New, Wondering about Brokers?

Discussion in 'Forex' started by GSD, Jul 13, 2012.

  1. GSD


    Hey I was just curious about brokers.
    If I open an account with FXCM are they my broker? Or I need to sign up with someone other than them?
    Any help would be appreciated I am new to all of this..
    Thanks in advance.
  2. Jason Rogers

    Jason Rogers ET Sponsor

    Hi GSD,

    First of all, welcome to the forum!

    To answer your question: Yes, if you open an account with FXCM, we would be your broker. You not have to sign up with someone else, because you can place your trades through FXCM. If you are new to forex trading, you might want to begin by trying a free demo:

    I am FXCM's Brand Ambassador here on Elite Trader. If you have more questions about FXCM, you're welcome to post them in the FXCM Discussion thread:

  3. hey Jason, I know FXCM is a market maker. Personally I prefer using an ECN. Could you explain the benefits of using a market maker as opposed to using an ECN?
  4. NoBias


    ECN vs. MM's

    ECN Broker list
    [Google Search provides many lists]

    Interactive Brokers offers Forex at a reasonable commission and good execution.
    [also with global acct your funds are not limited to "Forex" only]

    Since you are new, I may suggest Oanda due to the minimum acct required and the fact you can trade micro size to get better acquainted with Forex
    [Just be aware they have wide spreads and you may not want to use them for size]


    Also spend some time drilling down in Investopedia, there is a wealth of information available
  5. Close your account ASAP; Monday before you have breakfast. This is not a commentary on the firm you use. I know nothing about them. But if you need to ask "are they my broker" you need to study some before you enter this highly competitive business.

    You are dead meat until you educate yourself. And even then you may or may not be the prey!

  6. Jason Rogers

    Jason Rogers ET Sponsor

    Hi Oldtime,

    We use a No Dealing Desk forex execution model. When a client places an order with FXCM, we immediately offset the risk on the other side with one of our 10+ liquidity providers. Whether the client’s trade ends up as a profit or a loss has no impact on our bottom line since we're compensated through the pip markup which acts as a commission. You click here to see a short video that shows how this works in more detail:

  7. thanks, I watched both videos. So then, what is the difference between a non dealing desk and an ECN? Is there no difference other than one marks up the spread and the other charges a commission?
  8. Jason Rogers

    Jason Rogers ET Sponsor

    Hi Oldtime,

    I've seen the terms used interchangeably at times, but I've also seen use different brokers use the term ECN to mean different things. At FXCM, we use the term No Dealing Desk forex execution, because many forex traders are familiar with the term "dealing desk" from having traded with a dealing desk broker, and the meaning is unambiguous. NDD means that we don't have a dealing desk taking market positions on the other side of our client's forex trades. We immediately offset our client orders one-to-one with our liquidity providers.

    In regards to a spread markup vs commission, we've found that for simplicity, more of our clients like the spread markup option. That way, when they see their P/L on a trade go positive, they know they've already covered transaction costs and are making money. We actually offer an option to trade with commissions instead of a pip markup to Active Trader clients:

  9. stwh


    Hello Jason,

    I would like to pick the thread up from a year ago by asking you a straightforward question, i.e. is FXCM a market maker or ECN? It seems to me that your explanation below did not really touch on the key difference between MM and ECN but put more emphasis on the difference between NDD and ECN in terms of the business revenue model.

    As far as I understand it, a MM is the counterparty that stands to provide liquidity in all market conditions to its clients, albeit with wider spread or sometimes "dynamic spread adjustment" as is described by Oanda which is a market maker.

    On the contrary, an ECN does not guarantee execution of trade orders but pass them through to matching liquidity providers. Therefore, on average an ECN may end up charging less spread and/or commission but the risk of order non-fulfilment falls on clients' shoulders.

    If my understanding is correct and FXCM is a market maker as advertised, then your firm must therefore guarantee trade executions no matter what market condition is with the consequences of flexible spreads as oftern enountered. Is this correct? Can you please confirm?



  10. Jason Rogers

    Jason Rogers ET Sponsor

    Hi Stwh,

    Welcome to the forum :)

    FXCM now offers clients a choice between two types of forex execution: No Dealing Desk (NDD) and Dealing Desk. The execution you choose impacts your trading experience and spreads. While FXCM believes that NDD execution provides the best all-around trading experience, we also offer dealing desk execution as an option for traders whose primary concern is low spreads. Because we can create the prices on which you trade, FXCM's dealing desk execution option is able to offer spreads for FXCM's 12 most popular currency pairs that may be up to one pip lower than those provided by the No Dealing Desk (NDD) model.


    In regards to your question about trade execution, FXCM maintains a no re-quote policy. That means regardless of which execution model you choose, your orders will be filled based on available liquidity. FXCM aims to provide clients with the best execution available and to get all orders filled at the requested rate. However, there are times when, due to an increase in volatility or volume, orders may be subject to slippage. It's worth noting that slippage can be either positive or negative. Positive slippage is also referred to as price improvements. The stats below show that FXCM clients get price improvements on their orders just as frequently as negative slippage.


    Slippage most commonly occurs during fundamental news events or periods of limited liquidity. During periods such as these, your order type, quantity demanded, and specific order instructions can have an impact on the overall execution you receive. For example, when triggered, stop orders become market orders available for execution at the best available market price. Stop orders guarantee execution but do not guarantee a particular price. Therefore, stop orders may incur slippage depending on market conditions. On the other hand, limit orders guarantee price but do not guarantee execution. In cases where the liquidity pool is not large enough to fill a limit order, the order would not be executed but instead reset until the order can be filled.

    There are techniques you can use to maximize price improvements and minimize negative slippage.

    How To Maximize Positive Slippage - USE LIMIT AND LIMIT ENTRY ORDERS

    FXCM recommends opening and closing trades using limit and limit entry orders in most cases. The benefit to these order types is that you are guaranteed to receive your requested price or better without receiving negative slippage. Remember, that although limit orders guarantee price they do not guarantee execution making order types an important consideration in any trading decision.

    How to Minimize Negative Slippage - USE MARKET RANGE ORDER TYPES

    For example, when trading with market orders, FXCM recommends setting the order type to "market range" on our Trading Station platform to avoid potentially receiving negative slippage. A market range order type allows you to control the amount of slippage your order can receive when it executes allowing for price certainty (see image below).


    A market range of "X" pips assures that all or part of your order will be filled within a "X" pip range of the current market price ("X" pips above or "X" pips below) if liquidity is available.

    #10     May 24, 2013