FXCM -vs- DCFX Spread Challenge II

Hello Traders,

For those of you that do not know, I've been trading both Stock Options and Currency Pairs for the past 10 years. I've grown from private Retail Trader, to private Institutional Trader. I trade ONLY my the capital within my own firm and I do not solicit the funds of others. I operate a closed fund that engages the FX markets on a daily basis, through the FXAll trading platform.

When the initial spread challenge video was posted on several trading forums in the Retail Forex Forum community, representative "Jason Rogers," of FXCM Inc., responded by saying that the video depicted the differential in spreads between FXCM and DCFX, during a time of day when volatility was "notoriously low." The suggestion was that if the video had been taken at an earlier time when volume was higher, that the differential in spreads between FXCM and DCFX, would not be so great.

As this video will show, as it turns out, during times of "normal volatility," the spread differential between FXCM and DCFX actually increased not decreased, to my surprise. This video highlights the increase in FXCM spreads relative to its competition and it further highlights the need for New FX Traders to be fully aware of what's going on relative to the price they pay for accessing the Retail Forex Market through ANY Retail Forex Broker, not just FXCM[/u].

I'm now working on the private research team at CollaborativeFx, and our mission is to determine the viability of converting my Excel based prototype trading system, through an OOP environment, based on the performance of a fairly complex lower Time Frame Bot design (the current prototype does not have access to lower time frame data).

The CollaborativeFx (after it reopens) will primarily be a pure proprietary research site that is non-commercial to the core. There's no advertising because there's to sell. So, vendors won't be interested in a pure research site. We will also make some of our results available to the general public. And, there will also be a limited discussion forum for the sole purpose Researching Automated Trading Systems, and then discussing how individuals might think about organizing their thoughts with respect to developing their own system.

One of the other things we will do, is hopefully shed some light on the Retail Forex Trading Business as whole, and to help inform traders about the pitfalls that they might encounter along the way in dealing with such firms. If you are just starting out in Fx and you do not have ample start-up capital, then you will have very few choices when it comes to who you use as your Retail Forex Broker. Nonetheless, you should understand what you are dealing with, BEFORE you get involved and open an account with ANY Retail Forex Intermediary.

This video is early glimpse into the kinds of things that we tend to bring out into the open at the CollaborativeFx in our free to the public video library. For now, you will have to watch these videos hosted by YouTube.

Cheers and very successful trading to you all!

NOTE: The video has just been uploaded to YouTube. You may have to wait several minutes before the video is available for viewing, as YouTube must finish processing the video file.
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FXCM -vs- DCFX Spread Challenge (Questions) II:

FXCM -vs- DCFX Spread Challenge II - YouTube

Good lord, that's a huge difference!

Cool vid.

Can't wait for the brokers rebuttal.

I am not sure there is any value in comparing the spread of 1 FX bucketshop against another. Your comparison would be more valid if you compared the price against the spot on an institutional feed like Reuters 3000.

The issue with what you are doing is that some bucketshops will create an artificially low spread to get business in, some outfits have even offered zero spreads in the past, this is because they know in the long term retail traders will lose and/or there are other ways to manipulate the risk/reward in their favour.

The FXCM quotes you showed looked very poor though given that you can get a 0.5 - 1 pip spread at other bucketshops.

The spread differentials were unreal and uncalled for. There's no need for this and it really does need to stop. If DCFX can offer the Retail community a decent spread, than so too can every other Bucket Shop in the world, including FXCM.

But, for FXCM - it gets even more outrageous. When they are not busy tweaking their spreads, they are manipulating their core price! So, much so, that core prices lag other dissimilar retail platforms that very nearly in-sync with each other, while FXCM delivers a core price that is sometimes as much as 10-20 pips away from the rest of the OTC Retail FX Market.

That other video is inside this section of the forum as well.

ChocolateDigestive said:

I am not sure there is any value in comparing the spread of 1 FX bucketshop against another. Your comparison would be more valid if you compared the price against the spot on an institutional feed like Reuters 3000.

The issue with what you are doing is that some bucketshops will create an artificially low spread to get business in, some outfits have even offered zero spreads in the past, this is because they know in the long term retail traders will lose and/or there are other ways to manipulate the risk/reward in their favour.

The FXCM quotes you showed looked very poor though given that you can get a 0.5 - 1 pip spread at other bucketshops.

Click to expand...

It is valid if you are a Retail FX Trader!

How many Retail FX Traders are getting a stream from Reuters 3000? Only when a Retail FX Trader can use an Institutional stream and actually transact at market price using those streams (which will be never), would such a comparison be appropriate. But, Retail Traders in FX, by definition will never be using Institutional pricing. So, the righteous comparisons can only be made in the same theatre of operations. And, that means you have to use other Retail Platforms as the baseline for comparative value.

But, I do agree - FXCM is a pure Bucket Shop and they not only trade against their customers (in more than one way), but they also manipulate both the Spread and the Core Pricing (two different forms of price manipulation).

And, yes - I am waiting with baited breath for Jason Rogers, to pop in here and start answering some of these question that are now obviously on the table. Or, how he plans on deflecting them off into some obscure interpretation of the FXCM Client Agreement, or some other kind of unintelligible non-sequitur reply that never (ever) addresses the question head-on.

There is no excuse for the material contained in these videos - none whatsoever.

In the U.S., there are only two real choices if you are forced to trade Retail FX:

- CitiFX
- Interactive Brokers

If you live outside the U.S., then you can add:

- DCFX
- London Capital Group (maybe?)

That's it - in all the world of Retail Forex - that is it. The vast majority of everything else, is a total Bucket List of Bucket Shops.

I might have added Saxo, but Saxo never dumped its previous leadership which got it into trouble before and that came from a different financial institution which had a bad reputation in Europe and some very shady dealings. Until Saxo replaces its leadership and turns that old corner (though they might be doing better today), I cannot allow myself to include them among the reputable Intermediaries, no matter how many bank charters they apply for. I like SaxoTrader, but the history of its principles is just too strong for me to overlook.

TraderNumber7 said:

The spread differentials were unreal and uncalled for. There's no need for this and it really does need to stop. If DCFX can offer the Retail community a decent spread, than so too can every other Bucket Shop in the world, including FXCM.

But, for FXCM - it gets even more outrageous. When they are not busy tweaking their spreads, they are manipulating their core price! So, much so, that core prices lag other dissimilar retail platforms that very nearly in-sync with each other, while FXCM delivers a core price that is sometimes as much as 10-20 pips away from the rest of the OTC Retail FX Market.

That other video is inside this section of the forum as well.

Click to expand...

I agree the pricing looks horrible. There are examples of regulators turning a blind eye to all sorts of manipulation if you go looking, don't get me started on US stocks, dark pools, flash orders, sub pennying. FXCM are a particularly nasty buckshop like the last place you would go if nobody else would let you trade lol.

Newbies would be better served starting off with an exchange traded instrument imo.

The brokerage in the video charges $6.00 round trip per full contract traded = 0.6 pip. Add that to the spreads shown. Still less then FXCM with no commissions but not as bad as it's made to look. Also the difference including comm. is much less when comparing other currency pairs such as EJ, GJ,AU, etc.

TraderNumber7 has some vendetta against FXCM, other than they are a bucketshop, so take his posts with some reservation. He is guilty of the same things he accuses FXCM of...not fully disclosing his argument. You only get to see what he wants.

Peter

wackypete2 said:

The brokerage in the video charges $6.00 round trip per full contract traded = 0.6 pip.

Click to expand...

Not when your spreads are consistently 300 to 600+ percent higher. Those are multiples of 0.0001. That math is unavoidable and quite clear. Precious little can be said to debunk the video on this fact. A sub 1 pip consistency during trading hours of normal volatility, when added to a paltry $3 entry/exist commission, and the 300 t 600 percent differential, doesn't even come close to being substantive enough to use as a counter argument.

wackypete2 said:

Add that to the spreads shown. Still less then FXCM with no commissions but not as bad as it's made to look.

Click to expand...

I'm not even sure we are talking about the same video anymore.

wackypete2 said:

Also the difference including comm. is much less when comparing other currency pairs such as EJ, GJ,AU, etc.

Click to expand...

No, I'm quite confident we are not talking about the same video. The delta remained consistent throughout the ALL pairs being offered from BOTH intermediaries. If you want, I can post another video showing that fact, but the video that was posted, clearly shows the other prices in the Pip Column that was apparently missed, or overlooked before you made your post.

They were not just different prices, they were grossly different - why else would I shoot the video. Or, that's why I recorded the video.

wackypete2 said:

TraderNumber7 has some vendetta against FXCM,other than they are a bucketshop,...

Click to expand...

Links, quotes, proof - or all of the above would be fine at this point. This is the problem with the online trading world. People just like you can't keep the thread on subject and on target.

If this were a court room, an attorney would immediately raise the objection: "Assumes Facts Not In Evidence," based on what you just stated as fact. Now, if you would like to introduce into evidence, something that corroborates your claim, then I'll be willing to hear it. Otherwise, point made is moot and non-sequitur at best.

wackypete2 said:

... so take his posts with some reservation.

Click to expand...

Take my post with reservation, but take the guy who failed to bring any evidence to court with him at full faith?

That's very much like the online trading community that I know. Toss something out there that you can't back-up, or more appropriately, where you don't have any idea what you are talking about, and then classify yourself as having actually said something that anyone would or could take seriously.

If you have some facts to back-up your assertion, other than your mere word for it - that would be helpful at this point.

wackypete2 said:

He is guilty of the same things he accuses FXCM of...not fully disclosing his argument. You only get to see what he wants.

Click to expand...

Huh?

What do I have to disclose to you? And, what argument are you referring to? Try providing a link, next time. It would make you look at lot more stable minded and in possession of the facts - at the very least.

Lastly, you did not see me make a written post only. You say a Video Post. That means, I had to make sure that what was being video recorded actually made sense and was actually factual. On the other hand, you just made two or three allegations and accusations that don't make any sense, because they are unsubstantiated. The video substantiates what preceded it in the introductory thread (post number #1). Your allegations are substantiated nowhere.

So, I would go back to the drawing board and come up with something that proves your claims to be valid. Else, I can only take your unsubstantiated allegations with a grain of sea salt. Not the ionized table salt, even. Those grains are bigger.

[re-view the video]

To some extent, it's "buyer beware" with these outfits. You know who they are and what they do and it's up to the customer to get the best prices.

FXCM are not doing anything wrong in charging these spreads. The market will obviously bear that sort of spread as they still have customers.

In terms of making the industry more competitive, it would be interesting if someone could create a web facing dashboard that showed current prices across a number of brokers. It wouldn't be that hard to do.

I'm just not sure what would motivate someone to put the effort into creating such a site.

Anyway - I think most punters don't do a lot of research anyway and this is the reason these guys survive.

Seems like FXCM are charging a higher spread and getting away with it. The day that punters demand competetive rates will be the day things start changing.

ChocolateDigestive said:

Newbies would be better served starting off with an exchange traded instrument imo.

Click to expand...

Yup - much safer to trade in & out of an ETF in 100 share lots. Great way for a newbie to start with low risk

Trouble is you need $25k for PDT equities.

So - retailers end up trading futures without sufficient capital or a bucket shop with an unbuilt negative edge.

PDT rule needs to change IMO.

TraderNumber7 said:

Not when your spreads are consistently 300 to 600+ percent higher. Those are multiples of 0.0001. That math is unavoidable and quite clear. Precious little can be said to debunk the video on this fact. A sub 1 pip consistency during trading hours of normal volatility, when added to a paltry $3 entry/exist commission, and the 300 t 600 percent differential, doesn't even come close to being substantive enough to use as a counter argument.

.
.
.

So, I would go back to the drawing board and come up with something that proves your claims to be valid. Else, I can only take your unsubstantiated allegations with a grain of sea salt. Not the ionized table salt, even. Those grains are bigger.

[re-view the video]

Click to expand...

Sir, you make me laugh. Perhaps you should try stand up comedy. You individually attempted to pick apart EACH sentence in my post. A bit anal, eh? I stand behind every word I said. You are telling us that commissions don't mean anything when comparing a non-comm broker to a comm broker?? Also I suggest YOU review the video. And of course if you actually read some threads here on t2w and get involved then you'd understand about the "loose" and "lose". But of course you can't be @arsed to actually contribute positively on the forum, only bash FXCM.

You want links/proof of your vendetta or other issues against FXCM?? How about the 4 threads you started one right after another all bashing FXCM, (1 thread was removed!) and the pages and pages of Jason bashing on the FXCM thread. I'm not putting those links here. If you want to advertise your personal issues with FXCM then do your own dirty work.

Oh, and in case you forgot where you put those threads, PM me and I'll send you the links.

Peter

wackypete2 said:

You want links/proof of your vendetta or other issues against FXCM?? How about the 4 threads you started one right after another all bashing FXCM, (1 thread was removed!) and the pages and pages of Jason bashing on the FXCM thread. I'm not putting those links here. If you want to advertise your personal issues with FXCM then do your own dirty work.

Oh, and in case you forgot where you put those threads, PM me and I'll send you the links.

Peter

Click to expand...

Hi Peter,

Where to start

First of all regarding the video, FXCM receives prices from 10+ liquidity providers and the best bid/ask price is automatically displayed on the trading platform along with FXCM’s pip mark-up (or commission if you will) unlike dealing desk brokers which can “fix” the price. Spreads will vary based on liquidity, and the rollover period conveniently chosen in the video is notorious for illiquidity, with some brokers even choosing to close trading completely for up to 15 minutes during this period. FXCM's traders can trade during this period; however, they should be aware of the risks of variable spreads during illiquid or volatile market conditions.

While I believe the vast majority of traders on the forum are here for an actual legitimate discussion, some users are here simply to spam and have an agenda. Traders can decide for themselves:

Forums - FXCM -vs- DCFX Spread Challenge (Realtime)
Forums - FXCM -vs- DCFX Spread Challenge II
Spreads? Or, Price Fixing? @ Forex Factory
http://www.trade2win.com/boards/for...anipulating-its-core-pricing.html#post1929800

Taking a look at the following thread, along with the 56 pages of posts, gives you an idea of the character of TraderNumber7 (or iDouble or Tango 6 Alpha, etc.) Forums - Leverage, I dont understand the principle of it.... I have no intention of getting into this low level of discourse that the poster devolves into, and the forums deserve better.

I'm certainly here to help those traders who have questions about FXCM and are are not simply here to mislead others. For those that have questions and would like help, they are welcome to post on the FXCM thread.

Jason

Jason Rogers said:

Hi Peter,

Where to start

First of all regarding the video, FXCM receives prices from 10+ liquidity providers and the best bid/ask price is automatically displayed on the trading platform along with FXCM’s pip mark-up (or commission if you will) unlike dealing desk brokers which can “fix” the price. Spreads will vary based on liquidity, and the rollover period conveniently chosen in the video is notorious for illiquidity, with some brokers even choosing to close trading completely for up to 15 minutes during this period. FXCM's traders can trade during this period; however, they should be aware of the risks of variable spreads during illiquid or volatile market conditions.

While I believe the vast majority of traders on the forum are here for an actual legitimate discussion, some users are here simply to spam and have an agenda. Traders can decide for themselves:

Forums - FXCM -vs- DCFX Spread Challenge (Realtime)
Forums - FXCM -vs- DCFX Spread Challenge II
Spreads? Or, Price Fixing? @ Forex Factory
http://www.trade2win.com/boards/for...anipulating-its-core-pricing.html#post1929800

Taking a look at the following thread, along with the 56 pages of posts, gives you an idea of the character of TraderNumber7 (or iDouble or Tango 6 Alpha, etc.) Forums - Leverage, I dont understand the principle of it.... I have no intention of getting into this low level of discourse that the poster devolves into, and the forums deserve better.

I'm certainly here to help those traders who have questions about FXCM and are are not simply here to mislead others. For those that have questions and would like help, they are welcome to post on the FXCM thread.

Jason

Click to expand...

Well I suppose when you get fined $20 million for dishonest slippage practices and so on then you'll always have a few people who view your every action with suspicion. That's not entirely unfair.

I mean if you knew some guy had numerous convictions for theft and burglary would you let him look after your house?

pboyles said:

Well I suppose when you get fined $20 million for dishonest slippage practices and so on then you'll always have a few people who view your every action with suspicion. That's not entirely unfair

Click to expand...

You make a fair point and I certainly agree but in this case T7's motives are not entirely clear but it's not due to a suspicion. His posts are deliberately misleading and full of questionable "facts" as he states them. You don't attempt to prove your broker is dishonest by being dishonest or manipulative yourself.

Peter

TraderNumber7 said:

The spread differentials were unreal and uncalled for. There's no need for this and it really does need to stop. If DCFX can offer the Retail community a decent spread, than so too can every other Bucket Shop in the world, including FXCM.

But, for FXCM - it gets even more outrageous. When they are not busy tweaking their spreads, they are manipulating their core price! So, much so, that core prices lag other dissimilar retail platforms that very nearly in-sync with each other, while FXCM delivers a core price that is sometimes as much as 10-20 pips away from the rest of the OTC Retail FX Market.

That other video is inside this section of the forum as well.

Click to expand...

dear sir if the core spread is 10-20pips away from other spreads why dont u sell it and go long a spread with another broker which has a spread 20pips below?

Its a smear campaign against FXCM by competing business interests to malign the excellent reputation it has built for itself over the years.

Tradernumber7 is as much an institutional trader as Mike Bagndaddy is a world champion of trading. The word "institutional trader" is molested by scam artists on frequent basis.

This kind of hate crime should not be tolerated.

Whether the thread starter has a personal score to settle with FXCM or not, he does have a valid point (no pun intended) about spreads. For instance, the UK SB outfit has a spread of 4pt on US30 in hours (6 out) and 2.6 typical on EU, when you can get 0.7p elsewhere. No commissions to complicate matters in this case, of course. So if other SBs can offer far tighter, and fixed, spreads, there doesn't seem to be any logical reason to trade these markets with FXCM, even if the available platforms are some of the best (and will get better still if they ever manage to get NinjaTrader working).

I undertook significant research on FXCM when selecting a broker. I couldn’t find any dirt on them post NYSE listing.

If you can provide factual evidence, as opposed to emotive slogans, I’d be interested.......and surprised.

I trade through FXCM for these reasons.
.

in terms of spreads, the attached FXCM spreads are pretty representative,
so no complaints from me.......but i'm not a scalper

jungles said:

in terms of spreads, the attached FXCM spreads are pretty representative,
so no complaints from me.......but i'm not a scalper

Click to expand...

I trade with fxcm and have never seen ej that low for a substantial length of time, 2.5 for GU and EJ is the norm.