forexsystems

Trading Systems

Forex System

Forex Account

With so many brokers all claiming to be top in their class and offering incentives to entice you to invest your money with them, it’s hard to separate the mediocre brokerage firms from the true professionals. While much of your choice will depend on your individual trading needs, following some basic guidelines can help you find the best broker for you. Registration and Financial Backing Legal registration and solid financial backing are the minimum that should be expected from a forex brokerage. In the US, forex brokers must be registered with the Commodity Futures Trading Commission (CFTC) as a Futures Commercial Merchant (FCM). This registration means that the brokerage firm is government regulated, but it doesn’t tell you much about the firm’s financial backing. Because of the large amount of capital required to provide adequate leverage, forex brokers are usually connected to banks or lending institutions. The security of your capital depends in part on the reserves of that financial institution. If the market takes a serious downturn, that institution should have the reserves to cope with the many investors who will want to withdraw their cash. Account Types Most brokers offer two basic types of accounts—standard and mini. For many, the amount of investment capital they have is the deciding factor in which type of account they choose. While standard accounts typically offers a variety of leverage options, these accounts require an initial investment of at least $1,500. A mini account can be opened for as little as $250 and offers the high leverage necessary to profit from such a small investment, but that high leverage also means more risk. Spread Type Rather than charging a commission like stockbrokers, forex brokers make their profit on the spread (the distance between the pips in the currency’s quoted price). Although fixed spreads are usually somewhat wider than the narrowest variable spreads, they can be safer over the long term. By choosing a broker who offers a fixed spread, you may not always have the highest possible profit, but you’ll have the advantage of predictability. A Variety of Leverage Options A variety of leverage options gives you greater control over how much risk you take with each trade. For instance, you can use less leverage when trading exotic currencies than when trading well-known, stable currencies. Although lower leverage means lower risk of a margin call (being asked to replenish the money in your trading account) it also limits your possible profit. However, this too depends on how much you’re able to invest. If your capital is limited, in order to turn a profit you’ll need a broker who offers high leverage, even if that’s the only type of leverage you can get. Trading Platform Choosing between the dozens of types of trading software out there can become as complicated as choosing a broker. Ultimately, though, the measure of a trading platform is whether or not it meets your individual needs. Not all platforms cover all areas of the forex market, so make sure the platform will let you trade what you what. Another basic requirement is for the trading platform to show live prices that will be honored once you place the trade. Avoid platforms that show only estimated prices. Good trading software will also offer “limit” and “stop” orders that can be included with your entry order. Remember, a platform may sound ideal in a written description, but the only way to find out if it’s really for you is to get a demo account and try it out. Trading Tools and Information Most brokers provide their customers with at least some of the technical and fundamental analysis, market research reports, and other data necessary to make informed trading decisions. In fact, many trading platforms provide real-time charts, news, and data. Tools for technical analysis and for specific trading systems may also be included. Naturally, these extra bells and whistles aren’t worth paying for if you think you’ll never use them. Before considering the pros and cons of what a broker offers, draw up a list of the types of tools and data you believe you’ll need in order to trade and consider how much of what the broker provides will actually benefit you. Customer Support The forex market runs 24 hours a day and a good brokerage firm will offer support around the clock, too. You want to know that if you run into a problem with a trade you’ll be able to reach a live person in the brokerage firm immediately. Support that’s available only during “business hours” isn’t sufficient because business hours at the firm’s company headquarters may be overnight where you live, leaving you with no support during your own business hours. What to Avoid While being familiar with the attributes of a reliable brokerage firm can guide you to the best brokers, knowing the red flags that mark an unscrupulous broker can save you hassle and expense. Opportunities that sound too good to be true Although dishonest brokers claim they can, no broker can guarantee even the smallest profit. It’s also unrealistic to expect a profit of, say, $300 a day from an investment of a few hundred dollars, as some of the late-night infomercials promise. Likewise, brokers who claim they can eliminate the risk of financial loss are also attempting to deceive potential clients and should be avoided. Trading systems can increase the likelihood of profit and a good risk management strategy can limit losses, but there are no income guarantees on the forex market. Sniping Sniping occurs when the broker buys or sells at preset points solely in order to increase his or her own profits. Needless to say, this isn’t going to do anything good for your investment capital. Before you settle on a broker, check with other traders to ascertain that the broker you’re considering isn’t known to engage in this practice. Trading on the interbank market The interbank market is a network of currency transactions performed between financial institutions and large corporations. While rates between these entities are usually better than they are for smaller investors, it’s not likely an individual will have the capital to trade on this market. Brokers who claim to be able help average investors trade on this market are often fraudulent or, at best, unregulated. Choosing the right broker is a vital step towards turning a solid profit from your investment. As you search, take the time to consult with other traders and check on the brokers’ standings with the regulatory authorities. By taking a close look at the brokerage’s financial background, account types, trading platform, and other essential factors, you’ll be able to find a broker you’re comfortable working with and who’ll help you get the most from your investment.

Forex strategies
Systems Trading
Forex Strategy
Forex Strategy

Forex Systems

Quite simply foreign exchange trading is the trading of world currencies in pairs. For example currency pairs are shown as EUR/USD. This means that you would sell USD to buy Euro. The foreign exchange rates fluctuate on a daily basis dependent on the political, economic and business environment domestically as well as internationally. Based on these conditions you would choose to either sell the currencies or buy currencies.

If you are dealing in EUR/USD currency and believe that the Euro rate is likely to rise, then you would buy the Euros and sell USD. On the other hand if you think that the Dollar rate is likely to increase, then you would buy USD and sell the Euros. The forex market is extremely risky and traders need to be very careful.

The forex market is the world's largest market that trades 24 hours a day. The daily volume of the trade is $3.2 trillion and is larger than the equities market. As a trader you would buy and sell the currencies with the help of leverage. When you use leverage, the gains and the losses due to currency fluctuation is magnified.

You should trade forex on margin after you have carefully considered your investment objectives, your risk appetite and have gained a level of experience. Seek the advice from another financial advisor if you are in doubt.

Most of the firms won't charge you a trading commission; rather they will take the difference between the bid and ask rates. Currency rates are always shown as Bid/Ask rates. If the current rate quoted for EUR/USD is 1.26985/701, it means that you would get 1.26985 Euros, if you were sell 1 USD. While you would get USD 1.26701 if you were to sell 1 Euro. The difference between the ask and the bid rate is known as the spread (the profit or loss) that would be made by the dealer.

Lets take the example of Euro and USD

EuroUSD

Bid Ask

1.4874 1.4879

Sell Buy

In this example the bid price is 1.4874 and the ask price is 1.4879. When the trader pushes the sell button, he would get $1, when he sells 1.4874. While the trader will have to buy 1 Euro by selling 1.4879 USD. Now if you think that the US economy is going to weaken further, then you will sell USD and buy Euros. The trader will anticipate that the Euro will increase in the future. The trader will sell the Euros at a later date and book the profit. If the trader believes that the USD will rise, then he will sell the Euros and proceed accordingly.

Operating on margin money

Traders operate on a margin account online. Margin account simply means that you can operate larger transactions with relatively less cash. For example you can trade 100 times the amount. By keeping $1000 in the margin account, you can trade $100,000 worth of transactions.

Interest rollover charges

Trading is also done in “lots.” Since you can't trade a single euro or a dollar, there are minimum lots in which you can transact. Lots can come in 10,000 or 100,000 units of a currency. Interest rollover charges are incurred as a part of forex trading. Interest is always levied on the currency that is borrowed and the earned on the currency that is been bought. It's important to ask your broker/ dealer for the interest charged and the procedures for debiting and crediting your account for the same.

If you find forex trading difficult, you can open a demo account with a number of brokers online for free. When you think that you has understood the way the forex market operates, you can start trading in the real market.

Forex Rate
Forex Rate

Forex Rate

. Connection stability of the brokers' trading platform.

. The leverage offered.
. The trading lots or the amount cost per pips.
. Customer service of the brokerage firm.
. Reliability and credibility of the firm.

The size of currency offered

Everyone probably heard of a “standard lot”. A standard lot is 100,000 units of a currency. Before I go any further, we must grasp the concept of a “pip”. Pip is a short acronym from 'percentage in point'. It is generally the forth decimal place in a currency amount.

For example, if EUR/USD is quoted at 1.5501 and it moves to 1.5502, it has increased by 1 pip. The value of 1 pip is calculated by the size of the lot that is traded. So, for the example listed, if you buy a standard lot at 1.5501 and it moves to 1.5502, it has increased by 1 pip, hence you gain $10 or (100,000 x 0.0001).

Most online forex brokers offer mini lots which are 10,000 units, so, we can trade at $1 per pip ( 10,000 x 0.0001).
Of course most online brokers offer the capability to trade at 1,000 units which is 0.01 mini lots. For beginner, it is much more affordable to trade at $0.10 per pip.

If you want to trade with little amount of money, find a broker that offers mini-lots. Some brokers indeed offer mini-lots, BUT they cap the maximum possible amount of deposit in your account which is not honest in my opinion. Depending on the broker, it may vary. Since most of the brokers do not cap the capital allowed, you just have to take note of it when choosing a broker.

Choose a broker base on the lots they offered, whether you can afford it.

The leverage offered

The higher the leverage offered by the broker, the more you can trade with a fix amount of margin. For example, for 100: 1 leverage, a trader with $10,000 account balance execute a buy order of 1 standard lot. With 100:1 leverage or 1%, the margin deposit will be $1000, leaving the account balance at $9000. ( The account balance is just a given scenario. The amount of balance doesn't affect the amount of margin deposit.)
With a 400:1 leverage or 0.25%, the margin deposit is $250, leaving the account balance at $9750.

There is something to notice here, higher leverage means same amount of lots with less margin deposit required.

Typically, a trader who knows money management will have no problem with higher leverage because he will ensure that his account will never reach a margin call. However for someone who is new without any Money Management skills and probably not knowing what is a margin call or how a leverage system will affect him, try out a demo trade platform to experience and understand what leverage is really all about.

Reliability and Credibility of the firm

When the first atch of online brokers emerge, there are a lot of 'bucket shops', frauds and scams. Some market makers really go against traders. However, situations are getting better due to many business reasons.

Watchdog agencies are set up to oversees the trading of futures. For example, the Commodity Futures Trading Commission(CFTC) in the United States is a Federal agency. One of their mission is to protect market users and the public from fraud, manipulation and abusive practices.

Find out if the online broker is registered with any similar kind of agencies or associations that can create some sorts of credibility. Another association is the National Futures Association(NFA) to take note. You can check their websites for informations about the online brokers that are registered with them.

However, even so, traders still complain about some registered online brokers having bad practices. Therefore, you can check on online forums to see the public's opinions and comments about the online brokers.

Customer Service

The best online brokers offer dealing support over the phone. Some offer online 'live chat' support, for example, Oanda. Most brokers now offer dealing support over the phone and to make sure you choose the right broker for yourself, its best to call them and talk to their personnels.

Different nationals have different language accents. Be sure you can understand them. While calling, is the phone line always engaged?

One important thing to note, I am referring to the dealing desk support here, not their sales department.

Connection Stability

Choosing the right platform with a stable server connectivity is utmost important. Most of the brokerage have a stable connectivity, meaning no downtime on their side. Most of the problem occurs with our internet connection, our internet providers and firewall setting.

As an active trader, a minute of internet disruption while actively trading is very critical. Anything crucial can happen within a short time frame.Choose an internet plan with no downtime on weekdays. A connection speed of 1 mbps is sufficient. If your location doesn't have a internet provider that fulfil the requirements, do not get upset as it is a common problem with internet connection (Those available to the public). However, some brokerage firms provide dealing supports over the phone which you can execute a trade if there are internet failure or no access to internet.

4 steps we can enforce to reduce problems with internet connectivity.

• Use a wired connection instead of wireless if possible. Wireless issues are usually because of waves interference of the same spectrum. Devices like mobile phones and microwave may be the cause.
• Dedicate a computer to trading and not surfing the webs to download files from non-trustworthy sources to prevent any chance of being infected with virus or spyware or malware which can slow down internet connection and cause other problems.
• It is imperative to have an Antivirus software or other security programs installed. It is even more important to keep them updated. This is to prevent ciruses, malwares or spywares from hacking into your computer that can cause internet problems as well as other important reasons like stealing your trading account and other sensitive informations.
• Double check your firewall setting to make sure a connection to the brokerage server is allowed. (By default, this should be fine.)

Forex Strategy
Forex Strategy
Forex strategies
Forex Autopilot