Forex retail brokerage system typically operates in a way in which the individual trader deposits his/her own money to open a ‘live’ account and starts to make trades. However, technological innovation is taking over, and this model is being disrupted. Now there is a new model in which the individual trader does not provide any capital but still gets access to trade with a live account using money supplied by no other than the brokers themselves. Capital providers invariably bear the risks involved in trading the markets. However, the profits earned are shared between the forex broker and the retail trader who applied his expertise to bag those profits.
The above-described model in which a broker serves both as the provider of capital and investor, while still performing the role of the broker at the same time, is gradually gaining ground in the forex brokerage industry and one of the pioneers of this model is BluFX. BluFX Limited (providers of the BluFX trading platform) is a UK-based company that provides traders with the opportunity to participate in the markets, by providing capital to use to trade for them.
Recognised and duly rewarded for its pioneering and innovative work, the platform BluFX provides enables traders to make trades risk-free, that is, without putting any money down and to share in the profits bagged after some time. In exchange, traders just have to pay a subscription fee to access the platform every month.
BluFX Membership and Subscription
To be able to have access to BluFX’s trading platform and make use of BluFX’s capital to trade, you have to register to become a member, and then pay monthly subscription fees. There are 2 forms of membership on BluFX, each with its perks and required subscription fee. BluFX offers Lite membership and Pro membership.
BluFX Lite Membership
To get access to a Lite membership, you have to pay a $99 fee, monthly. In exchange, you will be given access to a $25,000 account with which you can trade in the financial markets. As already mentioned, you don’t incur any liabilities for the losses you will encounter, but the profits you bag are to be shared 50/50 between you and BluFX. Lite membership comes with some restrictions, such as the fact that opportunities for account growth are very limited, and that you can’t hold trades overnight.
BluFX Pro Membership
To become a Pro member, you have to pay $249 monthly as a subscription fee; and in return, you are given a live account with $50,000. Just like in Lite membership, any profits you make are to be shared on a 50/50 basis. Being the “premium” version, the Pro membership account comes with a number of perks such as the opportunity for exponential account growth, access to personalised trading support and more importantly, the possibility to hold trades overnight. However, the 6 am to 9 pm trading time still applies.
BluFX South Africa
BluFX is present all over the world, as well as in South Africa. However, it does not yet have a dedicated South African office – as it does in Nigeria and Cameroon. As a result, the membership plan and subscriptions outlined above do apply to you as a trader in South Africa. Likewise, you are subject to the same benefits, instructions and of course restrictions as every BluFX trader across the world.
Benefits of being a BluFX trader include having access to considerable trading capital. To state the fact, only a very few traders can fund their trading accounts with $25,000 at a time, not to mention $50,000. Furthermore, you get access to a platform where you can meet other BluFX traders; here, you get to share useful ideas. Other perks include customer service support and the ability to withdraw your subscription at any point during each month. This means that you are forfeiting the account as well.
The BluFX trading platform is also said to be sophisticated with advanced charting and technical analysis tools that can help you make better trading decisions.
Some Points to Keep in Mind
Due to the very fact that you are not trading with your money, there are many instructions that BluFX has outlined for traders using its capital and trading on its brokerage platform to comply with. Failure to comply with these instructions might lead to your account being disabled and you being denied subsequent access; also, you can be levied with fines which will get deducted when your earnings are to be paid.
Maximum Incurable Downtime
While trading, never should your account lose more than 10% of its worth. That is, you must not make losses to the extent that your account gets depleted by 10% of its value. Otherwise, you will be disabled from the platform. As a result, if you are on a PRO membership, you must not see your account lose up to $5,000 at any given time. Likewise, a trader on a LITE account must not experience downtime to the tune of $2,500.
Tradable Instruments
The only market you are allowed to trade in on BluFX is the forex market. So you only have access to about 28 currency pairs. This means that you cannot trade Gold, Crude Oil, the S&P 500, NASDAQ and a lot others.
Restrictions on Trading Time and Trading Span
BluFX only allows you to trade between the hours of 6 am and 9 pm UK time. They also don’t let you hold your trades overnight, so you are to open and close all your trading positions within the space of that 6 am to 9 pm.
Smaller Leverage
Typical leverage offered by brokers for retail traders in the forex market ranges from as little as 1:50 to as huge as 1:4000. However, BluFX only gives you access to 1:3. We feel that the already humongous $25,000 capital should cater for this.
Is BluFX Legit
We obviously cannot say that BluFX is a scam. It does not appear to be one. However, there are some issues that you have to consider when deciding to trade with BluFX. These issues mostly have to do with their model and systems of doing things. Some of them are outlined below:
Questionable Business Model
Realistically, the BluFX business model leaves a lot to be questioned, and we cannot confidently assert that there is enough transparency as expected of a credible broker. For instance, it is advertised that signing up to start trading on BluFX does not require any exams or education or assessments of any kind. As such, this leaves the door open to all sorts of traders – including amateurs and newbies – since there is no way to ascertain who is capable of suitable trading. If we consider this objectively, no one will be comfortable leaving his or her capital – to the tune of $50,000 – to persons whose experience and credibility they cannot ascertain. Of course, we are not insinuating anything here; but it raises some red flags.
No Reported Regulatory Authority
If the above is not sufficient, this surely is enough to raise red flags. Every trustworthy broker should have at least a governmental agency or two that regulates it and that it answers to. However, BluFX does not appear to be regulated by any institution, as the mention of such is missing on its website. Any broker that is under regulatory authority is usually proud to list it on its website. However, BluFX does not list any regulatory affiliation on its website. However, we really can’t use that to conclude.
Seeming Lack of Transparency
It appears that some vital information seems not to (deliberately) be made available to traders on the BluFX platform; and one of such, amongst a handful of others, is the spread and swap charged for trades. Little things like spreads can significantly affect a trader’s profitability.
Lack of Control
Trading on the BluFX platform somewhat puts traders in a situation where they really can’t control some variables. Traders are confined to trading only one sort of asset and are thus denied the opportunities that may be available in much more liquid markets. As a trader, you can only look out for setups in only 28 currency pairs, and not elsewhere.
Likewise, the trading hours further restrict your choice as some markets, for instance, the Asia-Pacific currency pairs don’t happen to really be active during the open times of 6 am to 9 pm. You can only select those that fall into your trading hours. Also, you can only look out for intraday trading setups. To compound it all, the risk management framework on the platform has mostly been set up. Thus, it is not entirely subject to your whims and caprices.
BluFX Withdrawals
True to its unique nature, the withdrawal methods and associated modalities of BluFX quite vary from those of other known forex brokers. From the time of payment to the method of payment, significant differences exist, and you must be aware of these beforehand, to make the informed decision of whether you are comfortable with the arrangement or not. Some essential points are outlined below:
Payments are made monthly.
When you make requests to withdraw your profit, they are paid monthly. Requests for profits are said to be processed on the 20th of each month, and the actual payments are made on the 25th. Invariably, any requests for withdrawal made after the 20th will have to be processed and paid the following month. This goes as against what you get from other forex brokers.
Fines can be charged
Some rules must be adhered to while trading on the BluFX platform. Contravening such instructions will lead to either your account being disabled or – in milder offences – you being fined. These fines are deducted from every withdrawal request you make; the remainder is then paid to you.
5% One-time Withdrawal
It is important to note that at every point you want to make withdrawals, you can only withdraw a maximum of 5% of whatever profits you earn. In essence, if you bag profits of say $10,000, you can only make withdrawals of a maximum of $500 at a go. Of course, you can withdraw as much as you want to, but you must do it one after the other.
Profit Threshold of 10%
To be able to withdraw whatever profits you might have made, you must have grown your trading capital by at least 10%. As a result, if you are using a PRO account, you must have increased your $50,000 capital by at least 10% to reach $55,000 to qualify to make any withdrawals. If you are a trader on a LITE membership, you must raise your account by at least $2,500.
Equal Profit Sharing Formula
All profits you make from the BluFX platform are to be divided equally between you and BluFX. As such, if you make a profit of say $20,000, half of that ($10,000) belongs to BluFX, while the rest $10,000 comes to you. Anyway, the capital that enabled you to bag such profit in the first place was provided by BluFX.
BluFX Deposit and Withdrawal Methods
Only debit/credit cards are available for you to pay your monthly subscription fee with. For withdrawals, you can make use of PayPal, Skrill and Bank transfer.
Conclusion
In the Forex brokerage industry, we must say the BluFX model is highly welcome. It shows that brokers can collaborate with traders to solve their problems. However, we wouldn’t know if it fits everyone’s personality and trading style. As a trader interested in its services, it is crucial you do your research and see if this system and the plethora of rules are good for you.