Greetings,
If you live in the US you find your self with a limited amount of brokers to open an account with in the present environment. New brokers are not entering the US market for the most part. Brokers have been closing their doors and if FXCM did not buy their books than Gain probably bought them. FXCM has bought up the most books from these closing broker last being Cowboy IBFX which no longer exist. To day I was notified by FXCM of their new spread pricing and commission structure. I have never seen spreads this low anywhere. What they are doing is not adjusting the spreads at all. So this is what I am seeing as far as spreads on a micro account if I was trading 1k lots. For a 1k lot position I am presently seeing spreads of EURUSD 0.2 - 0.3 pips.
They are passing onto you what their liquidity providers are giving them untouched. They have gone to a commission model of .04 for the following pairs, EUR/USD - GBP/USD - USD/JPY - USD/CHF - AUD/USD - EUR/JPY - GBP/JPY.
So your opening position would cost you .04 and the close would be .04 plus the spread for a round trip of .10 cents on EURUSD.
Presently this is the spread I am seeing on GBP/USD .05 - .06 with the London session starting in 10 minutes. So it makes for a very transparent pricing structure. It is very easy to know what the max cost of a trade will be.
This is their statement in quotes.
"Say for example that you want to trade a 1K lot of EUR/USD. Simply add the commission to open and close a 1K EUR/USD trade ($0.04 + $0.04 = $0.08) with the value of the spread (0.2 pips X $0.10) = $0.02." Why X 10 cents because at 1K you are trading .10 lots. At 10k lots the total price round turn would be 1.00 and on a 100k position it would be 10.00. This is the most competitive price I have ever seen on FXCM.
The commission is .06 for all the other pairs including exotics:
AUD/CAD - AUD/CHF - AUD/JPY - AUD/NZD - CAD/CHF - CAD/JPY - CHF/JPY - CHF/NOK - CHF/SEK EUR/AUD - EUR/CAD - EUR/CHF - EUR/CZK - EUR/DKK - EUR/GBP - EUR/HUF - EUR/NOK - EUR/NZD EUR/PLN - EUR/SEK - EUR/TRY - GBP/AUD - GBP/AUD - GBP/CHF - GBP/NZD - GBP/SEK - HKD/JPY - NOK/JPY - NZD/CAD - NZD/CHF - NZD/JPY - NZD/USD - SEK/JPY - SGD/JPY - TRY/JPY USD/CAD - USD/CNH - USD/CZK - USD/DKK - USD/HKD - USD/HUF - USD/ILS - USD/MXN USD/NOK - USD/PLN - USD/RUB - USD/SEK - USD/SGD - USD/TRY - USD/ZAR - ZAR/JPY.
Where all this gets interesting is with your lower liquidity pairs and often higher volatility pairs. GBP/NZD for instance is trading presently at a spread of 2.9- 3.0. I have seen this pair as high as 9.0 to 12.0 with non commission type brokers in the past. Round trip on a 1K trade it would be 1.2 + a spread of 3 making it about 4.2 total round trip. I have never seen the exotic currency of USD/MXN with a spread of 17.8 as it is at this moment and adding a 1.2 round trip charge for this exotic is nothing making it like 19.0 total round trip. It usually is trading at a 30.0 spread on FXCM though but still lower than other brokers who have offered exotics. It seems high doesn't it but not when you consider that the present daily average can be much higher than the 725 pips high to low listed on my indicator coming off the weekend. This pair can swing over 1000 pips some days. For today it is already 469 high to low with the dollar gaining strength. With a cap of 20-1 leverage in the US on exotic positions you need to trade larger positions to equal what you would get with 50-1. However that does make your trade safer because leverage cuts both ways but it requires larger accounts to open these positions.
I do not know how this would compare to a MB trading but it seems like it would be very competitive glancing at their current rates. I tried to figure out their total cost but got lost in the way they describe their spreads and fees. I do not know if their current live spreads listed on their site includes their fees or not. The bottom line seems to be that FXCM can deliver tighter untouched spreads due to their larger liquidity pool to their trader. I do not know if their fixed fees are higher but with these low spreads the total cost seems to be on par with what I have seen in the past on the major Pairs and the total cost of a trade on your less liquid pairs and exotics are less expensive with these tighter spreads. These are just first impressions but the transparent nature of cost of a trade is a nice change from their past practices.
Cheers,
Doug