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The here has been a lot of pissing and moaning about the new law requiring forex dealers to have $20 million in adjusted net capital to stay in business.
Yet very few of the firms now affected by the law seem to have done much to stop it or modify it. At some point you have got to take responsibility for your own business. Everyone in the industry knew about this law. Yet where were the company press releases? Where was the organized lobbying? As Bob Dole once said "where's the outrage?!"
No. Instead you could hear the crickets chirping in the forex industry. Everyone acted as if nothing was going on. The response from smaller brokers seemed to be "maybe if we're real quiet they'll leave us alone." If Washington only hears the NFA's side of the story well then that is who they are going to believe.
If you want to blame someone for the passage of this law, blame the Forex Dealer in the mirror.
"Forex Dealer In The Mirror"
I'm Gonna Make A Change
For Once In My Life
It's Gonna Feel Real Good
Gonna Make A Difference
Gonna Make It Right . . .
As I, Turn Up The Collar On
My Favourite Winter Coat
This Wind Is Blowin' My Mind
I See These Forex Dealers In The Street
With Not Enough To Capital to Meet
Who Am I, To Be Blind?
Pretending Not To See Their Needs
A Summer's Disregard
An unregulated IB shop
And A One Money Manager’s Soul
They Follow Each Other On
The Wind Ya' Know
'Cause They Got Nowhere To Go
That's Why I Want You To Know
I'm Starting With The Forex Dealer In The Mirror
I'm Asking Him To Change His Ways
And No Message Could Have Been Any Clearer
If You Wanna Make The Forex World
A More Competitive Place
Take A Look At Yourself
And Then Make A Change
(Na Na Na, Na Na Na, Na Na,
Na Nah)
Forex Dealers Been A Victim Of
A Selfish Kind of Love
It's Time That They Realize
That There Are Some with No
Adjusted Net Capital
Not A Nickel To Loan
Could It Be Really Me,
Pretending That They're Not Alone?
A Willow Deeply Scarred,
Some trader's Broken Heart
And A Washed-Out Dream
They Follow The Pattern Of
The Charts, Ya' See
Cause They Got No Place To Be
That's Why I'm Starting With Me!
Week one of the Caveman Forex Challenge is in the books. Our friendly neighborhood Neanderthals gave out 12 free trades last Wednesday. It was not one of Caveman’s better weeks according to their own grid which shows them losing -5 pips overall on all their trades. However, due to risk/reward ratios and a slightly different price feed that resulted in the Savior making money on a trade the Cavemen lost on we made a $348.39 profit overall in our demo account as four trades went in our direction and four trades went in the other direction.
Tonight a new batch of trades will be published. You can find them here if you wish to play along: Wednesday's Free Forex Picks
CFTC Update: I have not heard anything yet about the new forex dealer rules. However, CFTC should be releasing their net capital report this week. Stay Tuned.
Last year Finex was investigated by the SFBC in Switzerland, however, they were not closed for fraud as was indicated in a post titled “The Dead Pool Graveyard.” It appears that Finex was bought out by Varengold FX thus bringing the investigation to a close. Details of the merger can be found here:
The new net capital numbers are out. These numbers are more important than ever due to the new law requiring all forex dealers have $10 million in adjusted net capital by the end of September and $20 million by May 2009. Here is the link to access the report: http://www.cftc.gov/stellent/groups/...cmdata0408.pdf
The following firms have net capital below $10 million
In particular you will notice that three firms are far below the upcoming increase to $10 million. Advanced Markets, Bacera and Money Garden. In fact, they are struggling just to meet the current $5 million net capital requirement with Advanced Markets a scant $41,000 above the current law! That kind of capitalization does not inspire much confidence and traders really need to beware doing business with them.
The following firms have net capital below $20 million
GFS Forex $11,376,000
Alpari $11, 766,000
IFX $12,362,000
ODL $12,995,000
CMS Forex $14,085,000
I Trade FX $16,054,000
FX Solutions $17,628,000
PFG $19,369,000
The following firms have net capital above $20 million
Interbank FX $21,367,000
GFT Forex $64,288,000
Gain Capital $66,314,000
FXCM $73,603,000
Rosenthal Collins $76,571,000
Oanda $163,136,000
As always conduct your due diligence and make sure the firm you are trading with will be able to comply with the new law.
Revelation Number 1) the Estate is short two million dollars.
Revelation Number 2) the receiver was able to further confirm that FXLQ had used a fake bond to prop up their adjusted net capital.
Revelation Number 3) FXLQ had been violating their adjusted net capital requirement as early as October of 2006.
Revelation Number 4) FXLQ paid over a quarter million dollars out to the Gray School of Irish Dance.
WTF?
Quote:
Under Tab 30 is a schedule of receipts totaling $251,500 that the Gray School of Irish Dance received from FXLQ, FX ARB, Robert Gray, TMA, and Forexify between April 21, 2006 and December 24, 2007. As the source of all of these funds was FXLQ, it is perplexing why payments to the Gray School of Irish Dance were routed through other entities.
Talk about getting your priorities screwed up. Here is a company that continually cannot meet its adjusted net capital requirement sending out huge chunks of change to what appears to be a dance school in CT? Gray School of Irish Dance Welcome
Hey I love Riverdance as much as the next Irishman but you’d think you would make sure your books are in order before cutting cheques to the tippy toe jumping set.
The good news for customers is that the receiver is recommending customers being fully reimbursed before other creditors. This apparently includes Interbank FX who is owed a whopping $10 million. Judging from IBFX’s plummeting net capital (almost below $20 million) they sure could use the dough.
Expect the FXLQ saga to last through the summer as the receiver continues to dig through mounds and mounds of paperwork, unexplained expenses and dodgy offshore bank accounts…
No Mas! No Mas! Like a bloody and battered Roberto Duran the folks over at Rosenthal Collins are giving up on MT4. This weekend they dropped a bombshell on their clients: Tradewview not part of RCG?! as of today
Quote:
Dear Valued Client,
From day one, Tradeview has worked to offer clients optimum trading solutions, by offering the familiar Metatrader 4 platform with sophisticated enhancements to the software. Our dedication has been to provide the latest trading technology by offering clients an unprecedented link to the biggest liquidity pools in the world. In doing so, we cultivated a new kind of FCM - one with a focus on innovation, and a relentless devotion to the best technology.
By creating our systems with this focus, we gained the ability to make fast changes in the most robust 24 hour market in the world. Every Tradeview client can rest assured that they will have access to the best possible solutions as soon as they become available.
We founded our partnership with Ikon GM based on our need for aggressive technical restructuring. Supporting 24 hour-a-day trading requires intensive support, and most FCMs are forced to outsource their technology needs. By joining Ikon GM, we are able to eliminate 3rd party solutions by utilizing their in-house technology company which specializes in network trading, and utilizing the latest market innovations. For our clients, this means we have direct control over our platform, and the ability to develop and test more advanced solutions in response to ongoing demand.
In addition to maintaining the best trading solutions, Ikon GM has a distinguished regulatory history. Since the firm?s original inception in 1999, Ikon Global Markets has maintained an exceptional record, which is an ethical priority we share.
By combining forces, Tradeview will continue to improve upon the promise we make to our clients: Providing optimum support, execution, and trading solutions that are unrivaled in the industry. If you have any further questions, feel free to contact us at our RCG office or our new office at Ikon Global Markets.
Anyone who spends time on the bulletin boards has gotten to know Tradeview Forex as they have spent gobs of money advertising their wares. Yet it appears they were never able to get MT4 to work proficiently and as such are simply walking away for the whole failed experiment. One Tradeview customer on the forex factory thread referenced above states:
Quote:
Well, considering what it has been like trading with Tradeview's MT4 platform all last week, a change for the better was needed. There have been numerous outtages to put up with and not to mention requotes during normal market conditions, invalid price messages, and not to mention when you enter an order the order does not go through and instead an "order accepted" message pops up and with no confirmed order. The message would sit there forever so one would have to cancel it and try again, but then one would get trade text is busy message. To circumvent around that you would have to close down the platform and re-open it and try all over again. That would cost you seconds and many pips. One night I could not close any orders and had to phone them in to close. The IT department has had their hands full rebooting the server and trying to fix the problems.
Tradeview says there were numerous problems related to hard coding from their 3rd party vendor for the STP technology. Problems that they could not get support for to fix.
While Tradeview should be commended for knowing when to call it quits I must take issue with this notion that Ikon has a "distinguished regulatory history."
Last fall Ikon merged with Royal Forex Trading, which had a poor regulatory record and was sanctioned by the NFA right before they gave up their FCM license due to the fact they did not have the necessary capital to stay in business.
Second, both of Ikon's principals were former principals of Coes FX. Right after they left Coes FX became the subject of numerous regulatory actions by both the NFA and CFTC resulting in a quarter million dollar fraud settlement and the closure of the firm. CFTC Settles Foreign Currency Fraud Action Against COES FX Clearing, Inc.
Third, sources have informed me that many of the clients that Ikon will be receiving from Tradeview were formerly the clients of One World Capital. One World was the poster child for undercapitalization and blew up last year just as the $5 million capital requirement was kicking in.
In short, Ikon seems to stick its fingers in an awful lot of cookie jars and it they aren't careful they may get their pudgy little digits stuck in one soon.
Finally, they are $10 million below the $20 million capital requirement set to kick in next spring.
So to those MT4 traders out there who chose Tradeview Forex because they were well capitalized I say buyer beware. Ikon is not Rosenthal Collins. It may be time for you to shop around again...
In that story informants claimed that as introducing agents they only made money if their clients lost money. Well, in this soon to be published book from the gang at easy-forex-warning they claim this is how introducing agents are compensated:
Quote:
In order to ensure it's wining against their clients, Easy Forex rewards their employees and people working for it outside the company, according to the amount deposited minus the withdrawals of their clients.
To demonstrate this method lets take an example.
1. An Easy-Forex agent convinces a person to open an account at Easy-Forex to trade the account by himself or to authorize an account manager to trade the account for him
2. The customer deposits $100,000
3. The agent is rewarded a certain percentage from this deposition. For the discussion let's assume 10%. That is, the agent is rewarded $10,000.
4. The customer trades the money in the account or someone else does it for him and after a while he withdraws the money. At this stage there are three possibilities:
a. The account is balanced. That is the account holds $100,000 that the customer withdraws. In this case the agent that brought this customer needs to pay Easy-Forex back the $10,000 he received for the deposted amount.
b. The account is drained. That is the customer lost all the money in the account. In this case the agent does not need to pay back Easy-Forex anything. In this case Easy Forex gets the reminder minus the money given to the agent.
c. The account gained relative to the opening time. Say, the account balance is now $200,000 and the customer withdraw all this money. In this case the agent needs to pay Easy-Forex the $10,000 they gave him and another $10,000 out of his own pocket.
What happens in practice is that they don’t charge the agent immediately. The agent's balance at Easy-Forex becomes now –$20,000, and next month he needs to recruit $200,000 before making any money. From any point of view this money comes from this agent pocket.
What Easy-Forex is telling their agent is that they are partners in the company: They tell them you will make money from the customers you bring only if the company will make money from the client, but you (the agent) will lose money from this customer if we, the company, will lose from him.
It’s called the “Net Deposit Method” and I must say this is all new to me. If it is true it is downright sinister. In fact, one agent provides testimony at the website in which he describes how angry an agent would get if their customer actually started making money: An agent testimony
Quote:
“I saw people with clients that made money for many months. They use to give him such bad service. Answer unpleasantly… There was a way of life in the company, a way of life… when a client was making profit they use to shout, the son of a *****, move away form here. The guy is making profit, he is destroying my account. He is destroying my salary. Fly from here, go to a different company. They gave him bad service to force him to move to a different company because it was on their expenses. This is a terrible thing. Now, at the end, it didn't matter what happened. I could not…. I, in the last Yom Kippur, and after talking to Rafi, I couldn't. This thing bothered me for a year or so. I don't know how I survived there one year or so.”
All of these testimonials apparently are related to Easy Forex’s Israeli operation. But is this kind of stuff going on in America too? Easy Forex is registered with the NFA and to date they do not have any infractions on file with U.S. regulators. But then again the more and more checking I do on these companies the more apparent it is becoming to me that the NFA has only skimmed the surface of retail forex (the fact that Robert Gray’s fake $50 million bond went unnoticed for months by regulators is still flabbergasting to me.)
In any case Easy Forex deserves particular scrutiny from the trading public over their alleged market making activities. Traders should seriously consider trading only with Dealers that are not in the market making business. The evidence against them is really starting to pile up.
I have been pressed for time and thus the Caveman Challenge has floundered as a result. But the cavemen are coming off three straight winning weeks. The Savior misunderestimated the knuckles dragging, club wielding, forex tabulating Australopithecines churning out signals over at cavemanforex.com
While only a fool would judge a signal provider favorably after checking out only a handful of trades amongst hundreds I will admit these cavemen have proved they are far superior to the monkeys who worshipped that stone slab in the opening scene from a Space Odyssey 2000.
So the Savior retracts his dis-endorsement of cavemanforex. Judge them by their numbers, not their body hair and sloped foreheads…
Linear Mode
