Forex Brokers Reviews

Forex Broker Vinson Financials Launches Website and Turnkey Partnership Solutions

Vinson Financials, a leading forex broker, today announced the launch of its new website as part of its expansion and innovation strategy. In addition to highly competitive trading conditions, it is now also offering an award-winning turnkey partnership solution for introducing brokers.

Vinson Financials, a leading forex broker, has provided investment services across the globe for over 10 years. The company is licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC), licence no. 184/12 and offers forex, CFDs, precious metals, futures and indices trading.

Today, Vinson Financials announces the launch of its new website, complete with advanced charting, coaching tools, daily news and technical analysis. A further six languages will be introduced shortly.

Vinson Financials aims to make trading easier and more transparent, offering six account types within two simple plans. As a no dealing desk (NDD) broker, Vinson Financials offers STP accounts for those seeking exceptional execution speeds and superior pricing as well as fixed spreads for traders who prefer no slippage and tighter controls on their trading.

Vinson Financials also provides attractive terms for partners, including introducing brokers and white labels.

Senior Manager, Victor Zachariades, explains: "Our team has a number of years in the industry, and our vision was to create a better client but also partner experience, providing unique benefits, to build trust and enhance partnerships."

Vinson Financials provides turnkey partner solutions combined with coaching, consultancy and competitive escalating rebates and commissions, which have contributed to its recognition as a leading player in industry partnerships.

"Our VIP Partner package offers a sophisticated plan with high tech automated payout features, facilities for monitoring client performance, rebates and commissions, as well as marketing support, including custom websites and full training on cutting-edge platforms," says Zachariades.

Education is also a key aspect of Vinson Financials' trader offering. "We believe that an educated trader can make informed trading decisions, allowing them to capitalize on market opportunities and maximize returns," says Kenny Simon, Head of Asian Markets and FX Training. "Aside from our extensive online resources, we have seminars in locations around the world, interactive one-on-one training, customized seminars, training programmes as well as platform walkthroughs for traders," says Simon.

Zachariades continues: "We believe that fairness and transparency along with fast execution, competitive pricing and superior education provide the best trading experience, making clients loyal to us as a broker. At Vinson Financials, we will continue to build this foundation of trust between us, our clients and partners."

Traders Join Exodus as Forex Probes Add Pressure on Costs

The foreign-exchange market is losing a slew of traders from big banks as a probe into alleged manipulation of benchmark rates widens and pressure mounts on the industry to reduce costs.

More than 30 traders from 11 firms have been fired, suspended, taken leaves of absence or retired since October, when regulators said they were investigating the market, according to data compiled by Bloomberg. London-based Barclays Plc (BARC) and Zurich-based UBS AG (UBSN) have been the worst-hit, each suspending at least half a dozen employees, the data show.

“That’s a considerable percentage of the workforce,” said Brad Bechtel, managing director at Faros Trading LLC in Stamford, Connecticut, who estimated the world’s largest banks have 80 to 160 voice traders for spot rates in the currencies market. “That explains the lack of liquidity in the market, and why what would normally be considered a small trade can actually push the market around more than normal.”

Regulators around the world are investigating allegations traders colluded to rig key foreign-exchange benchmarks used by investors and companies by pushing through trades before and during the 60-second windows when the WM/Reuters rates are set. At the same time, banks are trying to fight shrinking margins by replacing humans with computers, accelerating a longer-term shift in trading onto electronic platforms.

About 200 traders at smaller firms focus on spot exchange rates, Bechtel estimated in an e-mail.

UBS gained less than 1 percent to 18.40 Swiss francs today in Zurich. Barclays rose 0.8 percent to 252.2 pence in London.

‘The Mafia’

Authorities are examining whether bank traders communicated with dealers at other firms and timed trades to influence benchmarks and maximize profits. Some exchanged information on instant-message groups with names such as “The Cartel,” “The Bandits’ Club,” “One Team, One Dream” and “The Mafia.” No firms or traders have been accused of wrongdoing by government authorities.

Regulators from Bern, Switzerland, to Washington opened inquiries into the $5.3 trillion-a-day market after Bloomberg News reported in June that traders colluded to rig the WM/Reuters rates. No firms or traders have been accused of wrongdoing by government authorities.

Chris Ashton, global head of spot trading at Barclays, was suspended last year along with other spot traders at the bank in London and New York. New York-based Citigroup Inc. (C) said in January it fired its head of European spot trading, Rohan Ramchandani.

Personal Reasons

While many personnel moves were prompted by the probes, some people pointed to other motivations while stepping back.

Lloyds Banking Group Plc (LLOY)’s global head of spot foreign exchange, Darren Coote, resigned from the London-based firm for personal reasons, people with knowledge of the move said earlier this month.

James Pearson, Royal Bank of Scotland Group Plc’s head of trading for currencies in Europe, the Middle East and Africa, is taking a five-month sabbatical, also for personal reasons, the Edinburgh-based company said this week.

Deutsche Bank AG (DBK) said this week that its global head of foreign exchange, Kevin Rodgers, will retire in June. Rodgers, 52, plans to focus on academic and musical interests, according to the Frankfurt-based bank. His decision wasn’t prompted by the inquiries, according to a person briefed on his plans.

By: DailyForex.com
Recently, I came across an interesting trading strategy, intended for futures trading but theoretically applicable to retail Forex trading. The strategy’s author claims that even with completely objective and straightforward rules, a simple and complete “trend-following” strategy traded across a widely diversified group of liquid futures markets has produced an average annual return of approximately 20% per year over the past two decades, significantly outperforming global stock markets and equating to the kind of returns produced by professionally managed trend-following managed futures hedge funds.

As a Forex professional, I took a closer look at the strategy to see what kind of edge it might have historically provided to retail Forex traders. The results make interesting reading because they illustrate exactly why it can be so difficult for retail traders to exploit edges that exist within markets.

For the sake of full disclosure I reproduce the strategy rules in full:

• Risk: the 100 day ATR (Average True Range) should equal 1 unit of risk.
• Entry: long at the end of any day which closes above the highest close of the previous 50 days; short at the end of any day which closes below the lowest close of the previous 50 days.
• Entry Filter: long entries only when the 50 day SMA (Simple Moving Average) is above the 100 day SMA; short entries only when the 50 day SMA is below the 100 day SMA.
• Exit: A trailing stop should be used of 3 times the 100 day ATR from the highest price since the trade was opened (for longs), or the lowest price since the trade was opened (for shorts). The trailing stop must be recalculated constantly as a “chandelier stop” and it should be a soft stop: an exit is only made when a daily close is at or beyond the stop loss.

This strategy was tested against the most liquid and popular spot Forex currency pair, the EUR/USD, over a long and recent period of time (from September 2001 to the end of 2013), using publicly available spot EUR/USD data with the daily open and close at Midnight GMT.

The results show that the strategy provided a winning edge on EUR/USD during the test period. Over 366 trades, a total return of 33.85 units of risk was achieved, giving an average positive expectancy per trade of 9.25%. This means that the average trade produced a return equal to the amount risked plus an extra 9.25% of that amount. Considering the strategy is completely mechanical, and that it represents only one instrument within what is traditionally the worst-performing trend-following asset class (currency pairs), this is not such a bad result.

However, fees and commissions must be factored in, to determine the return that could actually have been enjoyed. Assuming that:

• the trading was performed by a fund with EUR/USD futures contracts, and
• a quarter of the trades had to be “rolled over” before the contract expired, incurring an additional commission, and
• a “round trip” commission of $20 per trade had to be paid, and
• an account of $10 million was traded with each unit of risk equaling a fixed 1% of the starting asset size, then

the total return would equal $3,385,000 minus 366 trades multiplied by $25 each, representing the commissions. This would mean a reduction of the return by only about 0.1%, giving a total return of 33.75%. It could be assumed that if the rolling over strategies were less than perfect, there would be some additional losses.

Imagine now a retail trader with an account of $10,000 who wants to trade this strategy using a retail Forex brokerage. Luckily for this trader, the brokerage allows access to some kind of approximation of a futures contract that can be traded with a very small lot size, as well as very small lot size spot Forex trading, so there is no problem with scalability.

The next step is to work out some likely costs of trading for the retail trader trying to implement this strategy over the same period on the EUR/USD. First of all we can look at the cost of using spot Forex:

• Each trade incurs a spread of 2.5 pips, and
• Each position that remains open at the New York close incurs an overnight swap charge that varies from position to position, but which averages out to, let’s say, three-quarters of a pip per night.

For the sake of simplicity we can perform a rough calculation based upon pips. The 33.85% return calculation was based upon a profit of 9,088 pips. The spread alone is 2.5 pips multiplied by the 336 trades, which are equal to 840 pips. Next, we must deduct the overnight swap charges. Our retail trader had a position open over 9,889 nights, which would account for 7,417 pips. So we must deduct a total of 8,257 pips from our total profit of 9,088 pips, which leaves a net profit of only 831 pips!

For the sake of this rough calculation, if we assume that the return is evenly spread over each pip, this represents a greatly reduced net profit to our retail trader of only 3.09%, as opposed to the 33.85% return achieved by the $10 million fund we looked at previously.

Our retail trader might have an alternative, which would be to buy synthetic mini futures contracts which do not incur overnight swap charges, but which have much wider spreads; something like 14 pips per trade for EUR/USD. Taking another look at the numbers and also assuming that one quarter of all trades must be rolled over, our retail trader would face a fee of 14 pips 458 times, equaling a deduction of 6,412 pips. This would represent a net profit of 2,676 pips. Assuming again that all return is spread equally over each pip, our retail trader ends with a net total return of 9.97%. So using synthetic mini-futures would have been much more profitable, but would still represent an annualized return over the test period of less than 1% profit per year! Furthermore, this return would be less than one third of the amount enjoyed by the large fund.

Breaking it down

Why are things so bleak for our retail trader? There are several reasons, and examining each reason carefully can help any aspiring retail trader understand how certain edges within the market can be effectively whittled away by the wrong choice of brokerage or execution methods.

Actual futures contracts are too large to be available to most retail traders, and position sizing cannot be achieved properly with amounts less than several million dollars in a diversified trend following strategy. Mini-futures are a potential solution, but if they are not very liquid then they are unlikely to present the same trend-following edge as ordinary futures. Exchange Traded Funds are another partial solution, but even so, the retail trader is going to have to pay some kind of spread for access to an appropriate market far in excess of the $20 round trip commission payable by a sizable client of a Futures Exchange.

This brings us to the topic of spreads. Frankly, there is no reason whatsoever why even a retail trader should be paying more than 1 pip for a round trip trade on an instrument as vanilla as the spot EUR/USD. Brokers charging more than this really have no valid excuse. It should be said that spreads in the retail sector have been going down in recent years. While this is good news, even if the retail trader in our example had been paying 1 pip instead of 2.5 pips, this would have raised profitability only by an additional 1.5%, and cannot truly be backdated all the way to 2001 in any case.

This brings us, finally, to the real culprit of the reduced return: the overnight swap rate, which is widely misunderstood, and so is worth a detailed examination.

Overnight Swap Charges

When you make a Forex trade, you are effectively borrowing one currency to exchange for another. You must therefore logically pay interest on the currency you are borrowing, while receiving in return interest on the currency you are holding in return. There is usually an interest rate differential between the two currencies, which means you should either be receiving or paying some extra fee each night representing the differential, and of course the exchange rate is a factor as currencies rarely trade at 1 to 1. The only time there would be nothing to pay or receive would be if the exchange rates were exactly equal at the rollover point, and there was no interest rate differential.

It would seem that sometimes you pay the difference and sometimes you receive it, so overall this swap cancels itself out. Unfortunately it is not as simple as that, for several reasons:

Currencies with higher interest rates tend to rise against currencies with lower interest rates, so you tend to find yourself in more long trades over time where you are borrowing the currency with the higher rate of interest, meaning you tend to be paying more often than receiving.

Retail Forex brokers charge or pay quite wildly different rates to their clients long or short of a particular pair. Many brokers are very opaque about this and do not even display the applicable rates on their websites, although the rates can be found within the brokerage feed on every MT4 platform. It is worth mentioning that, to be fair, there are legitimately different methods of calculating this charge. However if you look at the table compiled at myfxbook showing a range of overnight rates charged by some retail Forex brokers, you will get a sense of the wide variety in the market.

In addition to charging or paying the interest rate differential, some brokers also add an “administration” fee, which can mean that you will not receive anything even when the interest rate differential is positive in your favor! Ironically, these tend to be the same brokers that will bill you for account inactivity, and exactly what administration is involved when the trades are rarely even booked in the real market is highly questionable. The end result is to skew the fee even further against the client.

Most traders are highly leveraged, which means that they are borrowing the vast majority of the currency they are trading. Traders tend to forget that one of the negative consequences of leverage is to push up the overnight swap charges, as they must pay interest on all the borrowed money, and not just the margin that they are putting up on the particular trade. Of course, this is a legitimate element of the charge.

The practice of charging a fee for every night a client keeps a position open is not only open to abuse, but can be an effective way to dramatically reduce the odds that a trader might seek to move in their favor by an intelligent use of long-term trend trading, which usually pays off over time if executed properly. It might be said that some retail brokerages are using the widespread ignorance about these charges as a way to add to their balance sheets, and that regulatory agencies should be taking steps against this. On the other hand, it could also be said that a market maker cannot be expected to make a market in a way where they can be systematically put out of pocket by the long-term statistical behavior of the market. It might be that many of the differential rates between brokers are reflected by the currencies that their clients are long or short of at any particular time. It can be seen that one broker might be offering a better deal than another on one currency pair, but not on another, which seems strange.

A systematic study of this area would make a very interesting read. Meanwhile, a retail trader seeking to systematically hold positions overnight should make sure they fully investigate what is on offer when they are shopping around for brokers, and be aware that the speed of a price movement in their favor can have a big effect on the profitability of any trend or momentum strategies that they might be utilizing.


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KCG Announces Trading Results for June, ITG Releases Liquidity Estimation App

By Forexminute - Yashu Gola | Forex Industry News | Jul 15, 2014 11:09PM BST




KCG Holdings Inc. published trade volumes for the month of June on Tuesday.In terms of market making, KCG posted an average of $23.5 billion in transaction volumes, which is 8.2 billion shares and 3.4 million transactions per day in US stocks, a notable decline from the volumes recorded in May.

The company recorded $0.6 billion more, totalling $24.1 billion, singling out KCG as one of the few companies that posted poor results contrary to its peers in the institutional and retail electronic trading who posted higher transaction volumes in June.

KCG BondPoint on average stood at $129.4 million daily in fixed income par value, much lower than May’s reading of $130.7 million daily. In June as a whole, the consolidated U.S. stock volume on average stood at $227.3 billion and 5.8 billion stocks traded each day.

In the meantime, leading research and execution brokerage ITG launched its ITG FX Trading Cost Index Application on Tuesday. The app, which is targeted at portfolio managers and forex traders, is updated on a daily basis. The ITG FX Trading Cost Index approximates the cost of liquidity for twenty currency pairs, considering the notional trade value and the intended trading time.

“The ITG FX Trading Cost Index Application is the first of its kind in the foreign exchange space, leveraging the power of ITG’s industry-leading FX transaction cost database,” Ian Domowitz, ITG Managing Director and Head of Analytics, said in a press release. “The app is a free and easily accessible reference tool for investors who want to quickly check estimated FX trading costs.”

The index will also provide users with dealer and ECN estimates using historical costs and smoothened out for implied volatility and recent trends in costs.

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How to Choose a Forex Broker

Are you ready to open a live account and trade real money with a forex broker? Take a look at these factors you should consider in choosing a forex broker.

The forex industry is a fast-growing one and there’s an overwhelming amount of brokers that are already in business or are setting up shop. The sad truth is that not all of these forex brokers are doing honest business, as some may be “bucket shops” or scammers that are out to take your money.

Make sure you’re depositing your hard-earned cash with a reputable forex broker by choosing one that is regulated by the CFTC (Commodity Futures and Trading Commission) when in the U.S. or other regulatory agencies in offshore brokers. In Australia, ASIC (Australian Securities and Investment Commission) is in charge of regulating forex brokers in the country while FSA (Financial Services Authority) regulates those in the U.K.

It’s important to conduct business with a regulated forex broker because they are required to keep clients’ money separate from company funds and are also required to comply with capital requirements. Regulatory agencies make sure that brokers always maintain sound financial structure and that their employees are supervised against unlawful activities.

Another important factor to consider when choosing a forex broker is its customer service. Since most brokers offer online platforms and are open for trading 24 hours a day, their customer service should also be easily accessible online at any time of the day. This is because you might be opening an account with an offshore broker and might need to talk to customer service to settle account issues outside of office hours in their area.

In addition, having a reliable customer service builds good trust between a forex broker and its clients. You should be able to contact them easily if there are disputes regarding your trades executed or orders that aren’t filled.

Lastly, reviews from other traders definitely help in finding out about a broker’s reputation. After all, they’re the ones who have already had experience trading with that particular broker you’re considering so it’s best to get information first-hand from their reviews. They may have a few things to share about the broker’s quality of service, ease of using the platform, slippage, or bid-ask spreads.

There are several resources online that display these reviews on various forex brokers. A little research goes a long way when it comes to making sure that your funds are secure and guaranteed from fraudulent activities.

Platform diversity down under: Pepperstone set to launch MetaTrader 5

Australian Forex broker Pepperstone is building its portfolio of online trading platforms and has unveiled plans to roll out Metatrader 5. The name of MetaTrader 5 has appeared in the list of platforms supported by Pepperstone with a promise that the release is “Coming Soon”.

Such a move makes some sense when considering the more recent steps taken by Pepperstone, particularly its targeting of Russia and the Commonwealth of Independent States. Earlier this year, Pepperstone opened an office in Odessa, Ukraine, and launched a dedicated Russian-language website for its services. The website is gaining more functionality and also markets the pending launch of MetaTrader 5, which is well known in Russia in contrast to its relative scarcity in other jurisdictions in which most firms have stuck firmly to the ubiquitous MetaTrader 4 platform.

Admiral Markets continues to cast its net wide, prepares to launch MetaTrader 5

Admiral Markets’ Financial Conduct Authority (FCA) licensed British operation is engaging in a degree of platform diversity, having recently made a subtle indication toward the imminent offering of the somewhat under-subscribed MetaTrader 5 platform.

The company added a ‘coming soon’ tab to its Trade Forex, CFDs, metals & more with authorized online broker - Admiral Markets website, denoting the MetaTrader 5 platform as its next addition to its range of front end systems.

In preparing to add MetaTrader 5 to its armory, Admiral Markets is making steps toward further providing platforms for all audiences, despite its London location, in which retail electronic trading companies are usually notable for their use of in-house CFD and spread betting platforms which are specifically suited to the domestic market.

Admiral Markets added Spotware Systems’ cTrader platform in May this year, which became available across Admiral Markets’ Cyprus-based business, and the company has demonstrated further efforts to diversify its offering more recently when it rebranded its British Virgin Islands registered division to MTrading, and began to offer accounts with a 1:1000 leverage ratio.

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(Last updated on 27 August 2014)

InstaForex Review: Not That Good of a Broker

Quick Summary: This is not that good of a broker, and I say that mainly because they didn't return my money. Their spreads are also very wide, and their customer service is lacking for those who are not fluent in Russian. They are clearly targeting gamblers looking for fun more than serious traders.

Spreads & Instruments: The instrument list is impressive, with over 233 spot instruments and 72 currency options. 107 currency pairs, 85 single stocks and equity indices, plus commodities and bitcoin. In my opinion this is most likely a primarily B book broker who is probably relying on taking the opposite side of their clients trades as their primary source of revenue. They list their EURUSD spread as 3+ pips, which is higher than many brokers, and my experience trading with them confirms that they have higher spreads and higher rollover costs than many other brokers. As I typically trade on the daily timeframe, I’m not as sensitive to spreads as many other traders operating on shorter timeframes are, but even I noticed they were a bit wider and more expensive.

Pros: They are targeting the gambler portion of the market, and I think they are the most honest and unabashed about it. From the bright red design, to their use of selling sexual charisma, and their 1000:1 leverage with plenty of chances to win prizes, they are clearly about having fun and selling risk. This is clearly not for serious traders.