Is Your Forex Broker Ripping You Off?

Let’s not beat about the bush. If you are a retail trader with less than $500k in account principal the odds of getting a fair deal are overwhelmingly stacked against you. And if you’re trading Forex in the United States in particular you have officially entered Wild West territory with gun slingers, snake oil salesmen, and shysters waiting behind every corner.

The situation has been getting a wee bit better in the past few years but in general Forex is still considered a marginally regulated market into which retail traders in particular are lured with unrealistic promises (courtesy of unrealistic expectations) and then instantly churned and burned to the max. Investopedia actually posted an excellent article on the subject, so I won’t waste my time regurgitating the same theme.

What To Do

Instead I will sort you out Evil Speculator style – by telling what to look out for, and then point you in the right direction. First however there’s homework for you – I need you to do the following: Call your current broker or perhaps send an email to their customer support department. This is what I want you to ask them verbatim:

Does your firm or the network you are clearing through operate a dealing desk? 

If you are unsure if you can trust them or do not have a long term relationship make sure you get the response in writing – it’s always good to have an official written response (which if need be can be forwarded to regulatory agencies). Now they are going to either answer you back with a yes or no. If they say yes then odds are pretty high that your broker is trading against you – worse yet, they may start hedging against you if you are a winning trader or close your account based on some dubious reason. Why? Because a dealing desk (or deal desk) is a fixed spread platform where the desk makes their money in the spread trading against all of their customers. This rigs the market against hapless retail traders because they aren’t seeing true market quotes. The platform can move their quote wherever they need if they want to fill the client.

Now, if they replied yes there still is a glimmer of hope – it’s possible that they are operating a Non-Dealing Desk or NDD. That can be a Straight Through Processing (STP) desk or they are part of an Electronic Communications Network (ECN). There is plenty of pertinent information about those online and Google is your friend. In either case – if they uttered either one of those three acronyms then you are good to go and there’s no need to keep reading. Go back to your charts and to banking coin (implied of course as you are reading Evil Speculator).

What, you’re still here? Well, looks like we’ve got a problem. Apparently your new best pal at Forex’R’Us who talked you into opening an account with max leverage and low minimum deposits just so happens to run a dealing desk. And that’s why they sent you a beach towel for Christmas. Unfortunately this probably means they are shaving the spread which most likely are wide enough to drive a truck through sideways. Easy to figure out – if your spread is above 1 pip on the EUR/USD then they most certainly are taking you for a ride. If they’re over 2 pips then they have a picture of you hanging on their wall. But don’t fret – it’s NO PROBLEM. Not all is lost (yet I hope) – the Mole has got you sorted.

This Is NOT A Sales Pitch

As some of you know in the past few years we have increasingly shifted our focus from trading equities into futures and in particular Forex. The reasons are a plenty but in essence Forex is where the real action is as it thwarts all stock market volume combined given a daily trading volume of over $5 Trillion (not a typo). Which is why there rarely passes a day when I do not dig up some juicy setup on the Forex side. Some of you may have been playing along just fine but given the above I bet many of you may have gotten lousy fills – or worse!

So I always wanted to fix that for you guys and thus have literally spent months researching the space and interviewing various brokers. As I was working myself down a rapidly shrinking list eliminating candidates left and right, only two firms remained standing. Both of them run a clean ship and I would personally trade with them – as a matter of fact I will and so may Scott. Of course I strongly encourage you to research either of them online and report back right here if you find any credible negative feedback. Finally, if you think this is a sale’s pitch you are dead wrong – Evil Speculator will NOT be receiving any affiliation fees or financial rewards of ANY kind by endorsing these two firms.

FWIW – by working with Evil Speculator both firms are obviously putting themselves under scrutiny. Although I cannot directly be involved if problems arise you are absolutely free to post your experiences right here – may these be positive as well as negative. Which means that if any of our readers/subscribers are being treated unfairly we will all know about it. And I don’t think any firm would want to risk the wrath of the stainless steel rats – hey that sounds like a cool title for a new book. Too bad Harry Harrison passed away a few years ago.

With that said here are the profiles of the two firms Evil Speculator is currently recommending – this of course may change in the future and if it does I will advise you all right here.

ATC BROKERS LTD. is a premier brokerage firm providing online trading solutions within the foreign exchange industry to clients ranging from retail traders to institutional clients. Established in the United States as an introducing broker in 2005, ATC launched its UK brokerage entity in 2014 by registering with the Financial Conduct Authority (FCA).

The information below provides an overview for US and non-US account setup, for more information please visit our website at www.atcbrokers.com (U.S. clients) or www.atcbrokers.co.uk (clients outside the U.S.).

US Clients:

• Account opening: $5,000
• Account deposit in: USD, EUR
• Leverage: 50:1
• Minimum lot size: .10 (10,000 K)
• Decimal Pricing:  5 decimal pricing
• Regulation: NFA
• Seg protection: Not available in the US
• Hedging allowed: Yes
• Scalping allowed: Yes
• Execution type: Institutional Pricing (ECN)
• Trade Copier setup: Available for free for Signal providers with min client total asset of 50K.

Non US Clients:

• Account opening: $5,000
• Account deposit in: USD, EUR, GBP
• Leverage: 200:1
• Minimum lot size: .05 (5,000 K)
• Decimal Pricing: 5 decimal pricing
• Regulation: FCA
• Seg protection: Yes
• Hedging allowed: Yes
• Scalping allowed: Yes
• FIX connection: Yes
• Execution type: Institutional Pricing (ECN)
• Trade Copier setup: Available for free for Signal providers with min client total asset of 50K.
• PAMM accounts: Available, with min client total asset of 50K.

VanKar Trading Corporation is a futures/forex industry brokerage group that provides unique technology and research to institutional and individual clients. We specialize in developing high performance trading software, managed futures and systems trading. We are committed to providing innovative solutions to active traders and the alternative investment community.

Our mission is to develop and offer our customers valuable trading technology with the highest level of integrity. We achieve these objectives by listening to the needs of our client’s and serving those needs through an emphasis on research and development and technology innovation whereby creating an environment in which clients can thrive.

Many futures/forex brokerages these days have become just technology providers for traders. Being an independent introducing broker we do offer many solutions workings with over ten fcm’s/dealers but Vankar first and foremost is known for our expertise with managed futures(cta’s/ cpos) and systems trading. We’ve seen/ran/helped develop  hundreds of trading strategies over the past decade.

Bid/ask spread approx.- no commissions- ECN feed:

• USD/JPY= 0.8
• EUR/USD = 1.0
• GBP/USD = 1.1
• EUR/JPY= 1.5
• USD/CHF = 0.9

Commissions for Evil Speculator readers with futures self-directed – .80 a side plus exchange/NFA 3.92 on ES for example.

Other Services- offer hosting services next to exchange matching engines, help with development of trading strategies, professional trade desk monitoring of trading systems, block execution/ APS services, ability to convert Tradestation strategies to variety of execution feeds/clearing firms, multiple FIX/API and routing solutions.