FXOpen is among the better forex brokers to choose from. They are subject to strong forex regulations in the UK and Australia to protect clients. Client deposits benefit from broker bankruptcy protection in the UK. Dispute resolution services are available if signing up via the UK or Australia. Trading conditions are very good, with overall transaction costs being very low with FXOpen. Most important for new traders is that FXOpen offers demo accounts that do not expire, to allow time to practice and get profitable before risking real money.
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FXOpen is a online forex broker headquartered in Charlestown, Nevis, an island in the Caribbean Sea. The FXOpen brand includes the following companies:
- FXOpen Markets Limited, a company registered in Nevis
- FXOpen AU Pty Ltd, a company registered is Australia
- FXOpen Ltd, a company registered in England and Wales
FXOpen has been in operation as a forex broker since 2005. It had its start with a group of traders operating a trading education center before evolving into a forex brokerage. Trading instruments offered include a large number of major, minor and exotic currency pairs, index CFDs, crude oil, natural gas. The company also offers trading in cryptocurrencies, including Bitcoin, Litecoin, Namecoin and Peercoin. The company offers a range of account types.
⚠️Summary Of Regulatory Status:
FXOpen, under FXOpen AU Pty Ltd, is authorized and regulated by the Australian Securities & Investments Commission (ASIC). They are licensed with AFSL 412871 since 2011. ASIC is one of the most reputable and forward thinking forex regulators, providing strong protection to forex traders from unscrupulous brokers. Due to ASIC regulations, FXOpen publishes a Product Disclosure Statement and Financial Services Guide, which spells out exactly what customers are signing up for when they choose FXOpen as their broker, including the risks. Potential customers are advised to read these documents carefully before signing up.
As required by ASIC, FXOpen is also a member of the Financial Ombudsman Service (FOS) in Australia. This is a third party organization who exists to resolve customer complaints. If a customer has a complaint against FXOpen, they can first address the complaint through FXOpen’s internal dispute resolution process, where they are required to address complaints in a timely fashion. If the complaint is not resolved to the customer’s satisfaction, they can escalate the matter to the FOS to an independent review. The FOS will issue a judgement, which will be made binding for FXOpen, if the customer chooses to enforce the ruling. The FOS provides excellent protection to forex traders against a broker acting unfairly or fraudulently.
FXOpen, under FXOpen Ltd, is authorized and regulated in the United Kingdom by the Financial Conduct Authority (FCA). They are registered under firm number 579202 since 2013. The FCA is also a strong and reputable forex regulator.
FXOpen, under FXOpen Markets Limited, is not governed by any forex regulations. FXOpen Markets Limited is a member of The Financial Commission. The Financial Commission provides a dispute resolution mechanism and financial compensation fund for customers of member brokers. However, The Financial Commission is a corporation, NOT a regulatory body with the power to make or enforce regulations. Potential clients are urged to proceed with caution if dealing with the FXOpen Markets Limited, and should instead consider the UK or Australian arms of FXOpen.
FXOpen has a generally good regulatory record. However, in 2011 they were fined $140,000 by the Commodity Futures Trading Commission (CFTC), the forex regulator in the United States. CFTC fined FXOpen for soliciting customers in the United States without being registered with the CFTC. While this is against the law, it is a relatively minor issue for current or prospective forex traders because there is no evidence that FXOpen was trying to scam, cheat or treat customers unfairly.
✅ Counterparty Risk:
In Australia, although FXOpen advertises that they operate a true ECN, customers need to be aware that FXOpen acts as the counterparty to customer trades. This means that if FXOpen goes bankrupt, they may not be able to meet their financial obligations to their customers and those customers could lose some or all of their account balances. This risk is described in FXOpen’s Product Disclosure Statement. FXOpen typically mitigates this risk by hedging some or all of customer’s open trades with alternate liquidity providers. However, FXOpen is not required to do this. FXOpen also mitigates the counterparty risk by maintaining minimum capital reserves that are defined by ASIC.
In the UK, FXOpen UK specifies that it acts as the counterparty to customer trades for all orders except ECN orders. As such, for non-ECN trades, customers are exposed to counterparty risk by FXOpen. However, clients of FXOpen UK are protection from the Financial Services Compensation Scheme (FSCS). The FSCS is a compensation fund of last resort, to protect customers against bankruptcies of their financial services company. In the event that FXOpen UK cannot return client money for bankruptcy or some other reason, clients may be eligible up to £50,000 of compensation from the FSCS. This protection applies regardless of whether the customer is a citizen of the UK.
Customers of FXOpen Markets Limited are not protected by either ASIC or FCA regulations. As such, potential clients are advised to consider dealing with the Australian or UK arms of the FXOpen group of companies.
During the SNB Swiss franc event of January 2015, FXOpen temporarily suspended trading of CHF currency pairs, but was one of the first brokers to resume trading of these pairs. It survived the crisis without being significantly affected financially, and was able to keep a strong balance sheet. FXOpen’s positive outcome should give some confidence to traders that FXOpen may be in a good position to manage future similar events. This was in contrast to other brokers who did not manage the event as effectively, went bankrupt, and whose customers lost some or all of their account balances as a result.
✅ Broker Type:
In Australia and the UK, FXOpen uses the straight through processing / ECN business model, with no dealer intervention on client trades. Even though FXOpen may serve as the counterparty, this is similar to the model used by many other brokers that serves to minimize the conflict of interest between the trader and the broker. As such, Forex Scam Alerts does not take exception to FXOpen’s business model in this regard.
However, a strong caution is advised against the Micro accounts offered by the FXOpen company (FXOpen Markets Limited) operating outside of the UK and Australia. This micro account operates under the pure market maker model. As such, traders are trading directly against their broker, and the customer agreement makes no mention of hedging or offsetting trades with other counterparties. The extent of the conflict of interest is unknown, but the market maker customer agreement specifies that employees, directors, or dealers may act as the opposing broker for your trades. This suggests the potential for these parties to gain if a FXOpen customer loses money on these accounts.
The spreads offered by FXOpen varies depending on the type of account. Better spreads are available with ECN accounts, and the spreads for this account type are very competitive. Customers are encouraged to maintain deposits greater than £1,000 / $1,000 to get better spreads. Commissions also vary considerably based on the account type and money deposited. Accounts with deposits greater than 1000 units of currency are charged a very competitive 2.5 currency units per 100,000 (1 lot). Australian accounts with deposits greater than AUD $25,000 have an even lower commission of $1.8 / $100,000. The overall transaction costs with FXOpen are among the best available for such a well regulated broker. The following are sample live spreads during the Asian trading session:
✅ Accounts and Funding:
Clients of FXOpen can fund their accounts using a variety of methods, including:
- wire transfers
- local bank transfers
- credit / debit cards
- Electronic payment systems such as Skrill
Account withdrawals in most cases carry a fee. Wire transfer carry a customary fee of 30 units of currency, though in the UK these withdrawals are free. Outside of the UK, most forms of withdrawal except bank transfers charge a fee based on the % of the withdrawal amount, which can be very expensive for very large withdrawals. The exception is Skrill, which has a low maximum commission for withdrawals, but a higher % commission for deposits. Overall, founding and withdrawal options are reasonable.
FXOpen allows for deposits and withdrawals to be done for the major trading currencies.
Of particular importance to new traders is that FXOpen offers demo accounts that do not expire, as long as there is no more than 30 consecutive days of inactivity. This is an unusual and important feature, as it can take months or years for a new trader to learn how to trade profitably. It is very important to have a chance to do this before risking real money. Please see our article on How To Start Trading Forex Safely to find out more about the importance of this.
✅ User Interface:
FXOpen offers the very popular and functional MetaTrader 4 (MT4) trading platform. MT4 allows for manual trading and automated trading. For traders with programming skills, the MQL programming language allows for the creation of custom chart indicators and trading programs (expert advisors). In addition to the standard MT4, FXOpen also offers the mobile version of MT4 via Android or iOS apps. This permits traders to analyze, execute and monitor trades from anywhere with an online connection.
FXOpen, via FXOpen UK also offers MT4 WebTrader, which allows access to trading via a web browser with no need to download and use the MetaTrader application. This is typically for users who may have an unconventional or incompatible operating system on their computer or device.
FXOpen, via FXOpen Markets Limited, also offers auto-trading via Myfxbook and ZuluTrade. This is an option for traders to outsource trading decisions from those who may have more skill or a better track record. However, Forex Scam Alerts recommends against this because:
- FXOpen Markets Limited lacks enough regulatory oversight, which puts traders at risk. It is recommended to sign up with FXOpen UK or FX Open AU Pty Ltd instead to benefit from FCA or ASIC regulatory protections.
- Auto-trading platforms such as Myfxbook and Zulutrade are full of scammers. It is very difficult to make consistent, sustained profits via these platforms. You an find out more about this in our Learn About Forex Scams article.
The following is a screenshot of FXOpen’s MT4 trading platform:
Broker reviewed: FXOpen
Review date: 2018-05-28
Rating out of 5: 4.0
Reviewed by: Forex Scam Alerts Google+