The Changes of FXCM policy

[etext]

I have been trading with both FXCM and CMS now for over 3 years, so i am not a beginner any more. Initially I had problems with CMS, the system used to go down at any time when the market became reasonably active, etc. This doesn't seem to happen any more and it is up and running 99% of the time.

FXCM recently emailed me offering their "no dealing desk" option. The supposed advantage of a 1 pip spread on the Euro as opposed to their dealing desk spread of 3 pips pales into insignificance when they also remove their slippage policy, so I refused their offer. So far they have accepted my refusal but have stated that they reserve the right to place me on the "no dealing desk" option in the future. Fair enough - I also reserve the right to cancel my account in the future as well, which indeed I would immediately do if they enforced their new option.

Removing the "guarantee of no slippage" policy will kill any trader, slowly but surely it will bleed him white because you can guarantee that if you orders are filled they will be filled at a price which is not to your advantage.

Now they have announced that those who are on the "no dealing desk" option can also hedge their trades. This is another little ploy to try and encourage traders to swap their account to a "non guaranteed slippage account".

But there again CMS have always since I began with them 3 years ago offered hedging as a standard part of their dealing operation.

In short - to any newbie traders out there - If you are dealing with FXCM on their "no dealing desk" option without a guarantees against slippage, then my advice is - get out. And if you are thinking of opening a new account with them without a guarantee of no slippage, then my advice is - don't! They will crucify you.

I am a quiet sort of trader. I get up each morning and set in place my orders for the day and then walk away. My own system works well enough for me, and I don't post much to these boards.

But I have been at this for over three years. I have seen the spikes and erratic nature of the markets and above all - I do understand the terrible dangers of an UN guaranteed slippage policy. I would not dream of dealing with a company that enforced them. You might as well take your money and treat yourself to a new car or a holiday - at least you will enjoy your acquisition. You certainly will not enjoy being skinned alive by FXCM when they take you to the cleaners, because as sure as God made little green apples, their "no guarantee on slippage" is a nothing more than a licence for them to take all of your money off you any time they wish.

BE WARNED!

etext

 

[Trdr]

Hi Etext, well if fxcm are going to change to a 'banks feed' — if I can refer to it as that, then other
retail fx brokers won't be far behind.

Believe the lowest spread amount fxcm advertise is 2 pips -- eurusd, but more important is what do
spreads widen to ? and, when does widening occur ?

see Oanda for eg: http://fxtrade.oanda.com/resources/spreadstats/spreadsminmax.shtml

fxcm note: "Fixed Spreads* — * In Normal Market Conditions only."

There's been several attempts to create a single-source quotes feed that if all fx principals were to
subscribe to would in effect create a central exchange, however I think they've failed because it's
more advantageous for dealers - banks to do business 'off-exchange' where They determine prices
on a client-to-client / amount-traded basis.

Fxcm found out a few years ago with a surprise 'actual' Non Farm Payroll release that financially,
they could not guarantee stops. NO other non fx markets/brokers offer 'guaranteed stops'.

The last time I read futures trading account documents there were 3 dealing with 'loss' with one
pointing out that 'stops' do not guarantee that an order will be filled 'at that price' and that in fact
prices can (and do) travel past such stops and may then be filled at a (much) lower/higher price.

The advantage with fx brokers over futures brokers is that 'overloss' is prevented by fx brokers
closing out client positions when margin (loss) drops to $xx.
I'm not sure which if any futures have daily limits, an amount above/below the previous daily close
that the future can trade to, however such limits lock out being able to Buy in a falling market, Sell
in a rising market which causes the huge (over) losses associated with futures trading.

While the 'no dealing desk' can be seen as disadvantageous to traders, one could say its only
'welcome to the real world' of currency trading.

 

[fun2trade]

fxcm is trying everthing they can to put the odds in their favor. Freeze your trading during news, widen yr spreads, now this " no dealing desk" scam as an excuse to give u any slippage they want. They should go out of business like it's twin brother, Refco. People keep talking " dealing desk" , " no dealing desk", the desk is not the issue, there is no dealing desk at all, they have tens of thousands of accounts and only about 2000 emplyee worldwide, how many are working at the " dealing desk"? None, all they have to do is program their system to freeze your trading during news time and widen your spreads. You're not trading against any other traders in any market, you're trading against the numbers on the screen. They are the market makers, they have the right just to take your trades without passing them to the market. Reason is very simple, 95% of lose at the end anyway, why pass them to the real market? If you 're one of those 5% , they don't want your business.

 

[fun2trade]

You think they really make that 3 pip spreads ? they make 100% of whatever capital you put in ! because you will lose at the end , sooner or later. The 3 pip spread are just there to put the odds in their favor, in other words, even if you trade by flipping the coin with a 50-50% probability, they will still win, they have the edge over u.

 

[tradewinds]

You think they really make that 3 pip spreads ? they make 100% of whatever capital you put in ! because you will lose at the end , sooner or later. The 3 pip spread are just there to put the odds in their favor, in other words, even if you trade by flipping the coin with a 50-50% probability, they will still win, they have the edge over u.

I think this is the third post tonight by you where you have basically said trading is a waste of time. They will get your money in the longrun. Its a sure sign of an unsuccessful trader who always blames the broker. The broker is making it "impossible for me" to win.
A good trader wont blame the broker. At the end of the day people do make money or else there would be no business. Maybe if you scalp or day trade then it is more difficult to make money with slippage and spread, but someone who position trades and has nice wide stops while not using too much leverage wont worry about a few pips here or there. What about the traders who take on average 400-500 pips in one trade, and now again 1500-2000pips. The other thing to remember is that the system might not necessarily be entered around news breaks where the spread does increase. Is the little slippage that important,or whether or not the spread was 2 or 3 pips. Entry isn the most important aspect.

If the broker is making it difficult to be profitable in the short term by so called pip hunting, slippage, spreads the its up to you to adapt. A longer term based system or a direct market access broker is the key, possibly.

I ve been happy with my price execution, but then again I dont trade the news. I trade using the set up in advance using stop buys, stop sells and limit orders. All my trades have been enterd at the level i desired, give or take a pip here and there the odd time...

 

[fun2trade]

I think this is the third post tonight by you where you have basically said trading is a waste of time. They will get your money in the longrun. Its a sure sign of an unsuccessful trader who always blames the broker. The broker is making it "impossible for me" to win.
A good trader wont blame the broker. At the end of the day people do make money or else there would be no business. Maybe if you scalp or day trade then it is more difficult to make money with slippage and spread, but someone who position trades and has nice wide stops while not using too much leverage wont worry about a few pips here or there. What about the traders who take on average 400-500 pips in one trade, and now again 1500-2000pips. The other thing to remember is that the system might not necessarily be entered around news breaks where the spread does increase. Is the little slippage that important,or whether or not the spread was 2 or 3 pips. Entry isn the most important aspect.

If the broker is making it difficult to be profitable in the short term by so called pip hunting, slippage, spreads the its up to you to adapt. A longer term based system or a direct market access broker is the key, possibly.

I ve been happy with my price execution, but then again I dont trade the news. I trade using the set up in advance using stop buys, stop sells and limit orders. All my trades have been enterd at the level i desired, give or take a pip here and there the odd time...

You're totally wrong. As a matter of fact, I'm a profitable trader. Take a look at the performance I posted few days ago on my forex and gold accounts. I'm also providing real time signals to a forex signal provider that is widely used by traders of all levels. I was basically saying most FCMs are against your positions, your loss is their gains, and your positions are not sent to the real market. That's basically what I'm saying. How do I know? I've been in the business for over 18 years when back then we had to make a phone call to place a trade. I worked for couple of those companies, so I know.

 

[neil]

You're totally wrong. As a matter of fact, I'm a profitable trader. Take a look at the performance I posted few days ago on my forex and gold accounts. I'm also providing real time signals to a forex signal provider that is widely used by traders of all levels. I was basically saying most FCMs are against your positions, your loss is their gains, and your positions are not sent to the real market. That's basically what I'm saying. How do I know? I've been in the business for over 18 years when back then we had to make a phone call to place a trade. I worked for couple of those companies, so I know.

How about currency Futures - more trader friendly?

 

[fun2trade]

How about currency Futures - more trader friendly?

Good thing about currency futures is, in most cases, your orders will be sent to the real markets, I would say 95% of the time. There were a few dishonest companies who didn't sent all your orders to the market, and hoped that your loss will be their gains, Refco for one, and it's good that they 're out of the business now. The bad thing about currency futures is, the market is real, and you will experience slippage, sometimes in your favor , but most of time against you, depending on the liquidity of the market at the time. Good thing about it is, the FCM is not against your positions, they do want to see you win. The bigger your account grows, the more commission they'll make. I can go on and on about these brokers/FCMs because of my 18 years experience in the business, but I have to stop here unless you want to hear more. I'm sure some people are complaining about me talking too much here.

 

[fun2trade]

To tradewinds, you should be able to tell whether I'm winner or whiner by my username : fun2trade.

 

[Trdr]

so just who is it you think profits from your losses ?
http://www.fxcm.com/news-release.jsp

they do what ?
http://www.elitetrader.com/vb/showthread.php?s=&threadid=88731

 

[tradewinds]

To tradewinds, you should be able to tell whether I'm winner or whiner by my username : fun2trade.

Fair point and thanks for the reply. I just wanted to know the basis for what you were saying. You obviously know more than most, and you been in the game a longtime. I m still and infant in comparison. Goodluck.

 

[neil]

Fun

Good thing about currency futures is, in most cases, your orders will be sent to the real markets, I would say 95% of the time. There were a few dishonest companies who didn't sent all your orders to the market, and hoped that your loss will be their gains, Refco for one, and it's good that they 're out of the business now. The bad thing about currency futures is, the market is real, and you will experience slippage, sometimes in your favor , but most of time against you, depending on the liquidity of the market at the time. Good thing about it is, the FCM is not against your positions, they do want to see you win. The bigger your account grows, the more commission they'll make. I can go on and on about these brokers/FCMs because of my 18 years experience in the business, but I have to stop here unless you want to hear more. I'm sure some people are complaining about me talking too much here.

Thanks forthe reply - keep talking