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I was trading in practise account and i noticed that -1 was deducted with every trade. So thats the money deducted by FXCM for each transaction right?
Also i am NEW to this and would like to know any GOOD book on this subject for beginners to learn
Hello adarshakb, and thank you for your post.
Why do I always start off in the negative when I place a trade with FXCM?
Each time you place a trade you will notice that you always start in the negative.
This is because each time you place a trade you pay the spread.
What is the spread?
You will always see a two-sided quote in FX. In your FXCM account you will always be shown a Buy price and a Sell price from the "Advanced Dealing Rates" window in the top left hand corner of the Trading Station. They can also be referred to as the “bid” and “ask” respectively. The difference between the two prices is called the “spread”. The sell and buy price are highlighted below in green, and the spread is highlighted in red.
FXCM makes money by making a small markup on the spread; it is the only way FXCM is compensated. This eliminates conflict of interest between the broker and the client, because we make the same amount of money whether or not you are profitable on the trade. This is why we dedicate a lot of resources in trying to improve client profitability so they have the money to stay around and trade in bigger sizes. We don't benefit from customer losses. If fact we want you to be profitable because this way you will continue to place more trades.
How am I charged based on the spread?
Micro accounts are charged 10 cents per pip, per 1K trade. Using a numerical example, let's say the spread on EURUSD is 2 pips. If you were to make a 1K trade on a micro account when the spread is 2 pips, you would pay 10 cents per pip, so in this instance you would pay 20 cents.
(1K)(.10) = ten cents per pip
(.10)(2pips) = .20 or twenty cents
If you were to place a 2K trade with a 2 pip spread, you would pay 40 cents, and so forth.
(2K)(.10) = twenty cents per pip
(.20)(2pips) = .40 or forty cents
Standard accounts are charged $1 per pip per 10K trade. Using a numerical example, let's say the spread on EURUSD is 2 pips. If you were to make a 10K trade on a standard account when the spread is 2 pips, you would pay $1 per pip, so in this instance you would pay $2.
(10K)($1) = one dollar per pip
($1)(2pips) = $2 or two dollars
If you were to place a 20K trade with a 2 pip spread, you would pay $4, and so forth.
(20K)($1) = two dollars per pip
($2)(2pips) = $4 or four dollars
For more information regarding our spreads please click here. For more information regarding our execution model please click here.
Where can I find a good book on the subject of forex?
Although I do not have any information regarding books on the subject of forex, DailyFX is the best free educational resource that we have to offer for our clients. It sounds like you are new to the forex market. I believe the best place to start for clients like yourself that are new to the forex market can be found by clicking here. Once you open and fund a live account you will also have access to our DailyFX+ page which offers over ten hours of educational resources, along with live webinars that include Q&A with our educational professionals.
Please let me know if you need any resources that are specific to your trading strategy, and I will be more than happy to point you in the right direction.
Thank you again for your post and please feel free to post with additional questions or contact me directly at email@example.com
Originally Posted by adarshakb
Last edited by Rob at FXCM; 01-27-2011 at 01:16 PM.
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Thanks for your replies. That cleared my doubts.
I will open a micro account after i am comfortable trading in the free account with virtual money. I am doing it currently in your normal account(not live)
I Loved your videos and plan to see more.
1. In my tradings(demo) will there be any difference from demo & real account?
2. I Invested in EUR/USD bid. The markets been moving up last few days. I did make $150+ in virtual money. But also placed some bets against myself in order to test out that incase of loss.
Now my Euro value is has dropped than wen i bought it. the P/L is showing somewhere around -200. So i should wait for it to come back to profit or at least P/L 0.0 to close the bid right?
Great questions! Thanks for posting on the forum!
Is there a difference between a demo account and a real account?
The functionality of the platform features will be the same, but the execution can differ slightly.
In a real account, each order is submitted to a liquidity provider (bank) and is filled at the best available price. There are times when market orders may be filled at a different price than the order indicated if the price chosen was not available. Sometimes your order will be filled at a worse price but with FXCM's Execution Price Improvements possibility, you can also be filled at a better price than you selected. You can learn more about Price Improvements at this link here.
In a demo account, each order is instantly executed at the price you see on your platform. No order is sent to the market to be filled since the account is imaginary. You will not receive negative or positive slippage on a demo account.
Should I hold on to my losing position until it hits break even, or should I close the trade at a loss?
I am not in a position to be able to offer you trading advice, but what I can say is that you need to have a stop order set for every trade you place in your account. Allowing losing trades to run against you indefinitely and simply waiting for the trade to turn around to break even is a recipe for disaster.
How do I decide where to set my Stop orders if I should use them on every trade?
The great thing about becoming a Live account holder with FXCM is that you have free access to DailyFX+'s Trading Course! One of the topics they discuss is Money Management. To view the course and learn more about Money Management, click on the image below and login with the same login details you would use to login to your Live Trading Station II platform:
If you are still not a Live FXCM Micro client, what are you waiting for? Open a Live Micro account today with as little as $50!
Click Here to Open a Live FXCM Micro Account.
Let me know if you have any further questions about trading on your account or about the Trading Course. I am here to help!
Thanks again for posting on the forum!
Originally Posted by adarshakb
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