London Capital Group (LCG) Review

London Capital Group (LCG), founded in 1996, has continued to keep pace in the highly competitive and ever-changing online brokerage landscape. The company's latest rebranding effort occurred in 2016 with the launch of LCG Trader, which is a web-based, white-labeled version of the cTrader platform. This, coupled with the ubiquitous MT4 (downloadable) platform and a functional mobile application, comprises LCG's entire online offering to the consumer. LCG provides access to a broad selection of CFDs and spread betting instruments across several different asset classes. Like many forex brokers, LCG does not accept U.S. traders.

For the most part, LCG keeps it simple—functional platforms that can be downloaded (MT4), accessed via a browser (LCG Trader, MT4 Web), and through an application (LCG and MT4) for your mobile device. The company also offers a choice between standard or electronic communications network (ECN) accounts (though the latter requires a minimum deposit of $10,000), low margin requirements, and competitive spreads. ECNs enable clients to trade directly with market makers, which can lower the cost of the spread in liquid markets. One of the key features that catapulted LCG over the competition is its focus on customer service, which is important for all traders but even more so for the beginner. Investopedia's ranking algorithm factored in this functional simplicity when gauging LCG's appeal to novice traders.

Who London Capital Group Is For

As one of the major U.K.-based forex brokers, LCG offers a wide range of asset classes and a seamless trading experience. The firm's fees are competitive within the industry and it ranks high on our list for customer service. With these positive attributes along with its apparent focus on functional simplicity, LCG is well-suited to beginning traders. Aside from rating highly overall, the company is ranked as the winner for Investopedia's Best Forex Broker for Beginners in 2020. Although you certainly don't have to be a beginner to benefit from its offerings, LCG is hard to beat if you are just starting out.

Pros Explained

• LCG places an emphasis on customer service which includes 24/5 telephone support with access to the dealing desk and live chat facility. This, more than any other feature, buoyed them in the rankings, as being able to readily contact a broker is crucial, especially for clients new to the arena of online trading.
• LCG is regulated by the Financial Conduct Authority (FCA #182110) which is one of the main regulatory agencies in the UK and is highly regarded globally for being strict in ensuring that market practices are fair for both individuals and businesses. Simply put, being regulated by a reputable government-backed agency goes a long way towards establishing the credibility of a firm. Traders accept the risk that is inherent in markets but they would like the peace of mind knowing that their funds are not subject to risks outside of the ones that they are taking, such as counter-party risk. Additionally, all client funds are held at Tier 1 banks.
• LCG offers "negative balance protection" which has become a fairly important feature that most online brokers are offering these days. The catalyst was most likely the SNB event of January 15, 2015 that roiled the markets, especially the highly leveraged retail FX market. Additionally, LCG also offers guaranteed stop losses [GSLO] (additional charge) on LCG Trader only, which protects the trader from market gap risk.
• Incentives, such as premium services for high-balance clients and rebates for high-volume traders, are available.

Cons Explained

• Website maintenance leaves a lot to be desired. One of the hallmarks of an efficient organization, especially in 2020, is its web presence. While LCG's website is well designed with an intuitive feel, there are a few broken links and pages with either incorrect, outdated, and/or incomplete information.
• LCG does not accept U.S. clients due to regulatory constraints, which precludes LCG from being considered a global broker. This would be a red flag were it not for the fact that the company is regulated by the FCA which, along with U.S. regulatory agencies (NFA, CFTC), is widely considered to be the preeminent regulatory body.
• Differences exist between LCG trader and MT4 in terms of spreads, commissions, and product offerings. Essentially, LCG's web-based (cTrader white-label) platform is the company's de facto flagship offering and has far more functionality than does its MT4 white-label. This would not be as big of an issue were it not for the fact that MT4 is its only downloadable offering.
• LCG Trader is not equipped with back-testing or automated trading capabilities, and MT4 is the only alternative for algorithmic traders.

Costs

Most of the trading costs at LCG are charged through the spread which is competitive within the industry. Guaranteed stop losses (GSLO) are available only on LCG Trader at an extra cost (usually 3 pips) that is charged to your account. There is a "commission" charge that comes into play when one is trading individual shares and ETFs, but it is added to either side of the spread. As LCG advertises on its website: "Additional Spread is the spread LCG adds to the Market ask and subtracts from the Market bid prices."

Traders opting for an ECN account (minimum $10,000) will get access to the best spreads that LCG can offer, though there is still a difference between using LCG Trader and MT4. As stated on the website: "Commission of $45 per $1,000,000 traded will be charged on all symbols on LCG Trader and $10 per lot on MT4."

While this information is accurate, it is a bit misleading as the costs for an ECN MT4 account are greater than the cost for an ECN LCG Trader account. For example, the total ECN LCG Trader cost for a $1,000,000 trade is $45 + average spread, while on MT4 it would be $100 + average spread, as one lot equals 100,000.

Clients with high account balances can request premium services, such as VIP Analysis provided by TSE, which LCG offers at its discretion. There is also a rebate program for active traders which starts at £4/million and can go higher depending on the volume being traded.

Aside from an inactivity fee of £15 per month for each live account with no trading activity in 180 days (6 months), and 2% on credit card deposits, LCG does not charge any other fees.

LCG does not have a minimum deposit requirement for customers wishing to open a "standard" account, but logic demands that this amount will be subject to the margin requirements of the smallest trade size that the customer wishes to place. There is a $10,000 minimum deposit for ECN accounts.

Trade Experience

LCG Trader is a streamlined trading platform that is stable and easy to access from any browser (Chrome, Firefox, Safari, or Internet Explorer). This is the company's flagship offering and provides an updated look and feel, one-click trading, and full integration across desktop and mobile platforms that should serve novice traders well. Trading Central's technical reports are also available through LCG, which is useful to both new and seasoned traders looking for trading ideas.

LCG Trader has a simple and easy-to-use interface where traders can set up watchlists, analyze charts, place and monitor trades, have access to an instrument's "depth-of-market," and keep abreast of upcoming events with the market calendar. The technical analysis charts can be expanded to full screen and come with more than 70 technical indicators that you can apply over many different time frames, from tick charts to monthly charts. LCG also offers a MetaTrader 4 (MT4) option for traders looking for a familiar downloadable platform.

LCG Trader includes access to thousands of financial instruments, which can be traded from the chart or through the new order window. Traders can also set price-based alerts on instruments they are following, and LCG Trader will notify them via email or text message once the price objective has been reached. Unfortunately, LCG Trader is a closed system. Advanced traders who prefer to incorporate other analytical and automation tools in their trading process will be disappointed to see that they cannot integrate those tools directly with LCG Trader, but that option does exist with the MT4 platform.

LCG Trader has four basic order types with the option of attaching "take profit" and/or "stop loss" orders to them. Additionally, the trader can make the stop loss a guaranteed stop loss and/or a trailing stop loss. Furthermore, there is a choice as to whether the trader wants the stop loss order to be executed at the bid or ask rate.

• Market - The simplest order where a trader signals that their trade request should be executed at the prevailing market rate.
• Limit - A pending order where the entry is at a predetermined point below or above the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.
• Stop - A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it's a buy or sell. The trader also has the option of selecting the expiration time of this order.
• Stop-Limit - A pending order where the entry is at a predetermined point above or below the prevailing market rate depending on whether it's a buy or sell, but where the trader can select the tolerance range for execution. For example, if the market gaps over the selected rate and the tolerance interval then this order is immediately cancelled. The trader also has the option of selecting the expiration time of this order.

Most of LCG's special features are integrated into the firm's trading platforms, so LCG clients must decide which platform they prefer, LCG Trader or MT4. LCG Trader is a great entry-level platform with better charts by default, but MT4 is more flexible. Back-testing and automated trading are available within MT4, but there aren't many other supplemental tools for traders seeking something unique. Advanced traders, though, are likely to use LCG's MT4 platform, which provides more flexible trading technology through "Expert Advisors."

The mobile app stays true to LCG's theme of being functionally simple. The connection between the app and the web version on the desktop is instantaneous. Alerts are easy to set up which is a critical feature for working with a mobile app away from your desk. The charts are good, and it is easy to modify or add indicators to them. Navigation between order entry, account management, and research tools is very simple and straightforward.

As with the web version of LCG Trader, the mobile app is fast, easy to use, and has a standard menu and charting layout. Any changes or trades made on the mobile app are instantaneously translated to the web version. The charts can be used in full-screen mode and then reverted to a smaller version very quickly. Understandably, the mobile application could not accommodate the full repertoire of the desktop platform but the fact that there is no streaming news feed is a bit of a disappointment.

Range of Offerings

London Capital Group (LCG) provides access to a broad selection of financial instruments across a wide range of different asset classes, including:

• Forex
• Indexes
• Metals (spot)
• Bonds
• Commodities
• Options
• ETFs
• Individual stocks

Spreads are competitively low and all financial instruments, with the exception of individual stocks, have leverage tiers where: "LCG uses a dynamic leverage model both on MT4 and LCG Trader platforms, which automatically adapts to clients trading positions. As the volume per Instrument of a client increases, the maximum leverage offered decreases accordingly."

Customer Service

Telephone, chat, and email support are available Monday–Friday, 8 a.m.–7 p.m. U.K. time (24/5). Customers can call the "dealing desk" if the need should arise, which is a big plus. Hold times via chat and phone are much shorter than average, and the representatives were quick to respond and very courteous. Live chat can also be launched from within the LCG Trader platform, which is very convenient. The FAQs are quite informative and well organized.

Overall, LCG's customer support is responsive and knowledgeable. When using LCG's website (while logged in as a demo account) the chat box pops up frequently, unsolicited, to "check in." While that can be annoying, this does not happen with live accounts. There are no branch offices to visit and it is unclear whether the company's headquarters in London is set up to provide service in person, if a customer happens to be in the area.

Education

LCG's educational offerings are typical of the basic-level videos and articles offered elsewhere in the industry in that they do not deviate from the industry norm of providing basic education on forex and CFD markets. New investors will find some helpful background information, but relying solely on LCG's education to become proficient in the markets is unlikely.

The production quality of the education videos is high, but the material is presented in a green screen/teleprompter format without a lot of actual market application. On the positive side, the how-to videos for using the LCG Trader platform are very good. There isn't much content for more advanced traders looking to improve their skills in the education section, which leads one to conclude that this type of trader is not LCG's target customer. The glossary is adequate.

Market commentary articles in the "latest news" section of the website have not been updated in a while. LCG does offer weekly "Market Analysis" webinars, conducted by its analysts, that are scheduled every Monday and allows for a deeper dive into the events of the week.

Portfolio Analysis

LCG Trader offers traders a wealth of data in the "Active Market Panel" that opens on the right side of the platform. Everything is in real time and includes such necessary information as 'margin required', 'pip value', and 'trade value' so that the trader can make an informed decision.

LCG does not provide a trading journal nor do they provide tax accounting tools on the platform, but will provide, at the client's request, a report that "details the P/L, net deposit(s) and the balance on the first and last day of the requested period that can be sent to the tax authorities."

LCG's branded cTrader offering comes equipped with a tool for analyzing one's trading activity. Using a variety of filters, a trader can analyze their performance on a deeper level beyond the basic metrics, which can be especially useful for a beginner.

Research Amenities

LCG's analysis and insights are on par with industry standards and serve to connect traders to the market and supplement LCG's educational resources, which are relatively weak on their own. According to the website, the analysis "team" consists of one individual, but the content was above average and actionable. The charts and trading platform are regular features in LCG's commentary, which is a significant improvement over the green screen/teleprompter style that is seen so frequently in the industry. Trading Central's written technical reports are well-known and are also available from LCG along with the typical economic calendar and market-wrap articles.

Security

LCG also takes steps to ensure client funds are not co-mingled with corporate funds, in accordance with the U.K. Financial Conduct Authority's (FCA) client money rules. This ensures that client assets are protected in the unlikely event that LCG becomes insolvent by holding those funds in segregated accounts at regulated banks. Clients also have additional asset protection through the Financial Services Compensation Scheme (FSCS), up to £85,000.

LCG provides clients with a guarantee that they will never lose more than they have in their accounts via its negative balance protection. Guaranteed stop losses can be used on some instruments depending on market conditions, but they are subject to an additional cost as long as they are kept open.

LCG's mobile application's security isn't customizable, which is a concern considering that it can provide access to your entire account. There was no additional protection of two-factor authentication (2FA) or bio-metric scanning to access client accounts.

Verdict

Beginning traders looking for a very broad spectrum of markets (including cryptocurrencies and options) will find a lot to like at LCG. Although the spreads aren't the lowest, they are competitive. LCG adheres to the philosophy of functional simplicity in offering the client access to its platform via browser, download, and mobile application. LCG is a broker for traders who place a high value on excellent customer service, manually managing their trades on an intuitive, feature-rich platform. Investors who are looking for vanilla options will also likely give LCG a look. On the other hand, if you are the type of trader that requires the ability to execute algorithmic trading via a virtual private server, LCG is not the broker for you.