FXCM ceased among my friends from trading entirely. It was after he began to exchange TOO profitably on a normal basis.
FXCM would never admit it, but the true reason was because FXCM in fact takes THE OTHER SIDE of their customer's positions. The authentic income of FXCM isn't generated by this profit from spread, but by taking another side of their clients' positions.
Considering that the VAST majority of forex traders fail, ALL those money go to FXCM. As soon as you begin to trade profitably, they cut you off, because then you are in fact getting THEIR money - . Losing trader sets them on the RIGHT side of the place FXCM is pleased to invite newer and newer losers.
I don't understand about it, but I could imagine they've got some appliions when is the majority moving that way and according to this information their taken actions can be far better.
What we are seeing here is a conflict of interest. FXCM does not have any interest in seeing people traders make money since they take the other aspect of the transaction, they will lose money if we win. A bunch of winners are put on execution wind up leaving FXCM and replaces winners. That is FXCM business model. They don't care what we think of this because they are profitable. And arrogant.
Do not get fooled by their slick revenue reps.Once you start trading and have to manage their dealing desk, its a completely different story. Yes, you may have had one or two issued resolved to your satisfaction but they know in the long run, they'll wear your account down.
Retail Currency Market brokers or http://en.wikipedia.org/wiki/Market_maker manage a second fraction of the entire quantity of the foreign exchange market. According to CNN, one retail broker quotes retail quantity at $25-50 billion daily, http://money.cnn.com/2006/03/10/news...s.retail.reut/that is roughly 2% of the entire market. CNN also quotes an official of the National Futures Association Retail Currency Market trading has increased dramatically over the past few years. The amount of Currency Market fraud has also increased dramatically.
All companies offering foreign exchange trading on the internet are market manufacturers or facilitate the setting of transactions with market manufacturers.
In the retail Currency Market industry market manufacturers often have two separate trading desks- one that really trades foreign exchange (which decides the business's own net place on the market, serving as both a proprietary trading desk along with a means of offsetting customer transactions on the interbank market) and one employed for off-exchange trading together with retail clients (called the dealing desk or trading table ).
Many retail FX market manufacturers claim to offset customers' transactions on the interbank market (that is, together with other bigger market makers), e.g. after buying from the customer, they market to a bank. Nonetheless, the huge majority of retail currency speculators are beginners and who lose cash http://webreprints.djreprints.com/1276711190447.html, so the market manufacturers would be providing up large profits by offsetting. Offsetting does occur, but just when the market maker judges its customers' net position as being risky.
The dealing desk operates like the currency exchange counter at a bank. Interbank exchange rates, that are displayed at the dealing desk, are corrected to incorporate spreads (so the market maker is likely to earn a profit) until they are displayed to retail clients. Prices shown from the market maker do not neccesarily reflect interbank market rates. Arbitrage opportunities may exist, but retail market manufacturers are effective at eliminating arbitrageurs from their systems or limiting their transactions.
A limited number of retail Currency Market brokers offer consumers direct access to the interbank Currency Market market. But most don't because of the restricted number of banks willing to process modest orders. More to the point, the dealing desk model can be a lot more profitable, as a huge portion of retail traders' losses are turned into market maker profits. While the income of a marketmaker that offsets transactions or a broker that facilitates trades is restricted to transaction fees (commissions), dealing desk brokers can generate income in a variety of ways since they not only restrain the trading procedure, they also control pricing that they can skew at any time to maximize profits.
The principles of the game in trading FX are highly disadvantageous for retail speculators. Most retail speculators in FX lack trading expertise and and capital (account minimums at some companies are as low as 250-500 USD). Substantial minimum position sizes, which on retail platforms ranges from $10,000 to $100,000, force small traders to take imprudently large positions using high leverage. Professional Currency Market traders rarely use more than 10:1 leverage, yet many retail Forex firms default client accounts to 100:1 or even 200:1, without disclosing this is highly uncommon for currency traders. This drastically raises the risk of a margin call (that, if the speculator's transaction is not offset, is pure profit for the market maker).
According to the Wall Street Journal (Currency Markets Draw Speculation, Fraud July 26, 2005) Even individuals running the trading shops warn customers against attempting to time the market. 'If 15 percent of day traders are profitable,' says Drew Niv, leader of FXCM,'I would be amazed.' Http://webreprints.djreprints.com/1276711190447.html
In the united states, it is illegal to offer foreign currency futures and option contracts to retail clients unless the offeror is a regulated financial entity based on the Commodity Futures Trading Commission http://www.cftc.gov/opa/press01/opaadv06-01.htm. Legitimate retail brokers serving traders at the U.S. are most often registered with the CFTC as futures commission merchants (FCMs) and are members of the National Futures Association (NFA). Prospective clients can check the broker's FCM status at http://www.nfa.futures.org/basicnet/. Retail Currency Market brokers are much less regulated than stock brokers and there is no protection. The CFTC has noted a rise in Currency Market sc http://www.cftc.gov/enf/enfforex.htm.
I'm definitely not encouraging the usage of Retail Forex at all...I'm encouraging the usage of superior decision making.
There are not very many advantages of going via a retail broker, but obviously there ARE a few:
1) first and foremost is you may open a account with very little money. Is because a lot of the cash you pay into learning the market have to do with WORLD trading expertise. If I can do this with a $250 micro-mini account at FXSol, I can learn a lot utilizing world trading conditions. I'm a massive proponent of using money to understand how to trade as many of you've noted. You need to learn how to operate within the forex system in order to become profitable and if you're blowing out your demo accounts on theories and hopes that you don't actually learn anything. . .at not everything you are supposed to understand, like mind management and money management.
Two ) ECN trading technologies (and by that I mean that the actual systems you use to trade) are often cumbersome and not user friendly. Evidently, you can construct your own, but I discover that it's SOMETIMES (not all of the times) very fruing to attempt to input orders. I like to use things such as touch screens and simple mouse clicks in order to input orders. . .ECN trade channels (at least the ones that I've seen and demoed) are NOT easy to use. Obviously to reduce their costs and maximize their profits, ECNs invest a lot less time on RD for their own systems. . .and it reveals. This, of course can be overcome if you are ambitious enough...
3) In rare cases, higher leverage provided by retail brokers is really advantageous. Your money management skills are in peak form and if you are confidence is high, you are able to take advantage of risk trades together with maximum profitabiliy. For instance, if all models point to a good size run-up (200 pips or so) with neglible risk (50 pip error ), being in a position to leverage does have advantages. Obviously it's easy to make mistakes in this scenario, but I'm sure a lot of you've experienced that feeling soon after a semi-volatile news release that you new in your heart of hearts the market mood was so one-sided that leaping in was just so little risk. . .in other words, you knew that you would earn money just. In these special cases (which I find are couple. . .but not always far between), leverage may be used to your advantage. Some systems take advantage of this margin requirement to cancel risk in both directions.
Again, the biggest problem with all of this has to do with the choice to trade NFP in any way. In spite of ECN platforms, exact entries and exits are difficult and pre-existing limit orders work the same (for the large part) on both platforms. Everyone here will agree that trading NFP is a lot like gambling. . .not always because you can not possess a egy but a few egies are not compatible with the technologies. So for instance, attempting to jump in and jump out through NFP (rapid scalp). . .not exactly compatible with present technology (especially on retail brokers. . .and ECN prices jump a lot during high volatility...I was viewing NFP at MBT and the prices bid could jump up 20 pips down 30 up 15 all in a matter of a half a second). I'm sure it's not what a lot of you men want to hear, but seriously, it's easy to see why people lose their tops (or blow out demo and live accounts) in forex and that is due to decisions to try out trade NFP....why do it?
And I understand there is probably a philosophical argument raging about whether you SHOULD BE ABLE to do it. . .but that is really not the purpose. Evidently, everybody here is free to jump off a cliff, but honestly, I would not suggest it. Even from a stand point of whether you need to for many people, I would try to keep them from physically being able to do it if I could. Whether they would really want to, there's something to be said for respecting the wellbeing of others, and in this case, trading super high volatility is the forex equivalent. . .and while I understand there are a few extreme sport fans who would love nothing more than to base jump seas all of the live-long day...I dunno...I think I'd be fine with taking some priviledges for the safety of others. . .just my opinion.
I have two retail accounts and a single ecn fxdd,fxsol,mbt. Very or all good brokers. You can make money with retail brokers you have to find the perfect one like you said prior to your broker will probably be dumb to trade from you if your on the ideal side.
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