Before the Bust FXCM lobbied for HIGHER Leverage

[BSD]

Here ya go:

Virtual dealer pt1 - a demonstration of Virtual Dealers "Delay" setting, shows how to automatically create slippage with every market order.

This video shows how a broker can easily inject prices into the market to create spikes of various sizes and if needed hunt your stops. This feature is rarely used in the industry at this time. There are much more advanced plugins and tools offered by a number of software companies, whos main purpose is to make a Brokers life easier.

This video demonstrates how a brokers Dealing Desk operates. It can accept/reject/hold your orders or create some slippage for you.

Etc:

http://www.trade2win.com/boards/for...tor-virtual-dealer-other-plugins-setting.html

Chaaaaaarming industry.

 

[spinola]

Fast forward to 1.30 where FXCM guarantee that their clients risk is limited to the equity in their account, that clients of theirs can never lose more than their deposit, that clients will never owe a deficit as a result of trading even with higher leverage, and, as a sales tactic / jab against the competition, that their account guarantee offers "an important safeguard most forex brokers don't provide":

Indeed.

Another forex broker to whom that applies springs to mind under the harsh scrutiny of daylight.



https://www.youtube.com/watch?v=Vr2vnM9O0oA&feature=youtu.be

For those who are being pursued by fxcm, and their ' farce majeure ' shenanigans , you might want to download this evidence to support a case of them failing to ADEQUATELY highlight, the part of them, guarenteeing a no negative , and the reality of them now actually coming after you for a HUGE negative balance outside of their publicised promo video , above.

Naughty naughty FXCM .

 

[BSD]

Yah never gonna hold up in court in view of such unequivocally and strongly uttered sales promises of clear cut account guarantees where they "guarantee clients will not lose more then their deposit" slogans, that directly opens up the path to account holders counter-suing for false and misleading advertising claims.

Complete and utter PR disaster they let themselves in for.

That said, going thru some of the links highlighting a couple of unsavoury aspects of this industry it's really no wonder that over the last 20 odd years everyone and their uncle and his poodle opened up an OTC, non-exchange based brokerage.

 

[BSD]

Doesn't get clearer than that.

No amount of small print legalese hidden away somewhere is gonna out-compensate this clear cut statement straight from the source:

"Is there a debit balance risk? Can I lose more money than I deposit?
Not with FXCM. It is FXCM™s policy to credit accounts to a zero balance when debit balances occur as a result of trading. One of the greatest concerns traders have about leverage is that a sizable loss could result in owing money to their broker. At FXCM, your maximum risk of loss is limited by the amount in your account.".

http://support.fxcm.com/fxts/user-guide/margin/

 

[bredin]

When a position is opened for (say) one lot, a 100,000 currency position is opened. The trader has (say) 100:1 leverage meaning that 1,000 currency comes from the trader, the other 99,000 currency is borrowed by the broker (secured by their operating capital) and lent to the trader.

Nothing ive read in this thread leads me to believe that this is not the process in operation at FXCM.

A 100:1 leverage means that 1% of the margin is used per pip of loss. A 100 pip move completely destroys the traders margin. in the case of 1 lot 10 currency is lost per pip negative; 1000 currency will be lost in a 100 pip move (10 * 100 = 1000, the amount of margin).

Under 'normal' operation a broker can be reasonably certain that Mr. Margin Call will save their bacon by using the traders account to protect them (the broker) in a large move where there is no liquidity to take the traders order off the table as the brokers demand.

in the case of the SNB announcement, a traders (eg) 10,000 currency account can be killed, even if they are "sensible" and only use a 1 lot position, by a 1000 pip adverse move (1000 * 10 = 10,000 = total loss of account: equivalent of using 10:1 leverage from the traders perspective).

My broker reports a 7000ish pip move on the USDCHF. It is possible that there was not enough liquidity to get such a traders position off the table in the first 1/7th of the move. Meaning that the account closes negative.
The broker borrowed to allow the trader to open the position in the first place; the agreement is between the bank and the broker, not between the bank and the trader. Thus the broker is on the hook for the lossy position. These are typically call loans which are due as soon as the position is closed (remember 1929).

FXCM could have gotten spanked just because a significant portion of their client base was dumb enough to touch the swissy after it got pegged to the euro, and/or (the traders) never understood the reasons for that peg.

B.

(edit: an account could get killed in a 7000 pip move with just 1.42:1 leverage)

 

[tar]

Great FXCM is back to 400:1 lol

https://www.fxcm.com/uk/services/compare-account-types/

 

[alexaherself]

Great FXCM is back to 400:1 lol

LOL, they certainly "know their customer" (to coin a phrase): he's someone eager to trade with an outfit previously fined millions by regulators over the way they've treated their previous customers.

 

[Jason Rogers]

Great FXCM is back to 400:1 lol

https://www.fxcm.com/uk/services/compare-account-types/

Hi Tar,

Our new Mini account type with DD execution is a solution for our clients who demand higher leverage (up to 400:1) than we offer on Standard accounts with No Dealing Desk (NDD) forex execution. Given what happened with EUR/CHF, the industry is now looking very hard at any potentially similar issues, especially with the increased geopolitical risks in Europe and economic risks in China.

The primary change FXCM made was to remove some currency pairs from our platform that carried significant risk due to over-active manipulation by their respective government either by a floor, ceiling, peg or band. We also raised the margin requirements for other currency pairs which reduced the maximum leverage available on our Standard NDD accounts to 100:1.

However, we continue to receive requests for higher leverage (lower margin requirements) particularly from traders in emerging markets where the average account balance is smaller. Offering these traders a DD option through our new Mini account type in addition to our existing Standard NDD model allows us to cater to their demand for higher leverage from a risk management perspective.

 

[MajorMagnuM]

Jason this is not the most replete answer to many of the issues highlighted in this thread

 

[tar]

Hi Tar,

Our new Mini account type with DD execution is a solution for our clients who demand higher leverage (up to 400:1) than we offer on Standard accounts with No Dealing Desk (NDD) forex execution. Given what happened with EUR/CHF, the industry is now looking very hard at any potentially similar issues, especially with the increased geopolitical risks in Europe and economic risks in China.

The primary change FXCM made was to remove some currency pairs from our platform that carried significant risk due to over-active manipulation by their respective government either by a floor, ceiling, peg or band. We also raised the margin requirements for other currency pairs which reduced the maximum leverage available on our Standard NDD accounts to 100:1.

However, we continue to receive requests for higher leverage (lower margin requirements) particularly from traders in emerging markets where the average account balance is smaller. Offering these traders a DD option through our new Mini account type in addition to our existing Standard NDD model allows us to cater to their demand for higher leverage from a risk management perspective.

I dont mind it bring it on great , on the bright side it means i need to keep less money with you :cheesy:

 

[tar]

No Pound crosses - like GBPNZD - in the new account , not good for me :

https://www.fxcm.com/uk/advantages/mini-spreads/

 

[Jason Rogers]

No Pound crosses - like GBPNZD - in the new account , not good for me :

https://www.fxcm.com/uk/advantages/mini-spreads/

Thank for the feedback, Tar

While Mini accounts offer trading in 18 of the most popular currency pairs, there are more pairs are available on Standard accounts. However, the leverage on Standard accounts is limited to 100:1.

I'll let you know if additional pairs like GBP/NZD become available on Mini accounts in the future.