FX Club Broker Review

Today I’d like to go over a Forex Broker known as FX Club. I have tried out Forex Club on many occassions and feel I can shine some light on whether or not this may be the right broker for you.  First off FX Club offers a few things that make it stand out from the rest most of all being ZERO SPREADS and instant commission refunds on all losing trades.  I was enticed greatly by this offer and felt the need to instantly try FX Club because having no spreads when trading Forex is such a great tool, it can not be overlooked.   However, I came to find that power of trading Forex with “no spreads” came at a high price, the high price of commission charged by FX Club.

 

ZERO SPREAD BROKER
Forex Club has the distinguished honor for being one of the only Forex Brokers that does not earn a revenue by charging its users a fee between the bid and ask prices, otherwise known as a spread. Now, if you have experience with other brokers that do charge a spread, you quickly realize how beneficial this might be, especially if you enter many trades in any given period, lets say 20 trades with a 3 pip spread, thats 60 pips you are “paying” your broker before you break even. With Forex Club’s No Spread guarantee, you pay absolutely nothing! This can be one of the best things for a beginner trader to have at his disposal when entering a trade.

COMMISSION BASED TRADING
Forex Club does indeed try to make a profit however, through their comission fees. I believe their flat rate of $.40 per 1000 traded turns Forex Club into the best broker on the web, into a barely average broker that. Let me explain. $.40/1000 traded really translates into a $40 per full lot fee.  As I entered trade after trade I would see $40 missing from the profit each time. Compare this to Forex.com taking out zero for commission and 3 pips (eurusd) spread, Forex.com is clearly a more profitable way to go.  FX Club does however offer you that same $40 back if the trade does not go your way.  But at this point you are losing X amount on the losing trade itself, so you are still a loser, they are just giving you your own money back that went to them as I will explain in the next section.

COMMISSION REFUNDS
FX Club offers a commission refund on trades of yours that do not work out.  Taking this offer in context we have to measure whether or not getting back all that money from these commissions outweighs the amount of profit you make with trading with no spreads while compared to other brokers that charge you a spread.  The real time calculations  I made confirm this is not the case, that on average I have 60% winning trades, thats 6 winners for every 4 losers.  While I am getting back $160 commission, I am paying $240 for the winning 6 trades.  If I were using Forex.com for example, I would have just had to pay $300 (10 trades times 3 pips spread times $10/pip) without any refunds.  But if I had 9/10 winning trades, I would be paying FX Club $360 in commission while still only paying $300 spread on Forex.com.    I would have paid only $100-$150 at MB Trading for the same 10 trades while at FX Club I am paying $240-$360 still.   Multiply this by hundreds or even thousands of trades in your Forex career and you can see how much FX Club is making off of your trading compared to other Forex Brokers.  If you have more losers than winners, then you will be getting lots back on refunds, but at some point you have to realize you are losing MANY pips with losing trades just to get a “refund” on commission.  This almost forces you to have a low win rate with a disproportionately high average pips per trade gained with the few winning trades you do enter at FX Club.

In this first example, I entered a trade and you can clearly see under the Commission Payback column a losing 250,000 trade gives you back $100 which is 2.5 lots under the FX Club platform.  The $100 reflects 2.5 lots times $4/10,000 or $0.40/1000 as they advertise.   So, if this trade had worked out, $100 would be paid to FX Club and not refunded.  

 

In this second example, I enter a trade at 1 full lot which you must set yourself during the DEAL execution screen at 100,000 trade size.  On a losing trade you receive $40 back, but on a winning trade you pay that $40 to FX Club.  Compare this to other brokers like Interactive Brokers and you are paying almost $25 more on EURUSD per trade which adds up.  Interestingly enough, the USDCHF trade I am in was for 100,000 which equaled roughly $8.40 per pip.  If the commission costs me $40 per 100,000, I needed to gain 4 pips before breaking even, which is exactly the spread with NO commission charge at Forex.com.  Depsite no spread with FX Club when you factor in commission fees you are paying the same as other average retail brokers and in some cases you are paying MUCH more than the best Forex Brokers that charge variable pip spreads as low as 0.6 pips.

Final Word on FX CLUB

While Forex Club claims to have a great way for you to make more pips when you trade, in reality the spreads make no difference if you are paying $40 per round lot traded no matter how many refunds on losing trades you might receive. FX club seems quite gimmicky and it turns out, even if they are a legitimate broker, falling for the zero spread “gimmick” need not be the destiny for you traders out there. If you peruse through Forex Broker Comparisons you fill find many brokers that charge much less on commission while offering quite low spreads, not zero spreads, but most of the time 1 pip or less on EURUSD.  Fx Club also claims to be an ECN Broker, but the many things I have seen allude to the fact they probably are a market maker and you are trading in an artificial market environment.

 

We need to ask ourselves, if we are paying as much after commission on FX Club as Forex.com or other more reputable brokers, then what does FX Club have over Forex.com and the others? NOTHING is the answer.  The execution is just way too slow for my liking and the platform is not conducive for quick entries and exits. Moreover, the charts provided by the FX Club platform are just entirely way too simple and the smallest time frame is the HOURLY, nothing more precise.  

I can not say FX Club is a scam.  This is a real company that has a real team of people working for you.  This site does not favor any broker over another for monetary reasons even though FX Club has a vast marketing machine in effect paying thousands of webmasters to talk about them favorably.  Inevitably the choice is yours whether or not to invest real money in FX CLUB, happy trading!

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Tags: broker, club, commission, forex, fxclub, NO_spread, spreads

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