Unbiased Forex.com / Gain Capital Forex Broker Review

Overall Conclusion:

Forex.com receives low scores for some of the key criteria for a forex broker. Other brokers who have strong service offerings and a better regulatory record are covered in our forex broker reviews. Forex.com serves countries all over the world. This review is of Forex.com's service offering in the United States, which may differ from their offering in other countries. Unlike most other forex review sites, Forex Scam Alerts does not receive financial compensation from Forex.com or Gain Capital.

Visit Forex.com's forex website

 

Regulatory Action Against Forex.com / Gain Capital:

Gain Capital is the parent company of Forex.com. Gain Capital provides forex clearing services for Forex.com, as well as a number of introducing brokers. Forex.com and Gain Capital are covered under the same NFA ID 0339826. Under this NFA ID, this broker has been subject to regulatory action by the NFA.

 

Counterparty Risk:

As a market maker, Gain Capital, under its brand Forex.com, is a counterparty to all your trades. This means that your primary counterparty risk is that Gain Capital goes bankrupt, or otherwise is unable to fulfill its obligations to you. Prospective clients of this broker can determine the current financial health of the company by:

  • reviewing its financial statements, which are available online as a publicly traded company on the New York Stock Exchange (symbol GCAP)
  • reviewing its capital reserves, as submitted to the CFTC regulator

When last checked in April 2016, Gain Capital was maintaining capital reserves 67% higher than what is required by regulations. This is much less than some of the other brokers available to US forex traders. As such, prospective clients of Forex.com should be cautious when considering Forex.com as their broker.

 

Broker Type:

Forex.com uses the market maker model. This is not the preferred business model for a forex broker because it introduces a conflict of interest, whereby a forex broker may sometimes benefit if a client loses money in their trade. The significance of this depends on the regulatory environment in which the trader resides. US clients have the least to worry about because the regulatory framework in the US is so strong, with many regulatory protections in place to benefit the trader. Also, in the US, all forex brokers who serve retail clients are technically market makers acting as the counterparty to your trades. In other countries the regulations are not as strong, so there is a greater risk to the trader. 

 

Spreads:

Spreads are all-in and no additional commission is charged. The spreads are high compared with the leaders in this area. However, spreads that are narrower by ~0.5 pips are available for premium accounts that open with at least $25,000. The following are typical spreads as of April 2016 for their FOREXTrader accounts:

 

Accounts & Funding:

Forex.com allows fund withdrawals via wire transfer, ACH, checks or debit/credit cards. There are no withdrawal fees except for a modest processing fee for wire transfers. Note, however, that there is an inactivity fee of $15 per month for accounts that have had no trades for 90 days, so be sure to keep your account active, or close your account to avoid this fee. There is no charge for account deactivation or reactivation.

Forex.com offers free access to a demo trading account for up to 30 days. This is a good length of time to learn how to use their products, but it is not enough time to learn how to trade forex. If you have never traded forex you should open a permanent demo account with another broker to learn how to trade.

 

User Interface:

Forex.com allows a good choice of trading platforms, as follows:

  • FOREXTrader is Forex.com's proprietary trading platform. This platform is advanced and customizable. Experienced traders should find it easy to use and intuitive. New traders should not have trouble learning to use it.
    • ​Web trading is also available with the FOREXTrader platform, allowing traders to trade from any computer that has web access
    • Mobile trading is available with FOREXTrader, on iPhone, iPad, Android and even Blackberry devices
  • MetaTrader 4 requires little introduction. This platform has been a round a long time and should be very familiar to experienced traders. Notably, using this platform gives access to the very large library of algorithmic trading programs, known as Expert Advisors (EAs), otherwise known as trading robots.

Other Comments:

  • Forex.com publishes their trade execution statistics and delivers rapid and favorable trade executions.
  • Forex.com also allows trading of other financial instruments, such as spot gold and silver, commodities futures, and futures options via their affiliate, Daniels Trading

 

Visit Forex.com's forex website

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Broker reviewed: Forex.com / Gain Capital
Review date:
Rating out of 5: 2.0
Reviewed by: