Forex Brokers

Most FOREX traders use a broker to handle their transactions. What exactly is a broker? Strictly speaking, a broker is an individual or a company that buys and sells orders according the investor's decisions. Brokers earn money by charging a commission or a fee for their services.

A FOREX broker needs to be associated with a large financial institution such as a bank in order to provide the funds necessary for margin trading. In the United States a broker should be registered as a Futures Commission Merchant (FCM) with the Commodity Futures Trading Commission (CFTC) as protection against fraud and abusive trade practices.

Before trading FOREX you need to set up an account with a FOREX broker. You may feel overwhelmed by the number of brokers who offer their services online. Deciding on a broker requires a little bit of research on your part, but the time spent will give you insight into the services that are available and fees charged by various brokers.

The best advertising is word-of-mouth advertising, and this is just as valid in FOREX trading as it is for any other type of business. Talk to friends and associates to see who they are dealing with and find if they have any complaints or difficulties in dealing with a particular broker.

You could try selecting a few online brokers and contact their Internet help desks to see how quickly they respond to enquiries and whether or not they answer questions to your satisfaction. Keep in mind, however, that pre-sales service may be better than after sales service. This can be true for any online business, not just FOREX brokers.

Customer satisfaction and safety are just part of the story. You want to find a broker who executes orders quickly and with minimum slippage. All online brokers should offer automatic execution and have clear policies regarding slippage. They should be able to tell you how much slippage can be expected in both normal and fast-moving markets.

Next you want to know the fees involved. What is the spread? Is spread fixed or variable according to the type of account? Are mini accounts subject to wider spreads? Are there any other charges? Smaller spreads mean more profit for the trader, but there may be a trade-off between spread and service. Look at the overall picture before deciding to go with a particular broker.

Margin accounts are the lifeblood of FOREX trading, so be sure you understand the broker's margin terms before setting up an account. You need to know the margin requirements and how margin is calculated. Does margin change according to the currency traded? Is it the same every day of the week? Some brokers may offer different margins for mini and standard accounts.

Trading software is very important for the online FOREX trader. Get a feel for the options that are available by trying out a demo account at a few online brokers. Above all, you are looking for reliability and the ability to perform well in fast-moving markets. The software should offer automatic trading and may have special features such as trailing stops and trading from the chart. Some features may only be available at an extra cost, so be sure you understand what your trading needs are and how much the broker charges to provide them.

Other information to find out about includes the broker's policy regarding minimum account balances, interest payments on account balances, which currencies can be traded and whether or not non-standard sized lots can be traded. You should also find out whether clients' funds are insured and the extent of that insurance.

by Simon Harris

support@arundel.net

FOREX Trading Strategies

The world of trading and investment can be as frustrating as it can be rewarding! And Forex (Foreign Exchange) is no exception — often described as risky, profitable and complicated.

Forex is the largest trading market in the world.

Forex is the worldwide market for buying and selling currencies. These markets were developed to cater for the supply and demand of different currencies by governments, companies and individuals — for international trade and assisting importers and exporters.

Therefore those who trade in this market include consumers, businesses, investors, speculators and the banking industry.

Different countries use different currencies — which vary in their values against each other. Forex trading invovles the buying and selling of two currencies — trading pairs — you are selling one and buying another eg you may use the US dollar to purchase British pounds — if the supply of the pound lessens — it will cost more dollars to buy pounds — the Forex trader hopes to sell their pounds at a higher price than the purchase price.

A speculator in Forex is someone who accepts the possibility of adverse exchange-rate movements in the hope of making a profit from favourable movements in currency.

As a speculator you should always start trading with a small amount and have a trading system — which tells you when to get in and out of the market. It is a favourite option for currency traders as you can trade the Forex market 24 hours per day and the transaction costs are minimal.

This market — because of its sheer size — is hard to be manipulated — which stocks can be — it is more likely to be influenced by global news or events. Hence, the opportunity for 'insider trading' is eliminated.

However — beware -Forex brokers estimate that 90% of traders lose their money; 5% break even and only 5% achieve profitable results!

by Gay Redmile

Currency Correlation and How to Use It?

Currencies are priced in pairs, no single pair trades completely independently of the others. This makes the understanding of correlation very important.

For example, currency pair "A" moves in the same direction as pair "B" and we have been following up pair A's move very closely. We expect it to go up and we buy. We have not been following up pair "B" so closely and suddenly we look into that and the fundamentals or technical analysis suggests us that this pair may go down. We short sell. What eventually would happen that we would end up having profit on one pair and loss on the other as they moved in same direction. Similar case would happen if we simultaneously go long or short on two pairs which move in opposite directions.

Once we know about these correlations and their changes with time, we can take advantage of them to control our portfolio's exposure.

The correlation coefficient ranges between -1 and +1.

A correlation of +1 implies that the two currency pairs will move in the same direction 100% of the time. A correlation of -1 implies the two currency pairs will move in the opposite direction 100% of the time. A correlation of zero implies that the relationship between the currency pairs is completely random.

Positive Correlation:

A positive figure but less than +1 means that the currency pairs generally move in same direction but not always. A value closer to +1 means that most of the time they move in the same direction.

Negative Correlation:

A negative figure but more than -1 means that the currency pairs generally move in opposite direction but not always. A value closer to -1 means that most of the time they move in opposite directions.

How to use currency correlation when you are trading Forex? Well, your slow speed because of an occasional traffic jam on the expressway does not really indicate that the average speed you would end up on the road will be same. The correlation are dynamic and change every moment. Take a note of the correlation of the past few days and compare it with the correlation value in the long term, say past one year. If the short term value is far different from the long term value, may be it's offering you a chance to place a trade... but how? Let's say that currency pairs A and B has a correlation value of 0.98 during past one year. It means that they both move in almost the same direction. When currency pair A moves up, currency pair B also moves up with the same speed. Suddenly you notice that during the past one month or one week the correlation value of the currency pairs A and B is 0.10 i.e. moving in the same direction but with a different speed. To clarify as an example let's say two cars are moving towards the same destination, one is moving at 100 miles/hr and another at 10 miles/hour. But we can assume that ultimately both may have to catch up on the speed (similar speeds). So what do we do? Well, we find out which one is slow and ride that.

When we convert this car example to currency trading, suppose two currency pairs move in the same direction and have been moving up with a correlation over 0.60 in the long-term and we find that suddenly the correlation value in during the past few days has become 0.20, we just see which currency pair's movement (increase is slow) and we could buy that. On the other hand we could short-see another currency pair.

by Himanshu Jain

The author is a Forex Trader and also runs ForexAbode.com. By qualification a graduate mechanical engineer, with over 20 years of diversified international experience. The Involvement with Forex Trading started in the year 2000. Over the years Forex Trading not only became the greatest passion but evolved into a success which could replace the traditional successful consulting and business development career. Currency Correlation Page of http://www.ForexAbode.com/.

Do Interest Rates Drive The Foreign Exchange Markets?

Interest Rates defined: Interest rates are LIBOR-based for currencies of disbursement plus a spread which is dependent on the complexity of the transaction and the risk profile of the applicant.

The Forex, or foreign currency exchange, is all about money. Money from all over the world is bought, sold and traded. On the Forex, anyone can buy and sell currency and with possibly come out ahead in the end. When dealing with the foreign currency exchange, it is possible to buy the currency of one country, sell it and make a profit. For example, a broker might buy a Japanese yen when the yen to dollar ratio increases, then sell the yens and buy back American dollars for a profit.

The foreign exchange market, sometimes known as the Forex market, is one that is affected by several things. The market itself is becoming one of the most popular forms of trading today. It once was reserved for the richest of the rich, however today with lower minimums; this is a market that draws people from all financial levels. The attractive thing about this market is both its leverage and it liquidity. Many people with a grand background in the Forex system can take very little money and turn it into a lot using the foreign exchange market. However, when you have expertise in the foreign exchange market, you must also be aware of things that affect it. Being aware of these things is part of making logical and rational decisions of trading.

Interest rates are something that drives the foreign exchange market. While currency prices are what the market is all about, interest rates have a direct affect on those prices. Therefore, to be able to understand the current foreign exchange market, one must understand the current conditions of each individual interest rate. While economic and political conditions are also among the things that greatly affect the Forex, there is nothing that affects it more than interest rates. Something to remember is that money often follows interest rates. When the interest rates raise, investors will want to capitalize high returns and you will see money flowing into the country. When one country's interest rates rise, their currency is seen as being stronger than other currencies. This happens because investors seek more of that currency to profit more. Otherwise, it is seen as a good thing when interest rates rise and a bad thing when they fall.

Government participation in the Forex is not an uncommon action. Sometimes governments will flood the foreign exchange market with their own domestic currency. This action may seem foolish to someone who knows nothing about the foreign exchange market, however to those who know it well, it makes perfect sense. When governments flood the Forex with their own domestic currency, they are attempting to lower the price. When they buy their own domestic currency, they are attempting to raise the price. One might know this strategy as Central Bank intervention. Governments do this to help their overall economy. This is a type of action that keeps the foreign exchange market strong and steady. When you have extremely large players making appearances to keep everything as fair as possible, you create an attractive market.

While interest rates can drive the market for a short time, the nature of the foreign exchange market makes it difficult for them to drive it for a long period of time. The design of the market, with it being large in size and volume, restricts interest rates from having complete control over the system. Many times however, experts try to figure out when interest rates will rise or fall. The most common thing they do in order to keep up with rates is to pay attention to economic inflation indicators. Sometimes investors and experts will also listen to speeches from politicians and other influential people. They can pick apart clues in order to make a guess before the announcements are made. Most of the time, there is a little advance notice before interest rates move.

As you can see, the influences of interest rates on the foreign exchange market are strong. They can help determine which countries' currencies are the strongest. This of course is relative to all other currencies in the market at the time. When you think about the rise and fall of interest rates, you can remember that when interest rates fall, it is typically a good thing for investors and for domestic currency. When rates fall, it is not such a great thing. When rates stay low for an extended period of time, the market may seem a little dull, however the great thing about the foreign exchange market is that when government gets involved, which it usually does at these down times, there is hope for improvement. So, if you are beginning to learn about the foreign exchange market, don't forget to pay attention to the rise and fall of interest rates around you in order to make the best investment decisions possible.

by David Mclauchlan

Trading Currency Through Online Forex Brokers

Access to foreign exchange (forex), the most extensive market on the planet, is generally through an intermediary known as a forex broker. Similar to a stock broker, these agents can also provide advice on forex trading strategies. This advice to clients often extends to technical analysis and research approaches designed to improve client forex trading performance.

Financial institutions are generally the most influential in the forex market through high-volume, large-value forex currency transactions. Historically, banks enjoyed monopolistic access to the forex markets, but through the Internet, any forex speculator can also enjoy 24 hour access to the market via a forex broker.

Secure web connections today allow many forex traders to work from home, where ready access to news and other technical advice informs decisions on what forex positions to take. Similar moves are being made by stock brokers, who are also moving out of banks and other traditional institutions.

Your needs in the market will influence your choice of forex broker. Online forex brokerage firms, known as houses, provide those new to the forex market with detailed research, advice and simulators to learn how to use their forex trading tools. The experienced online forex trader is catered to by other broking houses, with in-depth advice, but less focus on forex trading instruction based on the assumption that you are familiar with the forex market. To make an informed choice, it is advisable to trial several differing online forex broking houses and their trading tools to find the best fit for your needs.

How to Find a Forex Broker That Won`t Rob You Blind

It`s not always easy to know what to look for in a forex broker, especially in any market, much less a market as complex as currency. But, if you want to trade in the market you need a good firm to work with. While it might be tempting to simply ask the brokers what they can do for you, you can`t always depend on them to give you a straight answer. So instead, I`ve put together a few things to consider when choosing your forex broker. You will want a forex broker that has low spreads. The spread, which is calculated in pips, is the difference between the price at which a currency can be bought and the price at which it can be sold at any specific point in time. Since forex brokers don`t charge a commission, this difference is how they make money. Low spreads will save you money.

Along with this, you should be looking for a forex broker attached to a reputable institution. Unlike equity brokers, they are usually attached to large banks or lending institutions. The firm should also be registered with the Futures Commission Merchant (FCM) as well as regulated by the Commodity Futures Trading Commission (CFTC).

Once you`ve narrowed your choices down to brokers that won`t cost you too much, and that are reputable, consider the trading tools that they are offering you. Forex brokers have many different trading platforms for their clients, just like brokers in other markets. These often show real time charts, technical analysis tools, real time news and data, and may even offer support for the various trading systems.

Before you commit to any one company, request free trials of their tools. Brokers generally provide technical as well as fundamental commentaries, economic calendars, and other research to help you make good trades. Shop around until you find a forex broker who will give you everything that you need to succeed.

The next item that you will need to evaluate carefully is the number of leverage options your potential partner has. Leverage is a necessity in forex trading because the price deviations in the currencies are set at fractions of a cent. Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your forex broker will lend you $100 for every $1 of actual capital you have. Many brokerage firms will offer you as much as 250:1. If you have low levels of capital you will need a brokerage with high levels of leverage to make reasonable profits.

If capital is not a problem, any forex broker that has a wide variety of leverage options would be a good choice for you. A variety of options will let you vary the amount of risk you choose to take. For example, less leverage (and therefore less risk) may be preferable if you are dealing with highly volatile (exotic) currency pairs.

Along with different levels of leverage, look for brokers that offer different types of accounts. Many brokers will offer you two or more types. The smallest account is known as a mini account and it requires you to trade with a minimum of around $300. The mini account also generally offers a high amount of leverage.

The standard account allows you to trade at a variety of different leverages, but it requires minimum initial capital of $2,000. And finally, there are premium accounts, which often require significant amounts of capital. They also generally have different levels of leverage available to the traders who use them, and often offer additional tools and services. You will need to make sure that the partner you choose has the right leverage, tools, and services for the amount of capital that you are able to work with.

A brokerage firm that meets all of these needs should be a good forex broker for you, but you still need to be certain that they are honest. Dishonest brokers can be prone to prematurely buying or selling near preset points (commonly referred to as sniping and hunting) or may indulge in other habits that will cost you money.

Obviously, no brokerage firm admits to doing things like these, but there are ways to know if they have. The best ways to find out more about your potential forex broker is to talk to fellow traders. There is no list or organization that reports dishonest activity, but a visit to online discussion forums, or a simple conversation will often reveal who is an honest forex broker.

You should also watch to see if a brokerage firm has strict margin rules. Since you are trading with borrowed money, your forex broker has a say in how much risk you are able to take. You agree to this when you sign a margin agreement for your account. This means your firm can buy or sell at his discretion, to cover the brokerage firm's interests, which could have repercussions for you.

Say you have a margin account, and your position takes a headlong nosedive before it begins to rebound to all time highs. Even if you have enough cash to cover it, some brokers will liquidate your position on a margin call at that low point. This action on their part can cost you dearly. You can only find out whether the firm is prone to this kind of activity by talking to other traders. Being informed on all aspects of a forex broker before you make the decision to trade with them will allow you to start trading the forex market with confidence.

Are Forex Brokers the Antichrist or Is Broker-Bashing One Gigantic Witch Hunt

In this article we would like to address the flip side to the argument we put forward in our piece Choosing the Right Forex Broker. That article focused on broker malpractices, but do we have the right to place the blame on these firms or are our expectations of them unrealistic?

Is It Fashionable to Blame the Broker?

There are a few sites scattered throughout the Internet (ours included) that offer you the opportunity to review your broker and it seems that there is a growing trend towards the negative. What I mean is that there are a far larger number of negative reviews than positive ones. There are several reasons for this: There is a tendency to jump on the bandwagon of bad reviews if you have lost money to the market and you have negative feelings associated with this. It may also be prudent to consider the fact that human nature seems to be drawn toward the negative; when you turn on the news how many negative stories are reported compared to positive ones? Is this because more bad things happen or because we find these stories more 'entertaining'? I believe that a lot of this 'broker bashing' is due to the fact that there are currently a larger number of 'bad' brokers than 'good' ones but I also believe that some of these reviews are not entirely fair because our expectations are not realistic in the first place. Let us take a look at and evaluate some of our common complaints.

Slippage

Slippage is the difference between the price at which you set your order for execution (in the case of a stop order) or the price you attempt to have an order executed (in the case of a market order) and the price at which you are actually filled. It should be noted that stop-loss or stop entry orders actually become market orders once active i.e. once the specified price is hit, so they do not guard you against slippage. This is one of the most common complaints made against brokers by furious traders who see potential winners turn into losers and small losers turn into large ones.

A loss is an unpleasant experience at the best of times and if you feel that your broker is the reason for it, or the size of it, you are bound to direct your anger towards them (N.B. Trading Psychology and management of emotions comes into play here). This is where we need to check our expectations and put any complaints into context.

Slippage is generally associated with periods of either extremely high volatility or extremely low volatility. As an added ingredient the size of your order can also contribute. The most common times of high volatility in the Forex market are at major news releases and it is no coincidence that this is also the time that traders experience the greatest amount of slippage. This is because economic announcements generate a large amount of interest and everyone is jostling for position at the same time.

Those traders that are active around these times will understand that a few pips here and a few pips there can make all the difference between closing the day with either a profit or a loss. A bad fill can be enough to make the difference and when you experience one it is natural to blame it on your broker for being too slow or for being dishonest and banking your money for themselves. However, the reality is that slippage at news times is very common and in some cases almost inevitable but rather than just blaming the broker there are steps that we can take to minimise or eliminate the bad fills, such as:

Be mindful of the times you trade: If you are not a news trader then you may wish to avoid the most highly anticipated news releases altogether. By doing so you will not be trading during times of massive volatility and your chances of experiencing slippage are greatly reduced. If you are a news trader then there are some precautionary steps that you can take (see below).

Enter with limit orders: A limit order will only be executed at the specified price or better thus eliminating slippage. However, traditional limit orders can only be placed above or below the market which requires you to enter on a retracement. This is an advanced trading technique and requires a good deal of experience. A limit order will only solve the problem of slippage on your entries and does not remove the threat of slippage on your exits if you want to cut your losses or take profit without the use of a fixed target.

Enter after the initial spike: The first move after a data release is oven extremely explosive creating what is known as a 'spike' in prices. If you wait for this move to play out then you are giving the market time to digest the news and you are avoiding the main body of volatility. This gives you time to plan your own trade based on the data released, possibly catching a retrace using a limit entry.

Choose your broker accordingly: If you use a broker with a dealing desk then you are more likely (in theory) to experience slippage than if you use an ECN style broker. It is likely that a human will actually be matching and filling orders on a dealing desk which leaves you open to an added delay, especially at busy times. An ECN broker doesn't have this limitation and that fraction of a second saved can make a huge difference. In conclusion, if you are actively trading at busy times then an ECN broker is probably most suited to your needs. On the other hand if you trade infrequently or you have a small account and cannot afford the commission fees that ECN brokers charge then a broker with a dealing desk may be adequate.

My Broker Is Trading Against Me

This is an extremely common complaint that has lead to the conspiracy theory that most brokers actually want you to lose your money because they are on the other side of your trades. Let us step away from this theory for the moment and consider the fact that there is ALWAYS someone on the other side of your trades. For you to go short someone else must go long and vice versa so someone somewhere always wants you to lose! Now, some brokers claim that they match client orders at the dealing desk while others use their dealing desk to offset their clients' trades with their own overall position in the market, which is known as hedging. If a broker is perfectly hedged then they simply collect the spread that you pay them (which is greater than the spread they pay in the interbank market) and that is their profit. The conspiracy theory has come from the notion that most traders lose and so it would be more beneficial for brokers to trade in the opposite direction to their clients rather than go in the same direction and hedge themselves. Experiences of delayed orders, slippage and stop hunting have added fuel to this fire because they can be easily explained as brokers stealing your money rather than potentially legitimate problems incurred at busy trading times.

Conclusion

In this article we have attempted to point out to you alternatives to broker malpractice theories and a few ways in which you can minimize their effects. If you are a firm believer that your broker is trading against you and wants you to lose then you are developing a potentially self-destructive frame of mind. This belief may prevent you from identifying problems closer to home such as trading psychology and strategy inadequacies. But the fact remains that if you are unhappy with your broker or you are experiencing excessive slippage, multiple re-quotes, poor customer service, possible stop hunting, platform freezing and held orders then you should change brokers. At the end of the day the reasons for poor service are of secondary importance behind the effect it has on your trading. It may be that your broker is honest but technologically inept or it may be that you are the victim of a bucket shop but try to keep your complaints within the context of market dynamics. If none of the coping strategies listed above make any positive difference then it is definitely time to find a new broker.

8 Basic Tips on Choosing Best Forex Broker

There are some basic notices that you should consider when you want choosing online 

1. Spread Amount

The spread, which is calculated in pips, is the difference between how much you can buy or sell a currency at a specific point in time.

Forex currencies are not traded through a central exchange market, so the spread can be different depending on the Forex broker you use. Some online Forex brokers have variable spread; some of them have two spread amounts that depend to day and night.

Some of them their spread depends to the position of market. When market is quiet the spread is small and when market is busy the spread is high. I prefer Forex brokers that have fixed spread, because over the long term fixed can be safer.

2. Execution

— How fast is the broker's order execution?

— Do they offer automatic execution?

— How much can you trade before having to request a quote?

— Do they trade against their clients?

The best way to find out is to open a demo account and give them a test drive.

3. Leverage Options

Leverage is expressed as a ratio between the total capital that is available to be traded and your actual capital. For example, when you have a ratio of 100:1, your Forex broker will lend you $100 for every $1 of actual capital you have. Leverage is a necessity in Forex trading because the price deviations in the currencies are set at fractions of a cent.

Before choosing an online Forex broker notice that what is their leverage. Many brokerages offer a flexible margin that allows you to choose the leverage that's right for you.

4. Account Types

Notice the Forex broker you choose has mini account or not. Mini account is designed for those new to online currency trading and those with limited investment capital. There is a smaller deposit required to start trade of just $300 or less.

5. Trading Platform

Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature — they mean you can set up your trade and then leave the software to get on with it.

6. Dealing Tools and Value-Added Services

Find out online forex broker that offers the best resources and information to help you make the smartest trading decisions. A good company should offer real-time charts, technical analysis tools, real-time news and data, and software or website support. Be weary of any company that refuses to share information or trial versions before opening up an account. You will want to try out their system before you choose to invest money in it.

7. Support

Forex is a 24 hour market, so your online Forex broker should offer 24 hour support. You should also check if you can close positions over the phone — essential in case your PC or internet connection crash at a critical moment. You could contact to their Internet help desks to see how quickly they respond to inquiries.

8. Get Referrals

Ask around and read Forex forums to find out which Forex brokers other people use and why they selected a specific broker.

by Mostafa Soleimanzadeh

Choosing a Forex Broker

Spread

Because currencies, unlike futures and stocks, are not traded through a central exchange, the spread can be different depending on the broker you use, so it's well worth checking a few out before you open an account. Most Forex brokers publish live or delayed prices on their websites so you can compare spreads, but check if the spread is fixed or variable. A fixed spread means exactly that — it will always be the same no matter what time of day or night it is. Some brokers use a variable spread, which might appear to be nice and small when the market is quiet, but when things get busy they can widen the spread which means the market must move more in your favor before you start to make a profit. Fixed spreads are generally slightly wider than the variable spreads are when at their narrowest, but over the long term fixed can be safer.

Execution

Some brokers will show live prices on their trading platform, but will they honor them when it comes to pushing the Buy or Sell button? The best way to find out is to open a demo account and give them a test drive. This will also give you the opportunity to see what the speed of execution is like — when you want to buy, you want to buy now, not sit around waiting for ten minutes whilst your order is confirmed!

Trading Platform

Good trading software will show live prices that you can actually trade at, not just indicative quotes. It will offer Limit and Stop orders, and ideally will let you attach these to your entry order. One-Cancels-Other orders are another useful feature — they mean you can set up your trade and then leave the software to get on with it. And the most important feature of all — can you actually understand the platform? Having all the bells and whistles is of no use if you can't use them, so again, get a demo account and give it a go.

Support

Forex is a 24 hour market, so your broker should offer 24 hour support. You might not be trading at 3am, but that could be what time it is in your brokers head office on the other side of the planet, so make sure there will be somebody there to pick up the phone if things go wrong. You should also check if you can close positions over the phone — essential in case your PC or internet connection crash at a critical moment.

Backing

Finally, before opening an account do a little homework and find out about the company. Forex brokers are regulated, but that doesn't mean they all have equal backing. If the market collapses, you want to know that they've got the reserves to cope with it and will still be around when you decide to withdraw your cash. If a broker is elusive when it comes to questions about their parentage and financial backing, then steer clear.

In Conclusion

Choosing a Forex broker isn't difficult, but don't rush the decision. Check out a few, and always get a demo account first to make sure you're happy with the way everything works before sending off your opening balance.

by Geoff Turnbull

Avoiding Forex-Related Frauds and Scams

A lot of people have been 'burnt' from scam operations on the Internet. Their sites may look so perfectly legitimate that you doubt whether they would have gone through all that trouble building a trading platform just to steal your money. Beware.

The first thing I look for is the geographical location of the broker. If I find that they are based in a country where the financial industry is, in my opinion, relatively unregulated and under-developed, I quickly forgo signing up. This is terrible news for honest brokers in those countries, but your job as a trader is to protect your capital. If you lose that, then you cannot trade. The onus is on them to convince you that they will do the right thing by you as an investor.

I started out with an Australian broker. Currently I am using an American one. I have not tried UK-based brokers but the British financial industry is one of the best. Companies that are based in countries such as Japan , Germany and France are probably just as good too, if their website speaks your language.

Notice any license numbers that they may have registered with regulatory bodies that act like government watchdogs who oversee the finance and investments industries. These are organisations that impose strict rules to safeguard your investment. Some of these rules may include the requirement that brokers segregate all customer funds from the operational funds of the business. Your money is required to be put in highly-reputable banks and the funds are only withdrawn from these accounts upon specific withdrawal requests.

Take note that there are some fake regulatory bodies being thrown around in cyber-space as well. Take a look at how long they have been operating for. Try and search out any reviews or comments made about them. See if you can find forums where traders have discussions about their brokers.

Below is a list of things to keep in mind to help you avoid being a victim of a scam:

Stay Away From Opportunities That Sound Too Good To Be True

There are people who may have just acquired a large amount of money just and recently are the same and are shopping around for safe investment vehicles. These may include retirees who have access to their retirement funds. It is understandable why retirees would be drawn to 'high-return, low-risk investments'. This is also what makes them very vulnerable. If you identify yourself to be one of these people, be careful. A lot of deceitful characters are after your money. Furthermore, only allocate a tiny amount of your money to trading until you can start growing it. Not all people can trade successfully, so it is a venture you should take on haphazardly. It is your life savings at risk.

Avoid Individuals Or Organizations Who Claim To Predict Or Guarantee Large Profits

Any form of trading is hard. Trading currencies is no different. Be wary of statements that make it sound easy. Statements like:

"Whether the market moves up or down, in the currency market you will make a profit";

"Make $1000 per week, every week";

"We are out-performing 90% of domestic investments";

"You'll make returns of 70% a year";

"Here is a no-risk strategy".

If they could make such returns, why would they even bother letting you know about it.

Be Wary Of Companies Who Downplay Investment Risks

Hold your wallet tight and zip up your purse when companies say that written risk disclosure agreements are routine formalities imposed by the government. Watch out for statements like:

"With a $10,000 deposit, the maximum you can lose is $200 to $250 per day";

" We promise to recover any losses you have ".

Be Wary Of Companies That Claim To Trade In The 'Interbank Market'

Do not believe it when some people say that they have access to the 'Interbank market' or that they can give you access to trade in that market because that's where bargain prices can be obtained. This is not true. The 'interbank market' is not a place, it is not a physical building. It is simply a loose network of currency transactions that are negotiated between big financial institutions and other large companies.

Ethnic Minorities Are Often Targeted

Ethnic newspapers and television 'infomercials' are sometimes used to attract Russian, Chinese and Indian minorities. Sometimes these ads offer so-called 'job opportunities for account executives to trade foreign currencies', whereby the recruited 'account executive' is expected to use his own money to trade currencies and would often times be encouraged to recruit members like their friends and family to do the same.

Seek Out The Company's Background

Check any information you receive to be sure that the company is who they claim to be. If at all possible, try and get the background of the people operating the company. Do not rely solely on oral statements and promises made by the company's employees.

If You Are In Doubt, It Is Not Worth Risking Your Money

If after trying to solicit information and at the end of it all, you are still in doubt about the credentials of a particular company, my suggestion is to start looking elsewhere.

You may find further information by contacting government 'watchdogs' because they keep up to date with trends and reports regarding scams and other fraudulent activities. Please check the resource section of this site for the information of organizations that regulate the securities industry, sorted by country. There is also a list of brokers that you may want to look at.

This is an excerpt, modified from the book: The Part-Time Currency Trader.

What is Forex Trading

Date of Forex Trading

Before we begin to explain what is trading in the forex market, we would like to offer you a brief history of Forex.

It was created in the foreign exchange market in 1875 with the birth of the monetary system to the gold standard. This system, which are all state registration of their currencies with gold to indicate their value was.The price of gold fluctuates between the currencies and this work on the establishment of currency exchange system.

World War II ended the gold standard monetary system came the Bretton Woods system. This new system was implemented in 1944, where he was the US dollar's status as a reserve currency all over the world. This  system did not work too much, and ended in 1971. In 1976 was the establishment of the foreign exchange market with the introduction of floating exchange Osar. In the mid-nineties of the twentieth century, taking trading in the forex market high on the huge electronic markets that are used to today.

Modern forex market

Forex market is an international financial market for decentralized, where currency is exchanged for another.Individuals and institutions can purchase a quantity of one currency and pay for it in another currency, where a company in London to import products from a company in Rome and pay for these products commission euro rather than the pound sterling. This easy exchange of one currency to another make it easier for corporations and international trade and investment.

Forex market is not restricted geographical boundaries, where he works 24 hours a day, and within 5 days a week. It also features it the most liquid market in the world.

When trading in the forex market there is a simple philosophy followed by rolling, when trading one currency against another currency, the currency in which the purchase price is expected to rise (long position), and sell the currency, which is expected to lower the price (short position). You can do such projections using the famous trading tools, but there is always a part of the risk. If I bought the currency in which the price rose as expected, you can sell it and get a profit, but if the price dropped reverse expectation, Vstkabl losses. You do not need to be an expert financially good for circulation, easy to learn Valtdol in the forex market if you wish.

When do you need us? The mediator is the one who connects sellers and buyers to each other. We search for the best bid and offer available in the market and offered to traders. We are mediators of this market, and we carry out the operations for you.

Three trading sessions

Forex Market Never Sleeps, to the continuation of activities at all times and in all parts of the world. This occurs through three sessions a system that allows traders to the possibility of trading whenever they want, regardless of time or place.

Asian session

22:00 GMT - 09:00 GMT

After the weekend, the recording activity in Asian markets first. Trading begins in the Australian market at 22:00 GMT and ends at 09:00 GMT. Other countries that operate in this period also China, Russia, New Zealand and Japan.

European session

08:00 GMT - 17:00 GMT

With the approach of the end of the Asian session begins work in the European session and interfere sessions. The most important market in this session is the London market, but there are important markets represent the European session, such as Germany and France. Activity in the European session starts at 08:00 GMT and ends at 17:00 GMT.

Session of the United States of America

13:00 GMT - 22:00 GMT

In the middle of the European session starts activity in the US session, and then at 13:00 GMT, and will continue until 22:00 Greenwich time. The most important participant in this session was to New York City.After the end of the US session and before the start of the Asian session calm lasts for a short period.

Articles about Forex

Income is the main motive is no secret that every person seeking to reap more profit from In order to meet most of the needs and requirements of a good income is to ensure the well-being and Stability in the era of information technology and easy access to any place in the world Millions of people have limitless opportunities in order to reap more profits and Doubling their capital through trading in the currency rate differentials through Forex market in the period Altmaninat and nineties were held in trading The stock market through the phone calls in the days can ramble for all traders Their trading and achieve more profits through the Internet anywhere is Forex Trading the currency market all over the world in the form of a global stock exchange where no Limited sales and purchase the banks companies and brokerage firms only, but also to any Everyone wants to trading For example, you can buy the euro at Ata or The lowest price, and then sell them at the highest price heard of such a system to achieve more Of good earnings through the Internet what you start with this question may appear : How can the people that Ahakqo profits in the forex and they are far from the world of Money and knowledge on the non-movement of various currencies on the whole trading in the market Forex is very simple, even if ordered as soon predict the movement of prices will be For your trading to be successful and achieve more profits if you feel that the euro loses Value all you need to do is to buy the dollar of the EUR / USD ie Open ordered Sale and in the end will bring a profit or loss if it is sound and projection, however, Trading was described by intuition, which can sometimes be profitable, but This will not make you a trader where Maher will not be able to make predictions more literal way but You will have the opportunity to learn Forex is a professional trader who uses several tools During trading: the beginning of the follow-up of the news media and fundamental analysis And even an integrated set of indicators and a Alaaksbertat daily trading volume In this market, the scope of the $ 4 trillion and everyone is trading in this market Possibility to get a piece of that huge pie will not require you to be an expert Financial or professional analyst only logical thinking and a little patience are enough to study The mechanism of trading in this market advantages of the Forex market leverage you can Multiply your capital 100 200 or even 600 times in this way over the top, which owner You can open the largest of the deals and make a significant profit but when you work in the forex market You should remember to work in ways that risk management and capital currently trading platform The trading platform is the most comfortable and popular are MetaTrader NAVA program The concept of a reliable and easy-to-use Moreover, being a free program any New traders may find it difficult in this program because of the many options available In it and in spite of that After understanding the program and you will find it easier to get used Even from the program photoshop for trading in Forex and you have to achieve profits First, know little of the trading platform is easy to use options as a program Of ICQ Or Ante virus program and are constantly developing new technologies And thus the software development time with MetaTrader platform allows users to Automated forex trading In addition to the manual to use and there's more Professional traders who own their strategies Astkhaddmo there is signal strength For sale and a strong signal to buy now, such actions can take place through Automated trading So let's say for example that there is a trader has a good strategy can Automated trading Alamwamr be carried out in accordance with that strategy In other words, call the That way or automated trading Alaaksbrittat can such that Alaaksbrittat Carry out orders rolling in Forex without the presence of rolling using the same status Forex automated trading features all interested trading is and wants to work in the market Forex currency can through trading online Forex alone It can work 24 hours a day except weekends and holidays To work regular dividends and substantial income you will have to allocate from 2-3 hours of your time To work in the forex rate rise in revenue from trading in the Forex: Can throughPer day to the high volume of submissions you ten times, even if you think you are Not lucky dealer or a professional this is much better than put your money in the bank to see How to lower your finances because of inflation effective analysis and forecasting changes Expected in the Forex market: After analysis of various trends in Forex and Sork Also the analysis of the economic situation in the world can be expected to price volatility and movement Directing your money the right way to deal with the smoothness and control the forex market Effective during trading it can make a profit of US $ 1 and up to $ 1,000 Next to that you can perform operations on the spot and the moment can suspend operations for a few Time and also you can close your account at any time you wish you can also manage your trades Anywhere I found him through a laptop computer or even a mobile phone .

Choosing the best broker in Forex

The most important first step rolling needs to do is to find a Forex Broker You can trust it. Mediator in the forex sector is an integral part of the equation Business, which is the main partner of the trader, and should therefore be found on rolling The best medium available in the forex market. Appropriate broker who meets the selection Your requirements trader is very important. There are some key factors That rolling must be considered when choosing the mediator .

Forex broker regulator

May This element of things seem obvious, but you may be surprised when you find out how much of Forex brokers are working without regulation. Intermediaries are better organization and supervision Them from local or international authorities. No organization can do all intermediaries What they want, and this may lead to unpleasant situations for traders. The security of yourself and choose Mediator who can trust him. Comply with the rules and conditions are a sign that confirms Mediator take trading seriously .

Small differences

What Are the differences? If you take the bid and ask price of a currency pair or any of the Other assets, and calculated the difference between them - this is the difference. If the differences Provided that the mediator is high, this means that this broker is to achieve profits Great on your account, so they should choose the mediator who provides less differences .

High leverage

The simplest Way to explain the leverage it allows the trader the possibility of trading volumes Currency great small deposit, and thus increase the purchasing power of the trader . Leverage is offered in the form of ratios, for example 1: 1000 means that the rise Purchasing power by 1000 times. In the case of the deposit of 1000 € gives you a mediator The possibility of trading the value of 1000000 €. If, give leverage for traders Opportunity did not find them before. Traders young owners of small deposits can Benefit from the financial leverage to increase their profits. But with increased capacity Purchasing, also increase the risk of loss, and therefore must be dealt with this property With caution and not be used on an ongoing basis, especially those who do not need it .

Speed ​​of execution

At Trading in the forex market, which is characterized by rapid changes that occur in it, you must Choose the mediator who can carry out orders quickly and effectively. Delays in Implementation may result in problems . 

Availability of different types of accounts

From Good offer a variety of types of accounts. Every trader is different, If the mediator presented an extensive list of types of accounts, every trader can choose Commensurate with its requirements. Best brokers know that traders prefer offers from Freedom of choice, not restrictions .

Demo accounts

Trading Experimental accounts before the start of the real trading accounts is very important . If the broker did not provide the possibility of trading on demo accounts, try to change This mediator. Trading on demo accounts gives you the possibility of trading the same Conditions, but virtual money, what makes trading free of any risk. And this The best way to learn about the trading features and create your own trading strategyAnd experience. You can discover the strengths and weaknesses you have and not the start of trading on the    Live accounts before you are confident of your abilities .

A variety of trading tools

as such I pointed out before, traders do not respond to such limitations. The more trading tools Provided that the mediator, the greater the possibilities of traders. Select a broker who offers Not only the basic trading tools, but also provides secondary and limited tools Demand, precious metals, and other commodities. For example, the gold of the most popular tools Trading during the financial and political crises .

Guaranteed trading applications

Mediator Featured offers the best trading applications. Trading that you can trust its application must That gives you quick access to the technical and fundamental analysis, and system Excellent security, and the possibility of automated trading, and charts, as it should be easy the use. The most widespread trading application is an application MetaTrader 4.

Automated Trading

Offers Automated Trading trader big privileges. Visttia rolling application Trading strategy of its own, or another trader strategy. Some applications It includes programs that automatically apply the trading strategy that you design or His choice. The Expert Advisors Who works on the trading application MetaTrader 4 A good example of that. Of automated trading features you do not need to sit in front of The computer screen all day waiting for opportunities to enter the market, where the system Automated trading to take that opportunity and implement the deal. But remember that the system works According to the strategy that you've designed or adopted, there is a risk of the occurrence Losses, in addition to the possibility of obtaining profits .

Deposits and withdrawals

From It is important to choose a broker who offers the possibility of credit and debit easily, as the The possibility of financing the account quickly help you to strengthen the trading positions and to take advantage of The opportunities that may arise in the market unexpectedly. In case of withdrawal should also Mediator allows the possibility of clouds quickly and easily, to get your money in at More than a few working days .