Good evening Jason, HPY to you & colleagues. my question is very simple & only required only honesty. i have been trading with an Australian Firm recently & feel that my broker was trading against me. In demo & back testing my strategy work nearly 70% but after coming to live trading & turning my account in 50% profit on the first day. I felt every time my apply my strategy, the trade went against me. So i redraw the rest of my deposit & i am now looking for a real ECN broker who will not do the same. I felt cheated & learned a hard lesson from them.
My question is that some kind of practise you also apply at FXCM. surely i expect your answered to be NO but is there any trader out reading this thread can answer for it.
I want to address your concerns, so first I need to make sure I understand what happened.
While I don’t know what broker you were using and I won’t speak for another company, it’s important to consider how your demo account or back testing results could differ from real account results for legitimate reasons.
Could you tell me a bit about the trades you placed that resulted in a 50% profit on your first day of live trading? In my experience, the correlation between your demo performance and your live performance will depend on the following factors:
[B]1. How realistic are the trade sizes you are using?[/B]
The default FXCM demo settings give you a starting virtual balance of $50,000 but what amount are you looking to invest? Keep your trade sizes realistic to the capital you have to invest. As a general rule of thumb, try not to exceed 10:1 effective leverage. That means you should consider opening no more than 1k for every $100 in your account. Jake mentioned that you can open an FXCM account with as little as $2000. With that amount you could trade up to 20k or 20 micro lots and still stay within 10:1 leverage.
[B]2. What percentage of your equity did you risk on your demo trades?[/B]
With virtual money it’s easy to stay calm when you equity drops 20%, because no real money is at risk. With a live account, such losses are hard to stomach. Try not to risk more than 2% to 5% of your equity on any trade, and by that I mean 2% to 5% of the equity you plan to invest with real money. So if you plan to invest $2000, then try not to risk more than $20 to $50 on any one trade. Note that you can still place long term trades. For example, on a 1k micro lot trade, you’re risking 10 cents per pip, so with $50, you could risk up to 500 pips.
[B]3. Does your demo trading strategy rely on perfect liquidity?[/B] (which does not exist in the real market)
Investopedia defines liquidity as follows: [I]The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Liquidity is characterized by a high level of trading activity. Assets that can be easily bought or sold are known as liquid assets.[/I]
For example, EUR/USD is the most liquid financial instrument in the world, but even for that most liquid currency pair, the liquidity will drop during news events. If your demo strategy is longer term and doesn’t place trades during news events, then your results on a live account with the same trades would likely be comparable.
However, if your demo strategy relies on getting filled at the exact price you requested during news events, you may find that such a strategy will not perform as well in the real market. That’s because no demo can replicate the liquidity or lack thereof during major news events. That means your real market orders could be more prone to slippage.
Slippage is when your order is filled at a different price than you requested. The good news with FXCM is that slippage can be positive as well as negative. Positive slippage is when your order gets filled at a better price than you requested. Below are the stats from over 127 million live trades executed through FXCM between January 1, 2015 and March 31, 2016:
[li]78.71% of all orders had no slippage.
[/li][li]12.77% of all orders received positive slippage.
[/li][li]8.52% of all orders received negative slippage.
[/li][li]50.2% of all limit and limit entry orders received positive slippage.
[/li][li]39.9% of all stop and stop entry orders received negative slippage.
Note that positive slippage is more likely to occur with limit (take profit) orders, while negative slippage is more likely to occur with stop orders. That’s due to the momentum of price movement when those particular order types are triggered.
It’s also worth noting that for market orders, Trading Station has a feature called Market Range (and a similar feature for pending orders called Range Entry) that allows you to specify how much negative slippage you’re willing to accept on an order if any. For example, if you set your Market Range to 3 then you market order will only be filled if the best available price in the market is within 3 pips of the price you clicked on. Otherwise, your market order gets cancelled. Note that this feature only limits you’re negative slippage. You’re still able to benefit from any positive slippage even if it’s greater than 3 pips. The video below has more info on how you can use the Market Range feature.
Good morning Jason, thank you for your reply. i must admit that my lots size was at 4 lots. In demo & live that was the way i started until i change to micro lot. but my problem was every time i trade bigger ( size 1 ) than micro lots my trade was going against me. It was not during news events & my pair was usd/jpy, cad/jpy all the majors. But my questions is it a practise you guys apply to trade against their clients?
I am new here … and in fact this is my first post … while I may be missing the point, I believe that you are asking if the broker trades against you for the purposes of increasing their commission. While I am new to this world, the Commission structure for FXMC actually circumvents what you are referring to.
This video gets into what you are talking about at about eight minutes and thirty-five seconds in.
As you pointed out, competition between liquidity providers on the No Dealing Desk (NDD) forex execution we provide to all Standard accounts (5k minimum opening balance) and Active Trader accounts (25k minimum) ensures FXCM prices are market-driven and fair.
It’s worth noting that FXCM uses the same base price for DD execution on Mini accounts ($50 minimum) before adding the fixed spread markup as the base price we use for NDD execution on Standard accounts before adding the commission. That’s a key reason you can have confidence trading with FXCM regardless of the account type you choose.
It’s still unclear what practice you mean. Are you saying you believe your current broker is manipulating the prices they quote to you so your trades are unprofitable? If so, please read my previous post to James where I explain how competition between our liquidity providers ensures FXCM prices are market-driven and fair.
Is it possible you are not taking into account the spread and/or commission cost on your trades? Note that the larger your trade, the larger your transaction cost in dollar terms. For example, while a 0.5 pip spread may only be 50 cents on a micro lot, it will be $5 on a standard lot sized trade.
Thank you James & Jason, i will do a little more research on my former broker & see what i can come up with. Thank you again for taking time & effort explaining me how do you guys work. To be fair FXCM was recommended to me but choose to go with another broker. for sure i will keep trying my system on your demo account & will open a live account again shortly.
I used fxcm for a while and I had pretty good experiences.
I did once run into an issue where I was ‘disconnected’ during a trade or two but it really could be an actual disconnection?
I withdrew small amounts without issue, never did a large amount.
Instant deposit is a nice feature but does ring some alarm bells as well.
Overall I liked the mobile app and the web app, the desktop app was crap and crashed a lot.
I moved to another broker because the pricing was cheaper.
Heard a lot of negative things recently about fxcm but I’m not sure if that’s just an overreaction to their US issue or if the company as a whole is problematic and one should stay away from them.
If feel the tech issue might have been on our end, you can file a trade inquiry so we can investigate. If there was an error on our part, we will make the appropriate correction to your account.
The deposit and withdrawal time frames vary by method. We try to offer many options to make the transfer process more convenient. What was it that alarmed you about instant deposits? I assume you’re referring to Visa and Mastercard deposits as there are the fastest deposit methods. Other options, like bank wire transfer, take longer.
It’s unusual for Trading Station Desktop to have issues like you described. Our tech support team would be happy to troubleshoot these for you to find you a solution. I’m glad you had a positive experience with Trading Station Mobile and Trading Station Web.
Our goal is to provide you with competitive pricing. What currency pairs and CFDs do you trade? How does our pricing compare to your current broker for these products?
Also, your forum profile mentions you live in South Africa. You might be interested to know in the FXCM South Africa office was recently opened.
While the nature of FXCM’s settlement with the US regulators prohibits me from commenting on the specifics, I want you to know we continue to stand by the quality of our trade execution in general and our No Dealing Desk (NDD) forex pricing in particular.
Consider what happened on January 15, 2015 with the SNB flash crash:
The majority of retail forex traders were long EUR/CHF when the Swiss National Bank made their surprise announcement to abandon the 1.2000 exchange rate floor they had established for the pair. Had FXCM been on the other side of client trades, we would have made money when EUR/CHF dropped and retail traders took massive losses on their long positions.
The moved wiped out those clients’ account equity as well as generated negative equity balances owed to FXCM of over $225 million. The caveat of our NDD model is that traders are offset one for one with a liquidity provider. When a client entered a EUR/CHF trade with FXCM, FXCM Inc. had an identical trade with our liquidity providers. During the historic move, liquidity became extremely scarce and shallow, which affected execution prices. This liquidity issue resulted in some clients having a negative balance.
While clients using NDD forex execution did not cover their margin call with us we still had to cover the same margin call with our liquidity providers. As a result, FXCM ended with a regulatory capital shortfall. Accordingly, FXCM needed to get a loan to cover this balance, which we did. For anyone that still thinks FXCM is running an FX dealing desk on our NDD model, the SNB event demonstrated that is not the case.
How does our NDD model work?
FXCM uses 16 liquidity providers to create a best bid best offer price stream for clients. LPs selected to price retail clients are forced to adhere to an extremely high standard of execution beyond just price including consistently low rejection rates, low latency, minimum quote sizes and high fill ratios even during market events.
We discuss in our UK execution study the criteria we use to rank our liquidity providers which you can see listed in question 13 of the FAQ. FXCM’s liquidity providers are ranked based on compliance to these standards which we identify as providing the best customer experience possible. Being a top ranked liquidity provider is important. Liquidity providers with the best pricing according to these rules may gain an advantage over other liquidity providers which could result in a large increase in orders captured. Poorly performing liquidity providers are ranked lower for order flow and ultimately could be removed from our platform until they return to compliance.
Also, the results of this study show FXCM UK retail client order prices to be better for FX than futures prices (74.97% of the time) and interbank prices(91.56% of the time).*
[I]* The study does not in away way attempt to represent that FXCM maintains a particular capacity or performance level. The figures in this study are provided for information purposes only, and are not intended for trading purposes or advice. FXCM is not liable for any information errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. Past results are not indicative of future performance.
FXCM’s Retail Clients are defined as individual, joint, and corporate accounts trading on our retail price stream.
The comparison to each of the Futures and Interbank data is made at the time that the FXCM client order is executed. Normal market slippage and slippage due to rejections by liquidity providers are already included by the time the FXCM client order is executed. However, there is an assumption that there is no slippage on the Futures or Interbank market data.
In order to maintain consistency, Futures Market data and Interbank data used the same acceptable ranges in market trades. The summary of findings is based on the assumption that the maximum acceptable difference between the FXCM price and the Interbank/Futures market price is 5 pips in either direction.
Fees that a participant would pay on the Futures or Interbank market, such as CME Exchange Fees, NFA Fees, FCM Fees, Clearing Fees, and other commissions, were excluded from the study. Similarly, FXCM Commissions are excluded from the study.[/I]
Hi, I have been using FP Markets for a while now and find it reliable and also its better compared to other brokers, i’m a scalper and if your into scalping then its best to try FP Markets, cause its execution is fast.