Like you, we believe our No Dealing Desk (NDD) execution to be the best model we can provide to forex traders.
With NDD, FXCM acts as a price aggregator. We take the best available bid and best ask prices from our liquidity providers—global banks, financial institutions and other market makers— and stream those prices to your platform. This large, diverse group of liquidity providers makes this model special: The more advantageous the prices, the more order flow the provider receives. Through competition, NDD ensures prices are market-driven and fair.
However, it’s worth noting that for risk management purposes, we limit the leverage available on NDD accounts to 100:1. That means traders must put up at least 1% margin. The feedback we received from traders with less than $2000 to invest in a Standard account is that they wanted an alternative that would allow them to trade with higher leverage (lower margin requirements).
Our new Mini account type with DD execution is the solution for such traders. We offer up to 400:1 leverage on Mini accounts which means traders only have to put up 0.25% margin which is easier to manage for people with less than $2000 to invest in the forex market.
Keep in mind that the disclaimer that you quoted is standard language required by our regulators that applies equally to any broker that offers you dealing desk execution.
What makes FXCM unique is that we offer a No Dealing Desk alternative in addition to our dealing desk option. In fact, the prices on our DD feed are taken directly from our NDD feed where liquidity providers compete with each other to quote the best prices. The key difference is that for Standard NDD accounts, we show the raw FX spread and charge a separate commission, while for the Mini DD accounts there is no commission and all costs are included in the spread.
The fact that FXCM offers clients an NDD option is important. It means that if you’re trading a strategy that exposes our dealing desk to more risk that it wants to take on, we can simply switch your account to NDD execution. With dealing desk brokers don’t have a separate NDD option to offer their clients, scalpers or arbitrageurs may encounter requotes or even have their accounts terminated for running such strategies.
All trading strategies are welcome on FXCM’s NDD execution, and we want profitable traders. That’s because they trade more, and we make money off their trading volume.