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FXCM Discussion

  • #1,881
  • Apr 25, 2011 8:18pm Apr 25, 2011 8:18pm
Quoting Jason Rogers
Hi Jet,

Thanks for the questions.

The website indicates that FXCM uses No Dealing Desk (NDD) forex execution which eliminates the conflict of interest that exists when your broker is acting as the market maker (operates a dealing desk).
See, now, I would have thought that whether NDD or DD, anything somebody offers me a Trading Signal while taking the other side of my position, would have a direct conflict of interest just on logic alone.

- Create the Trading Signal
- Take the other side of the trade
- No conflict of interest

I'm still trying to get my head around that concept. FXCM Micro creates the signal that tells me when to enter the position. That position is covered by FXCM Micro on the other side of the transaction. Thus, I'm necessarily Long when FXCM Micro is Short, based on FXCM Micro's signal. Yet, FXCM Micro has no conflict of interest because my Long position was executed without a FXCM Micro Dealing Desk.

So, FXCM Micro publishes a trade signal that by design causes it to lose equity, while at the same time, acting as sole counter-party to that same position. Thus, by logical definition, FXCM trades against its own signal.

Help me figure this out, please. I'm a little slow on the uptake.

Quoting Jason Rogers
If your broker is acting as the market maker for your transactions, then they are managing the risks associated with your trading positions. If they choose not to hedge that risk (meaning they choose to trade against their clients), then a loss on your trade could result in a profit for the brokers dealing desk.
But, now, FXCM Micro introduces this additional component: The Signal.

That signal is produced by FXCM Micro and is NOT intended to be used by FXCM Micro, rather FXCM Micro's clients. Otherwise, if FXCM Micro trades the same signal AND at the very same time acts as the sole counter-party to Micro transactions, then FXCM is net delta neutral in the position and thus actually losing money due to "additional associated business costs," such as the money it pays out to employees to be in online forums such as ForexFactory.

Therefore, FXCM Micro cannot be trading their own signal. Or, FXCM Micro trades its own signal, but cannot be counter-party, which is already stipulated as false.


Quoting Jason Rogers
With NDD forex execution, every transaction (including micro lots) is executed back to back with one of multiple banks or financial institutions. Therefore FXCM does not profit if you lose money on a trade. Our compensation is a pip mark-up add to the best bid/off spread being received from the banks, which essentially acts as a commission. So our compensation for NDD forex execution is directly tied to volume being transacted on the platform rather than client losses.

Counter-Party means (by definition) being Long, when I am Short, for a notional value that is equal to or greater than my position. Counter-Party does not mean Off-Setting. Off-Setting and Counter-Party, are two entirely different things. Secondarily, can you name any mainstream Interbank entity (Bank) who trades in fractional lot sizes? In order the make the market for micro, somebody has to engage the retail market at a notional value that is far below that of the Yards being re-positioned by Interbank on a daily basis. I know of no Bank that engages in $1k lot size transactions.

Quoting Jason Rogers
If your broker is acting as the market maker (operates a dealing desk) and offers trading signals, then I agree with you on the conflict of interest.
But, this is precisely what Counter-Party means. FXCM Micro, is by definition, countering my position in the opposite direction. When I'm Short, FXCM Micro is Long, equal to or greater than the notional value that represents my position. Again, does any Bank in Interbank trade in fractional lots that you know about? Maybe they do - I just haven't ran across any Bank that is willing to admit that to me on the phone and I've discussed the matter with Deutsche Bank, Citi, BofA, Well Fargo, BNC Mellon, HSBC, Standard Charter, RBS - as well as other Interbank entities such as Barclays, etc. None of them have confirmed with me in previous phone conversations that they Counter-Party on fractional lots on Interbank.

You won't find fractional lots on HotSpot, FX, e-Fx, iFX Deal, iFX Direct, AutobahnFx, FXall, Currenex/Viking, etc. Yet, you can find most of the liquidity mentioned above trading on these platforms. So, how does FXCM Micro "off-set" a fractional lot transaction against an industry that has no facility for doing so?

Thanks for helping me understand this issue - I appreciate your replies.
  • #1,882
  • Apr 26, 2011 10:37am Apr 26, 2011 10:37am
Quoting JetTrader
Help me figure this out, please. I'm a little slow on the uptake.
Hi Jet,

NDD forex execution works the same regardless of whether you trade a micro, mini, or standard lot.

First, the forex market is decentralized. It’s not as though you’re trading on an exchange where the lot size for all participants is fixed. If you’re trading on a platform such as EBS or Reuters, then maybe your minimum trade size is 1,000,000, but that doesn’t mean that the same is true for all forex trading platforms. The trade sizes that the banks are willing to accept from FXCM’s platform are negotiated on a one to one basis. The same is true with the spreads and liquidity that each bank is offering on the platform. If we wanted to restrict the minimum trade size to 100k it could be done, but this wouldn’t mean that it’s done because the banks aren’t willing to accept a smaller lot size. There may have been a point in the past where banks were not willing to accept micro lots. In fact when we originally launched FXCM Micro more than 3 years ago, I believe only 2 out of the 10+ banks providing liquidity were willing to accept micro lots at the time. That is no longer the case on FXCM’s platform.

Second, it’s important to understand how NDD forex execution (aka STP) works. The below video will take you through the execution process step by step:

Inserted Video


Just in case that wasn’t clear enough, I will also write out the example for you based on the video you just watched (…along with a little more detail added by myself to help). In the video, the best buy price being offered was 1.3524, and let’s nickname the bank quoting this price as Bank A. The best sell price being offered was 1.3523, and let’s nickname the bank quoting this price as Bank B. The best spread is 1.3523/24. FXCM then adds a pip mark-up to the spread as our compensation, and you see 1.3522/25 quoted on the platform for a 3 pip spread.

If you click on the buy price of 1.3525, the order is sent to Bank A for execution. If the order is executed, you have a long position at 1.3525 and Bank A has a short position at 1.3524. The pip difference is FXCM’s compensation for the transaction. Your order is hedged and the outcome of your trade, whether it is a profit or loss, does not result in a greater profit or loss for FXCM. The order is sent straight through to the banks for processing.

Going a little more into the details of the transaction…FXCM is still the direct counterparty in your transaction. You have a long position with FXCM at the price 1.3525 and FXCM has a short position with Bank A at the price 1.3524 to hedge your transaction. Every transaction is hedged immediately in this way in order to eliminate the conflict of interest that can exist with a dealing desk. The pip mark-up on the trade is FXCM's compensation therefore our overall revenues are dependent on trading volume. If we wanted to increase revenues, it would make more sense to create a mind control device causing you to trade more rather than wanting you to lose .

Why is FXCM still the counterparty to your transaction? Every broker is the counterparty to your transaction because you don’t have credit lines setup with the banks. What distinguishes NDD/STP from dealing desk execution is how the counterparty manages the risk associated with your position.... Is your position offset immediately or does the broker manage it in hopes of earning more than a commission or a pip mark-up. If the broker does not offset the position immediately, then you are absolutely correct that you should be wary of using trading signals from the broker. A loss on your trade could result in a larger profit for the brokers dealing desk. FXCM eliminates this conflict of interest by using NDD forex execution.
  • #1,883
  • Apr 27, 2011 1:41pm Apr 27, 2011 1:41pm
Jason,

Is there a way to export historical quote data for FXCM?

Thank you,

Rod
  • #1,884
  • Apr 27, 2011 2:18pm Apr 27, 2011 2:18pm
Quoting slade1986
Jason,

Is there a way to export historical quote data for FXCM?

Thank you,

Rod
Hi Rod,

Yes there is. The easiest way to get a hold of the historical data is by downloading it from here: http://forexforums.dailyfx.com/free-...ical-data.html . The data is for 1 minute candles going back as far as 2001 for most pairs.

You can also export data using the Marketscope chart. To do this, goto the top left of the chart and click on File > Export to Excel. Marketscope will export as much data as you have showing on the chart.

-Jason
  • #1,885
  • Apr 28, 2011 3:54am Apr 28, 2011 3:54am
Hello!

I've just opened a demo account and have a leap in my historical data on EUR/USD, GBP/USD on H4. See attachment. Is this something that I have caused or it there limitations in my demo account? How can I fix it?
Attached Image (click to enlarge)
Click to Enlarge Name: FXCM.jpg Size: 185 KB
  • #1,886
  • Apr 28, 2011 10:36am Apr 28, 2011 10:36am
Quoting TheSwede
Hello!

I've just opened a demo account and have a leap in my historical data on EUR/USD, GBP/USD on H4. See attachment. Is this something that I have caused or it there limitations in my demo account? How can I fix it?
Hi Swede,

The leap in your historical data is not caused by anything you have done. The data imported through the History Center is coming from Metaquotes server and not controlled by FXCM. There are a couple things you could do to fix it. First, you could manually add the candle by clicking on the Add button in the history center window. Second, you could try using the fix that a_trader mentioned in the following post last year http://www.forexfactory.com/showthre...5&#post3843655. Lastly, if you're looking for the raw data, you could always access the historical data FXCM has available http://forexforums.dailyfx.com/free-...storical-data/ .

-Jason
  • #1,887
  • Apr 28, 2011 3:50pm Apr 28, 2011 3:50pm
Updated USD Margin Requirements: This information was sent to all FXCM US and FXCM UK accounts denominated in USD. Please be aware in case you have not read the email (We know how distracting the Royal Wedding can be). Margin requirements for USD denominated accounts will be adjusted at market close on Friday, April 29th due to recent price fluctuations in the US Dollar. It is important to monitor your usable margin closely, making sure it does not fall below zero. Here is a table of the new margin requirements for accounts on 200:1 leverage with FXCM UK when trading a mini lot of 10k for the specified currency pair:

http://img146.imageshack.us/img146/6...ments42820.png


If your account is with FXCM US, multiply the amount by 4 to get the margin requirement for a 10k lot at 50:1 leverage. Last week I mentioned that micro lots are now automatically available for all new standard 10k accounts setup with FXCM US. If you have an existing standard 10k account with FXCM US and would like the ability to trade micro lots, please contact client services with the request.

At present, FXCM does not anticipate that margin requirements will have to be changed more than once a month. Up-to-date margin requirements are and will continue to be displayed in the “Simple Dealing Rates” window of the trading platform, by currency pair.
  • #1,888
  • Edited 5:04pm May 4, 2011 4:22pm | Edited 5:04pm
We're happy to announce that FXCM has partnered with Dow Jones Indexes to release the Dow Jones FXCM Dollar Index (USDOLLAR)!

http://img855.imageshack.us/img855/8...01151117pm.png


The symbol was added to all demo accounts an hour ago. If you don't see it in the dealing rates window, you can add it by clicking on the Symbols button at the top of the platform. I've been told that the charts may possibly be backfilled by this week. In terms of live trading on the index, it will be added to live accounts eventually.... possibly within a couple of months but still not certain. The index can also be found on most financial websites by searching for the ticker symbol USDOLLAR, i.e. Yahoo Finance.

The Dow Jones FXCM Dollar Index is composed of 4 currencies in equal weightings.

http://i51.tinypic.com/6zx8wy.jpg


It avoids outdated currency pair selection and confusing methodology to produce a more straightforward design. The index basket is designed to be as easy to understand as it is to trade. At inception date, the index reflects an equivalent $10,000 long position against the euro, British pound, Japanese yen, and Australian dollar. The value of the index is subsequently the average value of those US Dollar positions.

If the US Dollar rallies 100 pips against the euro, Australian dollar, Japanese yen, and British pound, the index will appreciate by approximately 100 points.

If you need help adding the symbol to your FXCM demo account, take a look at the guide found here.

___________________________________________________________________________________
“Dow Jones Indexes”, the marketing name of CME Group Index Services LLC (“CME Indexes”), is a trademark of Dow Jones Trademark Holdings LLC. “Dow Jones”, “Dow Jones Indexes”, “DJ” and “Dow Jones FXCM Dollar IndexSM” are service marks of Dow Jones Trademark Holdings LLC (“Dow Jones”) or Forex Capital Markets LLC, as the case may be, and have been licensed for use by CME Indexes and sublicensed by Forex Capital Markets. “CME” is a trademark of Chicago MercantileExchange Inc. The Dow Jones FXCM Dollar Index Basket is not sponsored, endorsed, sold, or promoted by Dow Jones, CME Indexes or their respective affiliates and none of Dow Jones, CME Indexes, or any of their respective affiliates make any representation regarding the advisability of investing in such Basket product.
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors as you could sustain a total loss of your deposited funds. Forex trading products are only suitable for those customers who fully understand the market risk.
All references to "FXCM" refer to FXCM, Inc. and its consolidated subsidiaries.
  • #1,889
  • May 5, 2011 7:48am May 5, 2011 7:48am
If your account is with FXCM US, multiply the amount by 4 to get the margin requirement for a 10k lot at 50:1 leverage. Last week I mentioned that micro lots are now automatically available for all new standard 10k accounts setup with FXCM US. If you have an existing standard 10k account with FXCM US and would like the ability to trade micro lots, please contact client services with the request.

Hi Jason. Is micro lots available for acounts with FXCM UK too?
  • #1,890
  • May 5, 2011 8:36am May 5, 2011 8:36am
Quoting suntzu
If your account is with FXCM US, multiply the amount by 4 to get the margin requirement for a 10k lot at 50:1 leverage. Last week I mentioned that micro lots are now automatically available for all new standard 10k accounts setup with FXCM US. If you have an existing standard 10k account with FXCM US and would like the ability to trade micro lots, please contact client services with the request.

Hi Jason. Is micro lots available for acounts with FXCM UK too?
Hi suntzu,

The change was only made for FXCM US (LLC). In order to trade micro lots with FXCM UK, you would need to setup a micro account. I haven't received any indication whether the same change is planned for FXCM UK.

-Jason
  • #1,891
  • May 10, 2011 2:49am May 10, 2011 2:49am
hi,Roger
I want open a standard account but the website does no offer open standard account link?So could you share the link at here?thanks
  • #1,892
  • May 10, 2011 8:29am May 10, 2011 8:29am
Quoting Specificers
hi,Roger
I want open a standard account but the website does no offer open standard account link?So could you share the link at here?thanks
Hi specifiers,

Try this link to goto the application overview on FXCM UK http://www.fxcm.co.uk//forex-account-international.jsp and the direct link to the online application can be found here .

-Jason
  • #1,893
  • May 10, 2011 10:41pm May 10, 2011 10:41pm
Hi,roger.
how much the minimum deposit with standard account?
  • #1,894
  • May 11, 2011 2:20am May 11, 2011 2:20am
How does an Australian individual trade with FXCM?

I previously had an account with a US broker/MM who later transferred it to their UK subsidiary, which was alright by me, but then the UK subsidiary transferred my account to another UK broker, which was not alright by me.

Is there a danger that FXCM will do the same thing in the near or even far future?

Is there a danger FXCM will stop taking individual clients and only take institutional clients?
  • #1,895
  • May 11, 2011 8:59am May 11, 2011 8:59am
Quoting Specificers
Hi,roger.
how much the minimum deposit with standard account?
Below is a table showing the minimum deposit for each account type. All of the minimums (excluding $50 micro) refer to the standard account for that particular account type.

http://img852.imageshack.us/img852/1...ination511.png

  • #1,896
  • May 11, 2011 9:16am May 11, 2011 9:16am
Quoting Macdon
How does an Australian individual trade with FXCM?

I previously had an account with a US broker/MM who later transferred it to their UK subsidiary, which was alright by me, but then the UK subsidiary transferred my account to another UK broker, which was not alright by me.

Is there a danger that FXCM will do the same thing in the near or even far future?

Is there a danger FXCM will stop taking individual clients and only take institutional clients?
Hi Macdon,

Thanks for the questions. FXCM is regulated in Australia by ASIC and all Australian residents are required to open through our Australian entity FXCM Australia Limited. I would say it is highly unlikely FXCM would decide to stop accepting individual clients since individual clients make up the vast majority of our business.

FXCM Australia just moved to a new office in Sydney's central business district (Suite 2, Level 18, 420 George Street, Sydney NSW 2200). You're welcome to stop by if you're in the area, and seminars are held in the office on a weekly basis http://www.forextrading.com.au/sydney-forex-seminar.jsp.

-Jason
  • #1,897
  • May 12, 2011 3:38am May 12, 2011 3:38am
Guys be carefully with fxcm uk .....they joke to send the withdrawal and also the moneys are not in segregated in uk as they declare but are in usa and to receive my moneys i have to wait 10 days ( i hope ).....completely scorrect......also very strange i cannot talk with anyone in uk......
  • #1,898
  • May 12, 2011 4:17am May 12, 2011 4:17am
Quoting gioviforex
Guys be carefully with fxcm uk .....they joke to send the withdrawal and also the moneys are not in segregated in uk as they declare but are in usa and to receive my moneys i have to wait 10 days ( i hope ).....completely scorrect......also very strange i cannot talk with anyone in uk......
I have an account with FXCM UK and had no problems withdrawing my money through bank wire. Last time it took 2 days to see them in my account.
  • #1,899
  • May 12, 2011 3:11pm May 12, 2011 3:11pm
Quoting gioviforex
Guys be carefully with fxcm uk .....they joke to send the withdrawal and also the moneys are not in segregated in uk as they declare but are in usa and to receive my moneys i have to wait 10 days ( i hope ).....completely scorrect......also very strange i cannot talk with anyone in uk......
Hi gioviforex,

Retail accounts with FXCM UK are segregated in accordance with FSA client money rules. This is outlined on both the website and in the trading agreement. FXCM UK can be contacted by phone, live chat or email, and support is available 24/7. Most withdrawals are processed within 1-2 business days, but a delay could result if any information submitted with the withdrawal is incorrect. Despite our efforts for perfection, a mistake could happen on FXCM's side, but we try to eliminate this as much as possible. If there was a delay, please let me know and I will have it reviewed by the quality control team. Any problems or delays are regularly reviewed by quality control to minimize errors.

-Jason
  • #1,900
  • May 12, 2011 4:37pm May 12, 2011 4:37pm
Quoting gioviforex
Guys be carefully with fxcm uk .....they joke to send the withdrawal and also the moneys are not in segregated in uk as they declare but are in usa and to receive my moneys i have to wait 10 days ( i hope ).....completely scorrect......also very strange i cannot talk with anyone in uk......
Hi gioviforex,
I trade using fxcm uk and I have never had a problem
withdrawing funds by wire, usually takes 2 days to arrive
in the bank account.

They are regulated by the FSA in London.

Good trading to you.
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