9 Things to Consider When Choosing an Online Forex Broker

When you start trading Forex, you automatically become a part of this huge trillion-dollar trading environment. Biggest market in the world, Forex gives us opportunities to gain fortune or experience devastating losses.

If your Forex career is just to begin, there are plenty of things to consider: personal goals, your funds capability, trading strategy, etc. Since there is no marketplace for the FX trading, you must get yourself a broker to conduct the activity for you.

And yet, it’s even more! Both your trading success and broker’s assistance are quite tied up. So here are some important criteria to think of when choosing a FX broker:

1.    Foundation
No secret that the number of online Forex brokers is growing fast. So be attentive and double-check a brokerage before you put your signature elsewhere. As online Forex brokers are not alone-standers, they are commonly backed up by some large bank or lending institution. This is of course the result of high leverage offered. Mostly brokers are ready to please you with 100:1 leverage, which does mean “tons” of money for you to trade. That is why you should check a broker’s back up to find out how strong the foundations are.

2.    Legitimacy.
Know your broker before signing contract and “period.” The legitimacy of a brokerage can be verified through the registration with certain regulatory bodies. For instance, USA brokers must register with national Futures Association (NFA) or Commodity Futures Trading Commission (CFTC).   And there is FSA (Financial Service Authorities) for which controls the United Kingdom brokers. Anyway, the broker’s location does not really matter, except the registration with the correspondent bodies. Look through a broker’s website carefully or study forums to avoid fraud.

3.    Competitive spreads
As your potential broker is legitimate and has funds secured, now you need to find out how good the offer is. Forex brokers earn their “snatch” in the spread, which is the difference in pips between buy and sell price of a currency. Here, we can speak about the difference in commissions if we mention stock market brokers. As a trader you should look for the one with smaller spreads, which is “willing” to give you maximum profit.

4.    Resources and Emotionless Trading
Nowadays, an average Forex broker can offer you a wide range of services. The trading itself is basically done through a broker’s trading platform – you must test and evaluate it before choosing a Forex broker. The platform must compete with the market standard and include real time charts, live news and market data updated, integrated technical analysis tools, etc. Also the trading platform helps you to leave your emotions out by setting Stop Loss and Take Profit points. Sticking to them does much of successful trades. No emotions make your trading cold and calculated. So check of your broker has the features needed.

5.    Leverage Flexibility
This is one of the biggest FX market advantages. Leverage makes a $100,000 transaction possible with only $500 balance in your account. Don’t get too excited! The higher leverage means greater risk. If your capital is limited, higher leverage offers you more opportunities. And if money is not a problem, the saying “Less is more” about leverage is the right one. So check if your broker can please your trading needs.

6.    Account Types
Your trading needs define the necessary account type. You must be sure that your broker offers the accounts you need.

7.    Margin Rules Democracy
Since Forex market, leverage allows us to trade with some structure’s money, we don’t actually have total control over our transactions.  This means that your broker determines the risks you are taking with brokerage funds when you are making a new deal. If a brokerage has tough margin rules, some of your positions may be sharply declined. A margin call is the worst here: a broker can liquidate your account before the position gets a chance to make you profits. As a result, you get huge losses. So check whether your broker has strict margin rules.

8.    Accessibility
It is about customer service and support. Are they accessible enough? No matter the problem you have (technical or general); there must be someone to assist you in the best way. If there is none, you better say, “No, thanks!” to this broker as sometimes low quality customer support can cost you thousands of dollars or more.  Examine this feature before signing for a broker.

9.    Demo Account
Last, but not least. And probably it is the first in order of importance. Before diving into the ocean deep, it’s better to have some training on the shore. Open a demo account to check your abilities. Of course, one might say demos do not indicate the success until you trade real money. It may be true as natural pressures could cause different results. However, trading with a demo account will help to test your strategy and yourself as a beginning trader. Not the best option ever, but it’s worth starting with.

Now you know what to demand from your potential broker. Please, also mind that rushing into the global market could lead to a fail. Be consistent with checking your online Forex broker against the above-mentioned criteria, choose a trading strategy, and master the technical and fundamental analysis to get prepared to play the real money.

This article was written by Alexander Collins from Forexeasystems. He believes that automated Forex is a future of Forex market and propose all Forex traders to try his sophisticated Forex EA. Use Google and search “Forexeasystems Fx Pulse” to download free freebie that shows actual news on chart and has built-in trend detector.

Some Key Facts about Forex

Pips Wizard Pro

When businesses buy and sell products from countries other than their own, they have an issue of currency to deal with.  For example, the US currency is the dollar, while Japan uses the yen. However, this doesn’t have to be a problem, as the foreign exchange, commonly known as Forex, was designed to provide a solution in these situations. They also allow you to invest in the country itself, buying and selling their currency as values fluctuate, similar to stocks, but at a much bigger level. It also helps with speculation of currencies for both changes in value and changes in interest rates. Most transactions are simple, and begin when one party buys a particular quantity of one currency by paying a quantity of another currency. Following the previous example, an American company would buy a large quantity of yen from the exchange by paying US dollars. They could also buy these sums of yen and sell them back at a later date when the value of the yen inflates.

This market is unique from other markets in many ways:

  • due to its large trading volume alone, it represents the largest asset class in the world, and it has high liquidity;
  • geographically, it represents an enormous majority of the world;
  • it runs on a 24 hours schedule, minus weekends; and
  • it works around all the various factors that tend to affect the exchange rates, and it does this at a fast pace, creating high liquidity.

The forex market allows investors exclusive and lucrative opportunities for investing, such as commission-free trading and many communication methods allowing for easy accessibility. Compared to other investment options, more consumers have chosen this method of investing due to these great features.

Foreign exchange does business for countries and large corporations around the world, but also encompasses small currency exchanges, say if you travel to Europe and need Euros while on vacation. You would have to go to a kiosk and exchange your currency. The expansion of globalization has caused the numbers of these transactions to multiply. This global market is without a doubt the largest financial market in the world, and sees volumes up to billions of dollars circulating through it on a daily basis.

One huge factor that causes this market to stand apart from the stock market is its decentralization, as well as its deregulation, which allows individual buyers to choose their lenders themselves, finding the dealer with the best price that they want to do business with and cutting out the middle man. Usually, larger dealers have better access to lower pricing at the biggest banks worldwide, and will share those deals with their consumers, allowing for a cheaper exchange rate.

If you are one who is thinking of investing for your future, and know little about the topic, but do not want to pay a middle man to do it for you, this is an easy choice. With its large market, easy accessibility, and fast return rates, this is might be the option for you.

 

Article by Debbie who frequently writes about personal finance, foreign markets and currency exchange.

Smart Tips For Trading In Forex

Super Profit Scalper

I wanted to take the chance  to share with you some smart techniques of Forex trading. The foreign exchange market is the largest and one of the most lucrative market places in the world. There is so much prospective to profit, even in economic downturns like the one predicted in the United States. I hope to give you a an advantage at this with some techniques I use to help myself. Like meal replacement bars, these tips may also sound effective.

The most important thing to know  is that when you’re in a market with very big banks that have a lot of money, you’ll notice that they can easily control the market.Well  it’s not to sound “evil” and they’re doing it on purpose. It’s the result of supply and demand because they can maneuver  huge sums of money. Since there can be a big change in a currency because of a bank, this isn’t good business for you, so this means you should be trading at high volume. High volume simply  means that there are a lot of people and money moving around at this time. Since the volume is so high, supply and demand will remain unaffected when one big player takes place.

Another thing you need to learn is how to control your emotions. It can really can’t help when you let your emotions make trading decisions rather than logical thinking. Some of these emotional tradings  are the stressed out frustration and the gut feeling. If you are stressed, get up and away from the computer. Fitness Training also suggests you to have  healthy work outs. All you need sometime is to cool off. And fop  the gut feeling, you just have to stop listening to it.

Another thing I want to share with you, is a technique for sucking profits out of the market like a tornado, the Forex Funnel.  It’s the hottest new technique for profiting in the foreign exchange market.

Taking Advantage of Euro/Swiss Franc Relations in Forex

SetForget Pattern Profit

As far as Forex trading is concerned, there exists one relationship between currencies of which every Forex trader should know before actually to start trading. It is the correlation between Swiss franc and euro currency pairs – the relationship extremely strong to ignore. According to the Forex market studies, it becomes obvious that the correlation between these currency pairs may be negative 95%. It is called a contrary relationship meaning that – by and large – in case EUR/USD gains in value, USD/CHF loses value in general. The opposite is also truth.

It is generally known that during the longer periods of time, like one year, the majority of currencies traded against the US dollar have over 50% correlation. It happens since the US dollar is a leading currency included in 90% of Forex transactions. Though the strong correlation between USD/CHF and EUR/USD occurs partly thanks to the general dollar impact in the two currency pairs, the explanation why the relations are much stronger than in other currency pairs comes from the tight links between Switzerland the Eurozone.

Switzerland borders on other Eurozone countries and, as a result, enjoys very close economic and political links with its bigger neighbors. The agreements between Switzerland and the Eurozone signed in 1972 and in addition to more than a hundred further mutual agreements that followed later enabled the free influx of Swiss citizens into the labor force of the EU as well as the slow but sure opening of the Switzerland employment market to citizens of the European Union. However, the links do not finish at this point. 60% of Swiss export is intended for the Eurozone, and 80% of imports are from the European Union.

As far as Forex trading is concerned, if EUR/USD and USD/CHF are long, two strongly offsetting positions are obtained or, on the whole, EUR/CHF. In the meantime, if one currency pair is long and another one is short, the same position is actually doubled up, albeit it can look like two different Forex trades. It is essential to realize for the suitable risk management since if something is skewed when one currency pair is short and another is long, losses can be multiplied easily.

The relations between the USD/CHF and EUR/USD decouple when there are different political or fiscal policies. For instance, if elections cause insecurity in Europe while everything is all right and stable in Switzerland, EUR/USD can decrease more in value than USD/CHF increases. On the contrary, if the Eurozone lifts interest rates assertively and Switzerland does not, EUR/USD can gain in value more than USD/CHF loses in value. On the whole, the fact that ranges of the two currencies may diverge more or less than the point difference, is the main reason why interest rate arbitrage in the Forex market applying these two currency pairs doesn’t work. The ratio of the range is measured by dividing USD/CHF range by EUR/USD range.

Provided by A. Collins who is a creator of simple forex trading system which is available on Forexeasystems. Also you can find there mt4 plugin Fx Pulse which can automatically collects Forex market information and displays it directly on the trading chart in real time.

Canadian Dollar is a Commodity Currency Profitable for Forex

Pips Wizard Pro

To start with, Canada is considered one of the ten largest crude oil exporters in the world, and this makes its currency, Canadian dollar, very lucrative for Forex traders who like to speculate on the oil prices. This speculation appears to be very profitable, since the loonie (as the Canadian dollar is often called) is a classical commodity currency.

The essence – when the oil prices are rising, Canadian dollar strengthens respectively (against US dollar in particular), since price for oil is denominated in the greenback. Accordingly, forex trades prefer to go long for the US dollars and to go short for Canadian ones when the oil prices are falling. It must be mentioned that this strategy appears to be very beneficial for the Forex traders in the majority of cases.

Every Forex trader willing to make profit on the Canadian dollar should keep in mind that one of the key factors supporting the strength of the Canadian dollar is the closeness of the two major stable buyers of Canadian oil – the USA and Japan. What is more, Canada is said to have the second largest reserve of oil in world, which is important in the context of constant flourishing demand for this commodity that is most likely to continue in future. This results in the fact that Canada and Canadian dollar are ready to meet and satisfy the world demand for oil.

As far as Forex market analysis is concerned, when using technical charts in order to spot the correlation between the Canadian dollar performance in relation to the oil, it becomes obvious that this correlation is very tight. It means that if the Canadian oil takes the leading positions, its dollar’s value rises, too. Thus, oil movements turn out to be a reliable indicator which prompts a Forex trader whether to sell or to buy the Canadian dollars.

Another thing to remember is that one more way to speculate on the correlation between Canadian dollar and oil is exchange-traded funds concentrated on the Canadian currency.

However, the main conclusion is that relations between Canadian dollar and such commodity as crude oil which is Canada’s major export are very profitable for forex trading. In particular this refers to the USD/CAD currency pair. In addition, the price action of the oil indicates to the trading opportunities as far as Canadian dollar is concerned.

 

This guest post is written by Alexander Collins who is a founder of Forex company. Forexeasystems can offer every trader wide range of forex trading systems that work since 2007.

Options Trading Strategies | The Long Put

The buyers of a put think about how to benefit from the falls of price of the underlying one or be protected from them. They have a downward vision of the market and usually hope that it should increase the volatile nature.

New York - "GREED STREET or Wall Street.....
New York – “GREED STREET or Wall Street…U decide?” Colorful tags below (Photo credit: David Paul Ohmer)

The long put option strategy is a basic strategy in options trading where the investor buy put options with the belief that the price of the underlying security will go significantly below the striking price before the  expiration date. His risk, his potential of loss, is limited to the premium whereas his potential of benefit is unlimited to the expiration on a descending market.

The threshold of profitability in this operation, is the price of exercise – the price of the premium. On the other hand to emphasize that his delta increases up to-1 as they lower the prices of the underlying assets.

More BEAR are the expectations of the market, the put must buy to itself in the position OTM as deep as possible, that is to say that the lowest price of exercise must be for the buyer of the put. Compared to short selling the stock, it is more convenient to bet against a stock by purchasing put options as the investor does not have to borrow the stock to short. Additionally, the risk is capped to the premium paid for the put options, as opposed to unlimited risk when short selling the underlying stock outright.

Let’s put an example: A Spanish company has come to an agreement with an American company tolling that to pay the Spaniard in 3 months a quantity in dollars. The Spanish company believes that the dollar can re-point opposite to the current levels that the euro shows, for what it does not want to cover this risk (it would win less), so he buys a put to 1,28, which is the current change (1,28 dollars = to 1 euro).