Comprehensive Review of FirewoodFX

FirewoodFX is an online forex brokerage company that provides a range of trading products such as forex currency pairs and CFDs. The CFDs are among the high-risk tools used by traders, and when combined with a broker having tier-3 regulation, they create big risks. On top of its trading services, the dealer also provides additional features like copy trading, affiliate programs, and welcome bonuses. Despite these offerings, the firm’s reliability remains largely low, leading many to question whether the company might be a scam.

Highlights

Key Trading Features

FirewoodFX is transparent about the details of its trading conditions, which is a positive aspect for potential traders. The broker lists five different account types on its official website: Cent, Micro, Standard, Premium, and ECN accounts. The entry fee is also attractive and reasonable. For example, the minimum deposit for opening a Cent or Micro account is as low as $10, while the minimum deposit for an ECN account is as high as $200.

The dealer supports margin trading and offers colossal leverage of up to 1:3000. However, there is a maximum limit of 1:30 for retail traders from the Eurozone. The broker uses floating spreads, starting at 0.3 pips, but they can widen to 3 pips in certain market conditions.

Additionally, FirewoodFX offers Islamic accounts. The stop-out level is 20%, while ‌traders can have up to 200 open positions at one time. The company also advertises their so-called ECN accounts, which supposedly grant access to automated trading platforms.

Overview of Available Trading Instruments

Although FirewoodFX offers a sufficient variety of currency pairs, as for cryptocurrencies, they have only two: BTC/USD and ETH/USD. It mainly deals in CFDs, meaning that most trades are done on contracts betting on the difference in prices, rather than on direct asset ownership.

CFDs, especially if used by dubious brokers, can be a very risky tool since it is mainly utilized for cheating on traders’ money. Statistics have shown that approximately 70-80% of retail traders suffer financial losses while trading CFDs.

Trading Platform Analysis

FirewoodFX provides several different trading platforms: a browser-based version of MetaTrader 4, a desktop application, and a proprietary mobile application for Android devices. The dealer does not appear to be affiliated with any of the major liquidity providers. It may lead to slower execution of trades because prices can change between the moment a trader gives the order and the moment it will be executed.

Besides, there is no advanced facility for trading indicators and tools required for technical analysis. These defects indicate some problems with the manipulation of trades and slow execution, making the platform less attractive to traders.

Additional Services

FirewoodFX has many peripheral services, their so-called offerings, which serve to attract traders. These tools include a margin calculator, news feed, and explanations of trading terminology. To be fair, one of the interesting tools they provide is copy trading, whereby traders can copy top performers. Of course, this should be approached with caution, given that most CFD-based trades inevitably result in losses.

The company also operates a referral program, which it categorizes as IB, VIP IB, and Affiliate. Affiliates with more than 25 new users can receive commissions that range from $1 to $7 per lot traded. This system incentivizes recruitment over the actual quality of the trading experience, which is another potential warning sign.

The dealer also heavily promotes its bonuses, offering as high as 88% on top of a trader’s initial deposit. As expected, the rules surrounding these bonuses are quite unforgiving, with several terms and conditions regarding withdrawal requirements and minimum deposit amounts. 

Fee Structure

FirewoodFX claims there are no trading commissions on most accounts. Anyone using an ECN account will have a $7 commission per trade. The broker does not charge fees for most of the deposit methods, but credit card deposits incur a 5.5% fee. There are no charges levied on withdrawals either, except on withdrawals to a credit card, which has a $10 fee.

Legitimacy of FirewoodFX

A major concern about FirewoodFX relates to its regulation. The company is regulated by a tier 3 offshore authority, which is generally considered untrustworthy.

Tier 3 regulators have limited supervisory powers, and their licenses are seen as a tool for brokers to pretend to be legitimate while avoiding actual regulatory oversight. This is the case here. The broker is registered under the SVG FSA — a well-known offshore regulator with the dubious reputation of being extremely weak at protecting consumers. In fact, this body does not license forex dealers at all.

Finally, the broker’s official website lists a physical address at Griffith Corporate Centre, which is the exact address used for registration by many fraudulent brokers. This fact further brings into question the company’s activities and its credibility.

Company History

FirewoodFX claims to have been in operation since 2014. According to domain name registration records and WebArchive checks, this claim is indeed factual. Apart from that, In addition, the date of incorporation of the company in the Grenadines corresponds to this point in time.

However, the “About Us” section displays misleading and probably some false information. In this case, achievements, awards and trading volumes were greatly exaggerated and the company was also falsely presented as being more regulated than it actually was, which increased suspicions about the broker.

Conclusion

FirewoodFX positions itself as a regular forex broker with different account types and variations of CFD trading, but a number of serious red flags plague the company. The reliance on CFDs, coupled with tier-3 regulation, poor liquidity, and negative user reviews, make this broker a risky one for traders. The false claims about its regulatory status and the lack of transparent information about its operations from the broker’s side bring even more concerns.

Weighing the Pros and Cons

Common Questions