Hello, There is a mass of critique on many brokers online (read: bucket shops, etc). I am looking for a trust-worthy broker to use as a US resident, that does not offer equities. I work at a bank that requires equities to be traded only through approved brokers but for FX & other products we can choose who we wish. I was looking at FXCM due to their java api, but I have found extensive critique out there. Due to FXCM advertising on CNBC I thought they were legitimate, but I do not have any interest in falling victim to a scam. Thank you in advance for any input, it is greatly appreciated.
As an update: I notice OandA charges $600/month for use of its API, while FXCM (appears) not to charge anything. Therefore, I should note that I plan to trade algorithmically using Java. This will hopefully guide responses. Thank you for any pointers.
You're going to find negative reviews of every broker, as well as many fake positive reviews. If you go by what you find online, you'll never settle on a broker... Just make sure the broker is well regulated, well established, and you can short list it from there. As for API trading... there are many ways to approach this but the best setup will depend on what you are trying to achieve by programming your own algos. Could you describe, generally, what your strategies will set out to accomplish? (ie, frequency of trades, latency requirements, analytic requirements..etc..)
I numbered your points to make it easier to respond. on 1 - yes i notice no matter who i look at, there is always a negative review. OandA i could not find any negative input, but then i saw the $600/month and this is too much to ask for me to begin at the moment. on 2 - FXCM appears well established, but also heavily critiqued. i suppose a firm cannot be around for as long as they have without catching some criticism. that being said, they are very large, and widely used (and a free api that allows Java). 3 - i will say as much as i can. due to working in finance, i am limited in my equity trading, and therefore use a broker without an API. Therefore without an API it is very difficult to trade more than once a day (at the open mostly), due to the data I am currently able to get. This being said I am trading approximately 1/5th of a universe of 30 names a day. For latency, the lower the better but i think that is a tough question to answer. trade frequency is also up in the air, but i would assume it plausible to trade a single name 5-10 times in a day (again, a total guess). On analytic requirements, i have all local libraries to generate signals etc. As of right now for me, it is really just having a data source and an API to throw trades against. Thanks for any additional input!
Well, it sounds like your API requirements are rather light.. which isn't to downplay your needs, just it sounds like a lot of other options might suit you without going the full API way. Is there something specific about Java you need? You could use any broker that does MetaTrader and use the native MT4 language to code strategies called MQL4. It's basically like Javascript with a few differences. You could then use the plug-in system within MQL4 to extend your script with C# or C++. Basically you code things that need extra speed in C++ or C#, compile it into a DLL, and call upon it within MQL4 when needed. Or, if you really want to do the coding part in Java, you could use a Java-MT4 bridge library... there are many free and paid ones out there. Though this is more of a hack and I'm not crazy about it. -or- If your whole idea is to write the code using only java and the API library, thus being able to run it on any platform, then you might want to look at brokers who do FIX instead of their own mix of an API messaging standard. At least then it's broker portable.. But then you get back to the problem of costs and options... I don't know many other brokers in the US who will do FIX or their own API without charging a monthly fee, have really steep deposit and volume requirements, or have spreads wide enough to make short term trading not so easy.
Yes you touch on my goal. Why java - I built a strategy that works quite nicely in Java. Some small tweaks, but more than would be needed to switch to C++ completely. C# is nice, but I do not have visual studio. It appears FXCM supports FIX protocol completely, and therefore I will develop with this in mind, and keep it generic enough that if i want to shed FXCM it will not be too painful.
FXCM is not illegitimate. They've been fined hard for doing shady stuff in the past, as most FX brokers have been. My critique of them is that their spreads are farily wide, and when I tried them I can't tell you the number of outstanding trades we missed by one or two pips...in some cases 1/10th of one pip. You don't have many choices. People seem to like Oanda, but their weird name throws me. I'd start with FXCM, and talk your broker down to a 1.3-1.5 pip spread on EUR/USD.....see how you like it before committing your total funding amount. GL!
Good luck with that... they won't budge on spread on standard accounts. If you ask them about it, even showing that you do volume, they'll suggest you go to their active trader platform, which will reduce the total cost a bit. The minimum deposit for AT is $50,000.. but they'll let you deposit as little as $5k so long as you turn at least $10MM a month is notional volume. If you push enough volume on top of that, they'll give you a commission break: Do half a billion a month in notional volume, and they'll cut a dollar from the RTL commission ($7 to $6 RTL.) Push a yard ($1billion) and they will cut it by another $2, down to $4 RTL. With a "typical" spread of 0.7 (as their site says) you'd be effectively paying 1.4 pips total cost out of the gate on EUR/USD, or 1.1 pips total cost if you push a billion dollars of volume. Though, this is 'typical' during the most liquid periods of the day, I've seen it float higher and it 'averages' a bit higher than 0.7 during the London and NYC sessions last I observed. So in perspective, you're paying for their API indirectly though the additional cost of trading and high volume requirement. Oanda might be $600 a month for the API (and I agree it's a little whacked) but their spread on EUR/USD during active sessions is 1-1.2 pips without any volume requirement. Put another way, let's say you do 50 million a month in volume: Assuming Oanda's average spread is 1.2 (it stays at 1pip flat during London NYC overlap session, but most other active sessions it's 1.2) your total P/L impact in spread costs is: $6,000 At FXCM, your standard account (2.3 pip average spread) would run you $11,500 And your Active Trader account (using example numbers above) would run you $7,000 So at that volume level, the $600 API fee you avoided would indirectly hit your P/L by a grand difference in cost. Of course, this is given 50MM in volume, as the number goes higher the difference increases, but lower and Oanda's API becomes more expensive. You gotta fit this to what you expect to push... if you're only going to push 20MM in volume, then AT would be better. This is why I suggested looking at FIX and being broker portable. If you ever consistently push 500MM a month, you're in a position of power to move your business. In all honesty, the $10MM to get the active trader account isn't hard to do for a day trader... so this would be the way to go should you choose FXCM. Of course, I have no idea how they tie AT into their API, that's a question for them.