RTC Finance Review, One of the best Forex and CFD trading platform

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FXTM Review

Review

FXTM, also known as “ForexTime”, is a well-established Forex / CFD brokerage house which has been in business ever since 2020. FXTM has grown rapidly in recent years and has a corporate structure composed of three entities which match its three bases of operations: the U.K., Cyprus, and Mauritius. FXTM allows its clients to trade Forex currency pairs and crosses, including some exotics, the precious metals gold and silver, crude oil and natural gas. Traders can also trade major equity indices, cryptocurrencies*, and CFDs** on major American stocks and shares. FXTM also enables direct trading in stocks, not wrapped in CFDs, where the trader takes direct legal ownership of the shares when buying them, just like a traditional stockbroker.

Regulation and Security

This should not constitute as advertisement in the territory of Belgium, France and Netherlands

FXTM enjoys an extremely high and very strong level of regulation in several jurisdictions. It is based in three different countries, with three different corporate branches to match.

ForexTime Limited (www.forextime.com/eu) is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 46614. The company is also registered with the Financial Conduct Authority of the UK with number 600475. Exinity Limited (www.forextime.com) is regulated by the Financial Services Commission (FSC) of the Republic of Mauritius with an Investment Dealer License bearing license number C113012295. Forextime UK Limited (www.forextime.com/uk) is authorised and regulated by the Financial Conduct Authority, firm reference number 777911.

This multi-jurisdictional setup allows FXTM to differentiate its offering depending upon where its traders are located. It is worth mentioning that acquiring regulation is not an easy feat for any Forex broker, so the mere fact that ForexTime has acquired regulation in several jurisdictions is extremely admirable.

FXTM is formally regulated in the United Kingdom, Cyprus, South Africa, and Mauritius. In the United Kingdom, ForexTime UK Limited is authorized by the Financial Conduct Authority to provide regulated products and services under license number 777911.

In Cyprus, ForexTime Limited is licensed by the Cyprus Securities and Exchange Commission under license number 185/12.

In South Africa, ForexTime Limited is licensed by the Financial Sector Conduct Authority of South Africa under FSP number 46614.

In Mauritius, Exinity Limited is licensed by the Financial Services Commission with a category 1 global business license and as an SEC-2.1B investment dealer (full service excluding underwriting) under license number C113012295. Exinity Limited is also a member of the Financial Commission, an international dispute resolution body serving the financial services industry.

FXTM’s regulation in both the United Kingdom and Cyprus provides its clients depositing in FXTM’s branch in either jurisdiction with a degree of investor protection. The U.K.’s Financial Conduct Authority has a Financial Services Compensation Scheme which can protect deposits of up to £85,000. Cyprus’ CySEC maintains an Investor Compensation Fund which is empowered to award depositors who lose their account deposit due to the failure of a regulated firm an amount up to €20,000.

FXTM has been in operation as a dedicated Forex / CFD brokerage house since 2020, giving it a reasonably long track record. Applying the “lindy effect” rule, the longer time a broker has successfully been in business, the better the reputation that broker can be assumed to have. This means that FXTM has a meaningful track record and an established reputation of safety as a brand which it needs and wants to protect, to ensure it remains in good standing in such advanced and highly regulated financial services centers such as the U.K.

FXTM’s story of steady expansion adds to their level of credibility. After its initial establishment in Cyprus in 2020, FXTM grew and acquired its South African license in 2020, and its U.K. license in 2020. FXTM’s client base globally has grown quite steadily.

As with all Forex / CFD brokerages regulated in member states of the European Union like Cyprus or the United Kingdom, clients of FXTM operating through FXTM in the U.K. or Cyprus are automatically granted negative balance protection, but this is NOT offered to all clients globally. This means that it is impossible for any client not using the Mauritius branch to lose more than the amount they have deposited with FXTM. The “tail risk” of an unusual, extreme market movement, which can be exponentially raised by excessive leverage, is borne fully and voluntarily by FXTM in other cases.

The total fees charged by any brokerage should always be one of the very top considerations of someone looking for the most suitable Forex / CFD broker. It ranks right up there with security / safety of funds deposited. Each cost should be examined rigorously. It can be helpful to divide all fees and costs into two categories: trading fees, such as spreads, commissions, and overnight financing; and miscellaneous fees, such as periodic charges for account inactivity, or fees or commissions charged by the brokerage itself against account deposits or withdrawals. The trading fee element is the much more important side, so it makes sense to begin a fee analysis here.

Looking at trading fees first, we will start with spreads and commissions, which are worth taking together as a comprehensive “round trip” cost of opening and closing one trade. As FXTM offer a few different account types which charge slightly different fees, we will judge the trading fees of its most common account type, the Standard Account.

The average round trip cost of trading the benchmark EUR/USD Forex currency pair is 2 pips with the company’s Standard Account. This is slightly on the high side for the industry. The Cent Account, FXTM’s account with the lowest minimum deposit (only $10) averages slightly higher at 2.2 pips. However, this falls to only 0.8 pips with one of the ECN-style accounts, which represents a very competitive rate considering the minimum deposit is only $500 for this account type.

The average round trip fees and costs for other CFD instruments offered such as commodities, individual stocks and equity indices are average for the industry.

Finally, FXTM’s offering of real share trading through its accounts based outside the European Union is not only a relatively unique service, its trading costs in this area are competitive and slightly lower than its direct competitors.

These levels of spreads and commissions are broadly competitive on the ECN side, especially for clients with relatively low deposit amounts. The minimum deposit required to open a “true” ECN account is only $500, so for traders depositing anything close to this sum, these fees are competitive. However, traders with considerably larger sums to deposit such as a few thousand dollars would find the trading fees average, but nothing special, at least for trading Forex and CFD products.

An often-overlooked element of the trading fee structure is overnight financing, which is typically a net charge applied to any trade open at 5 p.m. New York time. These fees are, at least hypothetically, calculated from intrabank tom/next intrabank fees, but retail brokerages usually give considerably less favorable rates. This can make swing or position trading expensive, particularly when a trader wants to be long of a currency with a relatively high interest rate and short of another currency with a relatively low (or even negative) interest rate. FXTM are totally transparent regarding their overnight financing rates, which is a sign of trustworthiness: frequently, brokers don’t publicize their existing rates, but they can always be found within the relevant trading platforms if you know where to look for them.

FXTM makes no claims about how their overnight financing / swap rates are derived. Many brokers claim they are based upon interbank tom/next rates, yet the rates offered always seem to be considerably less favorable to the client than the prevailing tom/next rates. Therefore, we are inclined to applaud FXTM for not making any such claims. A comparison of FXTM’s rates to the industry average at the time this FXTM review was written shows that FXTM’s rates are very competitive and slightly better than the average. Now here’s something truly unique about FXTM and their overnight financing / swap rates: some of their account types charge no swaps at all! The Cent Account and the Shares Account are completely swap-free, while swap is not paid in any other account that uses the MetaTrader 4 platform. While many brokers offer a swap-free Islamic Account option, it is usually offered only to Muslims, so this global swap-free option is both very rare and very appreciated. Overall, this means that FXTM is likely to be a good choice for traders planning to keep positions open longer than one or two days at a time.

A listing of FXTM’s overnight financing / swap rates applicable to Forex grabbed from their site at the time this review was written is shown below:

Another factor which makes us believe that FXTM has a commendable sensitivity towards the problem of traders being “bled” quietly by certain retail Forex CFD brokerages charging relatively high overnight financing rates, is that in 2020, they ran a limited period promotion where overnight financing would only be charged or paid over weekends, and not on weekday rollovers. This is impressive, and we never heard of another brokerage offering a similar promotion of this type.

Finally, we conclude the topic of fees by checking whether clients are charged any incidental fees by FXTM, regardless of whether a trade is made.

FXTM imposes a dormant account / account inactivity fee of $5 per month but an account must have initiated no trading activity for a period of at least six months before this fee will be imposed. This is good by the standards of the industry. FXTM also charges additional withdrawal fees against withdrawals made by credit cards or bank wire transfer. The exact charge depends upon the country of residence of the client making the withdrawal but is typically approximately $2 for a withdrawal by credit card and approximately €20 for a wire transfer. These fees are justifiable, but many retail Forex / CFD brokerages do not charge them, so it is not a competitive practice.

Our bottom line on fees: FXTM’s fees are competitive for traders making any amount of deposit to an ECN-style account type, but is especially good value at amounts close to the $500 minimum deposit.

What Can I Trade

Following safety of funds and regulatory oversight, plus fees of course, the major priority to think about when choosing a new Forex / CFD brokerage is what assets you can trade. Many newer traders will be looking to trade only one single asset class, such as Forex, or CFDs on individual stocks and shares, but more experienced traders will probably be looking for diversification, meaning a wide offering across Forex, commodities, stocks, etc.

FXTM offers the following instruments for trading:

Forex – more than 57 currency pairs and crosses, including exotic currencies, as listed below.

Metals – a category somewhere between Forex and commodities that deserves to stand on its own, in the opinion of many traders, so let’s treat it that way. FXTM offers trading in spot gold and spot silver. Gold is paired with the U.S. Dollar, the euro, and the British pound. Silver is paired with only the U.S. dollar and the euro.

Commodities – a narrow selection of commodities, with only energies offered: both types of crude oil and natural gas:

Equity Indices – a selection of 11 major equity indices, offered from approximately 10 developed nations (no emerging markets are included within the selection):

Cryptocurrencies –4 major cryptos are offered paired with the USD. At the time of this FXTM review, the only cryptocurrency not offered from the top 5 largest cryptocurrencies is Bitcoin Cash:

U.S. Shares as CFDs – a wide selection of 120 major U.S. shares may be traded as certificates for deposit:

U.S. Shares (direct ownership) – a selection of 10 major U.S. shares which may be bought and sold with full legal ownership and no CFD wrapping.

Our conclusion regarding FXTM’s offering of tradable assets is quite favorable, with a range of asset classes offered that should satisfy traders looking to trade Forex, major equity CFDs, and individual leading U.S. equities. We think that the offering is sufficient for traders who are not particularly interested in diversification across a wide range of commodities or emerging market equity indices.

Account Types

A choice of six different account types is offered.

Accounts are divided into two types: Standard Accounts and ECN Accounts, which operate an ECN-execution model. The difference is essentially between execution costs restricted to variable spreads subject to a minimum amount, and variable spreads subject to no minimum plus commission (ECN). Both execution models have pros and cons, and each may better suit a different type of trader.

The Standard Account with the lowest minimum deposit is the Cent Account, which requires a deposit of only $10 to open. The account may be denominated in USD, EUR, GBP, or Nigerian Naira for customers residing in Nigeria. Variable spreads are charged and are subject to the highest minimums imposed by FXTM, making a typical “round trip” spread on the benchmark EUR/USD currency pair as high as 2.2 pips. However, overnight swaps are not charged or paid in this account type. This account offers 25 major and minor Forex currency pairs and 2 metals for trading. The maximum position size per trade is 1 lot (typically equivalent to $100,000 in nominal value) although of course where account size is low, maximum leverage (more on leverage later) will play a big role in defining a lower practical maximum. The only trading platform which may be used with this account type is the MetaTrader 4 platform.

The next Standard Account is, a little confusingly, called the Standard Account. It is available in the same base currencies as the Cent Account, but a minimum deposit of $100 is required. Variable spreads are charged and are subject to somewhat lower minimums, making a typical round trip spread on the benchmark EUR/USD currency pair approximately 2 pips. Customers have a choice whether to use the MetaTrader 4 or MetaTrader 5 trading platform with this account type. If MetaTrader 4 is used, overnight swaps are not charged, but they are charged if MetaTrader 5 is used. This account offers the full range of Forex, metals, commodities, equity indices and equities as CFDs described earlier as FXTM’s offering – everything except U.S. shares not wrapped as CFDs. The maximum position size per trade is 30 lots (typically equivalent to $3 million in nominal value).

The last of the Standard Accounts offered is the Shares Account. It is available in the same base currencies as the other two Standard Account types and requires a minimum deposit of $100 to open. Only the MetaTrader 4 platform may be used with this account type. Over 120 U.S. shares can be traded wrapped as CFDs. A fixed leverage of 10 to 1 is offered. A maximum position size per trade of 10 lots is offered.

Now we will move on to the range of ECN Accounts offered by FXTM, which all offer (obviously) an ECN execution model. This execution model means that you will tend to pay a lower cost to execute trades, but that prices may gap wildly under extreme market conditions, especially when trading currency crosses with generally low liquidity. All ECN type accounts are available in the same base currencies which we already listed for the Standard Accounts. All the accounts are swap-free with no overnight swap charged if the MetaTrader 4 platform is used. Customers have a choice between using MetaTrader 4 and MetaTrader 5 in all account types.

The ECN Account with the lowest minimum deposit required is the ECN Zero Account, at only $200. No commission is charged, and the minimum floating spread is 1.5 pips, so it is very difficult to see here what qualifies this to be considered as an ECN account. Traders using the MetaTrader 4 platform can trade 48 Forex currency pairs and crosses, 3 metals, and 14 CFDs. Traders using the MetaTrader 5 platform have a smaller range of assets they can trade: 33 Forex currency pairs and crosses are offered here, as well as 2 metals.

The next account we’ll look at is the ECN Account. A minimum deposit of $500 is required. There is a variable floating spread which is always at a minimum of 0.1 pips, unlike some ECN style accounts at other Forex / CFD brokerages which offer no minimum spread and sometimes even quote inverted spreads. The commission charged is $2 per lot for a round trip trade, which translates to 0.02% of the nominal value of the trade position size. Traders using the MetaTrader 4 platform can trade 48 Forex currency pairs and crosses, 3 metals, and 14 CFDs. Traders using the MetaTrader 5 platform have a smaller range of assets they can trade: 33 Forex currency pairs and crosses are offered here, as well as 2 metals.

The final account of the six offered is the FXTM Pro Account. As its title suggests, this account type is intended for advanced and well-capitalized traders, requiring a minimum deposit of $25,000. Despite it being an ECN account, no commissions are charged, and the variable spread which FXCM describes as “institutional level” may fall as low as zero. If the MetaTrader 4 trading platform is used to trade this account, 43 Forex currency pairs and 2 metals may be traded. If the MetaTrader 5 trading platform is used instead, 33 Forex currency pairs and 2 metals may be traded, as well as 10 major stocks.

Bottom line: our verdict is that a suitably wide range of alternative account types are offered, but some of the account types seem to be better value and more meaningful than others. We see the best all-round account offered by FXTM as the ECN Account which requires a minimum deposit of $500. The Cent Account can be opened with a deposit as small as $10 and at this level of capitalization, even with the relatively high average spread on EUR/USD of 2.2 pips, at such a low deposit level it is certainly competitive.

Leverage is an important topic to consider when evaluating a Forex / CFD brokerage. FXTM’s position on leverage is a little complicated as it offers accounts based in several different countries, all of which have different laws and regulations governing the maximum amount of leverage which may be offered. This means that we must consider where the trader is based more than the type of account which the trader wants to open to determine available leverage.

FXTM in the United Kingdom and Cyprus offer a maximum leverage of 25:1 on Forex, 20:1 on precious metals and indices, 5:1 for individual stocks and shares, and 2:1 on cryptocurrencies.

FXTM in South Africa and Mauritius are not subject to any restrictions on leverage, therefore the maximum amounts offered by them to these accounts are a decision for FXTM alone. Here FXTM’s leverage offering is quite complex, because the maximum leverage offered is determined by a combination of factors:

  • Account Type (the Pro Account offers a lower maximum leverage than the other account types, presumably to mitigate risk to FXTM from large wins by successful traders who have deposited the $25,000+ minimum deposit)
  • Instrument Traded – major Forex pairs offer the highest leverage, minors and metals less, followed by Forex exotics and then cryptocurrencies, which are offered with the lowest leverage of any asset class.
  • Notional Value of a Trade – the maximum leverage is only offered on the first $200k or $300k of the notional value traded, decreasing by higher tranches of value. For example,

Despite this, we can set out the absolute maximum leverage offered by FXTM outside the E.U. and the U.K. by asset class as follows:

Forex- 1000:1

Indices- 1000:1

Metals- 500:1

Cryptocurrency- 100:1

Shares- 10:1

Every type of account offered by FXTM allows hedging, scalping, and automated trading via Expert Advisers. As FXTM only uses the MetaTrader 4 and MetaTrader 5 trading platforms, there is a wide range of automated tools available which work with these platforms, and FXTM does not block or disable them.

Forex and CFD trading explained – tips and advice for beginners

The forex market is the largest and most liquid market in the world. Every day, currencies worth 5,3 trillion of dollars are traded there. The forex market is a place where all the banks, businesses, governments, investors, and traders meet in order to trade currencies. Approximately 15% of the trading volume is performed by corporations and governments that buy and sell goods and services abroad, and 85% of the trades constitute of investments made with the aim of profiting on currency movements. The foreign exchange market transactions can take place anywhere in the world, but the biggest trading volumes come from: London, Tokyo, Zurich, Frankfurt, Hong Kong, Singapore, Paris and Sydney. It should be noted that there is no central forex market. The FX market is open 24 hours a day, 5 days a week.

What do we trade?

When we trade forex, we trade currencies. We can either buy them or sell them. The main currencies with the highest trading volume are US dollar, Euro, British pound, Swiss franc and Japanese yen. All forex currencies are traded in pairs (base + quote currency). When you trade them you basically predict which currency will do better in the future. In almost 90% of all FX trades, the USD is involved. When it comes to currency pairs, the most traded one is EUR/USD.

Simple Trade Example

Let’s say that you decide to trade the most common currency pair – EUR/USD. You for some reason believe that euro will do better in the future than the dollar. Therefore, you decide to buy euros worth 1 000 USD and you hope/pray that the value of euro will go up and that you will make a profit from the reverse sale. This particular trade type is called “long position”. Conversely, if a trader wants to make money on a downturn of the euro he has to create a “short position”.

*Long position – Buying the base currency and selling the quote currency
*Short position – Selling the base currency and buying the quote currency

Base and quote currency

EUR/USD – left currency (euro) is referred to as the base currency. While the right one (dollar) in this example represents the “quote currency”. Currency pairs are quoted with one price. So for the pair EUR/USD it can be for example 1.3261, which means that to get 1 euro we need $ 1.3261. In other words, this price defines us how many units of the minor (quote) currency are needed to buy the base currency.

Bid and ask price

Currency pairs are characterized by two different prices: the bid price and the ask price. The bid price (sell) is lower than the ask (buy) price. The bid price represents the minimum price for which your broker is willing to sell you a currency. The ask price represents the maximum price that your broker is willing to pay for a currency.

The difference between the bid and the ask price is generally known as the spread. Usually, the spread is the main source of money for your broker. When one trader goes to a long position when the ask price is 1,1354 and another one goes to a short position when the bid price is 1,1352, the broker makes money from the difference between these two trades – spread (2pips). The more frequently the currency pair is traded, the lower the spread is which is a reason why the EUR/USD spread is usually only about 2 pips.

Leverage – simply explained

Leverage is a very difficult, yet crucial tool that every forex trader should master. It can help you drive your profits to the heavens if you correctly predict the future direction of a currency. But at the same time, it can also destroy your beloved capital rather swiftly (if you predict the direction incorrectly). Forex traders can usually use up to 1:30 leverage. However, lower or no leverage can be also used. To understand how leverage works, please follow the next example: Let’s say that you trade the EUR/USD currency pair and you predict that euro will decline (short position). For this position, you use a margin worth of 1 000 Eur and leverage 1:30. This will allow you to trade with funds worth 30 000 Eur. Since the EUR/USD currency pair is quoted to four places after the decimal, each “pip” is 0.01% of the “whole price”. Based on the invested amount after leverage (30 000 Eur), each pip is worth 3 dollars. If your margin investment was 100 000 Eur and you used the same leverage, each pip would be worth nearly 10 dollars.

Things you need to know before you start trading FX

What is a Pip?

A Pip is the smallest movement (increase/decrease) in the exchange rate of a currency pair. For example, when the EUR/USD currency pair goes from 1,3634 to 1,3635, it is a movement of one pip. From every pip going in your direction, you make money.

What is a LOT?

A LOT is a standardized quantity of a financial instrument. When it comes to Forex, it is 100 000 units of the base currency. In addition to the standard lot (100,000), there is also a mini lot (10 000) or a micro lot (1000).

When to trade forex and CFDs – market hours

Generally, the forex market is open 5 days a week 24 hours a day. The market can be divided into four major trading sessions: the London session (has the biggest trading volume), the Sydney session, the Tokyo session, and the New York session. Let’s look at what are the open and close times for the biggest sessions in the world.

Session Open/Close GMT EDT
Sydney Open 10:00 PM 5:00 PM
Sydney Close 7:00 AM 2:00 AM
Tokyo Open Midnight 7:00 PM
Tokyo Close 9:00 AM 4:00 AM
London Open 8:00 AM 3:00 AM
London Close 5:00 PM 12:00 PM
New York Open 13:00 PM 8:00 AM
New York Close 10:00 PM 5:00 PM

Be aware that the open and close times can vary during the months of October and April because some countries shift to/from daylight savings time (DST). The table above features summertime opening hours. So when October comes, you need to adjust the times in this table. Open and close times are very important and to know them is almost crucial if you want to trade profitably. It is best to make trades when the market has the biggest trading volume. This happens when more than one market is open and the busiest times are when overlaps occur.

New York and London: between 13:00 PM – 5:00 PM GMT / 8:00 AM — 12:00 noon EDT
Sydney and Tokyo: between Midnight- 7:00 AM GMT / PM 7:00 PM — 2:00 AM EDT
London and Tokyo: between 8:00 AM – 9:00 AM GMT / 3:00 am — 4:00am EDT

How much can I earn by trading forex?

This question cannot be truthfully answered. It is because the real outcomes cannot be predicted with 100% certainty. From an investment of $100, you might earn an additional 200 USD, but you could also lose the whole investment or even more if you do not set up a stop-loss. The decision to end the trade is completely up to the trader and there is no way to exactly predict his behaviour, his moves and therefore his earnings. The trader can be in a position for example for a day, or two weeks or for just 10 minutes.

How can I adjust the risk of my trades?

This can be done using risk management tools. You can set an automatic closing of your trades when the currency reaches certain price (in profit = take profit, or in loss = stop loss) or you can actively monitor the trade and close it manually. Both stop loss and take profit are very important tools you should learn to use. The stop-loss makes sure that you do not lose all of your money when the market reverses and turns against you. The take profit is just the opposite, sometimes it is better to close a trade when you are up than lose the money you earned.

The difference between CFDs and forex

The difference between forex and CFDs is very often misunderstood even though it is very plain. As a CFD trader, you can trade CFDs on shares, commodities, indices, options, ETFs and also forex. When you trade CFDs on forex, you do not own the currencies you trade, you own just a contract on your trades. On the other, when you trade forex without using CFDs, you trade them “directly” and you are the owner of the currencies you trade. This being said, the difference between forex and CFDs on forex is very subtle as most traders who use one or the other want to speculate on currency movements anyway.

Where to trade forex and CFDs

Forex, as well as CFDs, can be both traded from a computer or a mobile device. The appropriate software or web-based platform will be provided to you by the broker of your choice. Most FX and CFD brokers feature a free demo account, so it is possible to test their platform without risking any money. We feature on our website 5 popular FX and CFD brokers that we personally recommend. Each of them is regulated either by the CySEC (a regulatory body based in Cyprus) or by the FCA (a regulatory body based in the UK). The minimum deposit required to start real trading varies from a broker to broker, having said this, the typical standard for the FX and CFD industry is an investment between $10 and $250.

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