FOREX.com Review

FOREX.com, founded in 2001 as part of GAIN Capital Holdings, is an established global online broker that caters to individuals seeking to trade the retail FX and CFD markets. GAIN Capital Holdings, a conglomerate that includes City Index, an online CFD and spread betting provider, and Daniels Trading, a futures advisory trading firm, was acquired by StoneX Group Inc. in February 2020.

StoneX Group Inc., a publicly traded company (NASDAQ: SNEX), advertises that it connects “clients to the global markets across asset classes through institutional-grade platforms, end-to-end clearing and execution, and high-touch expertise.”

Globally, FOREX.com offers an extensive range of offerings, from CFDs, to spread betting to futures, across several different asset classes, though not all are available in every region that it services. Aside from forex, where it derives its name, FOREX.com also offers commodities, indices, individual stocks, bonds, ETFs, gold & silver (unleveraged in US), cryptocurrencies, and futures to provide trading opportunities for all types of traders. FOREX.com (U.K.) also offers client account protection, such as ESMA-mandated negative balance protection and guaranteed stop loss orders.

FOREX.com offers U.S. clients leveraged access to over 80 currency pairs with competitive spreads across different account types. A well-organized and navigable website with fully­ disclosed services and fees, multiple user interfaces, education and research tools that are on par with industry standards, and regulatory oversight place FOREX.com in the upper echelon of online brokers.

FOREX.com stakes its claim as the #1 FX broker in the U.S. and that claim is validated by the latest (June 30, 2020) CFTC Retail Forex Obligation report which “represents the total amount of funds at an FCM, RFED, or FCMRFD that would be obtained by combining all money, securities and property deposited by a retail forex customer into a retail forex account or accounts, adjusted for the realized and unrealized net profit or loss.”

Who FOREX.com Is For

FOREX.com is for all types of traders seeking exposure to a wide array of products and asset classes but is a good fit for the high-volume trader. Product offerings vary by region but the broker emphasizes fast and reliable execution, a variety of platforms, and account security. In the U.S., it is geared towards clients who want to trade the foreign exchange markets.

Pros Explained

• Globally, FOREX.com offers clients access to a wide range of product offerings that span several asset classes. Clients have access to forex, equities, commodities, indices, bonds, ETFs, industry sectors, cryptocurrencies, gold & silver (unleveraged in US), and futures (through an affiliate).
• TradingView is “an advanced financial visualization platform” that has been integrated into FOREX.com’s web-based platform. Its ease of use and functionality make it, by far, the most impressive aspect of the web-based platform.
• FOREX.com is a registered FCM and RFED with the CFTC and a member of the NFA (#0339826). Additionally, GAIN Capital UK Ltd is authorized and regulated by the Financial Conduct Authority (FCA #113942). U.K./E.U. clients also have additional asset protection through the Financial Services Compensation Scheme (FSCS), up to £85,000.
• FOREX.com offers its U.K./E.U. clients “negative balance protection,” as mandated by ESMA, and guaranteed stop loss orders (GSLO) (for an additional charge), which protects against market gap risk. These rules likely resulted from the SNB event of January 15, 2015 that roiled the markets, especially the highly leveraged retail FX market.
• FOREX.com advertises fast, reliable execution making it a good fit for the high-volume trader, who can earn rebates through the “Active Trader” program, thereby lowering trading costs.

Cons Explained

• FOREX.com does not offer “negative balance protection” for U.S. clients. This means that U.S. traders with negative account balances are on the hook for more money than they initially deposited into their accounts.
• FOREX.com does not offer guaranteed stop loss orders (GSLO) for U.S. clients.
• An effective web presence is crucial for an online broker. While FOREX.com’s website has an intuitive feel, there are a few pages with either incorrect, outdated, and/or incomplete information, which speaks to a general lack of attention to detail.

Costs

FOREX.com started out primarily as a market maker, but has since morphed into an ECN that generates revenue either through customer trades that “cross” the bid/ask spread, or as commissions, which are on par with the industry. Pricing is transparent and easily found on FOREX.com.

The spreads vary depending on the type of account the client chooses. For example, the minimum EUR/USD spread for U.S. clients on a “standard” account is 1 pip while “commission” and “STP Pro” accounts will show spreads of 0.2 and 0.1, respectively. However, the latter two have commissions of $50 and $60 per million added to the displayed spread. Regions outside the U.S. also offer Direct Market Access (DMA) accounts for larger account sizes (25,000+). The DMA account offers no markup on spreads, but a commission is charged.

Standard account and commission account traders may also benefit from the Active Trader Program. The program is open to anyone who opens an account with at least $10,000 or who trades $25 million of volume in a month. The program is not open to DMA account holders, as that account already has volume-based fee reductions.

FOREX.com requires that the minimum initial deposit “is at least 100 of your selected base currency,” though they recommend a deposit of 2,500 so that the client has “more flexibility and better risk management” in their trading.

As is the norm in the FX industry, clients may be charged swap fees on positions they hold overnight, which can be subject to currency conversion charges if they trade in a currency other than the account’s base currency.

In terms of other fees, accounts with no trading activity for more than 12 months are subject to a $15/month inactivity fee. The website does not list additional fees for deposits or withdrawals.

Trade Experience

FOREX.com’s trading platforms accommodate the active day trading professional as well as the occasional longer-term trader. Clients can choose between the downloadable advanced trading platform or MetaTrader 4 (MT4) for a desktop experience, the web trader for a browser-based trading experience, or choose the FOREX.com or MT4 mobile app for trading on portable smart devices.

Within the platforms, traders can access charts, economic calendars, news, positions, and trade/order history, and access trade signals and research reports, as well as market analysis from FOREX.com analysts. There aren’t many drawbacks to the platforms. There are a sufficient amount of indicators and drawing tools to satisfy the avid technical analyst, and the platforms are functional enough to make rapid-fire trades, if needed. The charting package is provided by TradingView and is, by far, the most impressive aspect of the web-based platform.

Placing trades on the web trader or the downloadable advanced trading platform is intuitive. Clients can trade directly from charts by right-clicking and selecting the “trade” option or by clicking on the “buy” and “sell” buttons along the top of the chart. This brings up an order window where the entry, stop loss, and profit target are set. One-click trading can be enabled for rapid trade execution.

FOREX.com’s platform has four basic order types with the option of attaching “take profit” and/or “stop loss” orders to them. Additionally, the trader can choose to make the stop loss a trailing stop loss order. The one difference between the web-based and downloadable offering is that guaranteed stop loss orders are only available on the latter and, furthermore, only for U.K./E.U. clients.

• Market – The simplest order where a trader signals that their trade request should be executed at the prevailing market rate.
• Limit – A pending order where the entry is at a predetermined point below or above the prevailing market rate depending on whether it’s a buy or sell. The trader also has the option of selecting the expiration time of this order.
• Stop – A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it’s a buy or sell. The trader also has the option of selecting the expiration time of this order.
• OCO – A pair of pending orders (one an entry stop and the other an entry limit) where the execution of one automatically cancels the other. The trader also has the option of selecting the expiration time of this order.

A FOREX.com account can also be integrated with NinjaTrader, a popular third-party trading platform. VPS is available for MT4 accounts. Clients can use FOREX.com’s API to connect in for their own strategies. MT4 and MT5 connectivity allows the use of automated strategies using MetaTrader algorithms.

The mobile app is functional, providing traders with access to all their account information. Traders can add or withdraw funds, view trade history, create watchlists, access news, and view charts from the mobile app. It is also easy to navigate and set up.

The charting feature is one of the drawbacks of the mobile app. There are a limited number of common indicators available, such as RSI, MACD, and moving averages, but drawing functions and more advanced technical tools are missing. Full order functionality is available, including conditional orders and the ability to easily place stop losses and profit targets at the time of a trade.

Functional demo accounts are provided for free, giving potential clients time to assess the pricing structure before committing real capital. The one criticism of the broker’s demo accounts is that they expire in 30 days and FOREX.com doesn’t give the prospective client the option of extending or applying for a new one under the same credentials. The implication seems to be that you’ve had enough time to test our platform, so either open a funded “live” account or go elsewhere.

Range of Offerings

Globally, FOREX.com provides access to a broad selection of financial instruments across a wide range of different asset classes, including:

• 80+ currency pairs
• 4,500+ popular stocks
• Commodities
• Indices
• Bonds
• ETFs
• Sectors
• Cryptocurrencies
• Gold & Silver
• Futures & Futures Options – U.S. (FuturesOnline)

In the U.S., its product line caters solely to spot forex trading, unleveraged gold & silver, and futures through its affiliate, FuturesOnline.

Customer Service

The broker’s website lists multiple ways that clients can contact FOREX.com, including online chat and live phone support, from 10 a.m. ET on Sunday to 5 p.m. ET on Friday. FAQs and website client support were satisfactory, but repeated attempts to contact via “live chat” proved to be unsuccessful. Social media support is not available, although they do have social media accounts where they post market analysis and company information.

Phone support is the quickest way to have questions answered by a real person. There is a small menu to choose from at the start of the call. Wait times will vary based on call volume, but during a normal day you can expect to wait several minutes before being connected with a representative. Email support is available for more in-depth questions but expect to wait one to three business days for a response.

Education

FOREX.com’s educational offerings are on par with the industry standard and are well organized. Clients can access content according to their experience level, or thematically. All content, with the exception of “technical analysis” topics that are available on the platform, can only be accessed through the website.

Client experience is divided into three categories—beginner, intermediate, and advanced, while themes range from the industry norm of providing market basics, such as fundamental and technical analysis, risk management, and trading strategies, to platform tutorials. A comprehensive glossary is also available.

New investors will find some helpful background information, but relying solely on FOREX.com’s education to become proficient in the markets is unlikely. That said, the material covers all the major topics that a beginner should need to know.

Portfolio Analysis

Basic real-time information about client activity, such as balances, transaction activity, and profit/loss breakdown can be found on the platform. FOREX.com does not provide a trading journal nor do they provide tax accounting tools on the platform. In keeping with the competition, FOREX.com has recently incorporated a ‘Performance Analytics’ tool that analyzes clients trading behavior and past performance.

Research Amenities

FOREX.com’s market analysis and insights are on par with industry standards and serve to connect traders to the markets and supplement its educational resources.

FOREX.com’s platform offers Trading Central, a third-party vendor that provides technical analysis reports along with an economic calendar, Reuters news feed, and proprietary news and analysis market-wrap articles. Additionally, a margin calculator and an array of trading and charting tools can be found on all of its trading platforms. The broker’s “premium” and “pro” accounts have the option of receiving research tailored to the client’s needs.

Security

FOREX.com is regulated in several jurisdictions but since laws vary by country, the products offered also vary. For example, CFDs are not available to U.S. clients but are available outside the U.S.

FOREX.com is a registered FCM and RFED with the CFTC and a member of the NFA (#0339826). Additionally, GAIN Capital UK Ltd. is authorized and regulated by the Financial Conduct Authority (FCA #113942) in the U.K. Globally, the firm is also regulated by IIROC, ASIC, MAS, FSA, and CIMA

Client funds are kept segregated from the funds of FOREX.com, which helps safeguard clients’ money in the event the company has financial issues. U.K./E.U. clients also have additional asset protection through the Financial Services Compensation Scheme (FSCS), up to £85,000, while Canadian clients are protected by the Canadian Investor Protection Fund. U.S. clients are not as fortunate, as no additional insurance is provided by the company in terms of safeguarding their funds.

FOREX.com offers negative balance protection, which is mandated under ESMA rules that went into effect in 2018, and guaranteed stop losses at an additional cost for its U.K./E.U. clients.

However, non-U.K./E.U. client accounts can go negative, as negative balance protection is not offered to them. In plain English, U.S. traders with negative account balances are on the hook for more money than they initially deposited into their accounts. Also, U.S. clients are not offered guaranteed stop loss orders.

FOREX.com does have two-factor authentication (2FA) and bio-metric authentication for its mobile application, and encrypts data using SHA256, TripleDes, and MD5.

Verdict

FOREX.com is an online broker that can service all types of traders but its emphasis on fast, reliable execution makes it a good fit for the high-volume trader who can earn rebates that would lower their trading costs.

The broker offers access to a variety of financial instruments with spread and commission costs that are on par with the industry, a choice of account types, multiple user interfaces, and educational and research resources. Customer service is available and adequate, though substandard website maintenance speaks to a lack of attention to detail.

Being NFA/CFTC/FCA-regulated lends credibility, underscoring FOREX.com’s status as a global online broker. That said, the inconsistency in not offering negative balance protection and guaranteed stop losses in the U.S. is a bit disconcerting given that the former gives clients peace of mind while the latter offers a viable risk management tool in volatile market conditions.

Overall, FOREX.com checks off most of the boxes needed to be considered a good broker. However, the impression that one gets is that it could be so much better if a bit more attention was paid to the primary revenue generator – the customer.