Monday 28 September 2020 2:56 pm FXCM Talk

Retail trading - don’t become a one-trick pony

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Having joined FXCM in 2001 just out of college, Brendan has held various positions within the company over the last 15 years and was appointed Global CEO in 2017.

The markets around the world have recently been a hive of activity and volatility. When this occurs, it presents a multitude of potential trading opportunities. This has given birth to a new breed of traders accessing their platforms.

The average trader nowadays does not want to be confined to a single asset class or product; they want to shift quickly when a trading opportunity arises, whether this is in forex, equities, crypto or commodities. 

We’ve seen first-hand how markets and trading habits are always evolving. You have to adapt and provide a multitude of asset classes and products in which they can trade. 

We know what it takes to be a world-leading multi-asset broker. Over the past 20 years, we have grown our products to suit the requirements of over one hundred thousand clients. Today, our product suite includes FX, equities, metals, cryptocurrencies, oil, indices and more.  

The $6.6 trillion a day FX market continues to be extremely attractive as volatility returns. The crypto boom is still continuing with huge price fluctuations providing traders with the opportunity to participate in this nascent market.

However, financial markets can be a daunting place. Multiple asset-classes, sizeable price shifts and high prices leave traders wondering where to begin.

In the stock market in particular, high equity prices can be an issue. Household name companies such as Apple, Netflix and Google all have significantly high price points, and retail traders don’t want to risk such large amounts of investment upfront. 

That’s why we launched fractional shares as part of our share CFD offering. It allows customers to purchase only portions of a share at a low cost and smaller financial outlay, traders can test their strategies without a big commitment. Customers can easily invest a small portion in the companies they want to invest in. 

A further issue in retail trading is the high commissions that many brokers charge, which may scare the average trader off from the market. Realising this, when we introduced our share CFD product, we ensured that we were able to provide commission-free* share trading, so that small trades were not burdened by high brokerage fees. 

Use baskets to hedge your exposure

While trading can offer significant upside potential, the risk of a currency or share moving against you has to be factored into your trading strategy. 

Take shares, for example. Household names like Apple and Facebook have the best recognition but often these are not the biggest movers. Many traders want to trade multiple different companies shares at a time but are restricted by fees and the labour intensive process this requires. 

Exposure to a combination of related instruments via a ‘basket’ can offer the best of both worlds. You don’t have to pick a specific share or currency to trade – you just pick the direction. If you think American technology companies are undervalued and poised for a rally, go long. If you think tough times are ahead for the biotech sector, go short via a basket. 

Hedging your base investment against a basket lowers trading costs and reduces the risk of adverse movements in a single investment potentially amplifying losses.  

However, be mindful of complicated weightings. If five products make up a basket, different brokers may place different “weights” on each item, so basket traders may unknowingly have much more exposure that initially expected.

These baskets save traders time by combining the most sought-after stocks from the highest performing companies in their respective sectors into one tradable instrument – an easy one-stop-shop.  

The recent market turmoil showed brokers and traders alike that large market movements can come thick and fast across all markets. In times like this it is even more vital as a broker to ensure a wide offering so that clients can nimbly adjust asset class and execute trades quickly and efficiently. 

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 

75.38 per cent of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

To learn more about FXCM, visit 

FXCM is a leading provider of online foreign exchange (FX) trading, CFD trading, and related services. Founded in 1999, the company’s mission is to provide global traders with access to the world’s largest and most liquid market by offering innovative trading tools, hiring excellent trading educators, meeting strict financial standards and striving for the best online trading experience in the market. Clients have the advantage of mobile trading, one-click order execution and trading from real-time charts. In addition, FXCM offers educational courses on FX trading and provides trading tools, proprietary data and premium resources. FXCM Pro provides retail brokers, small hedge funds and emerging market banks access to wholesale execution and liquidity, while providing high and medium frequency funds access to prime brokerage services via FXCM Prime. FXCM is a Leucadia Company.

Trading Forex/CFDs on margin carries a high level of risk and may not be suitable for all investors. Leverage can work against you. The products are intended for retail, professional and eligible counterparty clients. Retail clients who maintain account(s) with Forex Capital Markets Limited (“FXCM LTD”) could sustain a total loss of deposited funds but are not subject to subsequent payment obligations beyond the deposited funds but professional clients and eligible counterparty clients could sustain losses in excess of deposits. Clients who maintain account(s) with FXCM Australia Pty. Limited (“FXCM AU”), FXCM South Africa (PTY) Ltd (“FXCM ZA”) or FXCM Markets Limited (“FXCM Markets”) could sustain losses in excess of deposits. Prior to trading any products offered by FXCM LTD, inclusive of all EU branches, FXCM AUFXCM ZA, any affiliates of aforementioned firms, or other firms within the FXCM group of companies [collectively the “FXCM Group”], carefully consider your financial situation and experience level. If you decide to trade products offered by FXCM AU (AFSL 309763), you must read and understand the Financial Services Guide, Product Disclosure Statement, and Terms of Business. Our FX and CFD prices are set by us, are not made on an Exchange and are not governed under the Financial Advisory and Intermediary Services Act. The FXCM Group may provide general commentary, which is not intended as investment advice and must not be construed as such. Seek advice from a separate financial advisor. The FXCM Group assumes no liability for errors, inaccuracies or omissions; does not warrant the accuracy, completeness of information, text, graphics, links or other items contained within these materials. Read and understand the Terms and Conditions on the FXCM Group’s websites prior to taking further action.