The difficulty comes in choosing the right one for your needs. In this article, we’ll look at FXCM vs. Forex.com, comparing the costs, services and suitability of these two popular online brokers.
What Is FXCM?
Its parent company, the Jefferies Financial Group, is publicly listed on the New York Stock Exchange and holds tier 1 regulation in three jurisdictions. Authorization is given by the Financial Conduct Authority (FCA), the Australian Securities and Investment Commission (ASIC), and the Investment Industry Regulatory Organization of Canada (IIROC), making FXCM a reasonably safe and secure broker. The FXCM review below gives an overview of its pricing, products and services.
Product Offering
FXCM gives clients access to around 39 currency pairs, which is a fair offering, but low compared to many other forex brokers. That said, if you’re just starting out, it trades in all the major currencies a beginner is likely to look for, so this shouldn’t prove too much of a limitation. In addition to forex, you can also trade CFDs in shares, commodities, indices and cryptocurrency, though we should point out that the instruments available to you will depend on the geographical location of your trading account.
Account Types
For retail clients, FXCM offers two account types, its Standard and Active Trader accounts. Standard is the most accessible of the two, with a minimum deposit of just $300. The Active Trader account requires a $25,000 minimum deposit but comes with far more competitive pricing and access to advanced features and tools. You can also trial the FXCM demo account for free, experimenting with $50,000 of virtual funds.
Pricing
This all depends on the account type you choose to open. The average spreads on forex pairs for the Standard account are high compared to other forex brokers, the EUR/USD around 1.3 pips for example, but this is a commission-free account with all costs rolled into the spread. The Active Trader account works on a tiered system with tighter spreads and lower commission, based on volume trading. Both accounts offer zero fees on deposits and withdrawals and come with multiple funding options including bank transfer, credit and debit card and selected e-wallets. Leverage of 30:1 is available on major forex pairs with both account types.
Platforms
FXCM offers a good range of platforms to trade on, including its proprietary Trading Station, and the popular forex platform MetaTrader 4. Both of these provide fast execution and intuitive functionality suitable for all experience levels. Clients can also opt to use NinjaTrader or ZuluTrade for social copy trading.
What Are the Pros and Cons of FXCM?
FXCM Pros
Low minimum deposits – With just $300 required for the Standard account, FXCM is an accessible broker even for those just starting out with limited capital. Wide range of trading platforms – With its proprietary platform available on desktop, web and mobile, and other popular platforms on offer as well, FXCM clients have a range of options to suit their personal preferences. Educational resources – One thing we haven’t mentioned but is worth doing so here is FXCM’s educational library, where you’ll find plenty of content to learn more about forex trading. Volume discounts – Though the minimum deposit requirement is much higher, the Active Trader account offers more competitive pricing the more you invest, making FXCM a good choice for high-volume traders.
FXCM Cons
Limited products – FXCM’s offering in terms of instruments to trade is relatively sparse, so if you are looking to establish a diverse portfolio it’s probably not the most suitable broker. Higher than average spreads – While the Active Trader account offers more benefit here, those who opt for a Standard account won’t get the most competitive spreads on forex pairs. No US clients – Unfortunately, due to a lack of relevant regulation, FXCM is unable to provide services to clients based in the US. It was actually banned from doing so in 2017 after a fraud scandal, which saw it pay out $7 million and withdraw its registration with the Commodity Futures Trading Commission (CFTC).
The parent company at the time has since been declared bankrupt, and FXCM continues to operate under strict regulation in various other global locations. Also headquartered in London, it’s not only regulated by the FCA, ASIC and IIROC, but also the Financial Services Agency (FSA) in Japan, and the Monetary Authority of Singapore. In addition, Forex.com is regulated by both the National Futures Association and the CFTC, so it’s able to cater to US clients. So you can make an informed FXCM vs Forex.com comparison, we’ve covered the same features of this broker below.
Product Offering
Forex.com’s product offering is somewhat more diverse, with over 80 currency pairs across majors, minors and exotics. Just like FXCM, it also deals in additional markets, covering shares, indices and the most popular commodities to trade. Again, we should point out that what you’re able to trade depends on where you’re located, trading on CFDs for example being prohibited in the US.
Account Types
Forex.com caters to both retail and professional traders alike through multiple account types. Beginner and low-volume traders are best suited by its Standard and MetaTrader accounts. These are commission-free and offer easy market access with just a $100 deposit required. Its demo account is available to try for free for 30 days and comes loaded with $10,000 in virtual funds.
Pricing
Again, this is entirely dependent on the account you choose to open. For Standard account holders, forex spreads are on par with FXCM, both of which are slightly higher than the market average, but you do need to take into account that there is no commission applied. As for the DMA and commission account, again you’ll get more competitive pricing when you trade at a higher volume. Forex.com also charges zero fees for deposits and withdrawals and you can fund your account by bank transfer, credit and debit card. A bonus here is that Forex.com is one of a limited number of forex brokers that accept PayPal for deposits. Leverage is slightly higher than FXCM at 50:1.
Platforms
All of Forex.com’s account types are tied to its proprietary platform, available as desktop, web and mobile versions. Experienced traders will find the feature-rich nature of the desktop version more beneficial, with a broad range of drawing tools, technical indicators and predefined charting strategies. Beginner or casual traders may be better served by the user-friendly design of the web version. There is one exception to this rule in the form of Forex.com’s MetaTrader account, which uses the MetaTrader 4 platform. Note that this is only available as a Standard account, so you won’t get the benefits of the high volume pricing structure if using this platform. Both are accessible for beginner traders with low minimum deposits, and both offer a similar pricing structure across all of their comparable account types. Due to the fact that it accepts US clients and is governed by more regulatory bodies, Forex.com could be considered the better of the two if we look at it purely in terms of reputation. That said, FXCM does offer more in terms of features and functionality, in particular social copy trading. It also facilitates advanced automated trading strategies through its API on premium account types. In the end, it all comes down to how you like to trade, and where you’re trading from.
General Tips for Choosing a Forex Broker
Check its regulation – This is the first port of call when looking into a prospective forex broker. Do your research to find out where it operates and who it is regulated by. Generally speaking, the more jurisdictions a broker holds regulation in, the more likely it is to operate by the highest standards. Look for existing client feedback – You can easily find online reviews for forex brokers to get an idea of the experiences people have had before you. Remember though that those who have had a negative experience are far more likely to leave a review online than those who have encountered no problems at all. Still, it’s a good place to start your research. Take advantage of demo accounts – Try these out for a few different brokers, especially if you’re considering using their proprietary platform. You need an interface you’re comfortable with using, and this is your opportunity to see how well it suits. Consider your trading style – Spend some time planning your long-term forex strategy before you commit to a broker. You need a clear picture of how your trading style will pan out to ensure that what the broker offers matches what you’re looking to achieve. Carefully compare pricing – It’s not easy to make a like-for-like comparison on forex brokers’ pricing, since each operates in a different way. Consider spreads and commission, but also look into additional costs like inactivity fees, overnight charges on open positions and withdrawal costs. All of this will impact your profit margin so it’s an important consideration.
No matter which broker you choose to facilitate your trades, remember that forex is a high risk investment area, and your capital is only as secure as the safety measures you put in place.
Final Thoughts
Hopefully our FXCM vs Forex.com review has given you a clear idea of which broker would be better suited to your needs. Forex.com is a US-friendly, slightly safer option, and though FXCM does have a lot to offer, you’re already taking a risk in trading forex, and could probably do with taking nothing more than the absolute necessary risk with your chosen broker.
