I’ve developed a new intra-day strategy which requires access to higher leverage. After reading through the epic 301 Moved Permanently thread, I’ve decided to go with FinFX.
I thought I’d try and post a breakdown of the basics of what you’ll find at this brokerage as well as create a potential repository of info about this broker as I don’t see an active thread dedicated to this particular broker when running a search-by-thread-title. So here goes.
FinFX is pretty much the leading Forex Broker in Finland. They’re a newer company and are doing a lot to earn a good name or themselves by providing great service to their customers. While they don’t advertise it, I’m sure that behind closed doors they have also decided to carve out a niche in the FX brokerage world by meeting a very specific need. That is they are looking to meet the needs of US traders who want access to higher leverage. In order to do this, FinFX is essentially willing to stand up to the mighty CFTC and tell them to pound sand when attempt to dictate terms to the world as to how they are to interact with U.S. clients.
Here’s a list of some of the pros and cons of this brokerage:
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[li][B]Higher Leverage [/B]- the company lists 100:1 leverage as standard and you get the option to choose that when signing up for an account. Once the account is established though, you can get that boosted to 200:1 by contacting the company directly.
[/li][li][B]Accepts U.S. Clients[/B] - the company has the stones to stand up the CFTC and tell them to suck wind when it comes to the Dodd-Frank requirement that any broker who wants to work with U.S. clients must register with the CFTC and follow their prescribed rules. This includes the 50:1 leverage limit and a slew of on-demand reporting requirements which are suppose to provide transparency but, in fact, just create an increased regulatory burden that is so unrealistic that most brokers have decided to turn away the large pool of business that U.S. traders represent and instead focus on non-U.S. customers.
[/li][li][B]No Regulation[/B] - it appears that Finland doesn’t consider Forex trading as an “investment” on part with equities and such. Thus it’s unregulated. This is probably a big reason why it’s easy for U.S. customers to get set up here. This cuts both ways though.
[/li][li][B]Nobody Making You Whole[/B] - with no regulation and no Finnish government oversight you can bet your bottom dollar that there is no FDIC-style fund out there that will make whole the various traders who are working through FinFX. Of course the point could be made that anyone still living in the pipe-dream that says that if my financial or investmnt institution goes down, I should have my principal restored deserves what they get. Ask the clites on MFGlobal and PFGBest how much money they’re getting back.
[/li][li][B]Integral Liquidity Provider[/B] - do a google search on Integral and you’ll find mostly glowing praise. They’re considered among the best out there right now and the Integral FX Grid platform is who FinFX gets their liquidity from.
[/li][li][B]Relatively Low Cost[/B] - spreads on their market maker accounts seem to be competitive but I’m less interested in that myself as I’m looking for the smallest spreads possible to prevent me from getting pulled out of a trade early simply because of the spread. That means the ECN account is what’s of interest to me. Commissions on their standard ECN account is $7.00 per lot round turn. If you have a larger balance, their ECN Pro account can bring that down to $6.00 per lot round tern. Since it IS possible to get as much as a $0.60 p/lot rebate via an Introducing broker, that means that you can get costs down to $5.40 per lot…which is rather competitive.
[/li][li][B]True PAMM Account[/B] - if you’re good at what you do, you might find yourself being swamped with people throwing their money at you to try and get a taste of your strategy in action. FinFX has a true PAMM account which creates a virtual pool of funds when placing trades on behalf of the entire group. The U.S. Government doesn’t like PAMM because it looks too much like a “commodity pool”…even if it isn’t one. There are other solutions out there for those looking to manage money, but again, if your strategy requires high leverage then your not going to be able to execute that strategy for anyone if you reside in the U.S. or the people who want you to trade for them reside in the U.S. unless they decide to go with FinFX. Good thing that this broker already has the whole PAMM thing locked on. The PAMM account reside on the ECN PRO server, so in theory you should get slightly faster execution. It also requires a higher investment though. People who want to follow your trades via PAMM need to be thinking about opening balance in the thousands of dollars and not hundreds of dollars.
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There is one thing that anyone who’s looking to start out on a shoe-string needs to consider before signing up though. FinFX requires the following three items when establishing and funding a live account:
[B]1) Utility Bill[/B] - they don’t want a cell phone bill or car insurance bill. They want some type of hard utility that establishes your residence at the address you provided on your application.
[B]2) Recent Bank Statement[/B] - this too is used to verify that you really are present at the address you provide. The statement must show your address and it needs to match up with the utility bill and what you provided on the application.
[B]3) Scan of Passport -[/B] this is the BIG stumbling block in my opinion. When I signed up for my account I immediately got an email requesting this along with the other two items above. I immediately got online with their live chat people and asked if my driver’s license would work for government-issued photo ID. They said that their new “Know Your Customer” policy requires a copy of the passport and that this is the ONLY thing that will satisfy them where photo ID is concerned.
This really sucks. A visit to the U.S. Postal Service website states that processing passports typically takes WEEKS. [B]It also costs about $200 to get it expedited![/B] I found that there are regional offices one can make an appointment to go to which will issue you a new passport within 5 days of application. I was lucky and was able to schedule one up the very next day. Your mileage may vary.
In any case, if you DON’T have a passport and you were planning on doing that whole thing where you invest $200 or less and play the game with micro lots instead of using a demo account, then the $200 expense of getting a passport might just make this not the best broker to start with. Other than that, this broker seems to be about as good as it’s going to get for U.S. customers looking to work strategies that require higher leverage.
I’ll update the post later after I can give insight on how quick I can get withdraws done as well as go over other aspects which can only be properly assessed once trading live for a number of months.
