High Margin Venues
This page is severely out of date. (Written on June 21st, 2004.) I'm including it here as a reminder to build a new comparison with current information.
I actually ended up going with CMS Forex and their Visual Trading software. (Isn't it annoying that each brokerage locks you into a proprietary software platform?) After a particularly expensive Non-Farm Payroll morning where they got completely overwhelmed for over half an hour, I switched over to GCI Financial. I've had to step away from trading for a couple of years, but I'm still with GCI Financial right now as I'm getting back on the saddle.
In the future, I have my eye on GAIN Capital for Forex trading, on CMC Markets Canada for CFD trading (despite their disappointing 6:1 leverage, they have a good reputation and a long list of available instruments. Their CFDs appear to be plain-old synthetic, but I have yet to find a DMA (Direct Market Access) CFD broker available to Canada. Finally I am consdering Questrade Canada for managing my upcoming self-directed RRSP. I intend to use TradeStation for charting, research and live Nasdaq TotalView market depth, but I'm surviving with GCI Financial's native Windows application for now.
| Broker | Futures | CFD's | Mini | FX Spread | Margin | Minimum | Withdrawal | Software Features |
|---|---|---|---|---|---|---|---|---|
| CMS Forex | - | - | Seamless .1,1 | 1-3-5 pips | 100 | $200 | Fax a form $35 wire (bank), $15 checks |
- Fund w/PayPal
- VISUAL TRADING!!! |
| FX Solutions | - | - | Seamless .01,.05,.1,1 | 3-5 pips | 100 | $300 | Fax a form Wire (just bank fee), free checks |
- Nice GUI w/charts
- FORGETS LAYOUT! - Charts sometimes buggy - Fund w/PayPal |
| GCI Financial | Yes | Yes | Separate, +.02 commission |
4-5 pips | 100 CFD 200 FX |
$2000 full $500 mini |
Wire Check PayPal CC |
- Java charts
- FORGETS LAYOUT! - eSignal free w/100+ lots/month - tax-free jurisdiction - Cute last digits |
| RefcoFX | - | - | Separate | 4-5 pips | 200 mini 100 normal 50 rollover |
??? full $300 mini |
Fax a form $40 wires, free checks |
- Cute last digits
- No charts - Cannot go negative |
| FXCM | - | - | Separate | 4-5 pips | 100 | $2000 full $300 mini |
Fax a form $40 wires, free checks |
- No charts
- Cute last digits |
| GAIN Capital | - | - | - | 3-5 pips | 50 | $5000 | Fax a form $40 wires, free checks |
- Cute last digits
- Java charts - Not yet tested |
Conclusion
My plan is divided into two distinct phases:
Development phase
CMS Forex will be getting my business first of all, despite FX Solutions being a noble second. FX Sol forgets layout and has some charting bugs, not to mention that CMS has up to 2 pips in spread rebate when one transacts many lots in one order. Since I intend to trade 10 lots at a time when I will be able to, that means 1 pip for EUR/USD and USD/JPY, 2 pips for GBP/USD and more... This significantly reduces the cost of bad trades. I will build this account up to 20 lots (USD$40,000) for day trading.
2004/04/16 - I have experienced 30+ minute outages with them on their live trading servers. Twice this week. Hopefully I am just unlucky and this is not a common occurrence...
2004/05/03 - I get slippage on market orders. 2 pips today unauthorized. Might as well pay the higher spreads with truly guaranteed prices at another brokerage. I've also noticed two more outages right when financial data came out.
2004/06/01 - After one final server crash on financial news, I gave up and closed my account. Each time, tech support claims to have "upgraded their servers" at that particular time (how convenient) and argues that "steps have been taken to prevent reoccurences". But they keep happening.
Main income phase
GCI Financial will be getting my business for trading trends throughout the day or multi-day. Higher spreads won't make a difference there, CFD's are a nice addition and its tax-free jurisdiction combined with PayPal withdrawals greatly simplifies management. PayPal now has a debit card which works in stores which accept MasterCard, and at ATMs which accept Cirrus. That's an unbeatable level of flexibility. Liquidity guarantee of 10 lots here as well, so not much more than 50 lots (USD$100,000) should be needed there.
2004/06/18 - I'm getting used to their tick chart combined with a third party application for 10 and 1 minute charts. Longer timeframes and lines on major pivots would be nice, but for 30-90 minute trends it's allright. I'm shooting for 10-25 pips per day. I use their Forex account because it already has all the securities I want to follow (currencies, oil, metals, major indices.)
Long term phase
GAIN Capital is for holding longer term positions in large sizes. You can submit a 100-lot order and its price is still guaranteed. Lower margin is also acceptable for longer term positions. The only question is, since these positions are on a longer term anyway, are guaranteed prices really a significant enough advantage to move away from GCI Financial's tax advantages? I'm not convinced.