FX & CFD Brokers

The Great Broker Robbery

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THE GREAT BROKER ROBBERY
 I investigated 141 FX and CFD brokers

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 Shocking Experience

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 $1.00 $1.50
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 Sterling Dollar = SAME PRODUCT EVERYWHERE

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 Tim spends $3570 Dollars more
than Jim in Bid Ask
commission.

SAME PRODUCT!!!

Tim trades Sterling Dollar twice a day. Jim trades Sterling Dollar twice a day.
He risks $10 per pip movement. He risks $10 per pip movement.
He trades 2 times a day He trades 2 times a day
Broker Price = Trades at 1.5 Bid Ask Broker Price = Trades at 0.8 Bid Ask

$10 * twice a day * 1.5 Bid Ask * 255 days = $7,650 $10 * twice a day * 0.8 Bid Ask * 255 days = $4,080

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 THEY FORGOT TO TELL YOU THAT

1/ ZERO SPREAD not guaranteed

2/ TRADING ON variable spreads.

3/ AND oh yes, commission on top

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Definitions

Spread: The difference between the buy price and the sell price.

Fixed Spread Broker: A CFD/FX broker where spreads stay fixed – even during volatile conditions.

Variable Spread Broker: A CFD/FX broker where spreads can fluctuate – even during quiet times.

Commission: Cost of executing a trade.

Silent Commission: (Buy price minus Sell price) * stake size = Silent Commission.

Every trader will pay some silent commission in the form of a Bid Ask spread.
Some brokers will add a commission charge on top. Some will not.

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The study: What did I do?
SCALP FTSE INDEX 5 TIMES A DAY
£300 A POINT
SPREAD = 0.4
SCALP 5 TIMES A DAY
£300 A POINT
SPREAD = 2.0
0.4 SPREAD 2.0 SPREAD
5 trades 5 trades
£300 £300
at 0.4 spread at 2.0 spread
over a year = £153,000 fee over a year = £765,000 fee
YOU DON’T BELIEVE ME?????

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YOU DON’T BELIEVE ME?????

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And here is the data from TD365.com.

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 Basic Comparison Study

TESTED 141 BROKERS

10 PRODUCTS

I noted the Bid Ask price of 10 popular traded products.

FX PAIRS Stock Indices

EUR USD FTSE Index

GBP USD DAX Index
JPY USD SP500 Index
USD CAD Dow Index
AUD USD Nasdaq Index
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 How Results are Shown

How are the results shown?

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 Why Am I Doing This?

NOT A CRUSADER

BUT LET’S GET REAL ABOUT TRADING!!!!!!!

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 Judging on Facts – Not Taste

JUDGE ON FACTS
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 Cost of Trading

PROBLEM IN A NUTSHELL
 Cost of Trading

CMC Markets:
5 trades * £10 * 1.0 spread = £50 => £50 is the silent Bid Ask commission. You pay no other
commission.

XTB/MarketsX:
5 trades * £10 * 2 spread = £100 => £100 is the silent Bid Ask commission. You pay no other
commission.

CMC Markets = £12,750 XTB/MarketsX: £25,500

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 Fixed Spreads vs. Variable Spreads

Most brokers are variable spread brokers.

Find a fixed spread broker.

You will save money – lots of money over time.

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 MT4 & MT5 Brokers

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 same platform

different broker name

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 IG Markets
- apparently the biggest FX CFD broker in the world.

- not the cheapest.

- variable spreads on many products

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Data Recording
 Comparison Study
THE HIGHER THE SCORE

THE WORSE THE BROKER

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 CMC Markets
- Cheap broker

- BUT not the cheapest

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CMC Markets

I like CMC Markets. I did a talk for them at their OPTO event. It
was a good evening – very professionally set up.

CMC has a slick platform, although they do not get any points for
that. This is purely a price comparison analysis.

As you can see, CMC has a total score of 9.8. Compare that to IG
Markets, which has a score of 11.27.

In other words, IG Markets is 15% more expensive than CMC

Markets. That is just a fact - not glorifying CMC or shaming IG!!!!
IG Markets is 15% more
expensive than CMC
Markets.

That is just a fact - not

glorifying CMC or
shaming IG!!!!
 City Index
- My old employer

- Nice platform

- Not good spreads

City Index is 20% more expensive than IG Markets. City
Index is 38% more expensive than CMC Markets.

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TD365.com
- Fixed spread broker

- Cheapest broker in the world

That makes CMC Markets 44% more expensive than TD365.com.

It makes IG Markets 65% more expensive than TD365.com

46
 Plus 500

- Awful platform – great looking adverts ☺

- Spreads so bad I had to double check

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Results so far

IG Markets = 11.27

CMC Markets = 9.8

City Index = 13.55

TD365.com = 6.84

PLUS500 = 16.47

XTB = 11.8

Etoro = ???
 Etoro
- Awful spreads.

- Nearly 175% more expensive.

- Worrying trend!

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TD365.com = 6.84

Etoro = 18.85

Just facts!
 IC Markets
- Wow – so deceptive

- “Raw Spreads” “From Zero”??

- Not a chance!!!!!!!

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The art of not making it easy for clients to
understand the true cost of trading.
IC Markets

The DAX spread is 0.7. Good spread – but to me

misleading.

Look at the “Depth of Market”.

You buy “6.50” at 15,250.20.

But if you trade bigger than “6.50”, the price jumps to
15,250.80 – an extra 0.6.

I placed a trade for “10”.

I thought I bought at 15,250.20, but my fill was 15,250.41

(see next page). When I closed, I thought I was selling at
15,249.50, but my fill was 15,249.25.

Fact is that even on a small 10 euro bet I was never able

to trade at 0.7. The real spread I paid was 1.16.
IC Markets

Here is the real joke of IC Markets.

I trade in clips of €100 in the DAX. My broker

fills me instantly at 0.9 spread. Like IC
Markets my broker does not charge
commission on stock index trading.

However, look at the depth on the previous

page, and you will see that had I executed
€100 with IC Markets, I would have paid
15,251.78 to get in, and 15,247.97 to get out
– even though the market had not moved.

Effectively paying 3.81 in spread.

What do you prefer? 0.9 or 3.81????

What a joke 
Low Spreads – High Commission

This is Euro Dollar. As you can see, the spread is just

0.1. That is very low. Good news, right?

Wrong!

I am proposing to buy 10 lots. That equates to risking

$100 per full pip movement.

The commission cost of the transaction is about $32

to get in, AND $32 to get out of the trade, or a total of
$64. The spread is 0.1. This equates to another $10.

So now the real spread is actually 0.74. But that is

before we have factored in the “Depth of Market”.
Trade Example

I buy 10 lots at 1.20832.

There is plenty of “Depth” to absorb my 10 lots buy.

Now look what happens when I try to sell (next

page)
I buy and sell at the same price!
Reality of IC Markets

I buy and sell 10 lots at exactly the same price. So why do I lose?

I go long Euro Dollar at 1.20832, and I close at 1.20832.

Factor in the “Depth of the Market” and factor in commission, I actually paid 0.72 in spread.

And that is with Euro Dollar being at ZERO spread!!

What if Euro Dollar was 0.1 or 0.2 or 0.3

You think you trade Euro dollar at 0.1 BUT YOU DON’T! You are easily paying 0.75 to 0.96

Well hell, even Etoro is cheaper than that!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Do you get it? You think you are trading with a really cheap broker, but in reality it is not cheap at all.
Final comments…….

I reviewed many more brokers – such as Tickmill, ETX Capital, Oanda, Ava Trade, Capital.com, Global
Prime, Pepperstone, FX Pro and many more…

I am currently putting the report together in a more comprehensive Excel sheet. The reason I have not
put so many brokers in this video report is because the vast majority of these brokers are worse or the
same to what you have seen here.

For example, a company like Tickmill offer many kinds of accounts. I can trade with really decent
spreads – but I have to deposit $50,000. That makes it difficult to compare brokers on a like for like
basis. So when I did compare Tickmill to the rest, I selected their Standard Account, which saw them
come in at 18.39 – shocking considering they are only marginally better than Etoro – yet they proclaim
to have some of the tightest spreads in the world.
And the worst is?
And the best is?
See results on TraderTom.Com
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 Thank You
hello@tradertom.com

Tom Hougaard

www.TraderTom.com

© Material is copyrighted by Tom Hougaard. – All rights reserved