Online FX Brokers - Are They Really That Bad?

A recent study from Forex Direct claims that more than half of online forex brokers are "fake." However, that seems unlikely. Let's take a look at how markets and Axitrader stack up against the top forex brokers. As I mentioned, I'm an investor in FX and I've been using FPNuts and Axitrade for many years. I am also a member of the independent ratings agency Moody's Investor Service. I like them both, but I've been wrong before when it comes to their strengths and weaknesses. So I wanted to look at their strengths and weaknesses and see if they are as strong as their claims. To do this, I decided to take a look at the claims made by FPNuts and Axitrade. FPNuts and Axitrade are rated A+ by Moody's Investor Service. In fact, they are rated as one of the best online forex brokers. According to FPNuts, "The Forex Direct platform is designed to help even the most inexperienced trader gain confidence in their ability to place trades based on fundamental analysis, technical indicators, and risk management principles." They even state that: "In a challenging environment, we believe the currency market is one where virtually any currency pair can be effectively managed by a beginner." I agree that in a tough market there are people who should not be trading currencies because they don't know enough. But this quote doesn't support the claim that they are one of the best online forex brokers. According to Moody's, FPNuts and Axitrade are A+ rated by Fannie Mae has long been a positive issuer in currency markets. At the same time, Moody's notes that FPNuts and Axitrade had a "negative" rating for the last quarter of 2020. For that reason, Moody's says, "We believe their financial strength continues to be insufficient to allow them to sustain a positive rating." That doesn't sound very good. Moody's says it is "unlikely" that FPNuts and Axitrade will improve their rating, and if they do, they won't have time to do it by July 2020. In fact, according to Fannie Mae, they may not have time to get back to that rating by then. Although they are rated as A+, FPNuts and Axitrade state that they have enough financial strength to sustain a positive rating for another year. So, at least according to Moody's, they are still in the lowest rating bracket. Again, as with FPNuts and Axitrade, this does not look too good. Moody's says it is "unlikely" that they will get back to being A+ rating in 2020 or in the future. Another thing I found surprising in Moody's study is that while they say they are large, they aren't many more brokers. Moody's's claims that they only have eight "large" forex brokers (which, of course, is not an actual definition) In fact, I find it interesting that as of November 2020, FPNuts and Axitrade only have two large brokers (ETF Securities and FPA). So, while I think they are indeed large, I don't think their size is large enough to be viewed as significant in the market. This should definitely be looked at in comparison to other forex brokers, particularly those who use an automated forex robot as part of their system. While FPNuts and Axitrade are rated A+ by Moody's, FPA is not. According to FPA's website, they "Are a full-service professional foreign exchange broker." FPA has two large brokers, which, according to FPA, makes them a "higher end" forex broker.

FPA has four brokers listed in its website. However, according to Moody's, FPA has one of the smallest number of fully staffed brokers compared to any of the three firms reviewed. They have one forex brokerage in New York, and there are two other brokers in Washington D.C. And that doesn't include the two fully staffed brokers in London and Tokyo.