New York, February 1, 2011—FXCM Inc., (NYSE: FXCM) launches the FXCMForex Execution Center. With numerous requests for transparency in the forex market, the FXCM Execution Center will be a central hub on the FXCM websites that will provide forex traders with detailed information regarding forex execution practices. FXCM will continue to update this area over the coming months with insightful information and analysis.
The first step is to explain the different forex execution models. Unlike most other forex brokers, who act as market-makers, FXCM operates on an agency execution model.
FXCM takes the best bid and ask prices streamed to them from multiple large financial institutions, adds a markup (commission) on top of those prices, and shows them to clients. FXCM makes an identical amount of money in the form of pip markups (which are really commissions) regardless of whether the customer makes or loses money on a trade. As a result, FXCM earns consistent and transparent revenue per trade.
This is significantly different from brokers who operate a dealing desk execution model, where the revenue per trade is not as transparent. There are common practices, many times unknown to customers, which allow dealing desk firms to make more than just the mark-up attached to the prices streamed from large financial institutions. These practices include, but are not limited to, re-quoting customer trades, taking the opposing side of customers trades, and even preventing customers from trading or managing their positions during news events.
Many experienced forex traders may find the concept difficult to grasp. And it is especially hard for those new to the forex industry.
No Dealing Desk (FXCM): Learn How FXCM Executes Your Forex Trades
Dealing Desks (most of the other guys) learn about the potential conflict of interest between dealing desks and traders
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At the heart of FXCM's client offering is No Dealing Desk forex trading. Clients benefit from FXCM’s large network of forex liquidity providers, enabling FXCM to offer competitive spreads on major currency pairs. Clients have the advantage of mobile trading, one-click order execution, and trading from real-time charts. FXCM's UK subsidiary, Forex Capital Markets Limited, also offers CFD products with no re-quote trading and allows clients to trade oil, gold, silver, and stock indices along with forex on one platform. In addition, FXCM offers educational courses on forex trading and provides free news and market research through DailyFX.com.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. Any opinions, analyses, or other information contained is provided as general market commentary and does not constitute investment advice. Read full risk disclaimer.
Jaclyn Sales, Vice President of Corporate Communications
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.
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