DislikedHi Jet,
Thanks for the questions.
The website indicates that FXCM uses No Dealing Desk (NDD) forex execution which eliminates the conflict of interest that exists when your broker is acting as the market maker (operates a dealing desk).Ignored
- Create the Trading Signal
- Take the other side of the trade
- No conflict of interest
I'm still trying to get my head around that concept. FXCM Micro creates the signal that tells me when to enter the position. That position is covered by FXCM Micro on the other side of the transaction. Thus, I'm necessarily Long when FXCM Micro is Short, based on FXCM Micro's signal. Yet, FXCM Micro has no conflict of interest because my Long position was executed without a FXCM Micro Dealing Desk.
So, FXCM Micro publishes a trade signal that by design causes it to lose equity, while at the same time, acting as sole counter-party to that same position. Thus, by logical definition, FXCM trades against its own signal.
Help me figure this out, please. I'm a little slow on the uptake.
DislikedIf your broker is acting as the market maker for your transactions, then they are managing the risks associated with your trading positions. If they choose not to hedge that risk (meaning they choose to trade against their clients), then a loss on your trade could result in a profit for the brokers dealing desk.Ignored
That signal is produced by FXCM Micro and is NOT intended to be used by FXCM Micro, rather FXCM Micro's clients. Otherwise, if FXCM Micro trades the same signal AND at the very same time acts as the sole counter-party to Micro transactions, then FXCM is net delta neutral in the position and thus actually losing money due to "additional associated business costs," such as the money it pays out to employees to be in online forums such as ForexFactory.
Therefore, FXCM Micro cannot be trading their own signal. Or, FXCM Micro trades its own signal, but cannot be counter-party, which is already stipulated as false.
DislikedWith NDD forex execution, every transaction (including micro lots) is executed back to back with one of multiple banks or financial institutions. Therefore FXCM does not profit if you lose money on a trade. Our compensation is a pip mark-up add to the best bid/off spread being received from the banks, which essentially acts as a commission. So our compensation for NDD forex execution is directly tied to volume being transacted on the platform rather than client losses.Ignored
Counter-Party means (by definition) being Long, when I am Short, for a notional value that is equal to or greater than my position. Counter-Party does not mean Off-Setting. Off-Setting and Counter-Party, are two entirely different things. Secondarily, can you name any mainstream Interbank entity (Bank) who trades in fractional lot sizes? In order the make the market for micro, somebody has to engage the retail market at a notional value that is far below that of the Yards being re-positioned by Interbank on a daily basis. I know of no Bank that engages in $1k lot size transactions.
DislikedIf your broker is acting as the market maker (operates a dealing desk) and offers trading signals, then I agree with you on the conflict of interest.Ignored
You won't find fractional lots on HotSpot, FX, e-Fx, iFX Deal, iFX Direct, AutobahnFx, FXall, Currenex/Viking, etc. Yet, you can find most of the liquidity mentioned above trading on these platforms. So, how does FXCM Micro "off-set" a fractional lot transaction against an industry that has no facility for doing so?
Thanks for helping me understand this issue - I appreciate your replies.