NFA's Action Against Forex.com or Gain Capital

[cogs]

Gain established the following slippage parameters for the Virtual Dealer Plug-ln
used for its institutional server:
Delay: 1 second
Maximum Volume: 100 contracts
Maximum Losing Slippage: 20 pips
Maximum Profit Slippage: 3 pips
Maximum Profit Slippage Volume: 5 contracts

34. Like the retail server, the institutional server also limited profitable slippage
(slippage favorable to the customer) to five standard contracts while negative
slippage (slippage unfavorable to the customer) was allowed on order sizes up to
100 contracts by default (the maximum volume setting). However, unlike the
retail server, the institutional server had asymmetrical seftings for maximum
losing and maximum profit slippage and allowed for negative slippage up to 20
pips before the customer would be requoted. Therefore, customers were far
more likely to have their orders filled when there were large market movements
unfavorable to them as opposed to when they were favorable to them.
35. Customer orders on the institutional server were negatively affected by slippage
due to the "maximum profit slippage volume" setting (i.e., greater than five
standard contracts). From May 1, 2009 through July 31, 2009, customers
ordering greater than five standard contracts on the institutional server
experienced almost $100,000 in losses due to unfavorable slippage when the
market moved against them, but their orders were rejected when the market
moved in their favor resulting in them experiencing zero gains.

See attachment for more detail.

A**forex recently locked me out of trading when the market moved against me, then reactivated the trading option, I am interested to see what muscle F.O.S and ASIC have to sort these crooks out.

Quite ruthless practices by Gain though.

 

[TulipFX]

That is extremely shonky, but not unexpected. Traders do not need that kind of 'help' from our brokers when less then 10% are profitable as it is.

I had big problems at GoMarkets during rollover with spreads blowing out to in excess of 75 points at times. Stop losses inevitably were hit which caused me quite a bit of annoyance - especially as the company refused to accept any responsibility for the widening spreads. They were quite within their rights to refuse any corrective measures as the terms of service indemnify them against such platform instability.

So I packed up and moved to The Collective and I could not be happier with the platform or spreads. With my VPS getting under 30ms pings to their server this situation was probably the best and worst thing that occurred in my trading of 2010.

Which brokers do others use? How have you found them?

 

[SmellyTerror]

The Collective, eh? I'm too chicken to trade with 'em. They look great, but a bit... precarious. Hell, your post made me want to go have another poke around to refresh my memory, but their website is down. Not the best sign, even if it's the Silly Season.

They're stillcharging a monthly-fee, no added spread, no commission? I remember checking them out a while back, and by all accounts they're hell fast, have great spreads (seriously - GREAT spreads), but all from a PO box in Bum**** Idaho or something.

 

[TulipFX]

The Collective, eh? I'm too chicken to trade with 'em. They look great, but a bit... precarious. Hell, your post made me want to go have another poke around to refresh my memory, but their website is down. Not the best sign, even if it's the Silly Season.

They're stillcharging a monthly-fee, no added spread, no commission? I remember checking them out a while back, and by all accounts they're hell fast, have great spreads (seriously - GREAT spreads), but all from a PO box in Bum**** Idaho or something.

Yes, they are not your usual brokerage set up. They are not even a brokerage. To avoid NFA regulation they are a 'platform provider' rather then a brokerage. Avoiding NFA regulation is good in one way, they don't suffer the restrictions on trade, but also take themselves out of the resolution system NFA has (but as seen by first post - does that even work?).

The funds go into the common CollectiveFX pool at which ever liquidity provider you select (hotspot, currenx or the Bank (Citibank I think it is - its for the larger lot sizes, but higher spread traders). So your money is under the collective name at the liquidity places.

The transfer of funds in and out of your account is much slower then other brokers because of this, and the fact that The CollectiveFX is not set up as a brokerage for the masses. It is invite membership only. Either a long wait, or an invitation is needed to join. So the front public part of the website not being up is not really a big concern.

Yes they work on a subscription model. I guess that is why they claim to be a platform provider and not a broker as they do not profit from the trades, but rather provide the platform to trade for a fee.

Their registered address is a residential address last time I checked. The company was set up by 7 traders looking to gain direct access to the liquidity providers for their own trading. By bringing other members onboard they were able to achieve better trading conditions. That's the basic history. The company is still run with that in mind so is not highly sleek with marketing and is a somewhat closed shop.

I had a small $10,000 account with them from near the start and this year moved funds over to have a much larger account. Risky, yeah, but having spoken to the owners many times they are no nonsense blokes. I guess as soon as you deposit money under the control of any institution other than a bank you are taking a risk; especially a forex broker.

As for trading conditions. They can't be beaten as you are straight on the back of the liquidity providers. No routing through a broker's systems to add on spread or charge commission. As I speak the USDCAD spread is 1.8 on The Collective and 5.5 on GoMarkets to give an example of the spread difference.

I hope that gives you some general background on The Collective based on what I know. They are not for everybody, and do not offer their services to everyone however the traders I know who use them are almost all full time traders with large balances. The other good thing I like is their demo is the same server as their live feed and is not over subscribed so testing on their demo is almost identical (apart from slippage) to their real accounts. So often you get slow ticks and incorrect bar prices from other demo providers.

Do you mind me asking who you use?

 

[cogs]

I have been trying to stay within Australia, purely to make support easier when/if it arises.

I have also been a user of most of the bucket shops over the years who use MT4, like Go, Vantage, Latitude, Axiforex (very corrupt meta manager settings, manually disabling trading to force margin calls etc, much like Gain's setup I suspect), and sniffing around FXCM and their new strategy tester which is in beta stage and still full of bugs. Non MT4 I have used FP Global (massive spreads and very slow platform), City index (closed me down when profit was over 50% cotinuous and making regular withdrawls), IG (with an under 10k account, so was stop hunted with their fixed stops), CMC (typical MM operations). Jeez the list goes on,,,,

I find automated trading suits my needs 24/6, emotionless and allows me to continue my full time job and sleep at nights. Add this to longer term trading and spreads like the above become less of a concern.

Even if a MM offered a good honest service they would do quite well, but they just have to get greedy.

Interesting operation by CollectiveFX. I see they are not regulated but there has a lot of discussion about their spreads being very good, I guess mainly due to their business model of subscription. Site is down at the moment??

 

[SmellyTerror]

Do you mind me asking who you use?

Not at all: MBT for Forex, and IB for everything else. Hoping to shift my (penny-ante) forex stuff over to IB soonish, but still working through some interface issues.

MBT is solid, decent commissions, decent spreads, decent speed, Navigator does the job, but IB has even less commission (0.2 pips even at my peasant volume) and - if I ever get it to work right - lets you trade right off the chart. Though to be honest I'm just about to give that fancy up and just use ZeroLine.

Can't say anything about IB live for Forex, though...

The Collective looks cool - hope I didn't sound like I was knocking them. I'm just a big chicken and I like the paths well travelled. You know those insanely big passenger jets? I won't be getting on one of those for another few years yet... :

 

[TulipFX]

MB Trading are a good brokerage firm. They also now offer MT4, however we have had reports of some strange situations sometimes occurring as their trading platform has some quirky rules. Nothing that can't be solved if you know about them. One example is the expiry of limit orders.

They are big, trustworthy, reliable and price leaders. I think they are probably the leading retail brokerage firm using MT4.

No problems about your concerns about the CollectiveFX, I have the same ones and they are very valid. If I hadn't seen them grow and experience their service from near the start, I would not start with them either, or at least not entrust my account to them.

MBT would be a better option, just be careful that any EAs you use are compliant with the MBT-MT4 platform quirks though. Otherwise top-top broker who I have never heard a complaint about.

 

[SmellyTerror]

Yeah, I've heard MBT's MT4 is not so hot, but I'm not an MT4 dude - I trade mostly naked.

I also make bugger-all, so this is not exactly a statement of superiority.