FXSavior,

What exactly is the definition of capital? Who does it consists of? Is it just the profit that the company has made and put into its own account? Or does it include the capital of the investor as well?

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Life is a Gamble. You win some. You lose some. And life goes on.

it is the firm's capital, not including customer assets.

^ Thanks. I figured as much.

It's a real incentive to trade against the customer, increase spreads, requotes and charge unfair swaps.

__________________
Life is a Gamble. You win some. You lose some. And life goes on.

Yet another small forex dealer is getting out of the U.S. market. HotSpot FXr is closing down their retail fx business and selling their customers to FXCM. This would be the third forex dealer that FXCM has feasted on this month.

FXCM Acquires Certain Assets of Hotspot FXr’s Retail Forex Business

The consolidation of the retail fx industry in the U.S. has dramatically accelerated in the last few weeks with ACM, ODL and now HotSpot departing.

HotSpot’s case is particularly interesting. They are owned by Knight Capital which certainly has plenty of cash to meet the $20 million requirement. But apparently their retail business isn’t large enough to justify their continuing operation.

Again, this is why a firm’s net capital number is so important. Many thought that because HotSpot was owned by Knight they didn’t need to report a lot of capital. But it turns out that Knight was not willing to fork over the money needed to keep Hotspot FXr a going concern. At the end of the day, HotSpot’s net capital number was a spot on indicator of the firm’s viability. Taking nothing else into consideration, their number gave off the impression of a firm struggling to stay afloat. So in the end is it really a surprise that their retail business sank to the bottom of the ocean?

Once again, traders should be aware of the risks you take by trading with a forex broker with net capital below $20 million. As we are seeing smaller forex brokers are liable to close up shop giving their customers very little notice. Here today, gone tomorrow.

Or in HotSpot’s case, gone in two weeks time…

Just an observation...

by eliminating all of the FX dealers in the USA...we will be left with just a handful of dealers that are well capitalized...which then makes it easier to standardize a feed eventually...

This would be nice to a have a standardized feed for the four or five retail spot forex dealers here in the USA...

When the day arrives where there is a standardized feed...then real regulation can take place to protect us traders...The problem has been that this is a global market and so fragmentized it is impossible to standardize.

ES

excellent point

Carefully, nobody get benefits from a monopoly.

And during 90's market walked the other way. Few brokers had all clients and you had to pay abusive feeds, till internet exploded and new brokers appeared.

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another good point

As we await the next CFTC Net Capital Report I thought I’d post some of the best trader thread titles I’ve seen on the Net’. Many an angry trader loves to lash out at their broker or adviser and there are some pretty humorous, if not over the top, thread titles detailing the woes and eccentricities of the retail fx trading public. Here are some of my favorites:

1. “GFT Forex – Nazi Paradise”
Forums - GFT Forex - Nazi Paradise.

Apparently, the creator of this thread, “IShopAtPublix” has never heard of “Godwin’s Law,” which states that invoking Hitler or the Nazis in an analogy serves to discredit the person who is injecting Der Fuhrer into the conversation. So why was this trader calling out GFT for being jackbooted storm troopers? Because they asked him for a photocopy of his credit card…

“Vee Hav Vays of Making you Talk!”


2. “FX Open Scam Scum”
FXOPEN SCAM SCUM - Page 9

Months ago I wrote about a broker war between FX Open and Poltek FX. Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Sadly, a tentative cease fire has appeared thus robbing the trading public of one of the most entertaining flame wars on the Internet.

Hot on the heels of this truce comes another “Peace in our Time” declaration as thread creator “Maxey” announces that he has gotten his long awaited payout of $70,000 from FX Open thus bringing a close to the volatile “Scam Scum” thread at Forex Factory.


3. “Felix with a Criminal Record (Forex Peace Army Under Government Investigation)”
T2W Day Trading & Forex Forums

The last year and a half has seen Felix Homogratus’ Peace Army under heavy scrutiny on various fly by night blogs and all over the bulletin boards. This is but one of the innumerable threads where the Peace Army does battle against its critics. In this one “Tom Harris” can be found ranting about the Peace Army being under government investigation. Mind you, no proof of such an investigation is ever presented but we are reminded that Forex Bastard’s girlfriend was thrown in the clink a year ago.

If you like the “paranoid style” this thread is for you.


4. “Patrict Sim’s (ExpertForextrader) Failed Arbitrage Strategy – Professional Scammer”
Patrick Sim's (ExpertForextrader) Failed Arbitrage Strategy - Professional SCAMMER

TalkGold is one of my favorite forums and has more threads than you can shake a stick at. Granted, many of the threads are from shameless marketers selling every forex related product under the sun, but that’s what makes the forum so interesting. It is a total free for all and gives traders a wonderful bird’s eye view of the utter chaos that is the retail forex market.

In this thread a trader by the name of “patricksimbastard” excoriates the real Patrick Sim whose trading signals “patricksimbastard” doesn’t seem to care for:

I like the “professional clown” appellate. So does patricksimbastard have a case? Don’t know, but whenever I see someone claiming to have a “Holy Grail” forex trading system as Patrick Sim claims to have I make it my business to stay as far away from such “experts” as I can. Patricksimbastard should have done the same.


5. “Oanda- Add Your Scam Screens Here”
Forums - Oanda - Add Your SCAM SCREENS Here

81 pages and still going strong. What has Oanda done to deserve such disrespect? Well, nothing. At least nothing out of the ordinary. Bad fills are a dime a dozen in retail forex, especially if the broker you trade with is a market maker taking the other side of the trade. Yet that doesn’t stop traders like “forestgril” from declaring jihad after they get a bad fill and taking to the bulletin boards to declare a fatwa on their broker. Another poster on this thread sums up “Forestgril’s” situation perfectly:

Forums - Oanda - Add Your SCAM SCREENS Here

Ah but nothing beats blaming your lousy trading on those rascally brokers does it? In any case Forestgril will not be denied:

Well, the best of luck to you Forestgril. You have your work cut out for you- as do all the disgruntled traders of fx world.

Sources are telling Jamaican media outlets that David Smith’s infamous investment scheme has only $10 million in local cash on hand. In short, it has become clear that David Smith is the Bernie Madoff of Jamaica, with the exception that Smith’s Ponzi Scheme is doing far more damage to the local economy: Welcome to the Jamaica Herald Online

Meanwhile, the NFA has yet to issue a ruling in regards to its complaint against I Trade FX: Forex Forum - FXstreet.com - View Single Post - NFA Forex Dealer Dead Pool

Smith was a formal principal at I Trade FX and while the NFA is not investigating Smith himself a ruling by the NFA could help clear up exactly what Smith has been doing with his customer’s funds all these years.

Hopefully, regulators have this case at the top of their “to do” list. It is far too important for them not to.