FXCM is an Institutional and professional Forex Trading platform
- $50 account minimum
- 1.3 to 7 pip fee for most accounts
- 0.2 pip fee for active traders only
- Best in full-scale, professional desktop trading tools
FXCM is a London-based retail Forex broker that, after being founded in New York in 1999, became one of the worlds largest brokerages in 2010. However, the company was permanently banned from operating in the United States of America in 2017 by the CFDC (Commodity Futures Trading Commission). The Jeffreys Financial Group is now the primary owner of FXCM and holds a majority interest.
Though still prohibited from operating in the United States of America, FXCM is licensed in Australia, the United Kingdom, South Africa, and several other countries of the European Union. FXCM provides a small number of CFD, Forex, and spread betting products to institutional, professional, and casual investors alike. Its damaged reputation has restricted growth since 2018, but its relationship with the Jeffreys Financial Group has helped FXCM to reestablish itself. Currently, FXCM adheres to MiFIR and MiFID requirements as well as the ESMA regulations that began in 2018. In general, these regulations strictly limit the use of leverage on the CFDs and Forex products and institute a requirement for negative balance protection.
Despite a limited range of trading instruments, FXCM offers a variety of platform choices designed to appeal to multiple account levels and trading styles. There is also an educational portal that focuses specifically on novice investors. Despite the strength of their educational portal, the general research area provided by FXCM lacks fundamental analysis, provides no videos or webinars, and there’s a surprising lack of transparency relating to final trading costs. This could be remedied by cost comparisons that are pulled from real-world examples and then explained side-by-side.
- Social trading platform
- Multiple desktop interfaces
- Algorithmic trading APIs
- Subscription fees for higher-end products
- Inconsistent features across mobile platforms
- Unclear variable average spreads on Forex products
With only 63 total securities (including two cryptocurrencies), the total number of financial instruments offered by FXCM is below the industry average. With an unusually small list of exotic currency pairs and absolutely no share coverage, clients must pay special attention to the contract details for spread bets and CFDs as they can have a different average spread which is an unusual cost structure for brokers in the UK. Worldwide clients can only trade nine major commodity CFDs.
Minimum account fees are £300 in the United Kingdom, which is surprisingly expensive given the services provided. Beyond this, additional fees can cause trading costs to rapidly increase, which obscures total trading costs. Legal contract documentation also provides FXCM the authority to be compensated through an increase to spreads and fees. Beyond this, the broker’s dealing desk is involved in all trades, including trades completed by active traders. Most other brokerages provide access to the interbank system for professional traders.
FXCM is regulated by the Financial Conduct Authority (FCA) under registration number 217689. Clients are insured for GBP 50,000 through the FSCS (Financial Services Compensation Scheme), but there is no private insurance to offer additional protection. Additionally regulated through South Africa, Australia, Italy, and Germany, client funds are kept separate from company funds; however, FXCM acts as a counterparty for every client transaction through its dealing desk. While there is a severely damaged reputation that FXCM must constantly battle, their connection with Jefferies Financial Group is an essential first step in their multi-year process of restoring trust.
Algorithmic trading and other automated interfaces are provided by FXCM along with other high-end third-party platforms, but all of these tools incur subscription fees. There is also confusion regarding service costs because some accounts include these services while others do not. Beyond that, professional accounts receive access to VPS hosting, but lower-end accounts must pay a $30 monthly fee for access to the same features. Also, higher-end accounts no longer pay spread costs on Forex trades but instead pay commissions. This change in fee structures causes confusion about whether there are real benefits to the higher-end accounts.
Commissions and fees
Although the published spreads and commissions are competitive, a concerning lack of detail from real-world examples causes confusion about total trading costs. For example, the average spread cost is published, but there is no information about the differences between active-hour trades and off-hour trades. Off-hour trades often cost significantly more, so the lack of clarity on this point probably causes many clients to resist the idea of investing with FXCM. They also charge higher than average bank wire transfer fees, withdrawal fees, and inactivity fees, which may be a further deterrent.
FXCM provides three primary services which are spread bets, Forex, and CFD trades, which can be completed through their platform called Trading Station or the industry-standard MetaTrader 4. Clients are also able to access multiple third-party applications and APIs as well as ZuluTrade, which provides a social trading platform. In addition, the Trading Station is now no longer an Adobe Flash application but has now been wholly rewritten in HTML5. This provides increased security and speed as compared to the soon-to-be-defunct Adobe Flash. However, enthusiasm for these valuable resources is tempered by subscription fees and account restrictions.
FXCM provides its clients with the full range of MT 4 mobile apps as well as mobile apps for Trading Station on the web, iOS, and Android. Within the Trading Station ecosystem, clients can use many different technical indicators and initiate advanced order types using proprietary technology. However, security is undermined by the lack of two-factor authentication, which is also a shortcoming of the MetaTrader mobile platforms.
Research tools available tools are well below the industry average. Essential tools such as daily technical levels, economic calendars, and third-party market news are available; however, little else can be found. There are no webinars or videos. The portal itself is difficult to navigate. Moreover, many of the more advanced technical analysis resources are only available if the client ops into yet another marketing list.
In contrast, the education portal provides a large number of tutorials geared towards platform usage and general education on Forex topics. There is even a live classroom section that includes past recordings accessible by the clients who sign up for the service. It seems, however, that the majority of the videos and tutorials are focused on platform usage more than technical or fundamental indicator education. There’s also very little in the way of CFD education, and the somewhat difficult to navigate design makes the absence of the search function a significant issue.
The trading desk, live chat, and phone support are all available 24 hours a day, five days a week, which is the industry standard. FXCM’s connection with Jefferies Financial Group also allows them to provide a wide selection of toll-free phone numbers for each country where they’re based. In addition to these services, clients can receive assistance through email and SMS messages, and the well-organized help section also provides a dedicated search function.
FXCM Review and Final Verdict
Recommendations for this particular broker are somewhat difficult to give since it’s been less than two years since being banned from the United States of America, and it takes a while to restore trust, especially with brokerages. Our uncertainty is magnified by the lack of transparency related to subscriptions and total trading costs as well as a lack of access to the interbank system. For institutional and professional investors, FXCM may be a better fit as it seems that many of the subscriptions and extra trading costs are “included” with the higher-ed accounts.
What we found best about FXCM are their low trading fees and financing rates, their fast and secure account opening process and the advanced research tools.
On the downside we didn’t like the fact that FXCM only offers forex, some CFD’s and cryptos. We also think that their mobile trading platform would need an updates as it is not user friendly and hard to work with.
What Is Next
If you want to compare FXCM to other trading platforms read:
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User Reviews and Trading Experience
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