class action against FXCM

Discussion in 'Forex Brokers' started by cking74, Aug 21, 2006.

  1. I don't know how fxcm handles orderflow, but the usual practice is that most of the small fx brokers, act as market makers, and try to profit off the spread by making retail pay wider spreads then what is available on the actual interbank market.

    This is the price retail pays to speculate using small amounts of funds and leverage. Most of all retail accounts end up loosing in the end secondary to:

    1) immense leverage
    2) volatility
    3) small stops/large stops

    Since these fx brokers use a 'representative market', if your making money on orders that last less then 1 minute, where round turn in/out, your most likely taking it away from the broker. Meaning if your scalping, and instinctually selling minute to minute waves, and buying minute to minute valleys, the broker can't offset fast enough for a profit, since initial orderflow will get matched with inhouse opposing orders first, and then offset in interbank.

    So there is a delay when this representative market is constructed. In volatile markets and it becomes even harder to offset this risk. Your order doesn't get sent to interbank in most instances.

    You can also get a bloomberg API, and game these Fx brokers, the API, quickly feeds the number of a popular report, and a deviation from the norm if its larger enough gets acted upon within milliseconds. Before the fx broker can represent the market in time. And people walk away with 20-40 pips or more within milliseconds. These fx brokers basically loose money to a faster system that arbs them, and cry fowl. They will confiscate profits, and close accounts. This problem could be avoided if they stopped being market makers. The stories abound. In Fx its the wild wild west. CME is working on a more refined FX system. So when it comes out, lot of these small brokers will be out.
     
    #51     Aug 26, 2007
  2. FXCM uses a no dealing desk model now, so they make money on trade volume as the orders get passed through to banks, but don't take the other side of the trades. A client who blows up their account on one overleveraged trade is bad for business. Spectre provided a good explanation of the challenge dealing desk firms face in offsetting orders for scalpers, but now that FXCM uses a no dealing desk model, FXCM prefers profitable short-term traders over profitable long-term traders, because they can make more profits on the greater volume.
     
    #52     Aug 26, 2007
  3. What a load of shit. FXCM appears to be a bucket shop like 80% of all retail Forex brokers.

    At this point, it is so well established that these shops can see your hand and that you are playing against them while they are providing the quotes, one needs to invoke the masochistic urge to explain why people still give away their money to these sharks. I have no sympathy whatsoever.


    It's all in the contract you sign and their asses are covered. Instead of wasting time dreaming about suing them, open a futures account and trade those until the legit exchanges come up with a forex product. If you don't have the money for this, work and save it up.
     
    #53     Aug 26, 2007
  4. LOL

    TIMMMAAYY!

    You'll only lose like 1.5% over 5 years. If you were to stick your cash under your mattress, inflation would eat it away slightly faster...

    But hey, at least by investing it with Timmay, you can help feed his entitlement complex brought on by rich parents that let him treat them like bitches!
     
    #54     Aug 26, 2007
  5. This is your allegation read from your complaint, not a fact that is ironclad or accepted by authorities.

    It is no more proof than firmly asserting the kind of hairspray you use.
     
    #55     Aug 26, 2007
  6. rock1968

    rock1968

    Totally agree. Just another trader who knows more about the legal system than his account. READ THE FINE PRINT and I also suggest learning what O-T-C means.
     
    #56     Aug 27, 2007
  7. That is exactly what the quote said.
    About proof, I invite FXCM traders to check its veracity by requesting the logs of their sessions (not just records of executed trades, which is what FXCM normally provides) and then judge by themselves.
     
    #57     Aug 28, 2007
  8. FXCM has always offset client trades in the interbank market however the way in which this takes place has changed in 2007. Prior to 2007 customer trades would go to the FXCM dealing desk which would then offset trades in the interbank market. In 2007 FXCM switched to what traders commonly refer to as a No Dealing Desk model whereby trades are sent directly to the interbank market without intervention by the FXCM dealing desk.

    Sincerely,

    David Waring
    Managing Director
    FX Business Development
    Forex Capital Markets LLC
    32 Old Slip, 10th Floor
    New York, NY 10005
    Tel (212) 897-7660
    Fax (212) 897-7669
    Email: dwaring@fxcm.com
     
    #58     Aug 28, 2007
  9. itrader911

    itrader911 Guest

    ???? :confused:
     
    #59     Sep 5, 2007

  10. greetings,

    with all due respect, could you explain how your "spread" is added if you send orders directly into the interbank market without intervention? your NDD model with the EUR/USD spread is primarily still at 3 pips, 2 pips flash on occasion--- the interbank spread is way less than this---obviously there is still intervention on your part--- please clarify.

    thanks,

    surf
     
    #60     Sep 5, 2007