Hi @GGekkoWallStreet,
You have brought up several points in your post, so we will address them one by one.
While it may seem that way at first glance, it’s good to know the details before jumping to conclusions. For example, in the case above, both our internal investigation and the ombudsman’s external investigation reached the same conclusion that the problem was with the client’s bank in Mexico, and not FOREX.com.
In regards to other reviews you mentioned, it’s important to keep a couple of things in mind:
-
It’s possible for problems on the receiver’s end to cause delays processing a withdrawal request that are beyond our control. While a client may think the issue was on our end, the example above shows how that may not be the case.
-
One challenge on the internet is that no one verifies whether the people posting broker reviews are real clients:
What’s to stop some obscure broker from trying to fake a reputation by having its employees post positive reviews for itself and negative reviews against its better known competitors? Have you ever wondered why some little known brokers seem to get great reviews online while more established brokers with clients around the world get poor reviews?
Your comments about “taking the other side of the trade” reveal some misconceptions about the forex market we would like to address. It’s worth noting that for institutional traders, our parent company, GAIN Capital, offers ECN solutions through the GTX marketplace, where we do not take the other side of the trade.
However, for retail traders, FOREX.com is a market maker, because we believe market making is the best way to provide our retail clients with reliable pricing at retail trade sizes while effectively managing our own risk. We are fully accountable for every execution and don’t outsource that responsibility to a third party.
It’s important to understand that if a particular retail forex broker tells you they are not taking the other side of the trade, that only means they must offset your trades with another firm that is a market maker. That’s because market makers perform a vital service, not only in forex, but in many financial markets, including major stock and futures exchanges.
Consider what the world’s largest stock exchange says about how their market model works:
The cornerstone of the NYSE market model is the Designated Market Maker (DMM). DMMs have obligations to maintain fair and orderly markets for their assigned securities. They operate both manually and electronically to facilitate price discovery during market opens, closes and during periods of trading imbalances or instability. This high touch approach is crucial for offering the best prices, dampening volatility, adding liquidity and enhancing value.
DMMs apply their market experience and judgment of dynamic trading conditions, macroeconomic news and industry-specific intelligence, to inform their decisions. A valuable resource for our listed company community, DMMs offer insights, while making capital commitments, maintaining market integrity, and supporting price discovery.
In the following post, we discuss the three methods retail forex brokers can use to offset your trades in greater detail: Who is the counterparty in an exchange?
The key point to take away from all of this is that FOREX.com welcomes profitable traders. We even offer volume-based rebates to attract more of them.
Without more details, it’s impossible to tell whether such spread variation is normal or out of the ordinary. You mentioned in a previous post, you are still new to the market, so it’s important to consider the following:
-
Is it possible you were looking at tenths of a pip (the fifth digit to the right of the decimal point) instead of full pips (the fourth digit)? Spread variations from 0.2 to 0.5 pips are quite common even in normal market conditions.
-
Which currency pair were you looking at, and at what time? Spread variations from 2 to 5 pips are quite common with exotic currency pairs in normal market conditions and with major currency pairs in illiquid market conditions.
On the contrary, the reason only four firms are currently approved as forex dealer members as of the latest data from the CFTC is precisely because the standards for US regulated forex brokers are so rigorous both in terms of financial transparency and accountability regarding the price where each customer transaction is executed.
Particularly noteworthy are the requirements for financial transparency and trade execution accountability. Below is an excerpt from the CFTC site:
The final rules include financial requirements designed to ensure the financial integrity of firms engaging in retail forex transactions and robust customer protections. For example, FCMs [futures commission merchants] and RFEDs [retail foreign exchange dealers] are required to maintain net capital of $20 million plus 5 percent of the amount, if any, by which liabilities to retail forex customers exceed $10 million. Leverage in retail forex customer accounts will be subject to a security deposit requirement to be set by the National Futures Association within limits provided by the Commission. All retail forex counterparties and intermediaries are required to distribute forex-specific risk disclosure statements to customers and comply with comprehensive recordkeeping and reporting requirements.
For example, the CFTC and NFA set the requirements a broker must meet in order to offer forex trading to US residents. Though not an exhaustive list, this membership application will give you an idea of some of those requirements: Compliance Requirements for Retail Foreign Exchange Dealer (RFED) Applicants | NFA
It’s our pleasure to help you. Focusing on brokers that are regulated by reputable government authorities where you live can go a long way to addressing these concerns. Key advantages of trading with a well-regulated broker are:
- minimum financial and trading standards they must meet,
- ongoing monitoring by the regulators to ensure compliance,
- a framework for handling complaints from customers, and the
- power to enforce actions against regulated brokers for violations.
