Broker Horror Stories??

[eurofan]

Quote from alekx:

Anybody else have problems with <b>FXTrader.net</b>?

I can't get my money out of them, all emails are ignored.

Anybody else traded with them?

I noticed the thread and decided to join as
I was trading with FXTrader.net – had a few problems, they had a 'sever
crash' and two days later when the site was up – nearly all my money was missing.
Their account manager-thief, Gideon Lowe, told me that they ‘lost’ their database!
Another excuse is that scalping is not allowed, so they ignore your balance and decide not to pay it!
They are mafia and scam and still owe me the money. And it is possible that they just have a dummy server and not participate in real interbank trade.

eurofan


PS to the 'moderator'
Is my IP address the same as other guys on this tread?

 

[traderob]

Quote from eurofan:

I

PS to the 'moderator'
Is my IP address the same as other guys on this tread?

No, I see you finally figured out how to route your posts through a different server.
Congrats.

 

[FXCMFXCM]

Quote from Pipstar:

Roberk says:

Finally: the main reason for success or failure is rarely the broker- it is you, the trader.
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Jimrockford says:

This just isn't true. Do a little research on the CFTC website. You will find an amazing, endless number of fraud cases in which astonishing amounts of money were stolen from customers by so-called FX brokers. The retail spot FX brokerage industry is running amok. It is a festering cauldron of fraud, lies, and deception. The main reason for failure, in retail spot FX trading, is very much the broker. You need to have a good broker, before you will even have a chance to become a profitable trader.
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I am sorry Roberk, but Jimrockford is 100 % right.
It is a myth circulated by brokers that 95 % of traders fail just because they are poor traders. That 95% of them fail is probably correct but the truth is that these traders fall prey to the forex sharks - namely brokers and liquidity providers - with shadowy practices who have a vested interest in whipsawing prices, hit stops, trade against you to clean your account.

When I first started trading some years ago and was losing money, I never used to hear from my broker(s). For the last few years that I have been profitable, those brokers have taken issue with my trading style because i am no longer a source of income to them. When this happens they resort to strategies to stop you like, reduced leverage or dealer intervention, all aimed to disable or hurt your trading until you eventually move on. They want to keep losers not winners - its like at the casino.

I am a representative of FXCM, and I want to clarify our stance on the issues of trading against clients as well as dealer confirmation.

I want to respond to the accusation that forex market makers only make money when clients are losing money. The only case where this is true is when the market maker is taking positions opposite to clients and not offsetting their market risk with an interbank dealer.

Trading Against Clients

As you will see below, it is highly risky for a large firm with 50,000 accounts to be "trading against" its customers, as it means that a single large, successful trade could mean a loss of millions of dollars for the firm. Instead, our business model relies heavily on our being aligned with clients in that traders breaking even or making money over a period of years are by definition long-term customers, and therefore a continuing source of spreads to FXCM, which results in profits.

To validate the idea that it is in FXCM's best interest for its clients to make money, take a look at the extensive educational offerings FXCM provides. These are not intended as a profit-center for the company, but rather part of a mission to have a larger percentage of profitable (read: long-term) customers trading with us.

If it were not in FXCM’s best interest to have profitable clients, FXCM would do its best to keep traders unprofitable. Educational offerings refute the idea that FXCM seeks unprofitable traders. Moreover, a workable long-term business model cannot continually rely on new entrants into the customer pool to provide a source of income for a company. Rather, a company with a core of profitable traders who are generating spreads for the market maker is much more feasible and predictable.

Dealer Confirmation

There are two main reasons why a client would be put on what is called dealer confirmation. To explain them I will have to briefly delve into the way our dealing desk operates.

To remain market neutral, we aggregate our order flow--meaning we match buyers and sellers internally--and then offset our "book" of orders with a bank on the level if we are net long or net short as a firm. Thus, in the end, we aim to take no positions in the market and thus minimize our exposure to the fluctuations of the market.

Scalping

If a client known as a scalper is simply trying to trade very short term (where he or she is in and out of trades within minutes), he is effectively making it very difficult for FXCM to offset its books. Effectively, most trades this client places are not able to be offset internally and must be offset with a bank, which takes a certain amount of time to do. By the time the trade has been offset, the trader may have already turned around and closed out the position, forcing FXCM to return to the level and attempt to offset again at what are hopefully still market prices.

Thus, when someone trades very short term with large size, the dealing desk must constantly offset those trades with a bank, even though by the time they do so, the trader has often closed out their position. To continue to allow the "candy-coated" conditions our 50,000 traders enjoy--fixed spreads, guaranteed execution of stops and limits under normal market conditions, and fills at the price shown on market orders--the dealing desk must confirm the entry price for traders who are holding their trades for minutes at a time. To accomplish this, dealers periodically scan the market to identify scalping behavior, and then begin confirming market prices for scalping traders.

Confirmation

In order to confirm the price at which a trader is trying to enter the market, our dealers will double-check market prices those orders prior to placing them. If the price requested is available, they will place the order. If the price is no longer available, the dealer will requote the trader and offer the trader an opportunity to confirm or reject the new price within 7 seconds. This is a very labor-intensive way of doing business, which is why we created an alternative that would meet scalpers' needs (see below).

Picking

The second type of trader who would be placed on dealer on confirmation is called a picker, meaning someone who intentionally and maliciously attempts to take advantage of technological inefficiencies to "pick off" FXCM's prices. Pickers will try to place orders in, for example rising markets so that they have a trade executed at a lower price than the current market price once their trade reaches the dealing desk.

Because this type of trader is trying to place an order at an off-market price, the dealers must confirm that the price exists prior to processing the order. If the price does exist, the trader will be filled at that price. If it does not, the trader will be requoted and given the opportunity to enter at a different price for a period of 7 seconds.
Stop, entry, and limit orders will still be executed automatically even for traders on dealer confirmation

Alternatives--PropFX

As has already been pointed out, the option available to a trader wanting to trade either of these strategies is to use PropFX, the professional level platform designed for scalpers, pickers, and any large trader who desires tighter spreads, anonymity, no requotes, and the ability to execute large size directly with banks. The platform also shows market depth. Visit the platform's site at www.propfx.com for more information.

I hope this helps. Comments are welcome.

 

[Lon Eagle]

FXCM please answer this question.

In August 2004 (the month stops were no loner guaranteed if you had read the small print which thankfully I had) the Non farm payrolls were very weak. The euro dollar gapped higher about 140 pips. FXCM for a few seconds took the euro dollar lower before gapping much higher, like the rest of the market. This behaviour caused a lot of stops on the downside to be falsely triggered compared to the 'real' market.

In hindsight do you think that this action was ethical? Do you consider that perhaps your strange price action was against the best interests of your clients?

Thank you very much.

 

[Mathemagician]

Quote from FXCMFXCM:

The second type of trader who would be placed on dealer on confirmation is called a picker, meaning someone who intentionally and maliciously attempts to take advantage of technological inefficiencies to "pick off" FXCM's prices.

You can't be possibly be saying this with a straight face, can you?

You are effectively acknowledging that FXCM's prices which are set by FXCM differ materially (i.e. exploitably) from the prevailing price available on a free exchange, and that this difference exists for the exclusive benefit of FXCM. Anyone else who attempts to exploit this difference is labeled "malicious" and a "picker" and their behavior will not be tolerated.

This attitude is precisely the reason I will never trade with any entity which both sets the prices and takes the other side of my positions. FX Dealers not only do both of these things, but they also have access to my open orders and custody of my funds. Hardly a fair and equitable trading environment!

M

 

[bigmrfrank]

Quote from FXCMFXCM:

I am a representative of FXCM, and I want to clarify our stance on the issues of trading against clients as well as dealer confirmation.

I want to respond to the accusation that forex market makers only make money when clients are losing money. The only case where this is true is when the market maker is taking positions opposite to clients and not offsetting their market risk with an interbank dealer.

Trading Against Clients

As you will see below, it is highly risky for a large firm with 50,000 accounts to be "trading against" its customers, as it means that a single large, successful trade could mean a loss of millions of dollars for the firm. Instead, our business model relies heavily on our being aligned with clients in that traders breaking even or making money over a period of years are by definition long-term customers, and therefore a continuing source of spreads to FXCM, which results in profits.

To validate the idea that it is in FXCM's best interest for its clients to make money, take a look at the extensive educational offerings FXCM provides. These are not intended as a profit-center for the company, but rather part of a mission to have a larger percentage of profitable (read: long-term) customers trading with us.

If it were not in FXCM’s best interest to have profitable clients, FXCM would do its best to keep traders unprofitable. Educational offerings refute the idea that FXCM seeks unprofitable traders. Moreover, a workable long-term business model cannot continually rely on new entrants into the customer pool to provide a source of income for a company. Rather, a company with a core of profitable traders who are generating spreads for the market maker is much more feasible and predictable.

Dealer Confirmation

There are two main reasons why a client would be put on what is called dealer confirmation. To explain them I will have to briefly delve into the way our dealing desk operates.

To remain market neutral, we aggregate our order flow--meaning we match buyers and sellers internally--and then offset our "book" of orders with a bank on the level if we are net long or net short as a firm. Thus, in the end, we aim to take no positions in the market and thus minimize our exposure to the fluctuations of the market.

Scalping

If a client known as a scalper is simply trying to trade very short term (where he or she is in and out of trades within minutes), he is effectively making it very difficult for FXCM to offset its books. Effectively, most trades this client places are not able to be offset internally and must be offset with a bank, which takes a certain amount of time to do. By the time the trade has been offset, the trader may have already turned around and closed out the position, forcing FXCM to return to the level and attempt to offset again at what are hopefully still market prices.

Thus, when someone trades very short term with large size, the dealing desk must constantly offset those trades with a bank, even though by the time they do so, the trader has often closed out their position. To continue to allow the "candy-coated" conditions our 50,000 traders enjoy--fixed spreads, guaranteed execution of stops and limits under normal market conditions, and fills at the price shown on market orders--the dealing desk must confirm the entry price for traders who are holding their trades for minutes at a time. To accomplish this, dealers periodically scan the market to identify scalping behavior, and then begin confirming market prices for scalping traders.

Confirmation

In order to confirm the price at which a trader is trying to enter the market, our dealers will double-check market prices those orders prior to placing them. If the price requested is available, they will place the order. If the price is no longer available, the dealer will requote the trader and offer the trader an opportunity to confirm or reject the new price within 7 seconds. This is a very labor-intensive way of doing business, which is why we created an alternative that would meet scalpers' needs (see below).

Picking

The second type of trader who would be placed on dealer on confirmation is called a picker, meaning someone who intentionally and maliciously attempts to take advantage of technological inefficiencies to "pick off" FXCM's prices. Pickers will try to place orders in, for example rising markets so that they have a trade executed at a lower price than the current market price once their trade reaches the dealing desk.

Because this type of trader is trying to place an order at an off-market price, the dealers must confirm that the price exists prior to processing the order. If the price does exist, the trader will be filled at that price. If it does not, the trader will be requoted and given the opportunity to enter at a different price for a period of 7 seconds.
Stop, entry, and limit orders will still be executed automatically even for traders on dealer confirmation

Alternatives--PropFX

As has already been pointed out, the option available to a trader wanting to trade either of these strategies is to use PropFX, the professional level platform designed for scalpers, pickers, and any large trader who desires tighter spreads, anonymity, no requotes, and the ability to execute large size directly with banks. The platform also shows market depth. Visit the platform's site at www.propfx.com for more information.

I hope this helps. Comments are welcome.

The idea that you're providing education so that traders are more profitable is amusing. It might be more believable if you were giving it away to customers but you aren't, you're charging hundreds of dollars. How about addressing spikes, proprietary feeds to clients and taking out client's stops. We're all ears.

 

[limitdown]

Quote from alekx:

Anybody else have problems with <b>FXTrader.net</b>?

I can't get my money out of them, all emails are ignored.

Anybody else traded with them?

what is it with these firms that think they can withhold returning people's monies?

AB Watley, Onsite Traders, Hold, Broadway Trading, Rush Trading and other firms?

Where are the moderators, Investigators and Compliance Officers on these boards?

Where are the Regulators?

Or, is it just that any person can set up as a firm, and then play these same cheap games and withhold monies?

Let's all get into the brokerage and futures business and then wait for the non-existent regulators to never come calling, and when they do, just ignore them, just like these firms do.

 

[Chood]

Mathemagician,

Your post is an excellent and succinct explanation of the reasons why fx retailers are not trustworthy. The rationale incentives at work -- none of which operate in favor of the retailers' customers -- are simply too powerful. The retailers exploit and trade against their customers because (1) they can, and (2) that's where the money is made. Confirmation of those facts come when, as here, a fx retailer is caught out and found out by an excuse which is implausible.

Quote from Mathemagician:

You can't be possibly be saying this with a straight face, can you?

You are effectively acknowledging that FXCM's prices which are set by FXCM differ materially (i.e. exploitably) from the prevailing price available on a free exchange, and that this difference exists for the exclusive benefit of FXCM. Anyone else who attempts to exploit this difference is labeled "malicious" and a "picker" and their behavior will not be tolerated.

This attitude is precisely the reason I will never trade with any entity which both sets the prices and takes the other side of my positions. FX Dealers not only do both of these things, but they also have access to my open orders and custody of my funds. Hardly a fair and equitable trading environment!

M

Of course, you gotta feel this retailer's pain, if just a little. How'd you like it if, after you've troubled yourself to create a beautifully rigged game, those malicious mini-account holders dare to snipe the quotes you push to your customers' PCs? Outrageous. Re-quote 'em all.

 

[FXCMFXCM]

Quote from Mathemagician:

You can't be possibly be saying this with a straight face, can you?

You are effectively acknowledging that FXCM's prices which are set by FXCM differ materially (i.e. exploitably) from the prevailing price available on a free exchange, and that this difference exists for the exclusive benefit of FXCM. Anyone else who attempts to exploit this difference is labeled "malicious" and a "picker" and their behavior will not be tolerated.

This attitude is precisely the reason I will never trade with any entity which both sets the prices and takes the other side of my positions. FX Dealers not only do both of these things, but they also have access to my open orders and custody of my funds. Hardly a fair and equitable trading environment!

M

I am a representative of FXCM. I appreciate your response and I hope I can clarify a few things.

First of all, FXCM's prices are not "set" by FXCM, in the sense that FXCM's system takes prices from up to 14 interbank dealers and quotes a price with the same median as the prices bid and offered by these top-tier banks. In other words, the aim of FXCM's prices is to precisely mimic the "free market."

Prices constantly fluctuate, and as a result, placing market orders in most markets results in lack of price certainty. In placing a market order to buy an individual equity, for example, one usually expects to be filled at a less favorable price. Hence the nearly exclusive use of limit and stop-limit order by sophisticated equities traders.

FXCM, however, aims to create a marketplace where traders can be filled at the exact prices shown on their trading stations at the time they place the orders. FXCM desires that traders never enter a trade without first confirming the price of that entry. Under normal market conditions, FXCM executes market orders at the exact price specified.

I will clarify how this works with an example. Suppose that a trader sees a market for EUR/USD at 1.2050/53 and places a market order to buy EUR/USD. That order is sent electronically to FXCM's servers, a process that usually takes a fraction of a second. When the order reaches FXCM's servers, suppose the market has moved up to 1.2051/54.

FXCM now has three choices. 1.) FXCM may execute the order at 1.2053, which is favorable for the customer as it is below the current market. 2.) FXCM can notify the trader that the market price no longer exists and offer another price. 3.) FXCM may fill the trader at 1.2054, which is less favorable from the trader's perspective despite its being the true market price.

To prevent constant requotes and "market has moved" messages, FXCM's system opts for choice 1 provided that the market has not moved substantially from the market price at the time the trade was placed. If the market has moved substantially, the trader will receive a "market has moved" message and will have the option of re-entering the trade (choice 2). FXCM maintains a policy of not opting for choice 3; in other words, FXCM chooses not to fill market orders at a price other than the price specified.

Now, to return to "picking." A picker views multiple price feeds, identifies a fast-moving market, and places a market order at a time when it is likely he will be able to buy for less or sell for more than the current market. He or she hopes that by the time the market order to buy reaches FXCM, the market will have moved higher. Knowing that FXCM will not fill the order at a different price, the trader hopes to enter within the allowable band and eliminate part or all of the spread.

Notice that this represents an attempt to profit from the Internet's inability to function instantaneously. It takes time--albeit fractions of seconds--for prices to travel to a trader's screen, and a picker hopes to buy at a price that is no longer the market price due to the "allowable band" built into FXCM's system.

As I stated in my previous post, a trader's alternative is to execute directly with interbank dealers, never experience requotes, and trade in a market that is not candy-coated. If a trader desires to pick off his or her market maker, it is FXCM's policy that he do so in the "true" market, not the sugar-coated market represented by FXCM's fixed spreads and no-slippage policy except under extraordinary market conditions. This alternative is in the form of PropFX (www.propfx.com).

Keep in mind that the vast majority of retail traders prefer the price certainty of fixed spreads and the ability to confidently place market orders. That is why FXCM's system operates the way it does (see above). PropFX is a system for traders who prefer the true market with no price certainty, fluctuating spreads, partial fills, and no requotes.

Finally, as to the issue of FXCM having access to open orders, PropFX operates such that traders are able to store stops, limits, and entry orders on their personal computers (not on a remote server) until the time the orders are activated by the market price hitting a specified level. This entirely negates the argument of "stop-hunting."

As always, comments are welcome and I will do my best to respond to them in a timely fashion.

 

[Lon Eagle]

Can you please respond to my very specific question from yesterday and explain FXCM actions please?

For instance it directly contravenes what you say above about FXCM not setting the prices. I can assure you not one single bank in August 2004 quoted a lower euro dollar rate after the figures than before. What you have siad in your opening paragraph in the psot before this is therefore a blatant lie.