Hello, I'm a stock trader that is considering adding Futures (ES & NQ especially) to my arsenal. I found a web site that very specifically advertises commission free Futures trading. It's called "Charter FX" - http://www.charterfx.com/ I can't figure out if this is a scam or what - does anyone have any experience with this company? How would they make money? some kind of liquidity rebates? Any help appreciated. Paul
From their FAQ page... Charter FX "Are there any fees or commissions? No. Trading with CFX is commission free, and there are no account maintenance charges. The cost of carry, however, is calculated daily on all positions at 5PM EST as per the rates in the "Currency Reference Rates" window. " What is "cost of carry"? Thanks, Paul
Neither Charter Capital Corporation, Charter FX, nor CFX are currently registered with the NFA as an IB or FCM. They are an offshore corporation engaged in the business of facilitating the trading of Contracts for Difference or CFDs on, among other things, futures. In essence, they appear to be an off-exchange, offshore, unregulated betting house as far as futures are concerned. Given the state of regulation these days, Iâm not sure if that is good or bad. Be aware, though, that in such a situation you are solely dependent upon the financial state of the company, without the benefit of oversight, and at the mercy of the moral character of its principles. In case of illegal activity, you will receive no regulatory recompense. slapshot: âWhat is "cost of carry"â? I suspect that this is a daily interest charge on open positions. âHow would they make moneyâ? If you accept that a high percentage of traders lose money consistently it wouldnât be difficult to envision a company whose business was based upon taking the other side of all its clients trades and thus, dependent upon the number of clientele, generating a substantial income. I am aware of such an operation that was closed down by the CFTC and NFA here in the US. After the closure, one of the desk personnel commented on how easy it was for the company to generate income solely based on trading against its clientele in light of the fact that almost all its account holders lost money regularly. This income was apart from additional moneys acquired from commissions and interest charges. There were always new clients opening accounts to feed the coffers and the payouts to the minority of mildly profitable traders were easily offset by the gains from the trading activities of the less fortunate traders. Those few traders whose winnings increased substantially were easily persuaded to move to another broker through a highly sophisticated tactic called âpoor serviceâ.
slapshot, Stay clear of these operations. You get what you pay for, and you don't want to deal with uncertainty. There are plenty of reputable brokers that charge around $5.00 a round-trip per contract. Stick with the mainstream and you'll have more recourse for any problems you encounter. Deal with some company that nobody else deals with and you'll be left in the cold if they decided to just close up shop and disappear. Don't let yourself get scammed. The company may be legit, but if it was so great, just ask yourself, "why isn't everyone else using them?" Caveat Emperor
CFD's work like forex- there's no 'commission' per se, but they'll give you extra wide spreads, so you end up getting jacked alot more than you would with a real futures broker.
Exack attack lee. Also, if you follow their quotes, they won't necessarily be the same as another firm's quotes. Apparently they make their own markets in the wide, undersea world of FOREX, according to thier needs at the moment, presumably within a very wide 'real' market.