Proposed NFA Capital Requirement

Caveman Forex Challenge: Week One

Week one of the Caveman Forex Challenge is in the books. Our friendly neighborhood Neanderthals gave out 12 free trades last Wednesday. It was not one of Caveman’s better weeks according to their own grid which shows them losing -5 pips overall on all their trades. However, due to risk/reward ratios and a slightly different price feed that resulted in the Savior making money on a trade the Cavemen lost on we made a $348.39 profit overall in our demo account as four trades went in our direction and four trades went in the other direction.

Tonight a new batch of trades will be published. You can find them here if you wish to play along: http://www.cavemanforex.com/WednesdaysFreeForexPicks.html

CFTC Update: I have not heard anything yet about the new forex dealer rules. However, CFTC should be releasing their net capital report this week. Stay Tuned.
 
Quote from forexsavior:

Correction: Varengold and Finex

Last year Finex was investigated by the SFBC in Switzerland, however, they were not closed for fraud as was indicated in a post titled “The Dead Pool Graveyard.” It appears that Finex was bought out by Varengold FX thus bringing the investigation to a close. Details of the merger can be found here:

http://download.varengold.com/varengold.de/download/VG-Finex_Press_Release-us_customer.pdf

The Savior regrets the error.
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LOL, "bought out" is a loose term here, don't you agree?

IOW, same company / gig / scam as FINEX and TradexFX before. I think they now refer to themselves as "Boston Trading and Research" or something like that.
 
Quote from ssblack:

LOL, "bought out" is a loose term here, don't you agree?

IOW, same company / gig / scam as FINEX and TradexFX before. I think they now refer to themselves as "Boston Trading and Research" or something like that.
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agreed. finex was dodgy no matter how you slice it but in fairness to them at least they closed up shop in an honorable fashion.
 
CFTC Net Capital Report Update

The new net capital numbers are out. These numbers are more important than ever due to the new law requiring all forex dealers have $10 million in adjusted net capital by the end of September and $20 million by May 2009. Here is the link to access the report:
http://www.cftc.gov/stellent/groups/public/@financialdataforfcms/documents/file/fcmdata0408.pdf

The following firms have net capital below $10 million

Advanced Markets $5,041,000
Bacera $5,370,000
MG Financial $5,886,000
CMC $7,089,000
Forex Club $7,562,000
Easy Forex $7,741,000
Hotspot $7,783,000
Friedberg Mercantile $8,053,000
MB Trading $8,381,000
Ikon $9,418,000

In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $41,000 above the current law! That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.

The following firms have net capital below $20 million

GFS Forex $11,376,000
Alpari $11, 766,000
IFX $12,362,000
ODL $12,995,000
CMS Forex $14,085,000
I Trade FX $16,054,000
FX Solutions $17,628,000
PFG $19,369,000

The following firms have net capital above $20 million

Interbank FX $21,367,000
GFT Forex $64,288,000
Gain Capital $66,314,000
FXCM $73,603,000
Rosenthal Collins $76,571,000
Oanda $163,136,000

As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law.
 
The Gray School of Irish Dance

The receiver for FXLQ released their latest report to the court and it is chock full of eye popping revelations. http://www.robbevans.com/pdf/forexlqreport02.pdf

Revelation Number One: the Estate is short two million dollars.

Revelation Number Two: the receiver was able to further confirm that FXLQ had used a fake bond to prop up their adjusted net capital.

Revelation Number Three: FXLQ had been violating their adjusted net capital requirement as early as October of 2006.

Revelation Number Four: FXLQ paid over a quarter million dollars out to the Gray School of Irish Dance.

WTF?

Under Tab 30 is a schedule of receipts totaling $251,500 that the Gray School of Irish Dance received from FXLQ, FX ARB, Robert Gray, TMA, and Forexify between April 21, 2006 and December 24, 2007. As the source of all of these funds was FXLQ, it is perplexing why payments to the Gray School of Irish Dance were routed through other entities.
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Talk about getting your priorities screwed up. Here is a company that continually cannot meet its adjusted net capital requirement sending out huge chunks of change to what appears to be a dance school in CT? http://www.grayschool.com/welcome.htm

Hey I love Riverdance as much as the next Irishman but you’d think you would make sure your books are in order before cutting cheques to the tippy toe jumping set.

The good news for customers is that the receiver is recommending customers being fully reimbursed before other creditors. This apparently includes Interbank FX who is owed a whopping $10 million. Judging from IBFX’s plummeting net capital (almost below $20 million) they sure could use the dough.

Expect the FXLQ saga to last through the summer as the receiver continues to dig through mounds and mounds of paperwork, unexplained expenses and dodgy offshore bank accounts…
 
Tradeview Throws in the Towel

No Mas! No Mas! Like a bloody and battered Roberto Duran the folks over at Rosenthal Collins are giving up on MT4. This weekend they dropped a bombshell on their clients:
http://www.forexfactory.com/showthread.php?t=92624

Dear Valued Client,

From day one, Tradeview has worked to offer clients optimum trading solutions, by offering the familiar Metatrader 4 platform with sophisticated enhancements to the software. Our dedication has been to provide the latest trading technology by offering clients an unprecedented link to the biggest liquidity pools in the world. In doing so, we cultivated a new kind of FCM - one with a focus on innovation, and a relentless devotion to the best technology.

By creating our systems with this focus, we gained the ability to make fast changes in the most robust 24 hour market in the world. Every Tradeview client can rest assured that they will have access to the best possible solutions as soon as they become available.

We founded our partnership with Ikon GM based on our need for aggressive technical restructuring. Supporting 24 hour-a-day trading requires intensive support, and most FCMs are forced to outsource their technology needs. By joining Ikon GM, we are able to eliminate 3rd party solutions by utilizing their in-house technology company which specializes in network trading, and utilizing the latest market innovations. For our clients, this means we have direct control over our platform, and the ability to develop and test more advanced solutions in response to ongoing demand.

In addition to maintaining the best trading solutions, Ikon GM has a distinguished regulatory history. Since the firm?s original inception in 1999, Ikon Global Markets has maintained an exceptional record, which is an ethical priority we share.

By combining forces, Tradeview will continue to improve upon the promise we make to our clients: Providing optimum support, execution, and trading solutions that are unrivaled in the industry. If you have any further questions, feel free to contact us at our RCG office or our new office at Ikon Global Markets.

RCG Office: 212-437-1870
Ikon Office: 212-482-8275

Regards,

The Tradeview Team
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Anyone who spends time on the bulletin boards has gotten to know Tradeview Forex as they have spent gobs of money advertising their wares. Yet it appears they were never able to get MT4 to work proficiently and as such are simply walking away for the whole failed experiment. One Tradeview customer on the forex factory thread referenced above states:

Well, considering what it has been like trading with Tradeview's MT4 platform all last week, a change for the better was needed. There have been numerous outtages to put up with and not to mention requotes during normal market conditions, invalid price messages, and not to mention when you enter an order the order does not go through and instead an "order accepted" message pops up and with no confirmed order. The message would sit there forever so one would have to cancel it and try again, but then one would get trade text is busy message. To circumvent around that you would have to close down the platform and re-open it and try all over again. That would cost you seconds and many pips. One night I could not close any orders and had to phone them in to close. The IT department has had their hands full rebooting the server and trying to fix the problems.

Tradeview says there were numerous problems related to hard coding from their 3rd party vendor for the STP technology. Problems that they could not get support for to fix.
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While Tradeview should be commended for knowing when to call it quits I must take issue with this notion that Ikon has a "distinguished regulatory history."

Last fall Ikon merged with Royal Forex Trading, which had a poor regulatory record and was sanctioned by the NFA right before they gave up their FCM license due to the fact they did not have the necessary capital to stay in business.

Second, both of Ikon's principals were former principals of Coes FX. Right after they left Coes FX became the subject of numerous regulatory actions by both the NFA and CFTC resulting in a quarter million dollar fraud settlement and the closure of the firm.
http://www.cftc.gov/newsroom/enforcementpressreleases/2006/pr5215-06.html

Third, sources have informed me that many of the clients that Ikon will be receiving from Tradeview were formerly the clients of One World Capital. One World was the poster child for undercapitalization and blew up last year just as the $5 million capital requirement was kicking in.

In short, Ikon seems to stick its fingers in an awful lot of cookie jars and it they aren't careful they may get their pudgy little digits stuck in one soon.

Finally, they are $10 million below the $20 million capital requirement set to kick in next spring.

So to those MT4 traders out there who chose Tradeview Forex because they were well capitalized I say buyer beware. Ikon is not Rosenthal Collins. It may be time for you to shop around again...
 
Easy Forex Exposed

Or so this website claims: www.easy-forex-warning.com

You’ll remember earlier this year the Savior wrote up a story on Easy Forex after an Israeli news broadcaster ran an expose on them: http://www.forexfactory.com/showpost.php?p=1723203&postcount=525

In that story informants claimed that as introducing agents they only made money if their clients lost money. Well, in this soon to be published book from the gang at easy-forex-warning they claim this is how introducing agents are compensated:

In order to ensure it's wining against their clients, Easy Forex rewards their employees and people working for it outside the company, according to the amount deposited minus the withdrawals of their clients.

To demonstrate this method lets take an example.
1. An Easy-Forex agent convinces a person to open an account at Easy-Forex to trade the account by himself or to authorize an account manager to trade the account for him
2. The customer deposits $100,000
3. The agent is rewarded a certain percentage from this deposition. For the discussion let's assume 10%. That is, the agent is rewarded $10,000.
4. The customer trades the money in the account or someone else does it for him and after a while he withdraws the money. At this stage there are three possibilities:
a. The account is balanced. That is the account holds $100,000 that the customer withdraws. In this case the agent that brought this customer needs to pay Easy-Forex back the $10,000 he received for the deposted amount.
b. The account is drained. That is the customer lost all the money in the account. In this case the agent does not need to pay back Easy-Forex anything. In this case Easy Forex gets the reminder minus the money given to the agent.
c. The account gained relative to the opening time. Say, the account balance is now $200,000 and the customer withdraw all this money. In this case the agent needs to pay Easy-Forex the $10,000 they gave him and another $10,000 out of his own pocket.

What happens in practice is that they don’t charge the agent immediately. The agent's balance at Easy-Forex becomes now –$20,000, and next month he needs to recruit $200,000 before making any money. From any point of view this money comes from this agent pocket.

What Easy-Forex is telling their agent is that they are partners in the company: They tell them you will make money from the customers you bring only if the company will make money from the client, but you (the agent) will lose money from this customer if we, the company, will lose from him.
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It’s called the “Net Deposit Method” and I must say this is all new to me. If it is true it is downright sinister. In fact, one agent provides testimony at the website in which he describes how angry an agent would get if their customer actually started making money:
http://www.easy-forex-warning.com/_mgxroot/page_10755.html

“I saw people with clients that made money for many months. They use to give him such bad service. Answer unpleasantly… There was a way of life in the company, a way of life… when a client was making profit they use to shout, the son of a bitch, move away form here. The guy is making profit, he is destroying my account. He is destroying my salary. Fly from here, go to a different company. They gave him bad service to force him to move to a different company because it was on their expenses. This is a terrible thing. Now, at the end, it didn't matter what happened. I could not…. I, in the last Yom Kippur, and after talking to Rafi, I couldn't. This thing bothered me for a year or so. I don't know how I survived there one year or so.”
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All of these testimonials apparently are related to Easy Forex’s Israeli operation. But is this kind of stuff going on in America too? Easy Forex is registered with the NFA and to date they do not have any infractions on file with U.S. regulators. But then again the more and more checking I do on these companies the more apparent it is becoming to me that the NFA has only skimmed the surface of retail forex (the fact that Robert Gray’s fake $50 million bond went unnoticed for months by regulators is still flabbergasting to me.)

In any case Easy Forex deserves particular scrutiny from the trading public over their alleged market making activities. Traders should seriously consider trading only with Dealers that are not in the market making business. The evidence against them is really starting to pile up.
 
Cleaning up with the Cavemen

I have been pressed for time and thus the Caveman Challenge has floundered as a result. But the cavemen are coming off three straight winning weeks. The Savior misunderestimated the knuckles dragging, club wielding, forex tabulating Australopithecines churning out signals over at cavemanforex.com

While only a fool would judge a signal provider favorably after checking out only a handful of trades amongst hundreds I will admit these cavemen have proved they are far superior to the monkeys who worshipped that stone slab in the opening scene from a Space Odyssey 2000.

So the Savior retracts his dis-endorsement of cavemanforex. Judge them by their numbers, not their body hair and sloped foreheads…
 
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