Acknowledging the elephant in the room (your thoughts)
TLDR; Until we get fully regulated exchange style trading, retail fx will always be the "wild west" and believe me the sharks will eat you alive no mercy. So I've been thinking about this for a while now and it kind of worries me. I'm a successful live trader but the "very long term" worries me. What if this and that. I don't want to quit my job and then find out one day that I can't live off of this anymore... I trade with Darwinex at the moment and they are fucking amazing but even then I'm still worried that my relationship even with them might not last very long if I keep winning consistently. As I'm sure you are all already aware, currency trading is performed over the counter. Meaning there is no exchange where all parties can trade with equal terms. And that creates an inherent conflict of interest. This means that it's not in your broker's best interest for you to win consistently. With stock trading, on the other hand, you are trading on a centralised and fully regulated exchange and your broker will pretty much NEVER work against you because the more you trade, the more commission you pay. In the world of fx, prices are different everywhere! In the world of centralised exchanges, everybody gets the same price! This is a reality we all have to face. With fx, sure you have spread and commission but there's always a counter party. And that'll either be:
Another trader (if there's enough people on the other side)
You broker (direct loss)
A liquidity provider (the bank pays the broker who pays you)
So even if your broker has best model possible, which is working with an LP (NDD/DMA/STP/ECN), the LP might decide one day "hey ban that trader or we stop doing business with you". So my questions are: A. Let's be brutally honest with ourselves. Is RETAIL Forex trading really viable in the long term? B. Do you agree with me that we need something like an international exchange facility that is fully regulated? C. Do you think this is going to happen anytime soon? The only company that I've come across to implement something even remotely similar to this idea (I'm not promoting them just saying) is LMAX Exchange with their multilateral trading facility model which proves fair trading conditions for ALL traders regardless of account size or lot sizes. They really offer full transparency. But that's just the first step. It's not quite the right solution, in my opinion. Has anybody come across anything better out there? I've read a few articles about the "FX Global Code" and rebuilding trust and bla bla bla but nothing for us poor retail traders.
Help me to choose a broker -- Oanda, FXCM, forex.com, FXDD
Hi all, I posted this thread on a Forex forum, I re-post it here hoping to get more advice. I live in China, and I'm a newbie to Forex trading. I plan to deposit 5,000 USD to experiment Forex trading after I get used to the demo account. After I'm OK with 5K USD, I may invest not less than 10K. I'm struggling to choose a broker, here are my criteria, 1, Allow hedging. I'm 100% wanting this. Indeed I'm not going to hedge the same amount of money at the same time to earn quick money (which is often used in big news event). What I want to do is, I have a long term position which will be there for several weeks, then I do some short term positions (intraday or several days). That's possible that I have two positions in two directions at the same time. 2, Money safety. During my Googling, I found that some brokers close a trader's account just because he/she earns too much money. 3, 100:1 leverage. 50:1 is not too bad but 100:1 gives me more flexibility. 4, Prefer to NDD (ECN or STP), but DD and MM is acceptable if money safety is guaranteed. 5, Regulates with NFA or FCA. 6, Support depositing using credit card. This is cheapest way for me, at least cheaper than wire transfer. 7, Easy to open an account. I prefer to open an account via internet only so I don't need post a lot of certifications to the broker. The other points except 1 are tolerant, but I really want point 1 and I think it will be important to me. Now comes to the brokers I've done some research on. I've checked a little with Oanda, FXCM, forex.com, and FXDD. Oanda, the most money safety one. 50 leverage. However, it doesn't allow hedging. All other brokers in my list are not as same money safety as Oanda. FXCM, the one that's really annoying me is the margin. Why margin for a lot of EURUSD is $750? That's really weird and is not connected to the real price. Can any one explain to me? Forex.com, as big as FXCM, but in the event that ECB put down the interest to 0.25% at Nov.7 this year, a lot of Chinese traders get network error and lost money. That scared me. FXDD, not as old as Oanda, and not as big as FXCM and Forex.com, and registered in Malta... So, what's your advice of a proper broker for me? The one not on my list is OK too. Thanks EDIT: another disadvantage of Oanda is that they have 6 candles a week, but it's a trivial problem since I can use other broker's MT4 for technical analysis.
I'm pretty new to the whole Forex thing and I'm looking for a broker. I've come across some confusing and conflicting information about whether US citizens can use foreign forex brokers and use higher leverage and trade CFDs and the like. From what I know, I believe the answer is "no" thanks to the recent Dodd-Frank legislation, which forbids foreign exchanges from serving US citizens without being registered with US regulators. However, although I'm personally living, working and residing in the US, and am subject to US taxes, among other things, I'm not a US citizen. So my questions are:
As a resident alien, am I subject to these regulations?
If someone subject to these regulations opens a foreign forex brokerage account anyway, what's the penalty?
Are there any issues with foreign forex investing and tax?
Can anyone recommend a good lawyer to talk to about this? (I'm in CA if it matters)
I had a brief look at the text of the act itself but apparently it's nearly 900 pages long. EDIT: Reading into it more, it seems the penalties are generally imposed on the brokers themselves under "Memoranda of Understanding" between the US and various countries. It also seems that the restrictions do indeed apply to residents as well. At least the brokers that make a statement on the matter use the word "resident". It seem mainly the media and forums that use the word "citizen". My impression so far is that some brokers operate in countries that aren't subject to the memoranda and as such are outside the jurisdiction of the US regulators, so continue offering services to US citizens/residents. There's a good list of foreign brokers that work this way here. Tallinex, Tradersway and Fxchoice seem to be the main ones. Out of those only Fxchoice appears to be regulated but it's not clear whether it's selling ECN (they call it "NDD") or not.
List of NDD (No Dealing Desk) Forex brokers. FXGlobe is a regulated, international forex broker working in this industry since 2009. A list of ECN Forex brokers that provide Forex traders with a direct access to the other Forex market participants — retail and institutional. This results in some advantages — no anti-scalping, no «stop-loss hunting», very low spreads; and disadvantages — ECN brokers charge commissions for Forex trading. ECN stands for Electronic Communication Network and means a network of traders ... This allows clients to believe that the more they trade the more profits the Forex ECN Brokers are making without worrying that they expect from the Brokers to make more on their losses. In addition, the agency role of the Forex Broker allows clients to use many of the trading strategies that may not be accepted by some other Brokers such as scalping, news trading and other. - However, the ... ECN stands for “electronic communications network” and sometimes brokers of this type are also referred to as “STP brokers” (STP stands for “straight through processing”) or “no dealing desk” (NDD) brokers. All these terms mean approximately the same thing: clients’ trades are executed by matching them with other clients or 3rd party counterparties who wish to take the other ... Types of forex brokers: ECN - STP - NDD - DD. DD - Dealing Desk: A dealing desk broker is a market maker. Market makers typically offer fixed spreads and may elect to quote above or below actual market prices at any time. Market makers are always the counterparty of the trader, who doesn't trade directly with the liquidity providers. Market makers get paid through the spreads, and they usually ... ECN Forex Brokers. ECN or Electronic Communication Network is a technology bridge that built with a purpose to links retail Forex market participants or traders to liquidity providers.. So eventually ECN is a non dealing desk bridge with straight through processing execution that enables execution in a direct connection between the parties.. What is ECN ... NDD Forex Brokers. No Dealing Desk or NDD Forex Brokers as it is obvious from the name does not use Dealing Desk in its operation and passing traders’ orders directly for execution, while the broker only provides a connection between two parties the trader and market itself.. That means while you are dealing with the broker of that type you get access to an interbank market where the foreign ... Forex brokerages utilize different execution models. Simply put, they have different ways to execute a trade in the market, and therefore can be divided into several categories: Market Makers, Straight Through Processing (STP) or ECN brokers. ECN stands for “Electronic Communication Network” whereby computer systems electronically match up buy and sell orders, thus eliminating the role of ... What is an NDD Forex broker? With this type of broker, there is no dealing desk, and this particular group of brokers includes ECN Forex brokers, STP brokers and also those which are a combination of the two. When this type of broker accepts an order it is passed directly to liquidity providers for immediate execution, rather than passing it through a dealing desk first. An NDD broker ... Many forex traders prefer to work with ECN brokers because it means more liquidity, faster execution, and accurate pricing. According to some experts, true ECN forex brokers are the real future as ...
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