NADEX Proves Brokers Can Look Out For Their Clients

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FOREX.com vs. Nadex

Dan Schmidt
Contributor, Benzinga

Thanks to tough regulations, forex leverage maximums are capped and products like CFDs are completely banned in the United States. Many brokers who deal in these markets offer pared-down services to U.S. traders or simply avoid the U.S. altogether.

Thankfully, FOREX.com and the North American Derivative Exchange (Nadex) operate with the needs of American clients in mind. While both focus primarily on U.S. clients, the similarities between the two brokers end there. FOREX.com and Nadex target distinctly different groups of traders and it’s important to identify what type of trader you are before choosing between the two.

Reduce your trading costs by up to 15% with cash rebates, Forex.com is the #1 Forex Broker in the US. Signing up for an account now will get you waived bank fees on all wires, as well as one-on-one support from an experienced Market Strategist.

FOREX.com vs. Nadex: Overview

Commissions

Spreads start as low as $1 But vary based on trading volume

Commissions

$1 per contract side

Best For
  • Forex traders located in the United States
  • MetaTrader 4 users
  • Beginner forex traders
  • Active forex traders
Best For
  • Binary options trading
  • Advanced trading and charting tools
  • Low fee structure
  • Impressive, easy-to-navigate platform
  • Wide range of education and research tools
  • Access to over 80 currencies to buy and sell
  • Leverage available up to 50:1
  • Easy-to-use interface
  • Availability of great educational resources to educate investors
  • Access to advanced technical analysis, tools and charts
  • Option to exit a trade before expiry to preserve profits on the “in-the-money” or cut losses when “out-of-the-money”
  • Cannot buy and sell other securities (like stocks and bonds)
  • Confusing margin requirements that vary by currency
  • Limited customer support options
  • Cannot open an IRA or other retirement account
  • Free to deposit; only fees are for wire transfers for withdrawals
  • Limited choice of asset classes, with stock trading not allowed through the exchange

FOREX.com vs. Nadex: Platform and Tools

FOREX.com is a market maker forex broker with a wide selection of currency pairs to trade. There’s no shortage of forex news and research available to clients.

Nadex is the first regulated U.S. exchange to offer lawful trading of binary options, touch brackets and call spreads. Nadex isn’t a broker or market maker, but a live exchange that matches buyers and sellers. The strategies used here are complex, but Nadex’s educational materials can bring you up to speed in no time.

What FOREX.com Offers

FOREX.com has a few different ways for account holders to trade currencies. First, there’s the ever-popular MetaTrader 4, a sophisticated forex trading platform in which you can write your own automated trading programs.

All Expert Advisors are supported and FOREX.com even provides a few of its own to clients. Mac users can use the MT4 desktop app without sacrificing functionality and both iOS and Android phone users can use the mobile platform.

Forex.com

FOREX.com also has its own proprietary trading platform called the Advanced Trading Platform. You’ll have more than 80 technical indicators to use on charts with 15 different time periods to backtest. Like MetaTrader, the Advanced Trading Platform is also available in browser and mobile versions.

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What Nadex Offers

Nadex offers two different ways to clients to trade: Nadex Desktop and NadexGO for mobile users. On the desktop version, you’ll be plugged directly into the Nadex exchange with the ability to take the best price at the top of the book, or work an order to try to secure a better price. Since binary options are an “either/or” proposition (either a price point is reached at a certain time or it’s not), you’ll easily find a counterparty using the market depth feature.

If you’re a Nadex client, you’ll also have Market Order Protection in your arsenal, which means you’ll get the price you want when your order is filled.

Two mobile options are available at Nadex: NadexGO and the legacy mobile app. NadexGO requires no download and gives traders all the functionality of the desktop platform, including chart tools and technical indicators. The legacy app is still available in the App Store but only spread trading is supported.

Bottom Line

Both FOREX.com and Nadex have tremendous proprietary trading platforms that allow seamless trading from both a desktop and mobile screen. Charting tools are plentiful on both platforms as well, but Forex.com simply has more to offer clients with outside apps like MetaTrader and NinjaTrader.

FOREX.com vs. Nadex: Research Offerings

What FOREX.com Offers

Research is in great supply at Forex.com and can be consumed in a number of different ways. FOREX.com has webinars every Monday at 9 a.m., which features commentary on markets, trading strategies and ideas as well as a live Q&A session.

FOREX.com also has a five-man research team led by CFA Matthew Weller, a senior analyst at Faraday Research. The team is constantly looking for new insights and ideas on forex markets through the lens of geopolitics, technical analysis and economics. Research articles can be filtered based on topics like central banks, inflation and interest rates.

What Nadex Offers

Since Nadex traders have access to more markets than forex, additional analysts are needed, and the company has a boatload. You’ll locate the Market News tab at the top of the Nadex homepage. Here you’ll find news and analysis from over a dozen sources on forex markets, commodities, equities and more.

Nadex also offers webinars that break down market moves every Sunday, Monday and Tuesday, along with occasional shows with special guests. For example, each week you’ll get a show hosted by Gail Mercer, founder of TradersHelpDesk.com.

Bottom Line

Both companies take similar routes with their research offerings, but Nadex has a volume of material that FOREX.com can’t match. Webinars are scheduled more frequently and Nadex commentators outnumber FOREX.com commentators by more than two to one. Nadex offers more markets to cover, but the sheer volume of research is impressive.

FOREX.com vs. Nadex: Commission and Fees

FOREX.com’s Fees

The fees charged by FOREX.com depends on the type of account you’d like to open. As mentioned above, FOREX.com has three different account types.

The commission account comes with reduced currency spreads but a fee of $5 is charged for every 100,000 units moved. The other two accounts are spread only and direct market access. Direct access means you choose the path and counterparty you want your order to go to on the other side of the trade.

Forex.com

You’ll need $250 to open an account and monthly fees do exist for inactivity, but only after 12 months. Withdrawals done via ACH or debit cards aren’t charged fees but wire transfers do cost $25.

Nadex’s Fees

Nadex has a simple fee schedule designed to lower trading costs. Since all securities traded on Nadex are derivatives, a small commission is charged on each one. At Nadex, this charge is $1 per contract, but only up to the first 50 contracts. After you’ve paid for 50 contracts, any additional contract purchases are commission-free.

Nadex.com

You’ll need at least $250 to open a Nadex account. There’s no fee for inactivity, account setup or wire transfers, but you will be charged a $1 settlement fee for each option that sells or expires in the money. If the contract lands out of the money, this settlement fee won’t be charged. Also, there’s a $25 charge for returned deposits and wire withdrawals.

Bottom Line

FOREX.com and Nadex both require $250 minimum to open an account. Comparing fees is difficult since the companies operate differently, but trading on Nadex is more expensive. You’ll pay $10 for a 100,000 contract order on Nadex, while FOREX.com’s commission-based account charges $5 for 100,000 forex units.

FOREX.com vs. Nadex: Security

What FOREX.com Offers

FOREX.com has relationships with numerous regulatory bodies, including the Commodities and Futures Trading Commission (CFTC) and the National Futures Association (NFA). Forex.com is a subsidiary of GAIN Capital (GAIN), a publicly-traded firm that publishes liquidity statistics on the website quarterly. Customers funds are held in affiliate banks away from the firm’s capital.

What Nadex Offers

Nadex also partners with the CFTC, which is important because binary options were an unregulated jungle before the Nadex exchange went online. As a U.S.-regulated exchange, Nadex cannot get involved in trades and must only match buyers and sellers. Nadex only makes money from exchange fees, not market participation. Customer funds are held separately in various U.S. banks such as BMO Harris.

Bottom Line

Both Nadex and Forex.com provide security and completely legal trading. There’s still plenty of risk involved with forex and derivatives trading, so a strong legal framework doesn’t automatically mean easy money.

FOREX.com vs. Nadex: Customer Support

What FOREX.com Offers

FOREX.com customers will have no problem reaching customer service should they run into problems. All of the three key contact methods are available: online chat, email and phone service. Customer service opens with the market at 10 a.m. on Sunday and then closes with the market at 5 p.m. on Friday.

If you need a question answered on a Saturday, FOREX.com has plenty of resources, FAQs and educational programs listed right on its website.

Forex.com

What Nadex Offers

Nadex offers some unique and complex products, so quality customer service is a must. Email and phone support options are available at Nadex, but lack of live chat means getting answers in real time could be difficult. Nadex also lists its downtown Chicago address in case potential clients want to snail mail something (or maybe just pop in and ask a few questions).

Bottom Line

Nadex loses points for the lack of chat features, but both companies provide ample time for customers to reach out and problem solve with company representatives. The FAQs, how-to videos and glossaries are all excellent resources for customers in need.

FOREX.com vs. Nadex: Tradable Asset Classes

What FOREX.com Offers

What markets does FOREX.com deal with? You guessed it: forex. Over 80 currency pairs are available on FOREX.com and trading is done through one of three different accounts.

Spread-only and commission accounts are standard fare for market maker brokers, but Forex.com also offers a direct market access account for traders wanting to match their own orders with sellers (or buyers). In addition to forex, the firm also trades in unleveraged gold and silver and certain futures.

What Nadex Offers

Nadex offers three ways to trade financial products:

  • Binary options
  • Touch brackets
  • Call spreads

These three products are unique and can be used to purchase from a number of different markets. Nadex contracts are written for stock indices, commodities and forex. Options trading of this kind is an advanced strategy, so be sure to comb the educational tools before diving in.

Bottom Line

Nadex and FOREX.com are highly specialized companies that deal with specific markets. Forex.com only offers currency trading (along with a little gold and silver trading), but Nadex contracts can be written about pretty much any type of financial product. However, Nadex only has 10 currency pairs and provides no leverage on forex trading.

FOREX.com vs. Nadex: Ease of Use

What FOREX.com Offers

FOREX.com is one of the easiest currency brokers to learn and use. If you use MetaTrader or NinjaTrader, you won’t even need to learn a new platform. Setting up an account is a quick task and plenty of support is available if you get stuck on something. Once you know the ins and outs of forex trading, there’s nothing you can’t do here.

What Nadex Offers

Nadex’s offerings are a little more sophisticated, so the learning curve is a bit steeper. You can only use Nadex’s proprietary platform to trade and the products do take a little time to understand clearly. There’s a healthy dictionary of support FAQs and customer service has convenient hours.

The Aftermath of US Regulatory Warning Against Binary Options – Software Providers to Partner with NADEX

The United States regulatory authorities’ position is unquestionable when it comes to the legalities of off-exchange binary options being marketed

Last week, two of the United States regulatory bodies made their position clear on the subject of what they perceive as the perils of trading off-exchange binary options, a method of trading which is illegal in the United States.

In doing so, both the Commodity Futures Trading Commission and the Securities and Exchange Commission posted detailed warnings on their respective websites in order to bring their intended message to the attention of American investors, in a national attempt to dissuade American citizens from engaging in off-exchange binary options trading.

It is one part of the regulators’ mandates to point out potential transgressions of law and act in the best interests of potential investors, but in this double-edged sword, both regulators have charged one particular binary options company, Banc de Binary for soliciting clients in the United States which is an offence.

On Exchange or Off The Market?

Quite clearly as a direct result of the regulatory action pending against Banc de Binary, the company is now no longer accepting clients in the jurisdiction. A representative of the company explained to Forex Magnates today that Banc de Binary categorically does not accept clients from the United States. This demonstrates a sharp contrast to its previously aggressive targeting of American clients which resulted in such a high-profile case being brought against the company.

This was perhaps an inevitable event, however with so many binary options brands now competing for market share, and the US leading the way as far as client protection is concerned.

Other regulatory jurisdictions are following closely, the Japanese Financial Services Agency being an example, which has set in place an entire set of procedures to which Japanese binary options firms must adhere, demonstrating that perhaps other jurisdictions may go down this route, with perhaps two potential outcomes.

Either binary options could be forced onto exchanges, whereby it would be mandatory that a trade goes out from the binary options company onto a real exchange to be executed rather than the client simply ‘betting’ against the company’s in-house risk-management desk, or it could see an exodus of binary options firms from the market as entry barriers to such regulated countries would be raised considerably.

The Voice From Within

Zacky Pickholtz, CEO of recently launched binary options platform CTOption shared his view with Forex Magnates: “In the short term we certainly anticipate brands avoiding North America and similar jurisdictions as this involves major technological and operational changes requiring significant investments, however In the long term we believe on-exchanges will be the only way to work in regulated environments.”

“We are currently preparing our system for on-exchange integration, and have initiated discussions with NADEX for this purpose.”

Ilan Tzorya, CEO of binary options technology provider Tradologic elaborated on the corporate viewpoint on what lies ahead for entering the United States market whilst remaining within the remit of the regulators: “At Tradologic we currently have a policy under which our brands don’t operate in the United States. It is clearly stated in the company policy not to offer our platform in jurisdictions where it is contrary to regulations”, Mr. Tzorya made clear.

America – Land of Opportunity

The United States is a region of future interest to Tradologic, and Mr Tzorya considers the technicalities surrounding the correct method of entering the American market: “There is now a huge opportunity to change the binary options industry and we are in the process of developing an additional platform to accept on-exchange binary options. We have started negotiations with NADEX, and are starting to develop a platform that is suited to the US regulations.”

In terms of regulation, Mr Tzorya has tremendous respect for the regulatory bodies and understands that by preventing illegal operators, it will improve the market for the legitimate brands in future: “If the CFTC is now beginning to act against the illegal websites, this will rule them out and provide good potential for those who operate in accordance with the law to gain more clients. The United States is a good market. We will, however, not go to the market until we are sure that the specification of our platforms relate to the United States requirements. SEC and CFTC are very strong authorities, and Tradologic are investigating several channels to provide binary options in their jurisdiction.” he concludes.

Eyal Rosenblum, Co-CEO of software house TechFinancials provided his view on the points of detail to bear in mind when operating in accordance with regulatory rules in the United States: “We have very little experience with brokers which work in the US, and have very little access to any information surrounding their activities, as we provide technology solutions for binary brokers, all of which at this stage are in other jursidictions such as Europe and Japan.”

“Most of our brokers are responsible for their own compliance, therefore we provide software which can be configured to meet regulatory standards” explained Mr Rosenblum.

In terms of the North American market, Mr Rosenblum certainly considers it to be a valuable one, however he believes it to be a “difficult market to crack” because of the cost and development implications that go alongside ensuring compliance with the rulings which stipulate that binary options instruments must be traded on an exchange.

Mr Rosenblum detailed TechFinancials’ future development plans for US-compliant software to Forex Magnates: “We are working with a regulated company in the United States to offer a software solution for brokers to be able to offer their customers a facility to trade binary options in America using our product and our pricing. In the next few months the development will be further toward completion and we hope to be able to offer such a technology package which will be compatible with regulatory requirements”.

“Currently there is no attractive solution to offer brokers, therefore the only way is to develop further technology as a seperate entity because currently there is no benefit to binary options brokers in going to NADEX. For standard binary options brands, this is not economically viable. We have spoken to NADEX, who asked for the amount of traffic which our brands generate. We discussed this method of working in detail but ultimately it is not likely to be an option for TechFinancials. Even if a broker goes to the expense and effort of gaining a license to operate in America, that broker will still have to go through the NADEX exchange, so therefore they go through all that expense and hard work and the customers end up being NADEX customers” explained Mr Rosenblum.

“These factors combine to make the United Sates difficult to crack, however we do have a plan of entry and have started discussions with a major US exchange whereby we can offer a regulatory umbrella to brokers and IBs to allow them to work with a product we are developing specifically for the US market whereby it goes through the exchange and the broker will be compensated correctly and it will be in line with US rules. We hope to gain more traction from US brokers as this progresses. The Japanese products are aligned with the US options, the only difference is that Japan still allows brokers to be market makers.”

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On discussing whether other regulatory jurisdictions may follow the United States in restricting binary options trading to exchanges, Mr Rosenblum considers this very unlikely: “I don’t think other jurisdictions will do the same as the United States because the regulatory structure is completely different. In America, every trade must go through an exchange, and market making by individual binary options companies is illegal. I do not see any reason for the EU or Japan to act on this basis. We do see something happening in Japan at the moment whereby the time windows in which an option can be executed will be restricted, but market making is still legal.”

“For this reason, as a technology company, we built our offering to appeal to the Japanese market, where binary options trading is very popular. We have made developments to our offering which are in accordance with the new regulations effective July 17, when we will announce and present the product to the brokers.”

Finally, when considering the value of going into America with an exchange-compatible system, Mr Rosenblum concluded: “For us, the exchange environment is interesting. Not only will the software and trading experience be different for those who have not operated in America before, but the brokers themselves will also have to adapt, it will be different. Adaptability is the key to survival.”

Whilst from a platform conformity perspective, the software developers are able to engage in designing new platforms to enable their brands to operate legally in the United States, however there are more considerations to bear in mind.

The NADEX Factor

According to President and CEO of NADEX Yossi Beinart, market participants have two choices when considering a means of establishing compliant binary options services on the American market.

Mr Beinart explained to Forex Magnates: “The choices that stand are that binary options companies can either become an exchange and compete with us, or they can become a broker and act as an agent on the exchange for their clients in a similar way to how it works in the stock market.”

“Investors then instruct a CFTC regulated agent to represent them on the exchange, in return for a commission.”

When asked whether a sudden dramatic interest in NADEX could come about due to it being an established venue that can facilitate legal entry into the US market for so many binary options brands, and with the software companies already looking at compatibility, Mr Beinart considers the potential change in operating method to be not an easy task: “The only legal way to operate in the US is to come to NADEX, as off-exchange binary options are illegal.”

“I sincerely hope that the companies which want to offer these products will come to us. Whether they will or not I do not know, as this would requires dramatic change in their business model” said Mr Beinart. “The US model is that if you are providing services to retail investors, everything must be exchange listed.”

Mr Beinart confirmed that another means of entering the market is to become a market maker on the exchange. As a market maker, participants can quote their side of the market. This is perfectly legal under CFTC regulations.

“It is a complicated and expensive process whichever method is chosen” Mr Beinart commented. “It can take two to four years to become an exchange and costs a great deal of money, which can run into seven figures” he said.

Transparency of Settlement

According to Mr Beinart, there is an opportunity for binary options software providers to offer a solution that is US compatible. “They can then concentrate on marketing and then direct order flow to exchange. There is room for this, but it will require a very different business model to be adopted” he said.

“NADEX experiences longer lifetime values than the those providing tradition OTC product. This is often used as a real trading vehicle. It’s a different market which could be a good one to enter if done correctly”.

To follow on from this, the US regulators are interested in transparency and all activity must be accounted for. This is part of the reason why it is mandatory to trade all instruments through an exchange.

“When a contract settles on an exchange, the settlement process is transparent” Mr Beinart explains. “It is a contract, with member A on one side, member B on the other. If someone questions the prices, a report can be sent to the client along with the calculation. We are required by the CFTC to make sure that we are transparent and that our settlement prices have a formula with which we can demonstrate how we arrived at that figure.”

“The market is much more representative of probabilities which is what trading binary options is about. I think quoting a two-sided market is a good and fair method”.

Functionality differs from that of off-exchange binary options in terms of the trading experience offered to clients insofar as that placing trades through an exchange allows traders to close positions before the market settles. “A lot of up/down binaries don’t allow this, as a fixed option with a fixed expiry time is often provided. This difference makes the exchange traded option a real trading product. If you see the price move, you can sell at any time” Mr Beinart explained.

Room for Market Makers

NADEX is an open exchange which can accommodate individual members who wish to set themselves up as market makers. “If someone thinks they are a really good trader, they can become a member of the exchange and trade individually, or even set up as a market maker” said Mr Beinart.

“This entails being at the exchange at certain times, providing a two-sided market which is of benefit to the market maker because it makes the fees lower than if an occasional trader. We are required to provide an even playing field. If you want to be a market maker, you can. Business is conducted on an equal access basis”.

The dialog within the industry appears to indicate that the options available to the management teams of companies in this sector are indeed binary – either abide by the law and restrict service to certain jursdictions only, or the method in which these instruments can be traded must evolve to meet the needs of the ever toughening international regulatory structure.

Why do Forex brokers not accept US clients?

It is a common known fact that the Forex market trading goes on 24 hours a day, 5 days a week. This happens due to the fact that there are multiple centers all over the world where the currencies are traded. Yet, even though the New York session tends to have the most significant impact on currency rate fluctuations, the amount of US based retail traders tends to be quite small.

If you are from the US you can be quite puzzled by the amount of brokers that are offering the services throughout the world, but are still not present in the States. Even though the US is the major market for various goods and services, for some reason FX trading for individual investors is not so common.

US residents can trade Forex

Before we move on any further, it is vital to state that Forex trading in the US is not prohibited. A trader from the US can trade FX online as easily as a person living in Europe or Australia. However, the main difference lays in the variety of brokers a trader can choose from.

There are a few reasons why the amount of FX brokers is very low, let’s examine each of them below.

Licenses and Regulations

When it comes to the brokers that operate in Europe, the regulatory environment is rather simple. Once a broker has obtained a license from one of the European regulators, it can easily accept traders from all EU countries. In other words, a UK Financial Conduct Authority regulated broker can accept traders from Germany, the Netherlands, Bulgaria and other EU member states.

However, when it comes to the US, European licenses simply do not work. A broker that wants to have traders onboard from the US has to be regulated by the NFA, National Futures Association. At this point you may ask, there are brokers that have multiple licenses, like CySEC, FCA, ASIC and more, why would they not get another one to provide services in the US? The reason for this is quite simple – capital requirements. While a broker has to have around $100,000 – $500,000 of locked capital to obtain one of the European licenses, NFA requires quite an enormous amount of capital to be able to operate in the US – 20 million dollars.

This amount of money only corresponds to a deposit that a broker has to make and does not include any legal fees associated with obtaining the licenses, employment of lawyers to be placed on the register and executives. In other words, the US market is an expensive market to operate on.

Even though some brokers make profit enough to afford it, 20 million dollars is quite a large sum to allocate just for a license. On average, the world’s 15th largest broker would hardly earn 10 million USD in profit annually, hence allocating a profit of 2 years for the privilege to work in one country is an extremely serious investment.

The situation with capital requirements was quite different back in 2008 and at that time there were quite a few brokers that accepted US clients. However, today the amount of US friendly brokers is just less than five.

Profitability

Now you may wonder, if there are only a few brokers in the US, why are more brokers not trying to penetrate the market? There are over 300 million people living in the US and it is quite hard to believe that there are no more brokers that could actually afford the NFA licensing. Well, the truth is that, although more brokers could deposit 20 million to operate, not every broker will find it profitable.

As you know, FX brokers earn from the volume traded, hence the higher the trader’s volume is, the more profit a broker makes. However, unlike European countries where a trader has access to the leverage of 500:1, in the US it is only possible to supply 50:1 leverage on majors and 20:1 leverage on minors. This means that a broker can expect to receive some 10 times smaller profit in the US than in Europe, provided that it has the same amount of traders with the same amount of deposits in the two regions.

Furthermore, yet needless to say, wages in the US tend to be quite high, so the whole process of financing the US-based operations is not cheap at all.

Regulator’s attitude

Even though it is already quite hard for some brokers to start operating legally in the US and then to become profitable, historically US authorities have also been seen as a hindrance.

Quite a few brokers have been heavily fined by the NFA for malpractice. While the impact of the reasons behind the fines could be quite insignificant, the fines tend to be heavy: ranging from $200,000 to $2 million.

In other words, a broker may spend a year working hard, and by the end of the year its profits (or even more) can be simply taken by the regulator as a result of certain misconduct.

Indirect competition

US traders have also been much more inclined to stock trading, this is why they often choose to acquire shares over currencies. In most cases, trading stocks is actually more expensive for traders (or more profitable for brokers) than Forex. This is why US based brokers not only have to compete against each other, but also in order to take a slice of the stock brokers’ pie by increasing the awareness about online currency trading.

Conclusion

The limited amount of FX brokers in the US is certainly caused by the heavily regulated environment that requires brokers to deposit a substantial amount of funds and, at the same time, decreases brokers’ profitability by limiting leverage.

This also results in a few unregulated brokers offering their services in the US as they can better meet the needs of the traders, while their legal and operational costs are minimal. However, unregulated brokers that accept US traders should never be your choice.

Can anyone prove broker fraud?

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  • Feb 27, 2008 4:16pm Feb 27, 2008 4:16pm

This is not Fraud. It is market abuse. Fraud is knowingly deceiving someone for financial gain. Like telling clients they do not stop hunt, when in fact they do. Besides that, FX is not regulated, like a central exchange, so there is no such thing as a fair price. Abuse would be very hard to prove in the USA.

If you want a fair price, trade currency futures on a central exchange. No such thing in spot.

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  • Feb 27, 2008 4:23pm Feb 27, 2008 4:23pm
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  • Feb 27, 2008 4:24pm Feb 27, 2008 4:24pm
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  • Edited at 5:09pm Feb 27, 2008 4:26pm | Edited at 5:09pm
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  • Feb 27, 2008 4:57pm Feb 27, 2008 4:57pm

No I don’t think I want to do that. In fact I think I will just delete the post.

You are right. No hard feelings here.

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  • Feb 27, 2008 5:11pm Feb 27, 2008 5:11pm

smjones, I trully appreciate you trying to assist me in this matter, but I’m still trying to understand how exactly a broker would rip someone off and get away with it without any shred of evidence. I am really not trying to challenge you here, but rather I’m trying to get more clarity on this issue. When people talk of price manipulation is that for all of the broker’s clients? Or is it manipulation tailored to each client? If it is manipulation tailored to each order, then clearly the manipulation would be shown in a contrasting chart from the same broker. And if the manipulation is for all of the broker’s clients, then the broker’s charts should be so far off from other Forex charts that the corruption should be self-evident. (I believe someone did this with Crown Forex once, but Crown Forex was widely known to be a bucket job.)

I recently got a friend into Forex, and he rushed into the market with money. Naturally, he made all the obvious greedy-newbie mistakes and wiped his account out in no time. Later on, I then mentioned to him that some Forex traders believe that brokers somehow cheat, and he was convinced that he was cheated also (he didn’t think that risking 40% of his balance on one trade was a bad thing.) So that got me to thinking on the issue of broker-cheating: How much of it is TRUTH, and how much of it is simply SOUR GRAPES?

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  • Feb 27, 2008 5:14pm Feb 27, 2008 5:14pm

I also got to thinking.

If I had a Forex brokerage house. and I was in competition with dozens of other Forex brokers. wouldn’t I want my clients to succeed so that I could earn more profits in the long term? Wouldn’t it make more business sense to retain clients and continually gain new ones. as opposed to constantly losing clients (because their accounts were wiped out) and then having to worry about finding fresh new ones?

Also, how many times has a new Forex trader, with some super tight stop loss, blamed his broker because he got stopped out for having a 25 pip stop loss on some pair like the GBP/JPY?

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  • Mar 1, 2008 8:16pm Mar 1, 2008 8:16pm

I also got to thinking.

If I had a Forex brokerage house. and I was in competition with dozens of other Forex brokers. wouldn’t I want my clients to succeed so that I could earn more profits in the long term? Wouldn’t it make more business sense to retain clients and continually gain new ones. as opposed to constantly losing clients (because their accounts were wiped out) and then having to worry about finding fresh new ones?

Also, how many times has a new Forex trader, with some super tight stop loss, blamed his broker because he got stopped out for having a 25 pip stop loss on some pair like the GBP/JPY?

  • Post # 13
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  • Mar 1, 2008 9:05pm Mar 1, 2008 9:05pm

For me to believe that there is no broker fraud is for me to believe that all brokers are equal. Of course I don’t believe that.

There are all these claims of broker fraud, but little (if any) solid evidence to back them up. Not to mention the fact that most of these individuals, who claim to have been defrauded of tens of thousands of dollars, never once felt compelled to file a complaint with the NFA.

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  • Mar 1, 2008 9:42pm Mar 1, 2008 9:42pm

For me to believe that there is no broker fraud is for me to believe that all brokers are equal. Of course I don’t believe that.

There are all these claims of broker fraud, but little (if any) solid evidence to back them up. Not to mention the fact that most of these individuals, who claim to have been defrauded of tens of thousands of dollars, never once felt compelled to file a complaint with the NFA.

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  • Mar 1, 2008 10:04pm Mar 1, 2008 10:04pm
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  • Mar 1, 2008 11:28pm Mar 1, 2008 11:28pm
  • Post # 17
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  • Mar 1, 2008 11:56pm Mar 1, 2008 11:56pm
  • Post # 18
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  • Mar 1, 2008 11:59pm Mar 1, 2008 11:59pm

smjones, I trully appreciate you trying to assist me in this matter, but I’m still trying to understand how exactly a broker would rip someone off and get away with it without any shred of evidence. I am really not trying to challenge you here, but rather I’m trying to get more clarity on this issue. When people talk of price manipulation is that for all of the broker’s clients? Or is it manipulation tailored to each client? If it is manipulation tailored to each order, then clearly the manipulation would be shown in a contrasting chart from the same broker. And if the manipulation is for all of the broker’s clients, then the broker’s charts should be so far off from other Forex charts that the corruption should be self-evident. (I believe someone did this with Crown Forex once, but Crown Forex was widely known to be a bucket job.)

I recently got a friend into Forex, and he rushed into the market with money. Naturally, he made all the obvious greedy-newbie mistakes and wiped his account out in no time. Later on, I then mentioned to him that some Forex traders believe that brokers somehow cheat, and he was convinced that he was cheated also (he didn’t think that risking 40% of his balance on one trade was a bad thing.) So that got me to thinking on the issue of broker-cheating: How much of it is TRUTH, and how much of it is simply SOUR GRAPES?

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