Trading the financial markets (or forex specifically) online is unarguably one of the best and most popular channels to make money on the internet. Due to this popularity, there are always innovations regularly coming up to make it more accessible, simpler and easier for the retail trader.
To be able to trade, you need a broker. And one such area in which innovation has continuously occurred in the forex trading industry is in the brokerage space. One such brokerage innovation is BluFX.
Traditionally, most brokers work this way: you open an account with them and upon completing the registration process, you fund the account in compliance with the broker’s minimum deposit amount. Then you start to trade. However, there have been innovations here. For example, we now have broker-funded accounts where you register with the broker, but rather than provide any capital, you have your account already funded by them. One such broker that offers this type of service is BluFX.
Headquartered in the United Kingdom, the award-winning BluFX prides itself on being the first “subscription-based” trading platform. It allows traders to live-trade the financial markets without putting their capital on the line, while also making money from the profits they bag from the markets. It’s fascinating that you bag no liabilities at all for any losses incurred from trading with the broker. You have to pay a relatively small subscription fee monthly to have access to a trading account.
In essence, BluFX somewhat combines the features of a traditional broker account and a conventional proprietary trading firm. That is, it is a broker like every other broker, but it is an exclusive trading organisation because it runs its own money. Also, the broker is somewhat meant for traders who are risk-averse and are more predisposed to risk management, gradually growing accounts, and protecting against the downside, as against fast and exponential account growth-minded traders who are willing to put their capital at risk.
BluFX Subscription Fee
There are broadly two subscription fees on BluFX, depending on the amount you pay for the monthly subscription.
The LITE account requires a monthly subscription of $99 to get access. Your account gets funded with $25,000, and due to the leverage of 1:3, you have a total buying power of $75,000. The trading platform is MetaTrader 4. There are no liabilities on your part for losses incurred, while profits earned are shared on a 50/50 basis; 50% for yourself and 50% for BluFX.
To have access to a PRO account, you have to pay a monthly subscription of $249 to have access to a $50,000 account. As a result of the 1:3 leverage, you have a maximum buying power of $150,000, and you have the privilege to hold trades overnight. Still, the trading hours remain from 6 am to 9 pm.
BluFX Pros and Cons
Since there are no mentions of any countries restricted on the BluFX platform, it can be assumed that it is very much available to South African traders. This assumption is further buttressed by the fact that it has operations and (third-party) offices in other parts of Africa; there is an office for West Africa located in Lagos, Nigeria, and a BluFX Francophone Africa with an office situated in Yaounde, Cameroon.
Membership plans available worldwide also apply to South African traders. To be a member, you have access to a community of traders who are also on the BluFX platform, where you can get to learn and gain from others. You also have access to trading support during work hours. Moreover, you can tap into an array of sophisticated trading programs and charting tools and also trade via the MT4 platform. Importantly, you can cancel your subscription at any time.
BluFX South Africa General Instructions and Points to Note
There are some important instructions that you have to comply with when trading with BluFX.
- Trading Hours: You can only make trades between the hours of 6 am and 9 pm UK time (GMT+0). Furthermore, if you are signed up for the LITE account, you cannot hold your trades overnight; as a result, you must restrict your trading style to intraday trading.
- Drawdown: Your account must not experience anything below a 10% drawdown at any particular time. Thus, for the LITE account, you must not be down $2,500 at any point in time; and for the PRO account, you cannot afford to lose anything above $5,000. If you go below these thresholds at any time, you run the risk of you being disabled.
- Unauthorised Trading: You are prevented from engaging in ‘unauthorised’ trading activity. However, this is somewhat vague as we can’t really place what they mean by “unauthorised.”
- Only Forex Instruments: On BluFX, you only have access to a maximum of 28 currency pairs. Thus, you can’t speculate on commodities, stocks, CFDs, and other much more liquid markets.
- Leverage: Leverage on the BluFX platform is limited to 1:3. This is understandable as you have a relatively large trading capital. Furthermore, it might help to note that BluFX’s preferred trading style is that which is conservative and more risk-conscious.
If you contravene any of these instructions, you run the risk that you will be disabled from the platform or that “fines” may be deducted from your account when it is time for a payout.
After making profits with the capital provided to you by BluFX, you can then make withdrawals. However, there are some crucial points you have to note before you can withdraw funds from BluFX.
- Cannot Withdraw Capital: When withdrawing, you can only withdraw the profits you made with BluFX’s capital; you can’t have access to the capital itself. So for instance, assuming the scenario that you are subscribed under the PRO membership and have access to $50,000 as trading capital in your account; if you make say $10,000 for a balance of $60,000, the maximum amount you can withdraw is your rightful percentage of the $10,000, and no more. You can’t touch the $50,000 as it belongs to BluFX.
- Profit to be shared 50/50: Whatever profit you make out of trading from the capital assigned to you is not yours entirely to keep; you share it on a 50/50 basis with BluFX. Thus, still adopting the above scenario of $10,000 profit on a capital of $50,000; when withdrawing, you have a maximum of $5,000 coming to you while the rest goes to BluFX. You will agree this is a fair deal, especially when you consider the fact that you are not incurring any liability for the losses you make.
- 10% profit before Withdrawal: Making profits merely does not automatically grant you access to withdraw from your account. To qualify to withdraw from your account, you must make at least up to 10% of whatever trading capital you signed up for. Still using our scenario above, when you are on a PRO membership with $50,000, you must make up to $5,000 (with a minimum balance of $55,000) to be able to withdraw; for a trader on LITE membership, you must make at least $2,500 (with a minimum balance of $27,500).
- Can Only Withdraw 5% at a time: In addition to the above withdrawal rules, one other important one to take note of is that when you want to withdraw, you can only withdraw a maximum of 5% of whatever profits made at a particular time. That is, if you make a profit of $2,500, you can only make a withdrawal of $125 (5%) at any given time. That does not mean you can’t withdraw all your profits, but you can’t do so at once.
How to Withdraw money from BluFX
First, to deposit your monthly subscription fee, you can only pay through credit or debit cards. However, to make withdrawals, you have a plethora of options ranging from PayPal to Skrill and bank wire transfers.
Is BluFX Legit
Considering the number of reviews and recommendations we have come across as well as its popularity, BluFX can be said to be legit. This does not apparently seem to be your typical broker scam. But does that automatically mean you should jump on it? Absolutely not. There are several important factors, downsides or restrictions, to trading with BluFX.
Cons of Trading with BluFX
Prominent red flags that you should take note of when preparing to trade with BluFX.
- Lack of Regulatory Supervision: One required feature of a credible forex broker is that it must be registered under and subject to at least one regulatory institution, Very reliable brokers have two or more regulators. But BluFX is not – or appears not to be – regulated by any institution. Normally, its website should contain its regulatory certifications, but it does not. This has become something to be concerned about because it is headquartered in the UK and should at least be registered by the UK Financial Conduct Authority (FCA). Regulation is critical to forestall against violations of customer trust.
- Too many restrictions: The BluFX trader may find himself on a platform that he has little control over. For one, the trading hours of 6 am to 9 pm make a mockery of the assertion that the Forex market is a 24-hour market. As a result of this, you have to restrict your trading style and strategies to intraday trading. Likewise, you are limited to trading only 28 currency pairs, thus making you miss out on ample profitable opportunities in other markets – stocks, indices, commodities. Furthermore, you have little to no control over some important trading parameters like risk management as these have been pre-set for you.
- Lack of Important Information: So much seems to be in the dark concerning BluFX, as you don’t have access to some important details. For instance, you don’t know how much spread is being charged per trade; every professional trader understands what a difference spreads can make.
- Subscription Refund: Although you are allowed to cancel your monthly subscription and get your money paid back, that is still subject to some conditions. Before your refund is paid to you, appropriate “fines” for contravening any of the rules are deducted. Only the remaining amount will be paid to you. Also, any losses you incur may be cut as well. Usually, by the time you are paid, there is almost little to nothing left.
The BluFX broker model is quite a commendable one. But it must be said that it is not really meant for all types of traders. You should adequately consider the above to decide if it can work for you.