Forex.com vs. FXCM
If you’re looking to trade forex online, you’ll need to acquire the services of a forex broker. These are the firms that act as intermediaries between you and the forex market, allowing you to trade in currency pairs.
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?
Forex Capital Markets, more commonly known as FXCM, was founded in 1999. It is a forex and CFD broker, catering predominantly to retail clients with its headquarters in London, UK.
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.
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.
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.
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.
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?
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.
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.
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.
What Is Forex.com?
Founded in 2001 and part of the publicly traded StoneX Group Inc., Forex.com is an established CFD and forex broker with a solid reputation.
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.
Forex.com’s product offering is somewhat more diverse, with over 80 currency pairs across majors, minors and exotics.
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.
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.
For high volume traders, there’s the DMA account (direct market access), and for US clients there’s also a commission account, which comes with competitive pricing and volume-based discounts, though it does require a minimum deposit of $10,000.
Its demo account is available to try for free for 30 days and comes loaded with $10,000 in virtual funds.
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.
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.
What Are the Pros and Cons of Forex.com?
Good range of currency pairs– Compared to FXCM, Forex.com has a much greater range of currency pairs, ideal for those looking to diversify their portfolio.
Low minimum deposit– Though FXCM is accessible with its low deposit requirement, Forex.com is even more so, with just $100 needed to open a Standard account. Equally, its commission-based account also has a lower deposit against FXCM’s comparative offering.
Highly regulated – All in all, Forex.com is regulated in seven jurisdictions across the globe, giving this broker a strong reputation in terms of standards and security.
US clients accepted– Perhaps the most notable difference between FXCM vs Forex.com, and a major plus of the latter, is that it is able to offer its services to US-based clients.
No social trading functionality– Unlike FXCM, Forex.com does not allow for social copy trading, so if this forms an integral part of your strategy it’s not the best broker for you.
Limited platform choice – Although its proprietary platform is a decent offering, the lack of choice may be off-putting for some, and if you don’t find it easy to use it will impact your trading experience significantly.
Limited protection for US clients – Though Forex.com is able to operate in the US, there’s limited protection for clients here. For example, US-based accounts do not come with guaranteed stop loss functionality, nor do they afford negative balance protection.This means US clients need to be extra cautious when using Forex.com as a broker.
FXCM vs Forex.com – Which Is Better Overall?
This is entirely down to your personal circumstances and trading style.
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.
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.