FXCM Is Why Im Broke

 50 Words on – Why you can go Broke with FXCM?

FXCM is one of the true giants of the Forex industry; sure, a lot of brokers consider themselves the leaders, the best, but sometimes marketing plays a bigger role than actual facts. FXCM put their money where their mouths are and are commonly referred to as one of “the best” by traders, not by themselves. Ok so they’re great, but how can you go broke trading with them? Well, bad trading decisions are one way: not always the broker is to blame for your loss and if your trading is influenced by emotion or you lack the necessary knowledge, you could go broke with FXCM or any other brokerage. Also, negative slippage could get your account in the red but FXCM is one of the few brokerages that actually show you how to minimize negative slippage. Keep reading to find out how.

 

How to avoid going broke with FXCM

  • In order to limit slippages, you have to use limit orders. FXCM’s website contains a more complex explanation of how to do that and they show you how to maximize positive slippage while minimizing negative slippage. Follow the link at the bottom [1].
  • I talked above about how you could go broke if you lack the necessary knowledge. FXCM have that covered because they own one of the most prolific educational websites on the Internet: DailyFX.com. You will also find there trading ideas, Forex news, strategies, so I believe it’s a website you should use even if you are not an FXCM client.
  • If you are a high leverage trader, you should be aware of the fact that FXCM’s highest leverage is 50:1.
  • There are a lot of options when opening your account so you should familiarize yourself with their website layout. Make sure you’ll end up opening the best account for you and ask for help from their support team.
  • Be aware of the fact that spreads widen at news and this is valid for almost all brokers, not only FXCM
  • Although I don’t agree with the commonly known statistic which says that 95% of all traders lose money in Forex, I do believe the majority of traders lose. If you don’t want to be a part of that majority, you need trading knowledge and a good broker. You just found your reliable broker, now you need to work to become good at trading.

 

 

 The Good, the Bad and the Ugly Speak

The Most Transparent Broker Around The Most Transparent Broker Around

FXCM is headquartered in the financial capital of the world, New York and in December 2010, they launched their IPO (initial public offering), thus making their shares available to trade on the New York Stock Exchange (NYSE). Of course you realize that a bucket-shop brokerage wouldn’t be able to make an IPO and this speaks a lot about FXCM’s respectability and reputation, but more important, about their financial situation. Once a company is publicly listed, its financial situation must be fully transparent and this gives you, the trader, peace of mind because you can always check your broker’s financial health. And speaking of your funds’ safety, you should know that FXCM is regulated by the industry’s most fearsome regulatory agencies: the U.S. National Futures Association (NFA) and is registered with the U.S. Commodity Futures Trading Commission (CFTC). They have to meet strict capital requirements and have to submit reports on a regular basis. What this means to traders is that FXCM has to maintain a high standard and everything they do must be top notch. Of course, all regulatory agencies around the globe must enforce fair practices, but sometimes it’s more talk than action. This is not the case with U.S. regulation and that is the main reason why so few brokers are regulated by American regulatory bodies… why do you think so many brokers are regulated in Cyprus?

 

Tough Job… Tough Job…

Well, it’s a tough job for me to find something bad about FXCM because they are regulated all over the world, their proprietary trading platform (Trading Station) has won several awards and guys who still want to trade on the classic Meta Trader 4 have that option as well. There are various types of accounts which will fit all types of traders, their execution is Non Dealing Desk (NDD) so you actually have all the ingredients for an extraordinary broker. However, let me dig deep and try to find something: their minimum initial deposit is 2,000 USD (or base currency) which is a little steep but it’s probably a way to keep total newbies away. Also, the commission can be a bit expensive on some pairs, going as high as $60 per million per side (meaning that you will have to pay the commission again when you close the trade). However, the most traded pairs have a $40 commission per side. Although some traders consider this thing a positive, I consider their leverage too low: 50:1. Not really a bad thing, but I told you I didn’t have a lot to complain about so I had to find something. However, some guys don’t have any problem finding bad things about a broker… any broker, even FXCM and this brings us to the Ugly.

 

Complaining Skill: Professional Complaining Skill: Professional

I tell you, some dudes could complain even about the sun coming up… or not coming up when they wanted it to, so you can imagine what happens when they lose some money trading and have to find somebody to blame. For instance, “matfx” complains about not being able to trade during the weekends with FXCM [2]. Call me a complete noob, but I wasn’t aware that you can trade Forex during the weekends… this is new for me. Ok, sarcasm aside, I want to make it clear for everybody that the Forex market is closed during the weekend. Closed! If you are not able to trade during the weekend, it’s not the broker’s fault but as I said: some people could complain about anything.

On Forex Peace Army forums, Sherif Abdul from Egypt complains about his Stop Loss being triggered without price touching it [3]. Result: Mr. Sherif calls FXCM stop loss hunters… what else. Then an FXCM representative explains to him, with pictures that is trades were closed because the ask price touched his stop loss. I know it is frustrating to see your trade closed because the ask line hits the stop loss and immediately afterwards price moves in your original direction, but this happened to me a lot of times and it is not a reason to believe somebody is hunting your stops. Just activate the option to display the “ask” line on your charts.

As you can imagine, you can find tons of positive comments related to FXCM, coming from people who trade a long time with them: Bernhard Yohan from Canada says he’s been trading for years with FXCM and from his experience they have been the best broker [3]. Rui from Portugal says FXCM exceeded his expectations and admits that when he loses money it’s by personal mistake and failure to stick to his plan [3]. Maybe all people who leave bad reviews should be more like Rui: think about you did wrong before blaming it on the broker.

 

Editor’s Note – Is FXCM a Scam?

I don’t really think the question is valid in this case because if FXCM were a scam it would mean that all U.S., British, Australian, French, etc regulatory bodies are useless. This is not a broker regulated in Cyprus or some island I never heard of. They are regulated globally and listed on the NYSE. I don’t see any scam here.

 

Would I trade with FXCM? Definitely!

When trusting a company with my money, I always like to go with the best and I believe FXCM is one of the best. Their position as one of the leaders of the industry comes with a lot of responsibility because it’s easy to fall when you are on top so I am certain they will do their best to remain at the top by constantly improving their service. That being said, the 50:1 leverage is something that still keeps me away because my trading style requires a higher leverage.

 

References

  1. FXCM Execution Improved
  2. FXCM Reviews on GoForex
  3. ForexPeaceArmy FXCM Review

 

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