This day in history: February 3, 2011. Education, education, education

Six years ago is a lifetime in terms of retail FX trading methodology. The bogus and the profane were abound, however one evergreen FX industry stalwart took the education resource ideology to a high level, whilst at the same time using it as a platform to generate long term traders and trumpet the agency execution model

Opinions vary with regard to the advantages and disadvantages of FX education and training companies, a plethora of which operate in some of the world’s largest financial and electronic trading centers including London, Toronto and New York.

“Wanna learn to trade, John?”

Often, FX training institutions fit into two categories, the first being independent firms which sell software and concentrate on encouraging novice traders to follow their formula which often involves a fee and an IB relationship with a b-book brokerage with which the training company places client deposits, or university-backed academic courses such as the one offered by University of Essex Online in partnership with FXStreet.

Things are very different in the Asia Pacific region, where educational tools are vital components within the trading ecosystem, and inside the whole realm of educational services that proliferate the internet and physical venues, the credible stands out against the absurd.

In the West, open-shirted, cologne-wearing, cigar-toting self-employed non-entities working from yachts in London’s docklands unscrupulously taking middle-class, uninitiated novice traders for a ride (and we do not mean a ride on the Thames), certain gentlemen (and I use that term loosely) portraying banal images of themselves ‘trading’ from helicopters, all the while claiming that if their followers pay a fixed fee for their course and software that is as effective as a placebo, they too could live the lifestyle of wealth and success with zero effort.

Falling outside the remit of the regulatory authorities, many of the perpetrators of these schemes are never brought to book, with only one example having been the subject of any form of sanctions. The rest soldier brazenly on.

Robert Lloyd Wilson, also known as ‘Aussie Rob’, a moniker that would be better suited to a used car dealer or timeshare salesman than a master of the electronic financial markets, fell foul of the long arm of the Australian Securities and Investment Commission (ASIC) three years ago, receiving a five year ban for promoting dubious software, before cutting and running to Laos in 2013 to begin again.

Today’s retail traders are thankfully not quite such a target for the ‘follow me and I’ll make you rich’ brigade, and largely that can be attributed to several factors, one of course being that the retail FX traders of today, especially those residing in nations with developed and sophisticated market infrastructure, are very experienced, analytical, and are demanding more features from their platforms and brokerages.

Another factor is the quality of customer support, and in turn, the resources provided to new traders by large retail brokerages that have the wherewithal to develop traders at the outset.

FXCM is a case in point

On this day some six years ago, a time at which many retail MetaTrader 4-based brokerages were still operating a completely isolated warehouse execution model with fixed spreads and the helicopter-and-cigar methodology was duping aspiring traders all over the world, FXCM was way ahead.

On February 3, 2010, FXCM introduced its very own educational resource service, all of which has been available online to all customers from its inception, under the moniker FXCM Forex Education Center.

Corporate efficiency and transparency: FXCM’s offices in New York

The rationale was for the education resource to be a central hub on the FXCM websites that provides forex traders with detailed information regarding forex execution practices. FXCM began updating that particular area over the ensuing months with detailed information and analysis.

FXCM took this opportunity to begin to educate its new customers toward becoming loyal FXCM traders. A very clever move, and one that is often used by firms that seek to engender lifetime customers.

The first thing that the FXCM Forex Education Center did once established was to explain the different forex execution models. Unlike most other forex brokers, who acted as market-makers at that time, some with absolutely no direct feed to a liquidity provider, FXCM has always operated on an agency execution model basis. Pointing this out immediately was a clever method of combining education with brand value proposition.

It is important to consider that when onboarding customers to a proprietary platform by holding their hand from the outset and striking a long relationship, return on investment is often higher.

In the United States, where FXCM, OANDA, Interactive Brokers and GAIN Capital dominate the retail sector as evergreen giants, proprietary platforms and customer loyalty are paramount. This is reflected in the average deposit size, which is $6600 in the United States, and $3800 in the rest of the world.

On the other side of the Atlantic, the same applies. IG Group, CMC Markets, Swissquote and Saxo Bank are masters of their own destiny with their own end-to-end trading infrastructure, and as a result, longstanding, loyal client bases which wouldn’t dream of looking elsewhere.

FXCM’s educational resources today consist of webinars and training sessions, the work of its initial Forex Education Center largely having been done some time ago, however, after six years, FXCM’s two-pronged method of educating clients toward FXCM methodology whilst keeping them engaged in trading has paid dividends.

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