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(New York, January 22, 2008) FXCM’s No Dealing Desk trading platform recently added an additional bank as a price provider, bringing the total to seven global banks that compete to provide pricing for FXCM’s Trading Station. Over the last three months, typical spreads have already tightened.

Watch closely for lower spreads in the following currency pairs:

EUR/USD Typical Spread: 2.3 pips, As Low As: 0.9 pip
EUR/CHF Typical Spread: 2 pips, As Low As: 0.1 pip

“FXCM’s No Dealing Desk trading platform aims to provide transparent and fair execution. Every trade is executed back to back with one of the world’s premier banks, or financial institutions, which compete to provide FXCM with bid and ask prices,” said Drew Niv CEO of FXCM. “The best spreads available to FXCM are streamed to you with a small mark-up, which is generally one pip or less for major currency pairs.”

I tested the spread on the demo platform but I have 2.6 pips on EUR USD and 3 pips on EUR CHF (look at the screen shot). The press release is optimistic… But I think the spread is not the most important, a broker who not take position against traders is important. FXCM with 7 banks as price provider shows a good trend for forex brokers.

After reviewing client feedback, FXCM has incorporated many of the requests suggested and have revamped the Marketscope charting package, which is integrated into the FXCM trading platform. These new changes will eliminate the need to toggle between the charts and the rest of the trading station in order to make orders or place trades.

Major Change, Trading from Charts:

• Place orders and manage positions directly from the chartOpen
  • New Positions and Close Existing Positions
  • Set and Manage Stop-loss and Limit Orders
  • Create and Remove Entry Orders
• See all open positions and waiting orders reflected on your charts

New Look and Feel, Fully Customizable:

• Create a layout that best meets your trading style
• User friendly and easy to navigate
• Improved Trendline drawing tool

I tested the new platform and… It’s great but can be improve.

What can we do on the platform ?

1. We can create an order on the chart
2. We can move the “Stop” and “Limit” on the chart

What can be improved ?

1. We don’t have the option to disable confirmation. I want to move my stop line without a click in a confirmation box.
2. Why the default stop order is 9 pips and limit order only 1 pip??? Can we change that in options menu?
3. The order lines are horizontals. Is it possible to make a line and fix my stop on it? It could be a very good tool to stop a position on a support/resistance of a channel.
4. And better : could we fix a stop/limit order on an indicator (moving average…)
5. The options are “Create market order” and “Create entry order”, with the sell option selected. I’d prefer “Sell at market”, “Buy at Market”, “Sell order” and Buy order” it’s clearer. I also want the possibility to deactivate the confirmation on market orders.

I have many wishes on my Christmas list ;) I’ll continue to test the platform…

This is the answer of FXCM about my question on fractional pip pricing :

Hi, this is Tim Shea, the producer of the video about Fractional Pip pricing. I’d like to elaborate more on the benefits of fractional pips, and why I think that it is a great development in the FX market. As I mentioned in my video, since the introduction of fractional pips, we’ve seen generally lower spreads. The spreads I used in my video are real spreads coming from real prices.

Fractional pips introduces more precise pricing. This puts more pressure on the banks that provide us liquidity to offer us better prices. The multiple banks on our NDD system (currently 6, and we are working to add more) each have different prices. The system fills orders with the bank that offers the best prices for the necessary liquidity. So, that means if a bank wants order flow from our NDD system, it must give us higher bid prices and/or lower ask prices than the other banks are at the time. With an average nominal trading volume of over $200 billion per month, there’s a lot of order flow that’s worth competing for.

With fractional pips, the pricing becomes keener. There are many instances where several banks want to pick up some of our order flow. Without fractional pips, we had instances where 3 banks would quote a 3 pip spread, and that’s the lowest they are willing to go. They would want to cut their prices to pick up more business, but when a spread is 3 pips, going to 2 pips is cutting your price by 33%. That’s a lot! Many banks would be unwilling to do that. Now, with fractional pips, these banks can lower their spread by 5%, 10%, 20%, etc, in order to compete. So, in order to win the order flow, one bank might quote 2.8, while another quotes 2.5, and the third 2.9. Much of the time, the bank quoting 2.5 will get most or all of the orders, beating out the other 2 banks to get the business coming from the NDD system, while the bank with the highest price, 2.9, would get little or nothing of the order flow. This makes for more pressure on the banks to give better prices to the NDD system.

The result is generally lower spreads for FXCM clients. This means their cost of trading is now lower, saving them money. We’ve gotten a positive response to fractional pips from our clients, as they enjoy saving money.

Thank you for your answer.

FXCM announced today they will now offer fractional pip pricing. Clients can now see an additional digit in the price quotes.
I discovered this option this morning. On the first sight it seems cool but I saw the presentation, the video explain that FXCM give tighter prices. Look at http://forex.acrobat.com/p68453006/. This is a capture of the video:

It seems great for traders. But in reality the price is often as follow (Capture of the demo platform):

When the price is 1.40466 / 1.40493 the spread is 2.7. Before the fractional pip pricing the price was

• 1.4046 / 1.4050 spread = 4, cool !
• or 1.4047 / 1.4049 spread = 2, not cool :(
• or 1.4046 / 1.4049 spread = 3 but “bid” is worse
• or 1.4047 / 1.4049 spread = 3 but “ask” is worse

The fractional pip pricing exist on many platform (Oanda, Saxo?, FXCM). Personally I don’t care about it because I trade with a 5 pips grid. But I don’t think it’s a good evolution in forex trading.
I will certainly have an answer from FXCM, I will publish it here :)