Great New Forex Site From Thomson
By Marc Prosser | November 28, 2007
FXCM and Thomson Financial have a great working relationship.
Thomson’s IFR Forex Watch product is one of the most respected foreign exchange market commentary services in the world. (and available free to FXCM’s retail trading clients).
Recently, Thomson created a free Forex website designed for both retail and institutional traders www.thomsonfxhub.com I like the site and have asked Thomson to provide a brief description of the site:
Thomson FX Hub is a foreign exchange-oriented site which takes advantage of Web 2.0 technologies to connect our analysts and readers in real time. FX Hub filters news, commentary and analysis on the web and puts
our authoritative spin on it. We surround our commentary with tools and information critical to traders and investors, enhancing its value.
If you are looking for tedious PhD-produced palaver, FX Hub is the wrong place for you. If you are looking for sharp, opinionated, to-the-point content with enough fundamental backbone to illustrate a concept without making your eyes glaze-over, FX Hub is your kind of site. We pledge to remain regression analysis-free.
Tags: forex, fxcm, thomson, trading
Topics: Mr.FXCM | No Comments »
Trip to Europe
By Laetitia Vaval | October 10, 2007
I’ve just come back from a two-week trip to Europe. Needless to say that I sure felt the weakness of the dollar. I usually love to shop when I am in Paris but this time around everything was so expensive that it took away much of the fun.
I also visited London for the first time, and despite having heard many times that London was one of the most expensive cities in the world, I still couldn’t believe how high the cost of living was. It seemed as if everything cost exactly TWICE as much over there than it does in New York. For example, a 1-week subway pass is about 22 pounds over there (which is about US $45 !! — twice as much as what it costs here). A simple subway ride is 4 pounds — US $ 8 !!! Food, clothing, transportation seemed to keep the same numerical value as in the U.S. ( 32 for a basic T-Shirt, 12 for a pizza, etc) except that instead of being expressing in dollars prices were in Pounds (i.e. more than doubled).
Even duty-free over there wasn’t all that worth it given the exchange rate…
It was really interesting going there at this time, right after my stay at FXCM. I never had really paid much attention to exchange rates in the past, but my trip was a first-hand demonstration of the current situation with the US Dollar.
Tags: currency market, dollar, fxcm, laetitia vaval, wall street warrior, wall street warriors
Topics: Wall Street Warrior | No Comments »
FXCM - More Than Self Trading Forex Accounts
By Marc Prosser | October 2, 2007
FXCM is more than self trading forex acounts. We offer:
* Free and Paid Educational Forex Courses
* Managed Forex Accounts
* Automated Forex Trading SystemsIn short, we still focus our efforts on forex trading. However, to meet the needs of a growing forex community, we expanded our products.Education - We offer courses for new forex trading (FX Power Course), intermediate traders (Trading The Majors) and advanced traders (Day Trading Forex) These online courses range in price from $19.99 to $999.Managed Accounts - We offer the FXCM Sentiment Fund and FXCM Aggressive Sentiment Fund for those that want to passively invest in the forex market.Automated Forex Systems - Our Forex System Selector products enables clients to mix and match over 40 different forex trading systems.For more information about these products, please visit www.fxcm.com
Tags: forex, forex trading, fxcm
Topics: Mr.FXCM | No Comments »
FXCM’s Response to NFA Regulatory Changes
By Drew Niv | September 28, 2007
Questions provided by FXStreet
1 - What is your opinion on the recent NFA regulatory changes? How do you view the implementation of these new measures for FDMs?We believe the NFA pending regulatory changes will lead to a consolidation of the retail forex industry and this consolidation will benefit FXCM, since we easily meet the new proposed regulations.The proposed regulations will require that firms have at least $5 million in net capital. However, the requirement for brokers with large amounts of customer capital could be substantially higher. Based on the most current CFTC financial data we estimate that as many as 20 firms would not be able to meet this requirement if enforced today. The forex industry in the long term should benefit from having a smaller number of better capitalized brokers. In essence, a broker with more firm capital is less likely to make imprudent decisions that would put its funds and its customer funds at risk.Although these new regulations are good for the industry, the resulting short-term changes may be difficult for clients whose brokers do not meet the new requirements. We hope that the NFA will make every effort to facilitate an orderly transition as brokers make new arrangements to enable their clients to trade through firms that meet the new requirements. 2 - The new proposal also calls for the use of proper and uniform accounting methods and tightens internal controls. Do you think this measure could affect your company’s business in some way?
No. FXCM’s accounting practices should not be affected by the new proposed regulations. Our own business standards led us several years ago to adopt similar practices to those specified in the new proposed regulation.
For the last six years, FXCM has been audited by major accounting firms which audit public traded companies. Our financial statements comply with international GAAP standards. To live up to these higher standards, we have had to maintain a highly trained and professional staff of accountants and internal auditors. We believe only a large firm, such as FXCM, can make the type of investment in financial integrity which will now be required of all FDMs by the new proposed standards. 3 - Do you consider these measures could be a breath of fresh air that could result in more investors joining the FX Market?Yes. The FX market has been growing at an incredibly fast pace. However, its momentum could be slowed if one or more brokers became insolvent. These new proposed rules significantly reduce the probability of that happening. Thus, the proposed new rules help protect the future of the industry.My personal opinion is that the emerging credit crisis will have a major impact on equity markets. As profitability in trading stocks becomes more difficult, there will be a mass of traders into forex. We do not want those traders’ first opinion of forex trading to be of an industry in need of regulation.4 -
FXCM is in discussions with several small and mid-sized FDMs who are concerned about their ability to meet the new proposed requirements. We are interested in purchasing the client accounts of these firms, or finding a mutually beneficial relationship with them.
The FXCM Group is uniquely positioned to accept and service the books from other brokers. We have 1) A global footprint with offices in the Americas, Asia and Europe; 2) A staff of over 500, capable of handling the migration of a large number of clients; 3) over $120 million in group capital(unaudited) to fulfill the capital requirement associated with servicing these new clients.
A forex broker seeking a potential buy or an IB relationship, must first of all consider the buyer’s ability to pay. Brokers may have thousands of clients trading many millions of dollars; in such an instance, the buyer may be obligated to rebate millions of dollars to them. The brokerage firms must satisfy themselves that the buyer can afford to do that – and in fact, that it has been routinely doing that for years.
Also: The broker must be assured that the buying firm can potentially absorb thousands of new clients, service them well and, in order to continue to receive revenue from their trading, keep them as clients.
In my opinion, the most important reason that some FDMs are considering a relationship with FXCM involves trust. In blunt terms, I believe FXCM can always be trusted to pay the firm’s owners the revenue their accounts earn – in full and on time. FXCM has been working with Introducing Brokers for over eight years. In fact, our very first Introducing Broker continues to refer business to us.
Our No Dealing Desk business model is ideally suited to processing a large Introducing Broker book of business. Under our No Dealing Desk system, our monthly revenues, in the form of pip markups, are an exclusive reflection of trade volume: if we do X volume, we book X pips. And the revenues of our IBs move in perfect concert with our own, since they may be rebated an exact percentage of total volume.
The revenues of a market-making broker, on the other hand, are not only dependent on volume, but may vary significantly depending on the quality and effectiveness of the broker’s traders as well as market volatility. Therefore, if the FDM allies with a market maker, and that market maker suffers a losing month, yet still owes a volume rebate to the IB, the IB may encounter difficulties in collecting everything it is owed.
6- How do you see the M&A market in the Forex industry? Do you expect important corporative movements in the next months?
The M&A market in forex is particularly tough for several reasons.
- No common standards – for software platform, accounting standards, back office procedures. It makes integrating an acquisition much more difficult than a firm in the equity industry, for example, where standards are shared.
- Recent market volatility meant rising volumes and profits for most firms. August was one of the best months in FXCM Group’s history – we had over half a trillion in trading volume – and we suspect that other firms also did very well. This recent success, I believe, will make owners of smaller brokers reluctant to sell. As a founder of a forex firm, I completely understand their feelings and their attitude. It is very tough to exit now. However, as the new proposed regulations come closer to enactment there may be a major re-assessment.
- Many private equity firms and venture capitalists are eager to fund profitable forex firms. But they are in search of the fastest and surest payout, and will tend to ignore all but the largest and most competitive forex firms on the market. Furthermore, they realize that even those large FDMs have been put in a weak – and perhaps ultimately desperate — bargaining position by the new proposed regulations, and will negotiate accordingly. If past is precedent, at contract time the deal may become much more one-sided and full of pitfalls for the forex broker owner. Private equity firms are expert at negotiating terms that are extremely profitable for them but costly for the business owner.
The illusion of private equity firms lining up to invest in the business may give the owner false hope that buckets of cash are theirs for the taking. I believe that once the FDM owner is discouraged by the private equity experience, actual M&A activity between forex brokers will intensify.
7 - For many, the very business model of Forex brokerage firms that needs to be decided is whether or not such brokerage houses can take opposite trading positions to those held by their customers, i.e., trading ‘against them’, which contradicts traders’ well-being. What is your company position on this? How do you hedge your customers’ trades?We believe that No Dealing Desk model is best for both trader and broker, and FXCM is totally committed to it. Over 99.9% of our business is conducted on this model.
FXCM was primarily a market maker until the end of 2006, when we took a 180 degree turn to the agency execution model. So we know the market-making business. Currently, many of our competitors believe that because volatility has returned, market making is the more profitable business model. That is true — in the short term. Long-term, however, the no dealing desk system is better, in my opinion, for both the broker and the client, for several reasons.
- Better Execution During News Events & Market Volatility. It seems that in the past few years clients have become much more focused on trading news events — those turbulent times when it is most difficult to make prices. By aggregating large bids and asks from the large banks, we solved that problem, and the proof is that since we inaugurated no dealing desk our trading volume during news events has grown immensely. Market makers, however, have an especially tough time during news trading, because if they honor all prices they will lose money. (When we were market-making we certainly lost money during the big market moving news events.) Remember too that the market-maker’s prices are removed from the real market, and so they must protect themselves by offering created prices. We avoid the problem by having some of the world’s largest banks streaming their prices through us.
- Lower Spreads. We can now review our policies relating to prices and markups above the best bid/offer we get from the banks, and we’ve introduced fractional pips to further tighten spreads. In the next few months we plan to continue cutting the cost of trading pairs across the board. And we have launched numerous incentive programs to provide additional discounts to high-frequency traders.
- Greater
Opportunity to Scalp the Market. Many traders favor short-term scalping strategies. For scalping to be profitable for the client, the market maker must lose. So either the market maker takes the loss or disallows the strategy. With no dealing desk we are able to accommodate scalpers – but of course we clearly warn them of the risks involved. - Aligned Broker-Trader Interests. The no dealing desk strategy has aligned FXCM’s interests with those of our customers. Since it is in our interest for them to trade more, we want them to increase their profits and account sizes. We have studied which trading behavior is most profitable for the retail trader, and have discovered that most retail clients are less successful when they trade pairs with large swings – especially GBP/USD. They are much more profitable with the quieter, range-bound pairs like EUR/CHF, EUR/ GBP and AUD/NZD. To give our clients an extra incentive to trade the more successful pairs, we have been aggressively reducing our markups on these pairs to make their spreads the tightest of all the currencies we offer.
- Easier Implementation of Programmed Trading. We can now accommodate more black box traders, both those with high-frequency systems and those with break out systems. The change to no dealing desk allows us to service a large new group of traders who never thought of trading through us when we were market-makers.
8 - Would you like to add something else?
The major reason for the proposed regulations is that the NFA and the industry realize that we must provide more funds security to forex traders. The new proposals are a major step forward, but I think we all realize they don’t go far enough.
I am proud to say that FXCM is in the vanguard of the movement to convince the US Congress to pass legislation extending funds segregation to the forex industry. In fact, we have even established a Political Action Committee to support and coordinate the actions of this Safety of Funds initiative, and we have convinced three other large FCMs to add their names to our petitions. We are urging every firm in our industry to join us in this effort.
FXCM already has the ability to offer our clients segregated forex accounts. Thanks to our British subsidiary, accounts with Forex Capital Markets LTD (FXCM-UK) are fully segregated in accordance with
Tags: dollar, forex, forex broker, forex industry, forex market, forex trading, fractional pips, fxcm, gbp, market volatility, nfa
Topics: Mr.FXCM | No Comments »
Fractional Pips
By Tim Shea | September 21, 2007
If you trade either demo or live with FXCM, you’ve probably noticed an extra digit in your prices, recently. That’s because we’ve just started quoting prices out to a further digit. So, now, instead of seeing a EUR/USD price of, say, 1.3587, you’ll see a price of 1.35874. I’m so used to seeing prices only quoted in pips, and not tenths of a pip, that it’s been a little tough to adjust. But, believe me, this is great.
Why? Lower prices! Since FXCM has started fractional pips, I’ve seen tighter spreads most of the time. Like right now, it’s early afternoon in
Tags: forex, forex trdaing, fractional pips, fxcm, pips
Topics: What's New at FXCM | 2 Comments »
Favorite Forex Celebrities
By Marc Prosser | September 19, 2007
I got great feedback from my last post asking for suggestions on ways to improve DailyFX. Thanks.
So here is the next question: Who would like to appear in a live online Q & A session:
In October, Bob O’Brien of CNBC will be appearing to answer questions about the forex market.
Also in October, Drew Niv, the CEO and co-founder of FXCM will be taking your questions.
And I have a call into Andy Busch, global forex strategist at BMO to see if he would like to appear.
So who would you like to ask about forex trading?
No. Alan Greenspan and any current or former FED official is probably not possible
Looking forward to your answers.
Tags: forex, fxcm, webinars
Topics: Mr.FXCM | 1 Comment »
The Worst Offenders: Pairs for Trading
By Tim Shea | September 14, 2007
I’ve been doing some data analysis for FXCM mini accounts over the past year, and have broken down client profitability by currency pair.
The very best pair in terms of client profitability was the AUD/CHF. Unfortunately, it is traded by only a few clients.
The top 5 pairs (of those with significant volume) with the best results for clients are:
- GBP/AUD
- EUR/USD
- EUR/CHF
- EUR/JPY
- EUR/GBP
So, what do they have in common? 4 out of 5 pairs are Euro pairs. Number 6 is USD/CHF, which is often the mirror image of the EUR/USD. With the exception of the GBP/AUD, these pairs are low-volatility and low-spread pairs.
It appears that range trading tends to be more consistent than other approaches. All of these pairs, with the exception of EUR/JPY, spent most of the survey time range-bound. They all feature strong support and resistance lines, giving range bound traders excellent and consistent opportunities over the past year. Strong support and resistance lines also let you trade with tight stops, giving good opportunities to use good money management techniques.
Now, the 5 biggest losers, starting with the worst:
- NZD/JPY
- EUR/CAD
- AUD/JPY
- CAD/JPY
- GBP/JPY
What’s in common here? The JPY. JPY pairs tend to have very high volatility, and can be brutal for many accounts. Most of these currencies are popular carry trade currencies, with often violent sell-offs. When they drop, they drop a
To compare the extreme losses of the worst pairs, you can compare AUD/CHF to NZD/JPY. For every dollar of average net profit on AUD/CHF, there were over $6.20 of losses in NZD/JPY.
Results are based on closed trades on FXCM mini accounts from 6/30/06 to 7/31/07 (13 months); rollover interest is not factored in.
Tags: currency pairs, currency trading, forex trading, forex trading blog, fxcm, worst currency pairs
Topics: What's New at FXCM | 6 Comments »
The Second Day
By Laetitia Vaval | September 12, 2007
Today, I placed two trades on my demo account.
The first trade involved the GBP/USD pair. As you can see from the chart above, the pair has been trading in a range for a few days now. The wider range this pair was trading at can be set to 2.0358 - 2.0228. If you look at a shorter time frame, the range can be narrowed down to 2.0358 - 2.0281. I decided to trade that range, meaning to get long at the bottom of the range and short at the top. I got long the Sterling at 2.0316. I placed my stop 10pips below the 2.0281 support level at 2.0270.
Ialso had a long bias because the recent weakness of the USD and the relatively good unemployement news that came out in the UK overnight.
My second trade was buying the AUDUSD. On the 1yr chart (2nd chart), you can see that 0.8397 had been a resistance level in mid-April.
As far as fundamental analysis goes, the September Australian Westpac numbers came out above expectations during the night and indicated a 4.2% increase in consumer confidence since August. According to the Daily FX the Westpac number has a moderate impact on the market, however it might be partly responsible for today’s uptrend in the AUD.
At 10:18am, I got long the AUD at .8388. At 12:52pm, I’m up 32pips.
I placed my stop at 0.8277 and my limit at .0581. I placed my stop at the 50% fib level which closely matches the S1(daily) pivot level of 0.8273. My limit was placed close the nearest resistance level of 0.8600.
Tags: dailyfx, dow, forextrading, fxcm, gbp, pips, trades, wall street warriors
Topics: Wall Street Warrior | No Comments »
Help me improve FXCM’s forex news site!!
By Marc Prosser | September 11, 2007
I am looking for ideas on how to improve DailyFX.com.There is a major top-secret improvement coming in a couple of months but, I am thinking 6 to 12 months ahead.
Here are some questions:
Would you like to be able to receive forex price alerts by SMS or e-mail?
Would you like to have tools for calculating interest rate rolls?
What features do other forex web sites offer that you would like to see on Dailyfx.com?
All suggestions to improve Dailyfx.com are welcome. I cannot promise that we will act on them but, I will definitely consider them.
Tags: dailyfx, forex, fxcm
Topics: Mr.FXCM | 5 Comments »
DailyFX Forex Radio - US Dollar Hits 22-Year Lows on Dismal NFPs - Has the Fed Been Forced to Cut?
By DailyFX Radio | September 7, 2007
· US Dollar drops on dismal NFPs - how bad was it?
· Things aren’t rosy in Japan either - Q2 GDP estimated to show a contraction
· Be sure to view the rest of the week’s event risk on the DailyFX Forex Calendar
To discuss these or any other FX topics with the DailyFX analysts, check out the Forum
Click Link to Listen to our Evening DailyFX Radio PodCast:
http://media.dailyfx.com/podcasts/FXRadioPM090707.mp3
Want to hear our PodCasts daily? Subscribe to them for free on
Tags: currency trading, dailyfx, dollar, forex, fxcm, jpy
Topics: DailyFX Radio Podcasts | No Comments »