Hi Jason
I’ve looked at the FXCM website but can’t find the following info. Quite simple really, so maybe you just don’t do it:
I’m looking for a broker that offers Micro and Mini accounts for Spread Betting via NDD
Can you help?
Jason will doubtless correct me if I’m wrong (which is always possible) but aren’t “spread-betting” and “NDD” something of a contradiction in terms? Because the broker, by definition, holds the other side of a spread-bet and your position is therefore defined with reference to an “artificial instrument” rather than to an “objective” underlying market?
(I don’t mean this as an “anti-spread-betting sentiment” - I’m a supporter, in principle, of spread-betting, and perfectly willing to learn something, here.)
Hi Jazzman,
FXCM offers three spread betting account types: Mini (£50 minimum opening balance), Standard (5k minimum) and Active Trader (25k minimum).
While all three account types allow you to trade micro lots (10 cents per pip), mini lots ($1 per pip), and standard lots ($10 per pip) provided you have enough margin in your account to open trades of that size, you will need a Standard or Active Trader account, if you want No Dealing Desk (NDD) forex execution.
With the NDD model, FXCM offsets each of your orders one-for-one with the best prices from competing liquidity providers. Mini accounts use DD execution, but it’s worth noting, we use the same base pricing derived from our NDD feed to offset orders placed by our clients using Mini spread betting accounts.
Therefore, you can have confidence trading with FXCM regardless of the execution/account type you choose. For more details, please visit the spread betting section of our website.
Hi Lexys,
While some other brokers use a different execution model for spread betting accounts compared to non-spread betting accounts, FXCM does not.
All Standard (and Active Trader) accounts with FXCM use NDD forex execution whether they are spread betting or non-spread betting accounts. All Mini accounts use DD execution whether they are spread betting or non-spread betting.
With FXCM, the only difference between a spread betting account and a non-spread betting account (aside from the tax-free status the former provides to UK and Ireland residents) is that spread betting accounts are not charged commissions on our NDD execution (since regulations prohibit commissions on spread betting accounts). Instead, spread betting accounts are charged an equivalent fixed markup to the spread.
By contrast, non-spread betting Standard accounts have no markup added to the pricing received from liquidity providers. Instead, a separate commission is charged.
Hello I wanna ask a question I’m very new I open account yesterday at forex I have no idea about anything but it says they 150 that u can invest like I mean for 1000$ u can get 5000$ if u doing well in a time is it possible to do for a simple ::::— buy gold 1000$ from 50 times of my money and with another account sell 1000$ gold in a same time with different account at the end it will go up or down so I will lose in one account but in other I will take 50000 $ I will take profit 48.000$ just in one can u please tell me isit possible or not
Thanks Jason, that’s very helpful. Unfortunately, I’m not willing to commit the amount of funds necessary to open a Standard account at this time, which I would need to do to access your NDD route. Although I take your point re DD (mini account) base pricing feed, I’m looking for NDD in particular because I don’t want a broker’s dealers taking the other side of my trades, seeing my stops and taking them out. I’m not suggesting necessarily that this happens at FXCM, but my understanding is that this can, and does happen with some DD brokers?
Thanks again
You are right to consider the potential conflicts of interest which can exist with dealing desk (DD) execution. Since DD brokers don’t have to offset each individual client order one-for-one with their liquidity providers, it’s possible they could be taking the market risk on the other side of your trade. Therefore, a loss could for you might mean a profit for them, and a profit for you might mean a loss for them. Furthermore, DD brokers determine the prices where your orders are executed and can see where your stop loss and take profit orders are.
FXCM innovated transparency in the forex market with competitive and market-driven No Dealing Desk (NDD) execution to address such concerns. The fact is we would love to provide NDD on all accounts, and actually did so in the past.
Even now that we offer both NDD and DD account types, the bulk of our revenue still comes from our highest volume traders on the NDD model. However, in running the numbers, we found that below the 5k balance threshold, it is hard for us to recoup in commissions the fixed costs that go into providing customer support for any account.
Therefore, we use DD execution on Mini accounts is because it is a cost effective way to offer trading services to smaller accounts. What sets our DD model apart from other DD brokers is that FXCM uses the same base price for DD execution as the base price on our NDD feed. The only difference is that NDD accounts pay a separate commission of top of that base spread while DD accounts pay a fixed pip markup added to the NDD spread.
From a risk management standpoint, an another benefit of the DD model is how it allows us to offer traders (with a balance below the Mini account maximum of 20K) the option of using more leverage than the 100:1 cap we set for all NDD accounts (with exception of US accounts which are limited to 50:1 leverage by CFTC regulations).
Welcome to the forum, Sanchez 
As you said, you are still new to forex. I must point out that while 50:1 leverage technically means you can control $50 in the market every $1 you have on deposit in your account, that is not the correct way to trade for many reasons. The key reason is that this 50:1 ratio refers to your minimum margin requirement AKA the minimum amount of money you must keep in your trading account. If you start a trade by leaving yourself with only the minimum, then the moment the market moves even the smallest amount against your trade, you will receive a margin call, meaning you will have to close your trade out because you won’t have enough money in the account to maintain it.
You can think of the 50:1 leverage available to you like the top speed on a car. You may have a car that has a top speed of 150 miles per hour, but that doesn’t mean you can complete at 450 miles journey in 3 hours. More realistically, it may take you 10 to 12 hours to complete such a journey if you obeyed traffic laws and took rest stops along the way, and that’s with good highways and a driving partner to share the driving duties.
It’s worth noting that we conducted performance studies on tens of thousands of trading accounts to identify the traits of successful traders. One of the key factors differentiating the most profitable traders in the study is that they tended to use less leverage.
Our data showed that 40 percent of all traders who used an average per-position Effective Leverage of 5:1 or lower turned a profit in the 12 months captured. If we move above 25:1, that ratio drops by more than half to a mere 17 percent.
Excessive leverage can have key detrimental effects related to the mechanics of trading and a trader’s psychology. In terms of trade mechanics, using excessive leverage will give a trader a smaller capital buffer against losses. If the trade initially goes against the trader there is a higher probability that the trader will run out of excess margin and receive a margin call. The trade does not have full room to draw down before it might ultimately move in the trader’s direction.
When looking at individual trades, we found that an individual trade was more likely to be closed at a profit except when using over 25:1 leverage. Trades with leverage below 5:1 were profitable 61 percent of the time. On the opposite end, those with effective leverage above 25:1 were only profitable on 48 percent of all trades—a significant difference.
I personally try not to exceed 10:1 leverage in my own trading. That means I have $100 in my account for every 1000 currency units (AKA one micro lot) I trade. With $1000 you could trade 10,000 currency units which is ten micro lots or one mini lot and stay within 10:1 leverage.
WASHINGTON (MarketWatch) – FXCM has been banned from operating in the U.S. after the Commodity Futures Trading Commission found the retail currency broker had an undisclosed interest in the market maker that consistently “won” the largest share of FXCM’s trading volume - and thus was taking positions opposite its retail customers.
Jason, what are FXCM playing at, why can’t they just play fair!
Hi Jezzode,
Below is the statement we published on the FXCM website.
FXCM US Reaches Settlement with NFA and CFTC
FXCM to Exit the U.S.
Sells Accounts to GAIN
FXCM to Pay down Loan
NEW YORK, February 6, 2017-- FXCM Inc. (NASDAQ:FXCM) (“FXCM”) today announced simultaneous regulatory settlements with the National Futures Association (“NFA”) and the Commodity Futures Trading Commission (“CFTC”) against its U.S. subsidiary, Forex Capital Markets LLC and certain of its principals. FXCM Holdings, LLC was also named in the CFTC settlement. The named FXCM entities and principals neither admit nor deny the allegations associated with the settlements. The NFA settlement has no monetary fine, and the CFTC settlement has a $7 million fine.
FXCM will be withdrawing from business in the U.S. and has signed a non-binding letter of intent with GAIN Capital Holdings, Inc. (“GAIN”) under which GAIN would purchase FXCM’s U.S. customer accounts. The transaction is subject to regulatory approval and a definitive agreement. FXCM and GAIN are working to determine the timing for the account transfer and expect to provide further information in that regard in the coming days. In 2016, FXCM’s U.S. business had unaudited net revenues of approximately $48 million and generated an EBITDA loss, but the costs associated with the business will not be transferring to GAIN. There will be no changes to FXCM customers outside of the United States.
Withdrawing from this business will free approximately $52 million in capital. Proceeds from the account sale and the release of capital will go toward the further repaying of FXCM’s loan from Leucadia National Corporation.
FXCM will for the interim period continue to service its U.S. customers and to provide top quality trade execution pending the customer-account sale and business withdrawal. FXCM will also be working diligently to be sure that an account transition to GAIN’s retail brand, FOREX.com, will be orderly, expeditious and seamless. FXCM wants to express its most sincere thanks to those U.S. customers who have been with FXCM over the years and wish you all the best of luck following this transition.
FXCM wants to stress that these settlements have no impact on any customer of FXCM’s global businesses. FXCM and its global subsidiaries will continue to provide excellent execution and competitive pricing to its customers overseas through its award-winning technology, customer service and trading tools.
Disclosure Regarding Forward-Looking Statements
In addition to historical information, this release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and/or the Private Securities Litigation Reform Act of 1995, which reflect FXCM’s current views with respect to, among other things, its operations and financial performance in the future. These forward-looking statements are not historical facts and are based on current expectations, estimates and projections about FXCM’s industry, business plans, management’s beliefs and certain assumptions made by management, many of which, by their nature, are inherently uncertain and beyond our control. Accordingly, readers are cautioned that any such forward-looking statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict including, without limitation, risks associated with FXCM’s plans to shut down its US subsidiary and a potential sale of its US customer accounts, risks associated with FXCM’s strategy to focus on its operations outside the United States, risks associated with the events that took place in the currency markets on January 15, 2015 and their impact on FXCM’s capital structure, risks associated with FXCM’s ability to recover all or a portion of any capital losses, risks relating to the ability of FXCM to satisfy the terms and conditions of or make payments pursuant to the terms of the finance agreements with Leucadia, as well as risks associated with FXCM’s obligations under its other financing agreements, risks related to FXCM’s dependence on FX market makers, market conditions, risks associated with FXCM’s litigation with the National Futures Association or any other potential litigation or regulatory inquiries to which FXCM may become subject, risks associated with potential reputational damage to FXCM resulting from FXCM’s plans to shut down its US subsidiary, and those other risks described under “Risk Factors” in FXCM Inc.'s Annual Report on Form 10-K, FXCM Inc.'s latest Quarterly Report on Form 10-Q, and other reports or documents FXCM files with, or furnishes to, the SEC from time to time, which are accessible on the SEC website at sec.gov. This information should also be read in conjunction with FXCM’s Consolidated Financial Statements and the Notes thereto contained in FXCM’s Annual Report on Form 10-K, FXCM Inc.'s latest Quarterly Report on Form 10-Q, and in other reports or documents FXCM files with, or furnishes to, the SEC from time to time, which are accessible on the SEC website at sec.gov.
These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our SEC filings. FXCM Inc. undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.
About FXCM Inc.
FXCM Inc. (NASDAQ:FXCM) is a publicly traded company which owns 50.1% of FXCM Group, LLC (FXCM Group).
FXCM Group is a holding company of Forex Capital Markets LLC, (FXCM US), Forex Capital Markets Limited, inclusive of all EU branches (FXCM UK), FXCM Australia Pty. Limited, (FXCM AU), and all affiliates of aforementioned firms, or other firms under the FXCM group of companies [collectively “FXCM”]. FXCM Group is owned and operated by FXCM Inc. (NASDAQ:FXCM) and Leucadia National Corporation (NYSE:LUK). Leucadia National Corporation is a multi-billion dollar diversified holding company engaged through its consolidated subsidiaries in a variety of businesses.
FXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, spread betting and related services. The company’s mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides trading tools proprietary data and premium resources. FXCM Pro provides retail brokers, small hedge funds and emerging market banks access to wholesale execution and liquidity, while providing high and medium frequency funds access to prime brokerage services via FXCM Prime.
Trading foreign exchange and CFDs on margin carries a high level of risk, which may result in losses that could exceed your deposits, therefore may not be suitable for all investors.
Jaclyn Sales, 646-432-2463
Vice-President, Corporate Communications
Can you shed some light on the issue with the CFTC? It was mentioned that FXCM was taking the other side of client trades. Is it because you own Lucid which is an LP and they were pricing into FXCM retail stream? If this was the case, I believe that the CFTC was wrong for their ruling.
I’m sure Jason can’t answer anything other than what the Investor Relations ppl have said, but from what I can gather, FXCM owns Lucid Markets which is a liquidity provider on the institutional level. If Lucid was pricing into the FXCM retail stream, that means that technically they would be taking the other side of the trade. This IMO isn’t unethical at all.
Things get a bit tricky when FXCM has Lucid give better prices to the FXCM retail clients in order to gain more market share than other LPs (like Citi, BNP, RBS, EBS to name a few). On the one hand, the client still gets the best price from the LP like any other STP broker, but on the other hand, the broker indeed is a counterparty on a large percentage of trades when the clients have thought otherwise. While I wouldn’t consider this “fraud” per se, it isn’t the most transparent way of doing things.
Hi Ahirsch,
While I cannot speak about the NFA or CFTC complaint specifically due to the nature of our settlement, I can say that we have settled with the NFA and CFTC without admitting or denying any of their allegations or claims. Our full statement can be found here http://ir.fxcm.com/releasedetail.cfm?ReleaseID=1010639
Note FXCM would not have suffered more than $200 millon dollars in losses during the SNB flash crash had it been taking the other side of client trades – unlike so many of the DD firms in the industry.
Hi Jason
Re the above, would you then please clarify what you said earlier in this thread in your reply to my original post:
“Mini accounts use DD execution, but it’s worth noting, we use the same base pricing derived from our NDD feed to offset orders placed by our clients using Mini spread betting accounts.”
Does this then mean that there is no DD intervention? And if so, why have a DD?
Many thanks
Hi Jazzman,
I explained our rationale for using a DD model for Mini accounts in earlier response to you:
Please let me know if any points from my earlier post were unclear.
My apologies, I think my last question to you maybe wasn’t very clear. I was hoping for an explanation of how your DD works. I’ve since been reading another thread titled ‘honest broker’ in which you give an overview of your DD and NDD models and that has made more sense to me.
Just a couple more queries
Does your DD stick rigidly to your NDD base price feed? If that is the case, then the only difference between your DD accounts and your NDD accounts is that the spread mark up is added to the NDD base price for DD accounts, and commission is charged on the NDD accounts? Is this correct?
I’m still unclear as to what your DD dealers actually do? If DD pricing is NDD base price plus spread mark up, then presumably they’re not going to be ‘market making’ or taking the other side of client’s trades as price is already determined?
Can your dealers see or flag up mini account holder’s positions (including stop losses) or are all trades just put anonymously into a hedging pot (as another broker has described their procedure to me)?
For anyone else following this thread, I think I’ve found the answers to my questions (in my previous post) here:
BabyPips Forum Thread: Is FXCM going out of business? (Post 9)
There is a link in that post to the FXCM Execution Study document which states:
“FXCM has a dealing desk offering in which we act as the liquidity provider.”
“FXCM’s forex dealing desk offering does not have dealer intervention or re‐quotes. We are able to offer this service since it is only available on smaller account sizes with a limited number of currency pairs in order to minimize risk.”
This is the information I’ve been looking for. Thanks for your patience Jason!
It’s my pleasure, Jazzman
Below is more clarification regarding the questions you asked previously.
Yes, you have understood correctly. The forex pricing for Mini (DD) accounts is derived from the NDD pricing available to all Standard and Active Trader accounts. The only difference in the prices is that Mini accounts have a fixed markup added to the spread, while Standard and Active Trader accounts have a separate commission instead of a markup to the spread.
While the DD pricing for Mini accounts is derived from the NDD pricing for Standard accounts, the dealing desk has to decide how the risk from Mini account orders is managed. The dealing desk monitors our risk exposure and decides how best to offset it with our liquidity providers.
Perhaps there is sufficient balance between buy and sell orders for EUR/USD that the dealing desk can offset this risk internally. However, if there is an imbalance between buyers and sellers, then the dealing desk may look to offset some or part of that imbalance with our liquidity providers.
Since your orders reside on our servers, technically our dealers can see them. However, as pointed out above, with the NDD model for Standard and Active Trader accounts, FXCM offsets each client order one-for-one with the best prices from competing liquidity providers. While Mini accounts use DD execution, the DD pricing is derived from our NDD feed with the only difference being the fixed markup to the spread for Mini accounts.
Therefore, you can have confidence trading with FXCM regardless of the execution/account type you choose. For more details, please visit the spread betting section of our website. We have made our execution study public in the UK which can be viewed here and is a transparent comparison of FXCM’s actual NDD execution vs top tier futures brokers and the interbank market.