Thursday, October 29, 2009

TraderPlanet Today


The Euro edged higher in early Europe on Tuesday, but was again unable to make much headway with resistance below 1.4850 and was subjected to renewed selling pressure during the day.

German consumer prices provisionally rose 0.1% for October which was in line with market expectations and did not have a significant impact on currency rates.

The US durable goods data was broadly in line with expectations with a 1.0% monthly increase and an increase in capital spending provided some limited optimism over the manufacturing sector.

In contrast, the housing data was weaker than expected with new home sales declining to an annual rate of 402,00 from a downwardly-revised 417,000 the previous month. There was a drop in inventories for the month with the number of un-sold homes at the lowest level sine August 1982. Nevertheless, there were further fears over the housing outlook, especially with tax credits for first-time purchases due to expire during November.

Risk appetite deteriorated again following the housing data as Wall Street dipped significantly with particular pressure on the Nasdaq index. In response, the Euro weakened to lows near 1.47 during the US session.

There was some further speculation that the Federal Reserve will tighten its policy rhetoric at next week’s FOMC meeting which provided some dollar support. The Fed will need to tread a very careful path as it will remain very sensitive to a rose in bond yields and currency volatilities are liable to increase.



The trend of a firmer Japanese yen persisted on Wednesday with Asian equity markets weaker with the dollar retreating to 91.20 while the yen also recovered to a 1-week high against the Euro.

The Bank of Japan will announce its interest rate decision on Friday and there is a possibility that they will announce a timescale for removing emergency corporate funding measures, although a further delay is the more likely outcome, especially with pressure from the government. Further evidence of policy tensions between Finance Ministry and central bank would tend to undermine the yen to some extent.

As global equity markets came under further pressure, the yen strengthened to highs near 90.50 against the dollar and also secured a renewed advance to beyond 134 against the Euro.


Sterling again found support below 1.63 against the dollar during Wednesday and secured a significant advance in US trading with a peak above 1.6450. The main catalyst for the move was a sharp Sterling advance against the Euro with some stop-loss Euro selling once there was a break of the 0.90 level.

There were no significant economic data releases during the day and Sterling was surprisingly resilient when global stock markets were subjected to renewed selling pressure. Any renewed stresses within the UK banking sector would tend to undermine the currency.

There will be further uncertainties over monetary policy ahead of next week’s Bank of England policy decision. Sterling is in a better position to gain protection from a lack of confidence in other major economies rather than any great optimism over the UK outlook.

Swiss franc

The dollar found support below 1.02 against the franc on Wednesday and strengthened to a high around 1.0270 during New York trading. The Euro drifted back to near 1.51 against the Swiss currency which will inevitably result in fresh speculation that the National Bank will intervene to prevent further franc appreciation.

The bank will certainly be on alert, but it is also likely to be cautious, especially as they will not want to get locked into a pattern of defending specific levels.

The franc will still tend to gain some defensive support when there is a deterioration in risk appetite.


Australian dollar

The headline Australian consumer inflation data was marginally higher than expected with a 1.0% increase in prices for the third quarter, but the data was not strong enough to trigger increased expectations of a 0.50% interest rate increase at next week's Reserve Bank meeting and this curbed Australian dollar support as at least a 0.25% increase is already priced in.

Risk appetite was also generally weaker which encouraged profit taking and there was a low near 0.9070 in Asia. The Australian currency was subjected to renewed selling pressure as Wall Street weakened and there was a slide to lows below 0.8970 during New York as the break of 0.90 triggered stop-loss selling.

TraderPlanet Today

Monday, October 26, 2009

The FOREX Non-Dealing Desk Trader


1. No Inherent Conflict of Interest. Non-dealing desk brokerage firms do not trade against their clients. As facilitators of trading, they do not take positions that may from time-to-time conflict with the interests of individual traders.

2. Market Access. Non-dealing desk brokers offer every trader, big and small, equal access to the interbank market. The rates (bid and ask prices) on a non-trading desk platform are not those set by an individual broker but those derived from active trading between participating banks, institutional investors, FCM's and individual traders. The process itself makes every trader regardless of size an independent market maker.

3. Anonymity: Trading is done in total anonymity - the non-dealing desk broker does not know or have a need to know your positions so stop loss orders are not/cannot be targeted for takeout when a broker has a need to meet liquidity requirements.

Note: There is a growing suspicion that dealing desk brokers spike rates to take out trades when it suits their purposes. An insider a friend of mine talked with recently, a key programmer working for a dealing desk brokerage firm on the East coast, acknolwedged that brokers spike rates of up to 10 pips on a routine basis and for a variety of reasons. Whether used to fill unbalanced trades, leverage the broker's own account, or to meet immediate liquity requirements, spiking is a fact of life and difficult to prove. Sooner or later he believes the NFA will find a way to document the practice, but until then a lot of dealing desk brokers will continue to manipulate rates to their own advantage. At this point, they don't have any compelling reason not to.

4. Pricing Intervention (Bias). Non-dealing desk broker rates as well as bid/ask prices come directly from the interbank system. They are not filtered or otherwise manipulated to maintain established (undisclosed) profit margins or spiked by the broker to gain a trading advantage.

5. Reorders. Non-existent. Traders never get "reorders" from a non-dealing desk because they serve no purpose - the broker has nothing to gain or compensate for.

6. Full Disclosure. The non-dealing desk broker's fees are limited and clearly disclosed.

7. Transparency. No mind games. What you see is what you get.


1. The Cost of Trading: A large number of traders still believe that there is such a thing as commission free trading , a myth that continues to be perpetuated by a large number of dealing desk brokers. Make no mistake, the so-called "commission free" broker generates a transaction fee every time a trade is executed.

The difference is that the non-dealing desk fee is fully disclosed; the dealing deak broker's "fees" are not. What's more, the dealing desk's offer of fixed spreads also affects the individual trader's profitability because he/she is locked out of trades when market spreads drop below the broker's fixed differential. Instead of executing a market order, the broker responds with a reorder which guarantees that broker a fixed, undisclosed profit while at the same time depriving the trader the opportunity to take maximum advantage of a pricing move.

2. Spreads are Variable, Not Fixed. The Forex is an extremely fluid market. Spreads are in a constant state of flux and when traders trade through a non-dealing desk, they may see a dozen or more banks posting rates - the most attractive appearing above all the others.

During peak trading hours, spreads can drop to zero, a fact most traders using a dealing desk are not aware of. During off-peak hours, spreads can be considerably higher.

Non-dealing desk brokers don't offer or execute trades based on fixed spreads. They charge a nominal transaction fee. Such is not the case with the dealing desk broker. Whether interbank spreads are high or low, they just boost their rates to guarantee the profits they have imputed in their fixed spreads. They also generate an undisclosed amount of income trading against their trader clients.


On Sunday, November 22, FXCM LTD will be making changes to existing margin requirements for all account holders.

Margin requirements will be increasing, particularly for currency pairs with EUR or GBP as the base currency. FXCM’s experience in Hong Kong, where significantly lower leverage levels (higher margins) are mandated by law, suggests that trading with lower leverage may assist clients in trading more successfully over an extended time period. The new margin requirements are intended to reduce risk by restricting traders from using excessive leverage.

Below, you will see the a comparison of the present USD margin requirements* for some of our most popular currency pairs next to the new USD margin requirements that will take effect on November 22.





USD/JPY AUD/USD (most USD based pairs)



EUR/USD EUR/JPY (most EUR based pairs)



GBP/USD GBP/JPY (most GBP based pairs)






*CURRENT USD MARGIN IS BASED ON AN FXCM LTD 10K STANDARD ACCOUNT WITH 0.5% MARGIN. If you have changed your default margin to be above 0.5%, your NEW margin amounts will be higher. Please consult our FAQs for details.

Based on price fluctuations, all margin requirements are subject to change without notice and will be adjusted up or down in increments of $10 for USD denominated accounts. At present, FXCM does not anticipate that margin requirements will have to be changed more than once a month. Up-to-date margin requirements are and will continue to be displayed in the “Simplified Dealing Rates” window of the trading platform by currency pair.


Important Notice

  • All positions and orders established after November 22 will be subject to the above margin requirements.
  • Additionally, open trades and active orders initiated prior to November 22 will also be subject to the new margin requirements.

We recommend watching this video to determine if you have sufficient margin to prevent positions from being liquidated. View Video

Visit our Online Margin Help Center for more detailed information, frequently asked questions, and steps you can take to prepare for this change. Visit Now

Why Lower Leverage Is Important
The combination of high leverage and volatile currencies can be extremely dangerous. Accounts that trade volatile pairs, such as GBP/USD and GBP/JPY, with the maximum amount of leverage tend to have less positive performance. On the other hand, traders that focus on less volatile currency pairs, such as USD/JPY and AUD/USD, and use more conservative leverage may benefit from the reduced risk that accompanies trading on lower leverage. When trading volatile currencies with high leverage, one bad trade can wipe out the profits from many good trades. By trading with less leverage, a trader can reduce the risk of a big drawdown from one bad trade.

If you have specific questions about the new margin requirements, or their effect on your risk management, please do not hesitate to contact us at +0808 234 8789 or e-mail us at

Best regards,

Forex Capital Markets Ltd.
145 Leadenhall Street
2nd Floor Rear
London EC3V 4QT
+0808 234 8789