Has Anyone Tried This Broker?
Anyone that works in the financial industry has heard of Deutsche Bank but for those of you that don't, it is one of the bigger financial institutions. I'm wondering if anyone has tried the demo or real forex trading accounts. I never hear about them when looking for forex broker options but I mentioned back in May, 2006 that they had launched a platform for retail traders. At that time, the minimum required to open an account was $25,000 but they have since lowered it to $5,000 so it may be a more viable options for smaller traders. You can find out more about them and also sign up for a demo account at http://www.dbfx.com/index.html. I'm going to check out the demo in the near future.
Oanda
Comprehensive provider of foreign exchange, currency trading, and information services. Read more for Editor's Review.
Which Forex Brokers Ranked Highest
I just received the new Special Traders' Issue of Stock & Commodities Magazine ; they announce their 2006 Reader's Choice Awards.
The results for the forex brokerages ranked highest by readers:
Winner: Interactive Brokers
First Runner-Up: FXCM
Finalists: GFT Forex, Man Financial, and XPRESSTRADE
Semi-Finalists: FX Solutions and GAIN Capital
Honorable Mention: AlaronFX, CMC Forex, CMS Forex, and Lind-Waldock
Interesting results because I never really heard of Interactive Brokers…
CMS Forex
CMS is a registered Futures Commission Merchant (FCM), a member of the National Futures Association (NFA) (Member ID# 0313199) and is registered with the Commodity Futures Trading Commission (CFTC).
GFT Forex
Offers 24 hour online forex trading, offering over 40 currency pairs featuring DealBookFX, and free demo accounts.
Financial Health of Forex Brokers
I received a follow-up email from the DCIO or the Division of Clearing and Intermediary Oversight, a legal arm of the Commodity Futures Trading Commission. My questions were:
- How can the data (FCM merchant report) best be interpretated to conclude the financial health of a broker?
- What would be grounds for a broker having to halt operations based on the data from this report?
Their response, which was from the Special Counsel was long but the information indispensable. Click [Read More] to read their entire response.
The 2 important points I got from the response were:
- The FCM report that shows a firms net adjusted income is not totally indicative of financial health mainly because, in her words, "a firm's transactions and positions (proprietary or customer), exposed to market events can impact capital levels quickly." This is very similar to our (we traders) capital levels in a high risk market such as foreign exchange. Market events can impact our balance quickly.
- Similar to the Refco situation, in her words, "should an FCM with liabilities to customers for off-exchange retail foreign currency have to halt its operations due to a loss of capital, those customers may be left in the position of unsecured creditors of the entity with respect to trying to collect anything from the FCM."
The scary thing is that even though Forex retail firms keep customer funds separate from operating funds, your funds are subject to seizure from creditors first, which I'm sure Refco customer are well aware. This needs to change and additional regulation should be adopted to counter this.
[Read more]
Trade with a Flexible Lot Size
I'm now with my third different broker in the one year since I started trading. My first was FXCM, which I still use, my second was Gain Capital or http://www.forex.com, and the third which I most recently opened an account with, Oanda. If I had to describe each in one incomplete sentence, it would go like this:
FXCM – Comfortable platform with industry standard spreads.
GAIN – Offers a decent free API to standard account holders with at least $10,000.
Oanda – Lower than usual spreads during non-news events that allows any size lot trades.
It's pretty much impossible to describe in one sentence but I thought I'd give it a try. What I'm finding is that there really isn't a hugely noticeable difference between them. I've heard traders say that FXCM artificially spikes prices or that Oanda's spreads during economic releases turn news trades into news untradables but each have their issues and there is no perfect broker platform. If I had to make a semi-perfect broker platform, it might be a combination of the three.
- Spreads from OANDA
- Currency pair selection from OANDA
- API from GAIN
- Order types from GAIN which provide limit, stop loss, OCO, If/Then single, If/Then OCO, and trailing
- News from GAIN and FXCM
- Money transfer options from GAIN and FXCM
- Interest on balance from OANDA
This is just a list by quickly brainstorming but it might be beneficial if I created a feature matrix unless someone knows if someone already did on the web.
Originally, the whole point of this post was to mention FXSol's Flexi Contract options that I stumbled upon today. I thought Oanda was the only broker that offered variable sized lots but this is not the case. FXSol offers lot sizes of 1K, 5K, 10K (Mini), 50K, or 100K. Nice….
At this moment, my wish list of features that are not provided by any broker are both related to order scheduling:
- Ability to schedule an order at a specific time. This is provided by FXEngines and can obviously be done via an API
- Ability to receive alerts if and when this order is triggered also provided by FXEngines
Like I said, FXEngines can do both but what FXEngines really provides to you is a front-end to their API that communicates with FXCM. This front-end is web-based and slow. They really need to update their technology and offer a front-end to brokers other than FXCM.
Confessions of a Dealing Desk Broker
There's a good post on the NDD blog detailing a conversation between a trader, Pupkinus, and an Australian dealing desk broker which goes into the inner workings of the brokerage community. The broker talks about stop hunting and why brokers hate scalpers.
Check it out at http://nondealingdesk.blogspot.com/2006/09/confessions-of-marketmaker-dealing.html
Oanda Account Opened
I finally opened up an account at Oanda today and transferred funds. Hopefully I'll be trading through this account by today or tomorrow. I'll let everyone know how it goes.
On a side note, why must my spammers barrage my website. I find that I'm in a constant fight to keep them from posting their forex advertising and forex promotional material here. What a waste of time. I'm going to start another section called FOREX SPAM SITES that explicitly list the sites that they are trying to promote.
How can I prevent fraud when trading forex?
There exists the CFTC or Commodity Futures Trading Commission which has jurisdiction and authority to investigate and take legal
action to close down a wide assortment of unregulated firms offering or
selling foreign currency futures and options contracts to the general
public. In addition, the CFTC has jurisdiction to investigate and
prosecute foreign currency fraud occurring in its registered firms and
their affiliates.
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.
You can find the spreadsheets at http://www.cftc.gov/tm/tmfcm.htm
You can also visit their website at http://www.cftc.gov/cftc/cftcbeforetrade.htm.
An even more beneficial site is provided by the National Futures
Association which provides the Background Affiliation Status
Information Center where you can lookup Commodity Futures Trading Commission (CFTC) registration
and NFA membership information. This information is contributed by
NFA, the CFTC and the U.S. futures exchanges.
This is an excellent site to find out if your forex resource is reputable.
http://www.nfa.futures.org/basicnet/
You can find this and more useful answers to your questions in the Forex Knowledge Base.
