No Dealing Desk - Q&A

Commercial Content Broker Support
22

Hi Harri,

Sorry about the delay. Was out of the office for the past week and a half. So back to your question…

For example, you place an order to buy EUR/USD at 1.4220 and a couple seconds later you see your trade executed at the price 1.4220 and the current sell price is 1.4250. By the time you see your trade on the platform, you’re already in a 30 pip profit…the market has moved that fast. The dealer can’t react fast enough to hedge your position. If you close the trade out immediately, it results in an automatic 30 pip loss to the broker. In order to keep this from occurring, the broker will flag your account to manually confirm orders. If the price has deviated too much from the price they can offset the trade, you will receive a re-quote. Again, you will find that will probably occur most when you’re trading in the direction of the market move. If trading against the market move, the dealing desk will be quite happy to let the trade go through without interference since it results in a loss.

-Jason

23

Yeah, but what about middleware? What about Virtual Deal Desk? In other words, what about manipulation from your broker, inbetween the time it leaves the client computer and is executed at the liquidity pool?

Since you mark up the spread from the banks and we can’t see those prices (because you don’t offer DOM Book through MT4), how do we know that the spread is being marked up 1 pip or 3?

How can the FXCM client be 100% certain that there are no proprietary plugins or code that can be used to manipulate prices?

You say in your Customer Agreement:

"Your ability to close your transactions or offset positions is limited to what your dealer will offer you, as there is no other market for these transactions. Your dealer may offer any prices it wishes, and it may offer prices derived from outside sources or not in its discretion…

Your dealer may offer different prices to different customers at any point in time on its own terms."

It also goes on to state in your No Dealing Desk Disclosure:

“The prices FXCM offers might not be the best prices available and FXCM may offer different prices to different clients.”

Doesn’t this basically give you free reign in terms of pricing for clients? If that’s the case, and there’s no transparency from the time an order is placed and filled, isn’t it impossible to determine what, if anything is being manipulated in any given transaction?

Another interesting thing to note in your agreement is this:

“In some circumstances, FXCM may elect to remove you from “No Dealing Desk” model…In such a situation, you should be aware that FXCM may make more money if the market goes against you…”

Under what circumstances would this happen? Does this relate in any way to the “server migration” that seems to happen to some of your clients (after which it seems some long term profitable traders with you become unprofitable)?

Thanks for any insights.

24

Hi netlab,

Thanks for your post and I’m happy to help with your questions. Understanding the differences between NDD forex execution and traditional dealing desk brokers is important.

The use of NDD forex execution removes the conflict of interest between FXCM and our traders which would normally exist if your broker is acting directly as the market maker and can therefore profit from increasing your losses. The virtual dealing desk plugin you have likely heard of is designed to help a brokers dealing desk manage their risk or in more nefarious situations define slippage settings on your trades. FXCM does not profit from traders losses therefore increasing the slippage on your stop loss orders would not benefit FXCM from using this plugin and does not use this plugin. Every order is immediately off-set with one of multiple liquidity providers at prices available from those liquidity providers, and a pip mark-up is paid on the transaction. The same pip mark-up amount is paid whether the liquidity providers are able to fill at the price you clicked on or whether it is filled at the next best available price. Increasing your loss wouldn’t give any additional benefit to FXCM since we don’t profit from trader losses. (More detail on how NDD forex execution operates can be found earlier in the thread here 301 Moved Permanently)

Depth of market is not a tool available in the MT4 platform, but you could use the FXCM Active Trader platform to view depth of market if you like. The active trader platform also has a commission structure with reduced spreads so you could see what the spread is without the standard 10k account mark-up. The spread/pricing in active trader will appear different from the regular standard 10k account since it has a reduced pip mark-up. Active trader has this type of setup to reward high volume traders with lower transaction costs. Since FXCM is compensated by volume on NDD forex execution, the higher volume is able to offset the lower transaction cost allowing us to pass along this benefit to our traders. Same sort of idea as when you buy in bulk at a warehouse store.
FXCM is required to put in the disclaimer that an account could be removed from NDD if we so choose, but I have never heard of a trader to have been removed. If nothing else, the trader would be notified if this occurs, but again the reason why someone would be removed is beyond me.

Does this relate in any way to the “server migration” that seems to happen to some of your clients (after which it seems some long term profitable traders with you become unprofitable)?

Our accounts don’t migrate. Sounds like something you may have seen on the Discovery channel :slight_smile: . But joking aside…one of the few reasons your account number might change is if you request a new account in which case it could go to a different server based upon what account type you choose or if you move to another entity due to regulatory purposes (for example if you are moving your account from FXCM US to FXCM UK or vice versa), switching from a USD account to EUR denominated account, moving from FXTSII to Mirror Trader, etc.

-Jason

25

you could use the FXCM Active Trader platform to view depth of market if you like

Thanks but if I understand correctly, the liquidity that is shown on Active Trader is not the same as the one for MT4 accounts (if it is, you’re the only broker in the biz that has this correlation), right?

Q: Do Active Trader Accounts have access to your raw spreads (like your IB’s do)? If so, is it possible to get that raw spread price feed into your MT4 platform so that MT4 can be used for charts/tech and then enter orders via Active Trader?

Our accounts don’t migrate. Sounds like something you may have seen on the Discovery channel

Simply research into this will show you many traders that traded profitably with you that no longer could after being notified that their accounts were being moved to a new server. There are lots of half truths on the web but reading the same story from different people in multiple places is why I asked.

26

Hi netlab,

For the active trader account setups you would need to speak with the active trader team directly about the account options and setups. I know they can do it for FXTSII and believe they can with MT4 (not 100% sure), but they have better knowledge to help directly with all of the more detailed active trader questions. I can’t post a name or email on the forum of someone to contact (against BabyPips rules), so if you want someone to contact directly, you can send me an email through my profile.

-Jason

27

So is it in the Banks’ best interest that we lose?

How does leverage come into play in this whole dinamic between the retail trader, you and the Banks?

28

Hi Brolin,

The advantage of FXCM’s NDD forex execution is that the banks can’t see what trades you have. All the orders placed through FXCM display to the banks as trades from FXCM. All the banks can see are thousands of orders coming from FXCM to buy and sell. The banks have no idea which of our clients are buying and which ones are selling.

The banks can’t tell if the order you placed to buy 100k of GBP/USD was to open a new position or to close an existing one. The banks also don’t know where your stop-loss or take-profit orders are set. Those orders are on the FXCM system invisible to the banks. Only with the market price reaches your stop-loss or take-profit order be sent from FXCM’s system to the bank quoting the best price at that given time.

In regards to your question about leverage, it’s easiest to think about it in terms of the margin you put up to hold your trades. When you buy 100k GBP/USD you have to put up 500 GBP as margin, if your account is set up on the default 200:1 leverage for UK accounts. This 500 GBP margin is not a fee, but a deposit. You get it back when you close the trade. The reason we require the deposit is because while your trade is open, there is risk that you could lose money on the position.

Suppose that the only trade you have open in your account is the 100k GBP/USD long position. You would have to maintain an equity of at least 500 GBP at all times in order be allowed to keep your trade open. If due to trading losses, your account falls below that 500 GBP requirement, the system would automatically close out your trade to prevent further losses. This is is a safety mechanism designed to make sure you will never be in a position where your account could go negative. That means you are only ever risking the money in your trading account and will never owe FXCM money due to trading losses.

You can find more information about margin and leverage by clicking here.

Jason

29

I used to do carry trade for a long time and I always wondered where the money for swaps come from? Witha a market maker i guess is the broker itself who puts the money but in an NDD provider is the provider who puts the money? And another question why the swaps from a broker to another is so different?

And one last question, comparing swaps of sell GBPAUD vs buy AUDCHF, if the interest of CHF is zero, why the swap on sell GBPAUD is higher than buy AUDCHF?

Regards.

30

I tried to do business with you all but got turned off by a few things that I find hard to believe. First was how different you guys treat your standard accounts over micro account. On your website it states its due to money (which is always the case no issue there) but I am sure you have more smaller accounts that can add up. If I remember correctly you only offer email support to micro accounts in your terms and conditions. You have to have a standard account for chat and phone support. Please tell me thats not the case and the terms and conditions are just out dated and need to be revamped. I will never work with someone I can not call up or chat with when ever I feel like it. Hell I have a micro account and my account rep knows me (and me him) on a first name basses. We have talked just to shot the ****. Thats a relationship. I guess everyones needs are different. But it make me feel appreciated. They do or will not talk strats to cover them. But they are always looking to improve based on there clients. You guys seem to care not for anyone unless you have a lot of cash tied up.

Also about what was not already stated above. Other than what I quoted you ndd does not offer much. Banks cant see that I am entering the markets. Man I dont care who sees it after all I am placing the trade. I dont even care about my name being on the ticket for my stops (Iset them). Now You all are a reputable broker (hands down no question from what I looked into). So I can say I trust you all not to run your clients stops (most brokers dont anyway). But the fact you do not enter the stop till it is hit is a nice touch since it stays invisible to every one. Thats nice right there. One order less on the stop run. However when banks run stops they dont care whos stops there running. The only name they are looking for is the dead president on the paper they just made. Not who they hurt to do it. Dont take this as disrespect to you or FXCM. But if you do not offer chat and phone support along with a friendly name. Then maybe you can take this for continuous improvement for your company. I mean how much does it actually cost. I bet you already got overpaid employees sitting arround underworked and over paid (except for you since you deal with my crap and sorry your the account rep here and the only one I can talk to) well put them to work. Just food for thought man not calling you all out but thats the only reason I didnt put cash into you guys. Your plattform was great spreads were great. I know plenty that work with you all. Your a stand up broker I am just calling the flaws I see

31

Hi Bob,

I couldn’t agree with you more. Being able to call up and speak with your broker is a huge advantage. I can’t go into specifics at this time as details are still being ironed out. All I can say now is that we are currently exploring ways to increase the level of service available to micro account traders such as yourself. Keep an eye on the FXCM Announcements thread for news on this as it develops.

On another note, regarding the advantages of NDD execution, since there are multiple banks providing price quotes, in order for your stop to be hit, it would require all of the banks to quote a price that triggered your stop. Suppose you are in a long position. If even one of those banks quoted a price that stayed above your stop level, your trade would remain open.

Thanks again for your feedback on micro service. We are listening.

Jason

32

You sir might be onto something here. Will be interested in what develops

33

Thanks for pointing that out. Honestly, I would not want to do business with a company that might discriminate me because I don’t open an account with 2K or more. That’s a huge no-no for me. I like FXCM’s platform (a lot --desktop and mobile), and I’ve been doing some research because I’m seriously considering it as an option when I go live, but I’ve come across with stuff that it’s kinda pulling me away from them (e.g. like CFTC’s recent fine to them).

Their customer service seems to be excellent (at least on this forum), but my impression so far is not going in the good direction. I know they keep stressing the NDD execution feature, but no offense, I’m kinda smelling something fishy with the whole company. I don’t know why.

I’ll keep my research.

34

Hi Brolin,

Currently, all FXCM Micro service is based online, without live phone or chat support. Micro account holders can ask questions via email, use our online FAQs, or post questions on our forum: FXCM Micro Lot Support

If you have any other questions or concerns I would be happy to address them for you.

Jason

35

Hi jason after reading up on your threads I was just wondering if you guys offer phone/chat support for your micro accounts yet?

thanks

36

Hi darthfrancis,

Yes we do. The micro account was merged into the standard accounts so that traders can trade all lot sizes from the same account type. With this change, all account holders, including the micro accounts, now have access to phone/chat support.

Jason

37

It’s been over 5 years since the original post, yet the micro accounts are still traded through a dealing desk.

Any updates on this ?

38

Hi MakDad,

To clarify, FXCM standard accounts allow you to trade micro lots (10 cents per pip) on our No Dealing Desk (NDD) forex execution model. For risk management purposes, leverage on NDD accounts is capped at 100:1 (and in the US it’s 50:1 to comply with CFTC regulations).

In response to demand from traders who want higher leverage particularly those with lower account balances, FXCM has recently introduced a new micro account type which can be opened with as little as $50 and offers up to 400:1 leverage to magnify gains and losses.

40

Hi Jason

I too have been trying to catch up (after several years in the wilderness) with what FXCM currently offer. Your website appears to have radically changed since I last visited and I’m sorry to say I’m having difficulty finding account information there.

Previously you had a non dealing desk option for accounts of £5000 or over? This seems to have disappeared? I attempted to explore the account opening process but found no option other than Dealing Desk (for MT4)?

Previously, it was emphasised that FXCM dealing desk trades offered the same prices as the non dealing desk(?) and that the difference in transaction speed was negligible. Is this still the case?

Are your non dealing desk accounts charged commission based on trading turnover?

What is the minimum distance from market price to stops?

Can you please explain to me the difference between CFDs and Spread Betting? Or point me to where the information is? I understand that currently there’s no tax on spread betting gains in the UK but why not if there is on CFDs? I have Googled this obviously but can’t find an absolutely definitive answer. It seems that nobody else really knows either…

Many thanks

41

[quote=“jazzman, post:40, topic:32485”]Can you please explain to me the difference between CFDs and Spread Betting?

I have Googled this obviously but can’t find an absolutely definitive answer. It seems that nobody else really knows either…[/quote]
I googled it too & within a few seconds found several breakdowns, comparisons & explanations.
All the spreadbet companies offer info on them.


https://www.cmcmarkets.com/en-gb/learn-spread-betting/spread-betting-vs-cfd

42

Hi Kyle

Thanks for your input, but unfortunately like me, you’ve wasted your time. The breakdowns, comparisons and explanations don’t actually explain any difference.

Let’s take your IG comparisons link as an example:

The last 5 comparisons given are the same:

Deal on rising and falling markets
Leveraged access to the markets
No stamp duty
24-hour dealing
Use prices based on the underlying market

As for the remainder:

The difference concerning tax has already been identified and acknowledged.
The spread and commission are individual broker concerns. On any broker account you will pay the spread and/or commission so it’s essentially irrelevant to the comparison.
CFD DMA access - my understanding is that FXCM offer pricing based on this on their non dealing desk Spread Betting account.
Easy to bet in the currency of your choice – greater control of currency exposure. This isn’t actually a comparison statement
Trade at the market price on shares - irrelevant for Forex

Which leads me to the conclusion that there is no difference - Spread Betting is effectively CFD.