Dukascopy Forex Broker Review

 

Overall Conclusion:

Dukascopy is one of our top recommended brokers. They operate in a strict regulatory environment, and client deposits are protected by Swiss bank regulations. They also score very well on other key evaluation criteria. Dukascopy offers tight tight spreads, and commissions are low, particularly so for clients with large balances or high trading volumes. 

Visit Dukascopy's website

 

Brief Background:

​Dukascopy Bank is a Swiss bank that was founded in 2004 in Geneva, Switzerland. However, the company has its roots in the 1990's as a project headed by a group of physicists to model financial markets. Shortly thereafter, the company developed its online trading platform. In 2006 the company started up its SWFX Swiss FX Marketplace, which operates as an ECN. Dukascopy has since grown and expanded internationally. Dukascopy Bank owns Dukascopy Europe IBS AS, which is a licensed brokerage company that offers services under the same terms as Dukascopy Bank. In 2015 the company acquired Alpari Japan and operates it as Dukascopy Japan Co. Dukascopy has offices in Zurich, Riga, Kiev, Moscow and Hong Kong, and employs over 200 people. Dukascopy offers online brokerage services for spot forex, CFDs, precious metals and binary options. Further, as a bank, Dukascopy offers online banking services and credit cards. Dukascopy is audited by KPMG SA.

 

 Summary Of Regulatory Status

​Dukascopy is regulated as a bank and a securities dealer by the Swiss Financial Market Supervisory Authority FINMA, whose regulatory status can be verified here. As a bank, Dukascopy is subject to stricter regulations than forex brokers in other legal jurisdictions. In fact, all forex brokers in Switzerland are required to be licensed as a bank.  There are no known regulatory violations by Dukascopy.

 

 Counterparty Risk: 

Dukascopy maintains capital reserves consistent with FINMA's regulatory requirements, More notably, client deposits of up to CHF 100,000 are protected by the Swiss government, in case of Dukascopy's bankruptcy. This protection extends to all of Dukascopy's clients, regardless of whether they live in Switzerland or not. The protection extends to deposits that are held in any currency. More information can be found at esisuisse's website. As a further note of confidence, Dukascopy elected to forgive negative account balances resulting from the SNB Swiss franc event in January 2015 at great cost to the company, even though it was not required to do so. Further, Dukascopy did not cancel or negatively modify any trades that were made during that event.

 

 Broker Type:

Dukascopy uses the ECN business model. Dukascopy clients participate in the "Swiss FX Marketplace", which is an ECN operated by Dukascopy. All Dukascopy clients have equal trading rights and equal access to the same liquidity and datafeed. Major liquidity providers include Barclays, Currenex, Deutsche Bank, JP Morgan, Goldman Sachs, Citibank, HSBC Bank, and several others. The resulting deep liquidity pool allows for EUR/USD trades up up to 200 million in one click. If desired, individual clients can contribute to liquidity and get insides the spread by placing their own bid / ask orders in the market. All orders are executed with straight-through processing with no human intervention. 

Having said that, Dukascopy is the counterparty to all client trades. Clients are protected from any conflicts of interest by ensuring all clients have the same price, with a history of those prices made publicly available for verification by clients. Further, Dukascopy is required to comply with a code of conduct that is regulated by the Swiss banking regulations.

The reality of the broker model is similar to the straight through processing model used in the United States, where all brokers are the counterparty to client trades, even if the broker is not a market maker. As such, Forex Scam Alerts takes no issue with Dukascopy's business model.

 Spreads:

Dukascopy offers some of the most competitive spreads in the retail forex industry, especially for the major currency pairs. Dukascopy uses a transparent pricing model with a low spread and a commission added on top. The spreads float based on market conditions, and can widen briefly during news events or at the end of trading sessions.

To their credit, Dukascopy publishes historic spread information. The following charts show the distribution of spreads over a typical 3 month period for two of the major pairs:

Dukascopy forex spread distribution - EUR/USD

 

Dukascopy forex spread distribution - USD/JPY

As you can see, the spread for EUR/USD is most commonly 0.2pips, and for the USD/JPY it is most commonly 0.4 pips.

Dukascopy commissions ​are generally reasonable, starting at $3.50 per 100,000 lot per side for the smallest accounts. However, the commissions decrease significantly for larger account sizes or higher trading volumes. Account balances greater than $25,000 are charged $2.50 per lot per side and account balances greater than $50,000 are charged $1.80 per lot per side. For very large accounts greater than $10,000,000, the commissions drop to a very low $1.00 per lot per side. Similarly scaled down commissions are charged for high trading volumes.

 

 Accounts and Funding

Clients of Dukascopy can open and fund new accounts via wire transfer, debit and credit cards in a wide choice of currencies. However, Dukascopy's partner bank charges a commission of between 2% and 2.5%, so this funding method is not recommended for large transfers. Dukascopy does not charge for incoming wire transfers, but charges a customary outgoing transfer fee which varies by currency. For USD the fee is $20. Withdrawal options are the same as deposit options. It is regrettable that Dukascopy does not offer more funding methods.

As already mentioned, client deposits of up to 100,000 CHF are protected by government regulation. However, for deposits that are greater than $100,000 USD, Dukascopy allows the option of keeping your deposit with your own bank. To do this, you must provide a bank guarantee to Dukascopy from your bank that you have the funds. This provides the ultimate in flexibility and protection for large deposits. The catch is that Dukascopy charges an annual fee of 1.25% to use this option.

 

 User Interface:

Dukascopy offers a wide choice of trading options for forex traders including:

  1. Dukascopy's proprietary JForex Platform, which can be used for automated trading or manual trading, though it is optimized for automated trading. It allows for the development of custom trading strategies using the JAVA programming language. See the screenshot below.
  2. Dukascopy's proprietary Java platform, which is optimized for manual trading. It is intuitive to use, and allows use of the most popular chart indicators. 
  3. A web based platform, which can be accessed from anywhere with an internet connection. 
  4. Mobile trading apps for either Android or iOS.
  5. A 3rd party bridge to the MetaTrader 4 platform, with use of Expert Advisors.
  6. Dukascopy also allows access to its API, to allow you to connect to Dukascopy servers with a customized software solution that you develop yourself.

Dukascopy JForex Platform screenshot

Dukascopy's proprietary JForex platform

 

 Other:

Dukascopy has the following additional features:

  • Social trading and copy trading. This allows a trader to copy the trades of another trader if they believe the copied trader will have better performance. The historical performance of available traders to copy can be reviewed in advance of copying them. While this has the potential to work well, it also has the potential for scams as described in our article about forex scams.

  • Managed forex accounts with an advanced Percent Allocation Management Module (PAMM) environment. This permits a trader to have their funds managed by an account manager under a limited power of attorney. The account manager typically takes a cut of the profits generated.

  • Trading of binary options and CFD trading. Note, however, that Forex Scam Alerts does not recommend binary options trading.

 

 

Broker reviewed: Dukascopy Bank
Review date:
Rating out of 5: 4.5
Reviewed by: