Risks of Cryptocurrency Trading at FXCM
Volatility, Market Gapping and Slippage
Cryptocurrencies have a higher volatility than any other product available to trade at FXCM and market liquidity will fluctuate.
As a result, jumps in price are common and negative slippage can occur frequently on Stop and Market Orders.
Weekend Gapping
Crypto Trading takes place 24 hours a day, 7 days a week, however the FXCM platform is closed for trading over the weekend. There exists the possibility of large market movements over the weekend. During this time you will be unable to enter or exit positions.
If your stop or limit price is surpassed over the weekend, your trade will trigger for closure at FXCM Market Open and execute at the best available price at the time.
It is recommended to close your order prior to weekend close, if you would like to avoid the impact of any weekend movement.
Trading Costs
The cost of carrying a position past 5PM EST are higher (as a % of notional volume) on Cryptocurrencies.
Financing costs are displayed as “Rollover” in the Simple and Advanced Dealing Rates windows in the Trading Station Platform.
In order to avoid Financing Costs positions can be closed before the daily market close.
The financing costs and spread should be considered before entering any Cryptocurrency trades.
Price Referencing
Cryptocurrency trading takes place around the globe on many unregulated exchanges and the price of a certain cryptocurrency may vary greatly from exchange to exchange.
FXCM derives its Cryptocurrency pricing from multiple liquidity providers. The best available bid and ask prices are then displayed on the trading platform, with a markup. This pricing method ensure fair pricing for all FXCM customers.
However, FXCM’s price will vary from the current price and movements of any specific underlying exchange.
Variable Spreads
Given the above pricing methodology, the spread will therefore be variable and will narrow and widen depending on the pricing received from third parties, market liquidity and volatility.
Pricing Disruptions and Forks
In the event of trading suspensions, discontinuations, forks or any other event that may result cessation of trading for a certain cryptocurrency. CFD trading may also be ceased at FXCM.
For open position holders, FXCM will determine in accordance with market practice the appropriate adjustment, if any, to be made to the current value or quantity of your positions, in order to preserve the economic equivalent of your position, either prior to the relevant event or to reflect the effect of the event on your position.