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GFS Forex, one of the latest brokers to withdraw from the US market, has settled a Complaint that was launched against it by the NFA in December 2009. The Complaint charged GFS Forex and its Associated Principals Yun Ho and Matthew Censullo with alleged multiple violations of NFA’s rules such as:

0396633 CENSULLO, MATTHEW PAUL

• C.R.2-36(b)(1) – CHEAT, DEFRAUD, DECEIVE FOREX CUSTOMERS

0316995 GFS FOREX & FUTURES INC

• C.R.2-36(e) – FOREX DEALER MEMBERS SUPERVISION OF EMPLOYEES

• C.R.2-36(b)(1) – CHEAT, DEFRAUD, DECEIVE FOREX CUSTOMERS

• C.R.2-40 – BULK ASSIGNMENT OR LIQUIDATION OF FOREX POSITIONS; CESSATION OF CUSTOMER BUSINESS

0370391 HO, YUN LUN

• C.R.2-36(e) – FOREX DEALER MEMBERS SUPERVISION OF EMPLOYEES

Amongst other things GFS Forex was charged with soliciting its clients to bulk transfer their accounts to UK’s City Credit Capital (a company in which GFS’s President Alfred Tang is also a majority owner, so learned NFA independently) despite the NFA telling it that this wasn’t possible as it is not a US broker.

A few days later the following notice appeared on GFS Forex’s website: “We, of course, welcome you to transfer your GFS account to City Credit Capital (UK) Ltd. However, the choice of a new home for your forex trading account is exclusively yours and nothing in this Notice should be understood as a recommendation for City Credit Capital (UK) Ltd.”

You’ve got to admit it’s nothing short of hilarious though NFA wasn’t very amused calling this notice ‘deficient’ and directed GFS to immediately remove it from its website.

There are quite a few more amusing (more or less) examples of GFS’s alleged violations and you are welcomed to read it all in details here. In any case NFA agreed to settle the case again GFS, which still remains a registered FCM, and erase one count in a Complaint against Ho.

With all the 1:10 leverage turmoil happening lately we shouldn’t forget that NFA/CFTC are the only retail forex watchdogs in the US. From time to time the agencies perform well in uncovering forex frauds and in shutting down problematic businesses.

A few days ago NFA cracked on quite a few CTAs which lost millions of clients dollars and did all they could in order to hide these losses. If not the NFA these practices might have continued further and many more clients could have lost their money. I suggest forex traders and potential forex investors (and fraud victims) read the NFA’s documents in order to see how some investors were bilked for their money before handing their funds to any CTA.

Each case has different background but it’s an interesting read nonetheless.

CFS Capital:

On June 30, 2009, NFA issued a Complaint charging CFS, Andrew Elrod and Brian Elrod with misuse of customer funds; willfully submitting false or misleading information to NFA; and failing to diligently supervise. The Complaint also charged CFS and Brian Elrod with using fraudulent and misleading promotional material. Finally, the Complaint charged CFS with failing to follow the terms of the disclosure document and management agreement.

DECISION:

On February 3, 2010, CFS was ordered to withdraw from NFA membership and not reapply for NFA membership or act as a principal of an NFA Member. Andrew Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership, or act as a principal of an NFA Member. Brian Elrod was ordered to withdraw from NFA membership and associate membership and not reapply for NFA membership, associate membership or act as a principal of an NFA Member for five years. During the five-year period, Brian Elrod was ordered not to act in any capacity requiring registration, nor act as a principal of an NFA Member. If after expiration of the five-year period, Brian Elrod again becomes an NFA Member or Associate, or a principal of an NFA Member, he was ordered to pay a $30,000 fine, payable 30 days after he is granted NFA membership or associate membership or becomes a principal of an NFA Member.

Capital FX LLC:

On December 9, 2009, NFA issued a Complaint charging CFX and Pecord with providing false or misleading information to NFA and failure to cooperate in an NFA investigation. The Complaint also charged CFX with using an inaccurate or incomplete disclosure document and cheating, defrauding or deceiving another person or attempting to do so.

DECISION:

On February 3, 2010, CFX was ordered to withdraw its NFA membership and not apply for NFA membership or principal status with any NFA Member at any time in the future. Pecord was ordered to withdraw his NFA membership and principal status with an NFA Member and not apply for NFA membership, associate NFA membership or principal status with any NFA Member at any time in the future.

ACJ Capital:

On November 17, 2009, NFA issued a Complaint charging ACJ and Collazo with providing false information to customers about the performance of their accounts; and providing customers with fictitious account statements that showed significant equity in their accounts when, in fact, most, if not all, of their equity had been lost. The Complaint also charged Collazo with failing to observe high standards of commercial honor and just and equitable principles of trade.

DECISION:

On February 3, 2010, ACJ was permanently barred from NFA membership and from acting as a principal of an NFA Member. Collazo was permanently barred from NFA membership and associate membership and from acting as a principal of an NFA Member.

Icap, world’s largest inter-dealer broker and a foreign exchange leader, has cut its earnings forecast on Friday saying a slower trading in key markets meant new businesses were taking longer to achieve profitability. As a result Icap’s shares dropped by as much as 19%. This comes less than a month after Icap’s CEO Michael Spencer and his family sold 45 million pounds worth of Icap’s shares, although Icap says this happened before the profit warning was known.

Icap also keeps buying more and more technology. After buying Traiana, a post-trade processing provider, for $238m in 2007 Icap is now buying the remaining shares of  TriOptima – another post-trade processing provider. Icap invested in the company back in 2001 and is now buying the remaining 61% for $149 million.

Currensee, world’s first Forex social network, has made a couple of interesting additions to its platform. First is the addition of Thomson Reuters widgets which you can purchase with Currensee bucks and provide you various ideas, strategies and analysis. Second is the ability to Tweet your Trades and Positions from Currensee’s platform to your Twitter account.

It seems that Currensee are on the right track with these latest additions as the most important thing for a social network is to provide more and more content and activities to its participants from INSIDE the platform so that the participants will never have to leave to perform any other task.

A bit more about the Thomson Reuters widgets:

Currensee members can now purchase exclusive widgets featuring Thomson Reuters IFR Markets trade and market data from the Currensee Marketplace, the trusted source for Forex-related products and services. The widgets deliver professional-level trade data and analysis that is typically only available through brokers or large institutions. They include:

Trading Desk, which provides real-time trading ideas with stops and targets, support & resistance levels, and analysis and strategy

Squawk Box, which provides fundamental and technical commentary and analysis, including unique news events and economic data

Order Board, which provides indications of potentially significant orders, price points, option-related price levels and buying/selling interest

The Currensee Thomson Reuters widgets are delivered instantly through the member’s personal dashboard on Currensee. For a limited time, Currensee members have the opportunity to purchase the Thomson Reuters IFR Markets widgets at introductory pricing, including individual two-week trials, and a bundled discount for all three exclusive widgets, all starting at just 20 Currensee Bucks. To take advantage of the Thomson Reuters IFRM Markets widget offer, Forex traders can join Currensee at www.currensee.com/thomsonreuters. Introductory pricing is for a limited time.

More here.

A bit more about Currensee’s Tweet My Trades feature:

The Tweet My Trades feature is the first Twitter application that enables traders to automatically tweet their actual trades and positions to Twitter in real time.

“Twitter integration is something our traders have been asking for and we’re excited to launch this innovative new feature and leverage Twitter,” said Asaf Yigal, co-founder and VP of Product at Currensee. “Tweet My Trades is different from StockTwits, TradeMonster and many of the other Twitter-based trading apps because we automatically tweet the trader’s actual trades and positions. It’s one thing to say the EUR/USD is going to break out or you’re going long the AUD/NZD, but it’s quite another to actually take the position and share that information with your followers on Twitter.”

The Tweet My Trades feature is one more example of how Currensee is changing the world of Forex by bringing trust and transparency to traders across the globe. By giving traders the ability to extend their trade collaboration beyond the Currensee platform, Currensee continues to innovate social trading for Forex traders. Since Currensee is the only Forex platform that is connected in real time to over 100 Forex brokers, the moment the trader executes their order, Currensee instantly sends the tweet on the trader’s behalf.

This is the first online retail forex volume survey report for 2010. Last report was released in August and estimated $118 Billion in daily traded volume.

Many things happened since and I made a few important changes in the current survey:

First and foremost I removed Gaitame – Japan’s largest broker from the list mainly because Japanese Forex market is by far the biggest forex market in the world and deserves its own survey. This however is almost impossible as Japanese brokers don’t tend to report their monthly stats officially or unofficially. I did get hold of a very detailed Japanese volumes survey however it is now a bit outdated and in any case those volume results are no longer relevant as Japanese FSA slashed forex leverage to 1:50 last year and would further slash it to 1:25 later this year. All I can say is that FXCM Japan used to be much bigger than FXCM US however this too probably changed when leverage was reduced.

Other changes I made included raising Oanda’s volume to $500B a month and I suspect the actual figure is even higher than that, especially given Oanda’s recent progress in Dubai, Korea and several other key locations.

FXOpen reported a surge in volume probably due to their new MT4 ECN platform and FXPro were added to the survey for the first time and are pretty big despite withdrawing from the US market.

With the recent US forex leverage earthquake I expect many more developments in the coming months and perhaps the figures in this table will be completely shuffled again.

The numbers were officially, and to some extent unofficially, released by the brokers themselves or are based on industry rumored figures:

The figures are still incomplete as some brokers such as Dukascopy, FXDD, FX Solutions and CMS simply don’t report or disclose their numbers.

Moreover, it’s important to note that is very hard, if at all possible, to discern the retail trading volume (individual traders) and institutional trading volume as they are typically jointly reported by the brokers. Therefore, these numbers might reflect some institutional trading volume as well and my methodology is to just include what I perceive to be a mostly retail Forex brokers in this survey.

As many of you are aware, InterbankFX over the past few years have released certain trading tools/softwares available exclusively to their clients. One of these softwares is a tool called the Pattern Recognition Software. Now they’ve recently upgraded this software.

So, what exactly does their PRS do? Well, basically it will alert you of any pending setups on a variety of technical patterns, such as Head and Shoulders, Triple Bottom/Top, Double Bottom/Top, Downward and Upward Channels, amongst others.

Now, in theory, this sounds excellent, but in practice, is it any good? Well, firstly you need to have a live funded account with them to find out, but if you do, it’s totally free.

The good thing about this new PRS, is that it’s actually very accurate in determing such patterns, and if you rely purely on hand-drawing your patterns on a daily basis, this will prove a very useful tool. Having said that, it’s NOT a trading system on it’s own, and you need to define your own stop losses and take profits. This will not trade for you, it’s only a tool, albeit a very good tool, to assist you in your trading.

Quoting IBFX themselves:

“In our effort to provide the highest degree of transparency for our clients, we’ve enhanced our PRS tool and educational videos to compliment trading practices, available for download to all customers,” said Todd Crosland, Chairman and President of Interbank FX. “This PRS tool allows traders to drill deep into the Forex market and see discernable price consolidation patterns. In essence, it provides Forex traders beneficial information to develop a solid, well thought out trading plan.”

http://www.prweb.com/releases/Forex_Trading/Price_Patterns/prweb3558144.htm

It hasn’t taken other capital markets technology firms too long to realize Cognotec is a hell of a bargain. Latest news has it that First Derivatives, a Newry Ireland based global provider of solutions for Capital Markets, is looking to acquire the troubled foreign exchange company.

In fact, Irish Times reports that First Derivatives already entered into an exclusive agreement with KPMG’s receiver for Cognotec to acquire the forex technology provider within days. To me this seems a bit preliminary so perhaps this was leaked in order to have even more firms bid for the company but this also means that this whole process won’t take long any way.

It also seems that this transaction would require a leveraged deal or some kind of a shares exchange or a combination of both as First Derivates isn’t such a big firm – it reported only a $8,5 million pre-tax profit in 2009.

I’m quire sure this is not the last thing we hear about Cognotec in the following days, updates will follow.

Guest post by forextraders.com.

In forex trading online, as well as in any other branch of trading where technical analysis plays a significant role, backtesting does not work. It is not suited to the the task assigned to it, and when does predict an outcome, there is no relationship between the assumption and the conclusion.

1. Price action doesn’t replicate itself over time

First of all, market prices are chaotic, and. The patterns observed on any day’s trading do not replicate themselves at other times. As a result, the attempt at testing today’s market action on the basis of yesterday’s patterns will never lead to results that can be duplicated over the long term.

2. There’s no perfect strategy

We can restate the above phrase by simply emphasizing the impossibility of creating a perfect strategy. At least with the tools possessed by traders in today’s world, it is not possible to create a fores strategy that will do well under all circumstances. The market action is chaotic, and it can’t be formulated by the simplistic methods of technical analysis. The forex market changes its rules every single moment; nobody can trade it with a strategy backtested over the past decades.

3. Backtesting inspires false confidence

Backtesting will give false positives, and emphasize some approaches over the others. You’ll feel confident that this or that strategy has the potential for yielding better results, and you’ll probably choose to increase your risk. Unfortunately, such an approach will only result in great disappointments and failures for the trader; you should never base your plans on backtesting.

4. Money management is paramount

Ultimately, one can succeed in forex not through the constant application of a few well-developed forex strategies supported and justified by backtesting, but through the most diligent and patient application of money management rules under all kinds of circumstances without any assumptions about the validity of a particular technical approach. Technical tools can always fail without any apprarent reason, because price action has a great degree of randomness inherent in it. Yet if you take risks with prudence, you can limit your losses.

Baktesting a strategy will not give you reliable results in your quest to find a perfect forex trading strategy, but it does have some vale as an educational tool where you can evaluateyour understanding and knowledge of analysis by backtesting your scenarios to see if you use the tools available to you in the correct manner. But keep in mind that backtesting is useless otherwise, and don’t jeopardize your trading by making assumptions to the contrary, regardless of the stridency of a forex broker’s, or a software peddler’s arguments.

Interbank FX is now offering a series of webinars for foreign exchange traders. Professional off exchange retail foreign currency (Forex) trader Raghee Horner will hold a series of webinars each week in February. These exclusive webinars – available only to live account holders – will cover the following topics:

This Week, February 2: Introduction to MetaTrader4 Trading Platform

Next week, February 9: Popular and Powerful Technical Indicators

February 16: Understanding Price Action- Drawing Trend Lines, Using PRS (Pattern Recognition Scanner) Chart Patterns, Fibonacci Levels and Market Cycles

February 23: Ideas for Trending and Non-Trending Markets

February 27: 4 Hour Special Weekend Edition Webinar

Register now to you’re your seat!

You must register for each webinar you wish to attend individually.

RAGHEE HORNER is a private trader, founder of EZ2Trade Software, blogger, and author. She is a regular contributor at a number of sites including FX Street, Trading Markets, Baby Pips, Forex Pros,Autochartist, eSignal and a featured speaker at the Forex and Traders Expos as well as the International Stock Exchange. She has written articles for Technical Analysis of Stocks and Commodities, Currency Trader, Your Trading Edge, and Traders Journal magazine. Raghee trades from her home in Coral Springs, FL. where she lives with her husband, Herb, and their two dogs.

Following Cognotec’s latest round of difficulties Integral, the other large institutional large forex platforms provider, is now offering Cognotec’s clients an opportunity to move to Integral platform, hassle free.

Mountain View, Calif. (February 2, 2010) — Integral Development Corporation (www.integral.com), a leading provider of FX trading solutions and services, today announced for Cognotec’s customers that have been negatively affected by the ongoing disruptions at Cognotec, an opportunity to trade up. As part of the initiative, Integral offers free access to its systems for a limited time.

Integral continues to be profitable and has enjoyed record growth in 2009. It achieved year-over-year growth of 90 percent. From this position of strength, Integral is extending its support to Cognotec’s customers to ensure a smooth transition to a more stable, modern solution. More information can be found at http://www.integral.com/trade-up.

“Integral received several inquiries from concerned customers. None of these institutions should have to suffer from their provider’s missteps,” said Harpal Sandhu, CEO, Integral Development Corporation. “This is especially true in FX markets that are all about seamless, uninterrupted execution. We are extending support to Cognotec customers to help them to get back to business as usual, as quickly as possible.”

Integral said that it is uniquely qualified to do so as it can easily ensure a function for function replacement of Cognotec’s intended solutions using Integral technology. Once a Cognotec customer’s business has been stabilized on Integral’s platform, the option then exists to take advantage of Integral’s features and services to gain competitive advantages. The offer further entails for Integral to honor existing service level agreements and functionality. In essence, Integral will take over existing agreements at no additional cost to Cognotec’s customers. The offer is valid through March 31, 2010.

“While we have seen other FX solutions providers struggle, Integral has continued to be one of the industry’s fastest growing electronic foreign exchange platforms,” said Bill Carson, Managing Director, Hudson Ventures. “This is a remarkable achievement given the uncertainties and the restructuring that has occurred in financial markets over the last 16 months.”

Cognotec customers who are interested in learning more about transitioning to Integral are encouraged to contact Jon Barker, head of global sales, Integral, at jon.barker@integral.com and country code +44. 207 469 4172. For a list of regional sales offices please visit http://www.integral.com/trade-up.

About Integral

Integral develops and operates FX Grid, a global Multi-sided Trading Facility (MTF) connecting active market participants with all major sources of FX liquidity. Together with FX Inside, its real-time Execution Management System (EMS), Integral’s products represent the intersection of direct market access and algorithmic trading in the foreign exchange markets. Founded in 1993, Integral maintains development, support, and sales offices in Silicon Valley, Chicago, New York, London, Hong Kong, Tokyo, Singapore and Bangalore. Investors include Accel Partners, Adams Street Partners, Hudson Ventures, Ignite Group, Mizuho Capital and Mitsubishi UFJ Capital. For more information, visit www.integral.com.