD execution, and we feel it is a better setup since it eliminates the conflict of interest between a market maker and it's traders.

Feel free to post any questions.

Jason
Great Marketing spin.....
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Old Mar 19, 2010, 9:23am   #31
 
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Re: FXCM Discussion

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Originally Posted by morfisher View Post
Hi Jason
Many thanks. I have for now opened a demo on FXCM.

To our mutual friend, Tradernumber7, truly fantastic reading your comments, not that I understand all of it!! I am completely new to all of this and terrified of loosing my shirt, so it's great to know there are people like you around to fight our corner, I look forward to following this with you and hopefully a greater understanding on my part will start to take shape.

Do you trade forex? Who with? Have you any advice for a complete novice apart from run a mile!

Regards.
there's no advice for you to run a mile. What the message is to you is to understand what FXCM is marketing. it's fine to trade with them as long as you know that the ND STP is bull****. it's a well thought out marketing plan.
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Old Mar 19, 2010, 10:41am   #32
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Re: FXCM Discussion

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Originally Posted by >Apocalypto< View Post
there's no advice for you to run a mile. What the message is to you is to understand what FXCM is marketing. it's fine to trade with them as long as you know that the ND STP is bull****. it's a well thought out marketing plan.
So I assume that you still trade in full knowledge that the ND STP is bull with whoever your broker is then!
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