Before the Bust FXCM lobbied for HIGHER Leverage

BSD

Veteren member
3,819 985
http://www.bloomberg.com/news/2015-...erage-limit-before-franc-trades-went-bad.html

Can only say what goes round comes round !

Not to forget the fact how they mistreated their clients:

http://www.fca.org.uk/news/fca-fine...nfair-profits-and-not-being-open-with-the-fca

How Swiss Shock Humbled the King of Leveraged Currency Trading
http://www.bloomberg.com/news/2015-...d-the-king-of-leveraged-currency-trading.html

Force Majeur ???

Not in this Universe, NEVER gonna stick.

:LOL::LOL::LOL:

If you wanna trade and hope to make more than you lose then go trade on a regulated, transparent exchange where everyone gets the exact same price, period.
 

Forexmospherian

Legendary member
39,928 3,300
Morning F, and a good week to ya.

:)

Morning BSD

Thank you - and a good one to you as well

You are welcome to join me anyday you like in the Live FX intraday thread - no problem etcetc

I agree FXCM cannot say its Force Majeur - when other brokers are still staying with their agreements etc etc.

Also its important to point out how heavily they were fined in the past for some of their past tricks etc etc

Regards


F
 

BSD

Veteren member
3,819 985
"A few days ago I reported that FXCM was slapped with a class action suit over alleged fraud and racketeering. Today I bring you the full lawsuit document. Here are some of the more interesting details and you can read it in full yourself in the below embedded document.

The Plaintiff, William H. Sanders, claims to have lost over $150,000 to FXCM over the years due. Two main topics the lawsuit deals with is the Demo accounts which serve to attract clients while not simulating real market conditions and when clients do switch to live they receive completely different execution and the execution itself where it is claimed that FXCM is in fact a market maker which actively goes after profitable clients. The main excerpts are below:

Plaintiff, William H. Sanders, just like thousands of other customers, was lured into transacting business with Defendant, FXCM, buying and selling foreign currencies in what is known as the foreign exchange (“Forex”) market, but little did Sanders, or any of the others, know that FXCM intended to, and did, systematically bilk them out of their account money through an elaborate scheme of fraudulent tricks, devices, and artifices. What was represented to Sanders and others as a foreign currency trading platform developed upon professed principles of “fairness, honesty, and integrity,” which was supposedly rooted in providing customers with a true market trading experience, totally devoid of dealer intervention and market manipulation, was in truth a platform predicated upon deceit and trickery that systematically looted the accounts of customers who, like Sanders, placed their trust in FXCM.

The scheme deployed by FXCM was complex and varied, utilizing aggressive and pervasive marketing and advertising campaigns, including television, internet, seminars, webinars, and other media, portraying FXCM as a foreign currency trading platform where investors could trade foreign currencies in a true market environment. The advertisements were specifically targeted to convey a sense of trust and transparency to potential FXCM customers and to gain the customers’ confidence in FXCM’s trading platform. To further bolster customers’ confidence in its platform, FXCM enticed customers to use FXCM’s practice or demo account (hereinafter, the “Demo Account”) to simulate an FXCM trading experience. But the Demo Account, just like the myriad advertisements, misled customers about the true nature, functionality, and performance of the platform. Once lured into opening an account, customers were subjected to a staggering array of stratagems and ploys, some using extremely sophisticated computer software based upon complex algorithms and high-speed computers, to deceive the customers into believing that their trading was being affected by normal market forces, while in reality FXCM traded against its own customers."


Continued:
http://forexmagnates.com/full-details-of-fxcms-class-action-suit/#sthash.12EskuuG.dpuf

You really need to know who you're getting in bed with. Don't trade against bookies or bucket shops.
 
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BSD

Veteren member
3,819 985
Even though co-founder Michael Stumm is no longer there seems like common sense still prevails at Oanda:

"The SNB event was not the exception but the norm despite the cost to OANDA ... "

https://fxtrade.oanda.com/community/...opic/54010695/

Central Banks spring surpise decisions, always have, always will.

How else are they supposed to do their job without getting raped ?
 

tar

Legendary member
10,443 1,313
They have now increased the margin on fx to 2% and on Gold from $4 /1 oz to $26 :cheesy:
 
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BSD

Veteren member
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Lol tar, interesting info that !

Not exactly a secret that Bloombergs Billionaire founder is absolutely no fan of bookies masquerading as brokers and believes they should be made illegal just like CFD "Brokers" in the US today, and the sameself bucket shops of Livermores day and age who operated on the same principles.

That explains the tone and number of Bloomberg articles on this sorry fiasco.

FXCM Owners Are Almost Wiped in Swiss Franc Turmoil
http://www.bloomberg.com/news/2015-...ut-lets-leucadia-force-sale-of-brokerage.html
 
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BSD

Veteren member
3,819 985
What am I missing here...

FXCM made the claim that every trade is hedged.

How can that be reconcilable with the truth if a normal event like a surprise Central Bank decision put them in the red to the tune of 250 mill if they were indeed hedged, as per their public sales / marketing promises to unassuming clients and prospects ???

"...let’s say you want to buy GBP/USD and decide to click on the price 1.5627. When you submit the order, the order is sent to FXCM for the price 1.5627 and FXCM routes the order to Bank A offering to sell at the price 1.5626. If the order is accepted, Bank A has a short position at the price 1.5626, you have a long position at the price 1.5627, and FXCM has gained 1 pip in revenue. Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."
http://www.trade2win.com/boards/spread-betting-cfds/65334-spread-betting-fxcm-59.html#post1789922


Question from Tar:"does the Nfa/Cftc check the records for these hedging transactions ?"

FXCM's answer:

"I can't speak for them, but I am almost certain they do check the records. Saying one thing through our advertising, website, etc and doing another would be a big no no. Every NFA/CFTC regulated broker is also required to disclose in the trading agreement how trades are offset."
http://www.trade2win.com/boards/spread-betting-cfds/65334-spread-betting-fxcm-59.html#post1790692

What gives ?

Don't tell me there is a misrepresentation of the truth there somewhere.
 

tar

Legendary member
10,443 1,313
CHF shorts got busted and their accounts went deeply into the red - negative - , and fxcm is short as well with the liquidity providers/banks and have to pay the losses , that's why they are trying to collect from their clients now ...
 

BSD

Veteren member
3,819 985
Lemme try and rephrase that then.

How can FXCM lose money if they are hedged, ie have offset client trades as FXCM have stated.

Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."

If as they claim trades are offset then they have no exposure to market risk, instead, like real brokers, just earn a commission on client transactions, and could not be 250 mill in the red.
 

tar

Legendary member
10,443 1,313
Lemme try and rephrase that then.

How can FXCM lose money if they are hedged, ie have offset client trades as FXCM have stated.

Each order is offset individually in this fashion. The trades are not aggregated like you would have with a market maker so at no point is FXCM taking on the risk of trading against clients as a market maker or dealing desk would."

Think about it , clients accounts are now negative , how fxcm will pay the banks ?
 

BSD

Veteren member
3,819 985
But why didn't all other bucket shops go bust then as well is what I'm wondering, Alpari apart.
 

tar

Legendary member
10,443 1,313
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