# Why do some Forex brokers have more profitable traders than others?



## NickF (10 July 2016)

Based on the reports found here: 

http://www.financemagnates.com/fore...-profitability-report-shows-improved-trading/

and 

http://www.fxtradingrevolution.com/...ing-what-forex-brokers-never-want-you-to-know

I wonder if any of you tested the same strategy over the same period with different brokers. It would be very interesting to see, in case I make a strategy that I trust, to run it in an identical manner with different brokers and see if some brokers are better (at least for a particular strategy) than others. Some brokers accept accounts of $1000 and lots of 0.01 so it would not be that much of a risk.


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## DeepState (10 July 2016)

NickF said:


> Based on the reports found here:
> 
> http://www.financemagnates.com/fore...-profitability-report-shows-improved-trading/
> 
> ...




If you ran the same strategy but one broker offers lower fees (commission, spread, admin, financing...) than another, your strategy outcomes will differ.  Check the fees, it will explain most of it.


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## minwa (10 July 2016)

2 obvious reasons:

-Higher minimum requirements to open accounts means traders are more capitalized to reach profitability before blowing out.
-Bucket shops make the market and trade against you, of course you are going to get ripped on spreads. Real traders avoid these brokers.

You will definitely get different results on same strategy on different brokers, especially intraday trading. Their demo and real money live will also yield you different results. The brokers that allows you to open account with $1000 are mostly all bucket shops.


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## NickF (10 July 2016)

DeepState said:


> If you ran the same strategy but one broker offers lower fees (commission, spread, admin, financing...) than another, your strategy outcomes will differ.  Check the fees, it will explain most of it.




Thanks DS,

Does it all reduces only to fees? Are the fees so different that they affect so significantly the percentage of winners/losers? If the fees are not that different, it would mean the line between winners and losers is very thin, or the profits of the majority are really modest.

Nice to hear from you again 

Nick


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## DeepState (10 July 2016)

NickF said:


> Thanks DS,
> 
> Does it all reduces only to fees? Are the fees so different that they affect so significantly the percentage of winners/losers? If the fees are not that different, it would mean the line between winners and losers is very thin, or the profits of the majority are really modest.
> 
> ...




Nick, my friend, it's been too long.  Hope your rhino hide has not been taking a beating.

It's likely a little more than fees.  For example, larger account minimums are associated with lower fees.  So, maybe, larger account balance holders do better than smaller account balance holders.  That's a maybe.

There only needs to be a very small difference in fees to generate these types of results.  I would say that fees are responsible for much of this difference.  But not all.  Your surest gains are to incur less expenses (subject to credit risk).  So finding the least expensive non bucket-shop would be the first step in trading.

The guys around here would know where to go.  I plan on leaving the Forex stuff via CFD, ECN and going to futures.  Much more transparent in ways which are important to me.


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## NickF (10 July 2016)

minwa said:


> 2 obvious reasons:
> 
> -Higher minimum requirements to open accounts means traders are more capitalized to reach profitability before blowing out.
> -Bucket shops make the market and trade against you, of course you are going to get ripped on spreads. Real traders avoid these brokers.
> ...




Hm, I opened my account with FXCM with only $2000 and despite I pay no fees per transaction (only spreads), I think (hope) I am dealing through a NDD (no dealing desk) broker. Or maybe I should be better off to change my account type and pay fees per trade?

Nick


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## DeepState (10 July 2016)

NickF said:


> Hm, I opened my account with FXCM with only $2000 and despite I pay no fees per transaction (only spreads), I think (hope) I am dealing through a NDD (no dealing desk) broker. Or maybe I should be better off to change my account type and pay fees per trade?
> 
> Nick




You need to figure out what the 'round trip cost' is and any admin fees are for your account size and trade size.  The admin fees are usually not published and embedded within their 'swap' costs.  All this is part of the BS way in which the FX retail brokers attempt to separate you and your face.


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## NickF (10 July 2016)

DeepState said:


> Nick, my friend, it's been too long.  Hope your rhino hide has not been taking a beating.
> 
> It's likely a little more than fees.  For example, larger account minimums are associated with lower fees.  So, maybe, larger account balance holders do better than smaller account balance holders.  That's a maybe.
> 
> ...




DS,

I am ranting quite a lot on my thread https://www.aussiestockforums.com/forums/showthread.php?t=29809. Been active on Forex almost daily since I started in April 2015, except for the times when I was too down or too scared to trade  Did my share of silly things, now I was just able to gamble my way to profit for 2016 only (but nobody know for how long I'll be in green).

I had no idea you were involved in Forex, you mentioned to me last time we talked that this is one of the most difficult ways to make money. It's nice to see you were up for a challenge and winning 

Maybe I will join you in the future(s), but I have no idea yet what that thing is. 

Nick


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## minwa (11 July 2016)

NickF said:


> I had no idea you were involved in Forex, you mentioned to me last time we talked that this is one of the most difficult ways to make money. It's nice to see you were up for a challenge and winning




Did DS mean FX specifically or trading in general ? I don't really how FX is any harder or easier than any other form of trading.


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## NickF (11 July 2016)

minwa said:


> Did DS mean FX specifically or trading in general ? I don't really how FX is any harder or easier than any other form of trading.




As far as I remember, at the time I told him I start trading in Forex and he explained that with the share market, there is a positive trend over time, therefore making it slightly easier than Forex to stay profitable. Anyway, he could correct me in case I got it wrong.

Nick


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## Jason Rogers (16 July 2016)

NickF said:


> Some brokers accept accounts of $1000 and lots of 0.01 so it would not be that much of a risk.




Hi Nick,

While I posted this response for you in another thread, I thought others reading this thread might also be interested:

Unfortunately, those reports don't take into account the difference in account opening minimums between brokers. Therefore, what they end up showing is the correlation between account balance and profitability which is also confirmed by our research.

It's important to note that FXCM offers services to traders at all levels, including Mini accounts ($50 minimum), Standard accounts (2k minimum), Active Trader accounts (25k minimum) and multi-million dollar institutional (FXCM Pro) accounts. By contrast, the other broker you mentioned [for having the highest client profitability percentage on that report] has a minimum account opening balance of $10,000.

Below are stats from a DailyFX study on trader profitability in relation to account balance based on thousands of FXCM accounts. It showed that FXCM clients with an account balance of at least $10,000 (which is the minimum for the other broker you mentioned) had a profitability percentage of 43%.


​


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## Jason Rogers (16 July 2016)

NickF said:


> Hm, I opened my account with FXCM with only $2000 and despite I pay no fees per transaction (only spreads), I think (hope) I am dealing through a NDD (no dealing desk) broker. Or maybe I should be better off to change my account type and pay fees per trade?
> 
> Nick




To clarify, if you have a Standard account with FXCM Australia, we provide you with NDD execution on forex trades and DD execution on CFD trades. You trade on raw FX spreads and pay a separate commission. By contrast, your CFDs have no commissions as the spreads are all-inclusive.

FXCM also offers a Mini account type which allows a trader to open an account with as little as $50. On this account type, we provide DD execution on forex and CFD trades. Mini account spreads for forex and CFDs are all-inclusive with no commissions.


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## cogs (16 July 2016)

It appears that the most active forex threads here now seem to be shilling and advertising for FXCM.

Readers need to be aware of FXCM's massive debt commitment resulting from the SNB event. How do you think they will be generating revenue to pay off this debt?

http://www.financemagnates.com/fore...uarantee-of-deal-restructuring-with-leucadia/

I wouldn't mind so much, but Jason's passive shilling for the company should not be permitted, when the company could quite possibly be a in trouble, regardless of how he may sweet talk the great deals offered and best trade results.

After all, how brokers request you provide a reason why you want to make withdrawal, profits or losses.


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## Jason Rogers (21 July 2016)

cogs said:


> It appears that the most active forex threads here now seem to be shilling and advertising for FXCM.




Hi Cogs,

It's unfortunate you seem to have already made up your mind about FXCM, but for the benefit of others reading this thread, I will respond to your comments.



cogs said:


> Readers need to be aware of FXCM's massive debt commitment resulting from the SNB event. How do you think they will be generating revenue to pay off this debt?




The key point to understand is the terms of our loan from Leucadia impact FXCM shareholders, not FXCM account holders. Our CEO Drew Niv covered this in a recent interview with Profit & Loss Magazine:

*"Financially, we lost $300 million and then we got $300 million from Leucadia, so by Monday 19th of January, the company was fine in terms of balance sheet. Yes, because we’re a public venue you can see that our stock is a fraction of what it was, but people need to understand that the size of the pie hasn’t changed, it’s just that the ownership of that pie has. So the stock implies that the legacy shareholders of FXCM only own a small piece of the firm and Leucadia owns a much bigger piece, although the final determination on that will be made later this year once we’ve divested the assets we’re selling. This is about the economics to the owners of the firm, it has nothing to do with customers."*​

Despite the events of 15 January 2015, FXCM's capitalization remains at levels similar to before the SNB flash crash. As of May 6, 2016, the minimum regulatory capital requirement for our operations is $60 million. FXCM however, has regulatory capital of $167 million, a surplus of $107.2 million. Our clients appreciate this fact which is why the latest financial data from the CFTC show traders continue to have more money on deposit with FXCM than any other US-regulated forex broker.*

​

Furthermore, we have always stated our plan is to pay back the loan with proceeds from the sale of non-core assets.

​



cogs said:


> After all, how brokers request you provide a reason why you want to make withdrawal, profits or losses.




While there is a field on our online withdrawal form for you to provide a reason for your withdrawal, this section is entirely optional. FXCM uses this information to get feedback on how we can improve our services for our clients. 



_* The stats above only show the amount of client deposits with our US entity. FXCM also has trading entities regulated in Europe and Australia. As of May 2016, our global customer equity totaled $633.2 million worldwide._


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## CanOz (21 July 2016)

I'd suggest if you're with FXCM, or any broker for that matter, you keep the ticker symbols LUK and FXCM on your phone....

Jason, on another topic....do you know if there is any way to get the Sentiment Index into Ninjatrader?


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## cogs (21 July 2016)

> It's unfortunate you seem to have already made up your mind about FXCM, but for the benefit of others reading this thread, I will respond to your comments.



Hi Jason, 
It's not a matter of me having 'made up my mind about FXCM', as they have served me well in recent times, it's your practice on how you operate on forums in not participating from a traders point of view, not sharing live trades etc. but only for a passive sales pitch. Unfortunately Aussie Stock Forums doesn't have a controlled commercial section where you should be posting.

FXCM have quite a checkered history, the SNB event was only the most recent. Events such as the 2011, 2014 slippage events  which is why I guess you focus heavily on the 'positive slippage' FXCM now can provide with your postings. http://www.financemagnates.com/fore...-settlement-with-fca-for-asymmetric-slippage/
http://www.financemagnates.com/fore...e-malpractices-fxcm-will-credit-clients-back/
Maybe it's time for a revamp and name change. 

Really people can make up their own mind, and I wouldn't normally be bothered with such shilling, but personally I am too familiar with brokers sales pitches, and passive angles aimed at retail traders, and broker side practices that are adjusted after their clients become more profitable, and I have a little spare time. 

I am personally very happy with my current broker having been with them for well over 10 years. My posting on a public forum is only to converse with any newbie or current retail traders to be aware of the big picture, share trade ideas, and trades taken, as the moderators are quite relaxed here.

Seems you have just shilled again, but that's not a problem on this forum.


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## cynic (22 July 2016)

cogs said:


> Hi Jason,
> It's not a matter of me having 'made up my mind about FXCM', as they have served me well in recent times, it's your practice on how you operate on forums in not participating from a traders point of view, not sharing live trades etc. but only for a passive sales pitch. Unfortunately Aussie Stock Forums doesn't have a controlled commercial section where you should be posting.
> ...




I largely agree that people need to be aware that, a principal of a business concern will, likely be, principally concerned with the interests of that business, and it is prudent to entertain any proferred representations accordingly.

Notwithstanding, the aforesaid, I do consider some of Jason's offerings on platform functionality,representations on significant events etc., worthwhile, and hope that he continues to participate, and that some competing brokers/providers start joining in.

I do, however, question the wisdom of tailoring advice to a specific client, and then mentoring him  or her via a public forum, as such actions could very easily backfire.

One recent post in another thread, when viewed in isolation to another poster's voluntary disclosures, could easily be misinterpreted (or perhaps even correctly interpreted) as a flagrant breach of the privacy act.


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## Jason Rogers (22 July 2016)

CanOz said:


> Jason, on another topic....do you know if there is any way to get the Sentiment Index into Ninjatrader?




Hi CanOz,

Real-time Speculative Sentiment Index data are currently only available on Trading Station Desktop charts (Marketscope), though FXCM developers are currently working to create an SSI indicator for MT4. While there is no way to load real-time SSI data on NinjaTrader at this time, you can load historical SSI data onto the platform in one of two ways:


Import data from Trading Station Desktop. To do this you must add the free Speculative Sentiment Index indicator from FXCM Apps to your chart, and go to File > Export to Excel.
Import data from the zip files available in the SSI section of DailyFX PLUS.

The first method will give you access recent historical data, while the second method is for older historical data.


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## CanOz (22 July 2016)

Jason Rogers said:


> Hi CanOz,
> 
> Real-time Speculative Sentiment Index data are currently only available on Trading Station Desktop charts (Marketscope), though FXCM developers are currently working to create an SSI indicator for MT4. While there is no way to load real-time SSI data on NinjaTrader at this time, you can load historical SSI data onto the platform in one of two ways:
> 
> ...




Thanks mate, i'll add it to my too long 'to do' list....


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## Jason Rogers (22 July 2016)

cogs said:


> Hi Jason,
> It's not a matter of me having 'made up my mind about FXCM', as they have served me well in recent times




I'm glad to hear that, Cogs 



cogs said:


> it's your practice on how you operate on forums in not participating from a traders point of view, not sharing live trades etc. but only for a passive sales pitch. Unfortunately Aussie Stock Forums doesn't have a controlled commercial section where you should be posting.




As you noted, there is a not a specific section here where I can share my trade ideas as I do on some other forums. It's also worth noting that since I'm an FXCM representative, there are limitations to how of my personal trading I can discuss publicly. That said, I do trade forex as I'd mentioned to you in our previous discussion: https://www.aussiestockforums.com/forums/showthread.php?t=29809&p=912962&viewfull=1#post912962



cogs said:


> Seems you have just shilled again, but that's not a problem on this forum.




It's not my intention to intrude. This particular discussion thread began with a question about client profitability percentages at different brokers. I felt the studies conducted by our research team on this topic in relation to account size could provide some additional insight to the conversation.



cogs said:


> FXCM have quite a checkered history, the SNB event was only the most recent. Events such as the 2011, 2014 slippage events  which is why I guess you focus heavily on the 'positive slippage' FXCM now can provide with your postings. http://www.financemagnates.com/forex...tric-slippage/
> http://www.financemagnates.com/forex...-clients-back/
> Maybe it's time for a revamp and name change.




As you said yourself, FXCM has served you well in recent times. But since you raised the question, allow me to respond.

It's important to keep in mind FXCM's age and size relative to other forex brokerages. When FXCM was founded in 1999, we were one of the pioneers in what is still a relatively young and quickly evolving industry. As an industry leader regulated in multiple countries (while some brokerages are regulated in only one country or none at all), FXCM is subject to a greater level of scrutiny than smaller and less-regulated forex firms.

The links you provided are examples of this. FXCM is one of the few ASIC-regulated forex brokers that's also regulated by the NFA (US) and FCA (UK). We believe this additional accountability benefits our clients. That's not to excuse previous regulatory actions, but rather to emphasize how we actively work with our regulators to resolve issues and ensure the best trading environment possible for our clients. 

As noted in the links you provided, FXCM reimbursed current and former clients in full for positive slippage that was not passed on prior to 2010. Furthermore, the changes we made to made to our platform back then mean FXCM is now one of the only firms in the industry that not only passes on positive slippage (while some brokers requote their clients instead) but also publishes execution statistics proving this: http://bit.ly/1qLierb

This is another reason why so many traders continue to choose FXCM over other forex brokers as mentioned in my previous post.


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## Jason Rogers (22 July 2016)

CanOz said:


> Thanks mate, i'll add it to my too long 'to do' list....




No worries. I'll let you know if an SSI indicator for NinjaTrader becomes available.


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