FOREX (FOReign currency EXchange) is a market that allows investors to trade currency from one country for that of another. Unlike most financial markets, this one operates 24/7 with different centers coming online at different times around the world. Until recently, it was the private market of banks and large corporations. Today, regular investors may trade on this market using a variety of different brokers and platforms. This FXCM review will show some of the advantages of FOREX trading with FXCM (FOREX Capital Markets).
No FXCM review would be complete without a brief discussion of its history. FXCM was formed in New York, USA in 1999. This company was one of the pioneers of online FOREX trading. This experience assures users of expertise in obtaining market signals and financial news releases that can affect their trading strategies.
FXCM is a publicly traded company listed on the New York Stock Exchange. As such, it is regulated by the NFA (National Futures Association) and CFTC (Commodity Futures Trading Commission) in the US. Being a multinational corporation, this firm is also regulated in the UK by the FSA (Financial Services Authority), the FSA in Japan, and the ASIC in Australia. This makes them one of the most heavily regulated FOREX brokers in the world.
Banks that provide the liquidity on currency pairs never see users’ names, personal information, financial data, or orders. They simply execute the orders anonymously. This helps to ensure the security of user accounts.
Industry leaders have criticized FOREX brokers in general. They say that most retail traders lack the experience to truly make money in this relatively new market. Some estimate that less than 15 percent of day traders actually show a profit. Studies show that FXCM customers fare well above average with 21 percent of traders holding accounts of less than 1000 USD and 37 percent of traders with accounts over 5000 USD profiting regularly on their trades.
Most brokers allow traders to use only their platform. Users of FXCM are able to take advantage of their platform, but have several other options as well. In addition to their Trading Station, users may choose from other popular platforms such as MetaTrader 4, Mirror Trader, or Active Trader.
Some brokers do not allow users to employ FOREX bots (Expert Advisors). Others will tolerate certain ones only. This broker allows users to make use of any of the available bots or scalpers they choose. This is in addition to providing a method of entering orders in advance to be executed when market conditions reach corresponding values.
Outside the US, users are not limited to the FOREX market when making investments. These individuals may also trade in CFDs (Contracts for Difference) on major market indices, futures, and commodities such crude oil or gold.
Users may operate standard or micro-accounts. Standard accounts use a leverage ratio of 1:200. Minimum deposits are 2000 USD and the minimum lot size for trading is 10k USD. Micro accounts allow leverage of 1:400 with minimum deposits of just 25 USD. Minimum lot size for a micro lot is just 1k USD.
Hedging is enabled on the FXCM platform. Users may take a long position or a short position on any currency pair. They even have the option of opening both positions simultaneously during news events in order to minimize losses and maximize gains based on the outcome of such events.
No Loss through Slippage
Slippage refers to the difference between the price of a currency pair at the time an order is placed and the price at the time the order is executed. This broker works to process orders in real time to avoid any negative slippage. If, on the other hand, there is an instance of positive slippage (the price is more favorable at the time of execution than when the order was placed), the client receives the benefit of the better price.
Direct Market Access
Most FOREX brokers use a “Market Maker” model whereby they may actually be in direct competition with users on any given trade. This one follows a “Direct Market Access” model. This means that they have different liquidity providers (banks) quoting prices on currency pairs. Customers are given the best price of the competing offers. This works whether entering a position or exiting. One bank may provide the best price when entering and another may have the best offer when exiting. Customers are not locked into a deal with a single provider.
Multiple Signal Sources
Users are not limited to just one provider of market signals. FXCM uses signals from both Zulutrade and Tradency. This means that users can count on getting the fastest updates on signals regardless of location.
Gain Experience without Risking Cash
FXCM offers users the opportunity to open a practice account and trade with virtual funds. This means that they can place orders and track their results in order to familiarize themselves with the market without actually risking any cash. It can also serve to help them dial in their own trading strategies based on the performance of their practice accounts.
It should be noted that the performance of practice accounts seldom is mirrored in actual trading. This is because the virtual funds used in practice accounts do not have any direct real impact on the market. Actual trades tend to affect the market directly as different currency pair lots are taken out of circulation or put back into circulation depending on whether one is buying or selling. This FXCM review has provided some of the strengths and weakness of FX trading.
This FXCM review has revealed many different advantages of FOREX trading with FXCM. This broker is among the most tightly regulated and secure brokers in the world with experience that goes back to the birth of online FOREX trading. They are among the most flexible, with different trading options including allowing users to choose their trading platform and make use of scalpers, bots, and trading algorithms. They minimize spreads by working with ten different banks to provide quotes on currency pairs and allow users to benefit from the best price on offer at the time of the trade. Slippage works to the advantage of the customer while they minimize negative slippage and trader losses through slippage.