FXCM Review 2023
FXCM’s proprietary website is one of the best and there are many trading tools available. Independent traders will appreciate their many advanced trading tools while the more sophisticated traders who employ algorithmic trading (aka robots) will find FXCM’s platforms, with support for automated trading, particularly welcoming. On the other hand, beginning traders may be disappointed in the limited trading education and the absence of passive investment options, such as managed trading accounts or PAMM accounts, although social trading is available through the (widely available) Zulu Trade. Pricing is nothing special; on the contrary, trading costs seem higher than at competitors, including unusually high withdrawal and inactivity fees. And the fixed leverage (30:1) isn’t as flexible as at some other firms. But high-volume traders will benefit from a number of special offers and superlative flexibility.
Background
FXCM (short for Forex Capital Markets) is a British broker founded in 1999. The company suffered a big loss in 2015 when the Swiss National Bank pulled the rug out from under the EUR/CHF floor and the financial firm Leucadia – since renamed Jefferies Financial Group (NYSE: JEF) -- came to its rescue with a loan. Jefferies now owns 49.9% of FXCM’s stock and several of Jefferies’ executives also serve on FXCM’s board. Jefferies is a major international financial firm with a wide variety of activities (investment banking and capital markets, asset management, and direct investing) with a balance sheet of some $60bn and net income of $1.7bn in 2021. You won’t find any sounder company in the retail FX business. FXCM is headquartered in London with offices in Australia, Canada (affiliate), Cyprus, Israel, and South Africa. It exited the US market in 2017 and no longer accepts US clients (like me, for example).
Types of accounts
The company has three kinds of accounts: standard, active trader, and professional.
(They also have demo accounts and accounts for corporate clients, but those don’t concern us.)
· Have traded leverage derivatives in significant sizes over the last 12 months
· Have a financial portfolio of over EUR 500,000
· Have worked in the financial sector in a professional position requiring knowledge of derivatives trading for at least a year
If you are, you’re eligible for an account with no leverage limits – but also with no negative balance protection, no (or fewer) risk warnings, and less protection in case of disagreements with the company or the company’s bankruptcy.
Account opening and deposits
When you open an account it has to be in a particularly currency, known as the base currency of the account. FXCM offers only four base currencies: USD, EUR, GBP, and CHF (CHF not available to British clients).
This is fewer than some other large brokers. Furthermore it charges pretty high currency conversion fees. If you want to trade with FXCM and your money isn’t in one of those currencies you might consider opening an account with any of the many online banks first and using it to change your money.
FXCM doesn’t have any deposit fees. You can deposit your money by bank transfer or using a credit or debit card (the former can take several days, the latter is instant). Traders outside the EU can use Skrill or Neteller, two e-money providers. $50 is all you need to open a standard account. C’mon, what are you waiting for? You’d pay more than that for a date with a girl who’s going to ghost you afterward anyway. At least you have a chance to score here.
Opening an account with FXCM is fully digital but it can still take a bit longer than at other brokers. The firm doesn’t accept clients who are residents of the US, Brazil, Hong Kong, Japan, New Zealand, South Korea, or Turkey, as well as the usual international pariahs such as Cuba, Iran, Russia, and Syria.
Withdrawals
Once you’ve made a fortune buying & selling & buying again, it’s time with withdraw your winnings and buy that Porche you’ve always dreamed of (or withdraw what little is left in your account so you can pay the rent, whichever the case may be). Again you have the same two options if you’re an EU citizen – bank transfer or credit/debit card – or Skill or Neteller if you’re outside the EU (as the UK is now). The funds withdrawal with FXCM broker is fairly slow: Withdrawals to a bank card are processed within 24 hours, but wire transfers can take two business days in the UK, up to five days for other countries, and can cost $25-$40, depending on where the bank is located. Withdrawals to Skrill and Neteller can take a month! You’ll be evicted by then. Because of money laundering laws, all withdrawals are made to the same account that the money came from (common practice in the industry).
Fees
FXCM is not the best discount broker. Effective spreads for both FX and CFDs are slightly higher than the industry average. Of course, cost is just one factor involved in deciding which broker to go with. Besides, you’re going to lose all your money trading anyway, so what difference does it make? While spreads on the standard account vary according to how volatile the market is, under normal conditions you’ll pay about $13 for one lot ($100k) or EUR/USD. This is higher than the average ($9) at similar top-notch brokers. (But hey, since you’ve just made $10,000 trading BoJ intervention what do you care about $4?) If you’re going to hold your positions overnight, you also have to take into account the swap fees. These aren’t published on FXCM’s website so I can’t tell you what they are. There are also significant rollover fees for holding gold, silver, or other CFD positions over the weekend. FXCM also has some non-trading fees that are higher than other brokers. We mentioned the withdrawal fees if you want a bank transfer. There’s an inactivity fee of $50 a year after your account has gone 12 months without any trading. And if you have to convert one currency into another to withdraw it, you’ll be hit with a conversion fee of anywhere from 10 to 150 pips – potentially more than you made on the trade (of course the trade was a nominal amount much greater than the actual amount that you’re withdrawing). Consider yourself warned about these non-trading fees, which are among the highest in the industry.
Leverage
Leverage varies according to the entity you’re registered with. In the EU it’s limited by law to 30:1 for major currency pairs, 201 for non-major currency pairs, gold, and major stock market indices; 10:1 for other commodities and minor stock market indices; 5:1 for individual equities; and 2:1 for cryptocurrencies. One important point to stress: you can’t change the leverage. While of course you can’t go above the maximum leverage, you also can’t dial it down even if you want to. That could potentially expose you to more risk than you want.
Regulation & protection
FXCM is regulated by three top-tied regulators, three second-tier, and one third-tier. Its first-tier regulators are the Australian Securities & Investment Commission (ASIC), Britain’s Financial Conduct Authority (FCA), and the Investment Industry Regulatory Organization of Canada (IIROC) (via its Canadian affiliate). It’s also regulated by the CySec in Cyprus, ISA in Israel, and the FSCA in South Africa. One of its subsidiaries is also regulated in Bermuda. Plus of course the parent company is publicly trade and regulated by the US authorities (which didn’t help Lehman Bros., but you never know). Moreover, the company publishes detailed reports every month giving the percentage of orders that encountered slippage, both negative and positive, plus details on the quality of trade execution. This is more transparency than you’re going to get at most other brokers.
The company had been fined several times before 2017 but it hasn’t had any problems since 2018. Note that a lot of the investor protection depends on which legal entity you’re registered with, as does the maximum allowable leverage. For example, only clients of the UK and EU entities are covered by investor protection and negative balance protection (which means you can’t lose more money than you put up even if a volatile market prevents you from getting out in time). One potential issue: the company only has one-step login, not two-step nor biometric authorization. That could be a bit risky, although adding those steps would also add a bit of hassle to your daily login.
Tradable assets
The range of assets that you can trade with FXCM depends on which entity you’re registered with. As far as I can tell it’s limited to the major assets that most other brokers also cover. This should be good enough for 90% of all traders, especially novices – there are plenty of opportunities to lose money without seeking out new and exotic markets you don’t understand and shouldn’t be trading anyway. But this could be an issue for more experienced traders looking for a different way to go broke than they used last time. FXCM offers the standard currency pairs plus a few more exotic ones (CNH, MXN, TRY, ZAR, and the Scandis). They offer ??? CFDs on individual shares in the US, UK, Europe, Hong Kong and Australia, plus seven market indices (the usual ones in the US – DJIA, S&P 500, and NASDAQ -- plus Germany, France, and Japan. Spain is in there too). (Note: one company said there were 15 indices available.) Commodities are limited to gold, silver, oil (WTI and Brent), natural gas, and copper, plus cotton and wheat (there are apparently four more). There are also several cryptocurrencies available to non-UK clients. No bonds that I could find.
Platforms
FXCM clients can choose from a wide number of trading platforms (depending on where they’re registered). These include:
Plus more sophisticated clients can chose from any number of specialized platforms, such as QuantConnect (which bills itself as “the world’s leading algorithmic trading platform”) or NeuroShell Trader (“Trading software for building trading strategies using technical analysis indicators and neural networks” with over 800 built-in indicators) But if you’re at that level you probably don’t need this guide anyway. On the other hand, Metatrader 5 is not available. This is an unusually broad range of platforms that should satisfy almost all traders. Among these, only Trading Station is their proprietary platform, so that’s the one I’ll discuss. It’s good, no doubt about it. It can be customized to suit your preferences; basically the whole thing is nothing but customizable widgets that you can arrange to your little heart’s content, or use the seven predefined layouts. There’s a great search function. Traders can select what instruments they want it to display and these will appear on all devices and platforms that you use. The trade ticket offers a comprehensive list of order types, including many of the more advanced ones. Charting is supported with close to 60 different indicators and a wide variety of drawing tools. Trendlines automatically zoom while they’re being dragged so you can draw them precisely. You can also backtest your strategies in it, taking account of trading costs and slippage – quite a sophisticated tool.
An economic calendar is included and you can access some of the firm’s educational and research resources through it too, but not all (an inconvenience).
All told, the features are similar to MT4 but it’s easier to use. It’s available in both a web and mobile version (for both Android and iOs) so you can easily have it on your phone and trade on the train going to work, at the bar afterwards, on the toilet during the workday, or wherever the urge to buy $100,000 of GameStop hits you. The mobile version has most of the same functions that the web version does, except maybe fewer charting options (55 vs ??), shorter time frames, and some of the more exotic order types. Both lack two-step logins (you may think of that as an advantage if you don’t like the hassle). You can get price alerts on the desktop model but not the mobile ones, so no opportunities to impress that young lady at dinner by having your phone beep and announce that USD/JPY has hit your target level (but maybe if she comes back to your flat where you have your desktop trading station set up…) The desktop version also has excellent portfolio and fee reports. Trading Station is available in Arabic, English, French, German, Greek, Hebrew, Italian, and Spanish. The FXCM App store offers a number of add-ons, technical indicators, and automated trading robots. A dedicated support team is available to help you in developing your own Expert Advisor (aka trading robot) for the MT4 platform. FXCM doesn’t have in-house social trading but you can use Zulutrade for that if you like (just register with your FXCM account number and Bob’s your uncle!) Islamic swap-free accounts are available.
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