ETFX is a relatively new forex broker, which mostly targets the Chinese market. The company provides little to no information on the trading conditions. That being said, this may change in the future and we will update this review
The Company. Security of Funds
Company Country Regulation
GOLDEN FINANCE LIMITED New Zealand FMA
ET Services Limited Vanuatu VFSC
ETFX is operated by two companies, one of which is based in Vanuatu and the other in New Zealand. Both of them are regulated by the appropriate entities – the VFSC and FMA, respectively. This leads to believe that in the start of this project, the management team decided to go with the easily obtainable Vanuatu license, but then upgraded to the more reputable one.
In case you don’t know, financial regulation is a very important aspect of a broker’s overall credibility. As we hinted above, different regulatory agencies have different standards of scrutiny. While Vanuatu is a very popular destination, where basically anybody can operate a forex broker, New Zealand is a lot more demanding. The minimum capital requirement in these jurisdictions is $2,000 and $ 1 million, respectively. This is probably enough to give you an idea of the way they treat brokers, while there are a lot of other technicalities.
With that in mind, some people only prefer dealing with companies overseen by the top regulators, as the UK’s Financial Conduct Authority or FCA.
The FCA requires brokers to keep client finds in segregated accounts. These are special banking terms, which prevents the company from transfering your money at will. On top of that all UK brokers, who are overseen by the local watchdog have to be part of the Financial Services Compensation Scheme (FSCS). Think of it as an insurance company, which collects “premiums” from the participating companies. In case one of them goes bankrupt, all clients can claim compensation from the Scheme (limited to £50,000).
Minimum Initial Deposit
ETFX does not provide any information on a minimum deposit requirement. This is not the common industry practice, as most companies prefer to give a clear guidance. As an example, HYCM requires a minimum investment of $100.
That being said, not providing such information isn’t a big negative on the part of ETFX. This is just a simple oversight.
Average spreads & Commissions
The costs of trading at ETFX are included in the spread (i.e. no further commissions are charged, as is the case with ECN brokers). The company’s website does not give any target levels, but after registering a demo account we saw the EUR/USD spread hovering around 2 pips. The lowest level it dropped to was 1.8 pips, which is still rather high, when compared to other brokers. Nowadays 1.5 pips on this pair is considered the top end of good trading conditiosn.
ETFX does not provide information on the maximum leverage offered. When registering a demo account we saw 1:100 as the maximum option, so we concluded this is also the case for real accounts.
Even if 1:100 sounds low to you, this is definitely not the case. This level is perfectly suitable for trading systems, involving some sort of risk management. While many brokers provide higher levels, this is mostly done as an advertising trick, towards new traders, who don’t really understand how margin works and believe a higher level is “better”.
МetaТrader4 (MT4) is the platform of choice of this broker. This is currently the leading platform, when it comes to forex trading. There are multiple reasons for that.
The charting package provided by this platform is second to none. Some traders are so used to it, that they still have a demo account open to look at the charts, when trading with a non-MT4 broker.
On top of that, this platform provides a wide array of custom software add-ons. The most commonly developed ones are automated trading systems and technical indicators. After browsing the built-in marketplace, one can easily find free as well as paid versions of such tools.
Methods of Payment
At the time of writing of this review, only China Union Pay is available at ETFX. This underlines both of the major points about this broker – a strong emphasis on Chinese clients and not displaying too much information. The former is a perfectly understandable strategy, while the latter is a bit annoying.
That being said, this broker could benefit from implementing other payment options, such as Skrill or Neteller, which are popular among traders across the world.
ETFX is forex broker, regulated in both Vanuatu and New Zealand. Obviously (to those who are familiar with the matter) the second jurisdiction gives the broker a lot more credibility. ETFX is strictly targetting the Chinese market. We must reiterate, this is not a bad thing, but simply a conscious decision made by this broker. The overall presentation on the English version of their website is below the level we are accustomed to. That being said, this may change in the future and we will update the review.
ETFX Review Conclusion
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