Research Your Broker
May 5, 2006 by Trader Rich
There is a lot of interesting information on the CFTC (Commodity Futures Trading Commission) website, one of those things being a spreadsheet of net monthly capital statements for all Forex brokers. The important information in this spreadsheet are the Adjusted Net Capital and Net Capital Requirements which is the amount of capital each firm possesses in excess of minimum set by regulators. By looking in this spreadsheet, one can make assumptions of the financial stabilility of their broker.
Let's look at the Adjusted Net Capital for a couple of brokers I have come across:
- Alaron - $5,851,000
- Capital Market Services - $6,530,000
- FXCM - $19,092,000
- FX Solutions - $6,305,000
- Gain Capital (Forex.com) - 23,052,000
- Oanda - 29,188,244
- Tradestation - 37,744,000
I don't think firms without US locations are reported here since the CFTC is responsible for regulation in the United States but it would be advised to consult the information on the site.
http://www.cftc.gov/tm/tmfcm.htm
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Even though Gain does 23 million here, TradeStation does 37 million using Gain as their backend. Why do we imagine anyone would do it that way? No doubt because you then get full TradeStation data free - no extra $50 for FX data either like with Esignal - and on only 10 roundtrips / month. I respect eSignal and TradeStaion equally but when one is free and ther other is around $185/month, I think that tips the balance…
A great post, thanks for infos, I linked to your post from my Forex blog at http://www.Forextradinglandpro.com/blog