new FXCM Micro trading disclosure?

[jvaustintx]

FXCM has a new Micro trading platform and I wanted to get some opinions as to what their disclosure means. It sounds to me that the trader is trading against FXCM therefore, whatever money he/she lost, they gain. Any money the trader would make would be a loss to FXCM, therefore it would be in the best interest of FXCM for the trader to always lose. I have copied and pasted their disclosure statement so everyone can read it for themselves, and would appreciate any and all feedback.

"DISCLOSURE

THE FOREIGN CURRENCY TRADING YOU ARE ENTERING INTO IS NOT CONDUCTED ON AN EXCHANGE. FXCM IS ACTING AS A COUNTERPARTY IN THESE TRANSACTIONS AND, THEREFORE, ACTS AS THE BUYER WHEN YOU SELL AND THE SELLER WHEN YOU BUY. AS A RESULT, FXCM'S INTERESTS MAY BE IN CONFLICT WITH YOURS. UNLESS OTHERWISE SPECIFIED IN YOUR WRITTEN AGREEMENT OR OTHER WRITTEN DOCUMENTS FXCM ESTABLISHES THE PRICES AT WHICH IT OFFERS TO TRADE WITH YOU. THE PRICES FXCM OFFERS MIGHT NOT BE THE BEST PRICES AVAILABLE AND FXCM MAY OFFER DIFFERENT PRICES TO DIFFERENT CUSTOMERS.
IF FXCM ELECTS NOT TO COVER ITS OWN TRADING EXPOSURE, THEN YOU SHOULD BE AWARE THAT FXCM MAY MAKE MORE MONEY IF THE MARKET GOES AGAINST YOU. ADDITIONALLY, SINCE FXCM ACTS AS THE BUYER OR SELLER IN THE TRANSACTION, YOU SHOULD CAREFULLY EVALUATE ANY TRADE RECOMMENDATIONS YOU RECEIVE FROM FXCM OR ANY OF FXCM’S REFERRING BROKERS. FXCM ITSELF DOES NOT PROVIDE INDIVIDUALIZED CLIENT TRADE RECOMMENDATIONS. "

 

[Pharaoh]

That's the standard disclosure the NFA requires US brokerages that are not 100% pure ECN to publish. Some of these brokerages are total bucketshops, trade against you 100% of the time, and never pass orders to the interbank market. Others do pass your trades into the true interbank market, but not 100% of the time, and not instantly.

Ask them who their liquidity providers are and how long it takes from them accepting your order until they no longer are holding the other side of the trade.

 

[jsales430]

FXCM Micro uses 100% automated execution.

FXCM Micro acts as a counterparty in FXCM Micro transactions and,
therefore, acts as the buyer when you sell and the seller when you buy.
FXCM Micro is compensated through the bid ask spread when a trade is placed.

As a firm, our role in the markets is to aggregate positions in a mechanical fashion and send them to the banks in trade sizes they can accept. In accepting under $5,000 account sizes, FXCM seeks to limit the risk to itself while making microlots available to our clients. From an IT perspective, bank desks typically like the volume of individual traders, but not the sheer number of tickets.

In terms of style of execution, you can think of the price feed as highly similar to our no dealing desk price feed, with lower spreads. Feel free to load a demonstration account to see the spreads and how it compares to the no dealing desk prices.

Please note FXCM Micro in its discretion may or may not offset individual transactions unlike transactions in most FXCM standard and mini accounts.

For more on our execution, kindly visit Tighter forex Spreads with Microlot trading

FXCM Micro as a discount brokerage is dedicated to low spreads, fast service, and automated execution for the self guided fx trader.

Kindest,
Jaclyn Sales
jsales@fxcm.com



_______________________________________________________________
RISK WARNING: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your monetary objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent advisor if you have any doubts. Past returns are not indicative of future results.



FXCM Micro and its affiliates assume no responsibility for errors, inaccuracies or omissions in these materials. They do not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXCM Micro and its affiliates shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues, or lost profits that may result from these materials. This email is not a solicitation to buy or sell currency. All information contained in this email is strictly confidential and is only intended for use by the recipient. This communication was sent from a non-monitored alias email account. All replies should be sent to info@fxcmmicro.com. Replies sent to info@fxcmmicro.com will be received by the FXCM Micro corporate email system and are subject to storage and review by someone other than the recipient.

 

[jvaustintx]

In response to jsales430,

you still did not answer Pharaoh"s question asking who your liquidity providers are and "how long it takes from them accepting your order until they no longer are holding the other side of the trade." All of what you wrote in your forum response is the exact same things one can read on fxcm's website. You also stated, "FXCM Micro in its discretion may or may not offset individual transactions unlike transactions in most FXCM standard and mini accounts." When you say "may or may not offset individual transactions," aren't you basically saying, "maybe you will make money on your trade, maybe you won't" ? In addition, I wonder why only "most" not all standard and mini accounts are offset.

 

[Pharaoh]

Now comes the fun part. Some brokers brag about who their liquidity providers are. Others treat this like it's some sort of national security issue. Overall, I feel more comfortable with a broker that gives me as much info as possible.

I can probably partially answer the other part of the question for you. If we both had FXCM accounts and I went long on EURUSD for 1 lot and you sent Short EURUSD for 1 lot within the same second, then the brokerage could save itself the effort (and expense!) of passing the trades onto the real market, at least until one of us closed the trade.