Online Forex Trading

How to Select a Forex Broker

Forex trading is more popular than ever. This has resulted in an ever growing list of brokers trying to get you to trade with them. So how do you choose which broker to work with? There are several important factors to consider when selecting a forex broker.

Trade Execution

Nearly all forex brokers present live prices on their trading platform, but how do you know if your trades will get executed at the prices that are presented? Probably the best way to determine this is to open a demonstration account on a several brokers’ websites and try them out for yourself. This will not only allow you to see the broker’s speed of trade execution, but will also give you the opportunity to get a feel for the trading platform. Some sites offer online forex trading strategies and other tools of varying levels of complexity and use to allow you to personalize their site.

Spread

As you are likely aware, unlike stock markets, the forex market is not traded through one a central exchange. The spread may differ depending upon which brokerage that you select. It is certainly worth checking out several brokers before you open an account. Many forex brokers publish prices on their websites so you can compare spreads. Some brokers offer live quotes, others offer delayed quotes. Quote speed is important, but equally as important, if not more, is whether the spreads are fixed or variable. A fixed spread is, well, fixed. They are always are the same, regardless as to what time of day it is. However, some brokers use a variable spreads. You might think that these are worthwhile, but these variable spreads can get fairly wide. The market must move a greater distance in your favor before you start to make a profit. Fixed spreads, on the other hand, tend to trade slightly wider than the variable spreads when at their narrowest, but over the long term, fixed spreads can be safer.

Trading Platform

You are looking for a trading platform with an online forex trading website with real-time prices. The trading platform should offer both limit and stop orders. Other useful features to look for include the One-Cancels-Other option. This feature allows you to set your trades up in advance, and have the software handle things for you, automatically. Probably the most important aspect of any trading platform is completely subjective. How does the platform feel to you? Is it intuitive? Does it feel natural and easy to use? Trading platforms aren’t one-size-fits-all. Test drive several of them.

Technical and Trading Support

The foreign exchange is open nearly 24 hours every day. As such, your broker should offer round-the-clock support. You may not be trading in the middle of the night, but it’s nice to know that if you are, your broker is there for you, right when you need them. This is also helpful if you are traveling to distant lands and need access at odd hours. Besides Internet access, it would be ideal to have trading access by phone, in case you don’t have Internet access for some reason when it’s most critical.

Financial Support

Like stockbrokers, forex brokers are regulated. However, they all have varied financial backing. In a market crisis, you want to be confident that your broker is adequately funded, with enough reserves to cope with the difficult times. You also want to be confident that the broker will still be in business when you decide to withdraw your cash. Do as much research as you can. Question several potential brokers. If they are evasive when asked about their financial backing, move on to the next one.

In Summary

Selecting a forex broker is an important decision. Investigate several. Make sure they offer demo accounts to make sure you like the way their website works before sending opening an account.

Filed Under Forex Trading Strategies, Online Forex Trading, Trading Systems, brokers, software, spread, technical support, trading platform

Forex Market Makers

What is a Market Maker? A Market Maker is a broker-dealer firm that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security. Once an order is received, the market maker immediately sells from its own inventory or seeks an offsetting order. This process takes place in mere seconds.

What do Forex market makers know about the currency markets that you don’t? How are they using this important information? How well do you know your market maker?

Part of the forex’ market makers business is making sure that they are knowledgable about their clients. They tend to be highly selective with whom they are willing to associate with, and with whom they are willing to share information with. Market makers share information selectively — they pick and choose what they will share with whom. By withholding some valuable information, these market makers may be able to control (manipulate) the markets.

Since the market makers are controlling the release of information, in essence, they are controlling the Forex market. Are you receiving appropriate, timely information about the currency market that you are trading in? There is a saying in the poker community, “If you don’t know who the patsy is at the table, it’s you.” The same holds true in online forex trading. If you are not receiving the most valuable information, then someone else is. Someone else is benefitting from key information and likely making substantial profits in the Forex as a result. If you’re not getting the key, accurate, current, necessary information, why not?

You can’t be expected to successfully navigate the forex without proper information and strategies. You need to procure the quality forex trading software. Otherwise, you are likely to be unsuccessful in the forex.

Filed Under Forex Alerts, Online Forex Trading, Trading Systems

Compete with the Pros

How can you compete with the professional traders in the currency markets?

If you’re going to be a successful currency trader, you need to understand support and resistance levels. These levels are also known as pivot points. Seasoned, commercial currency traders recognize this. The professional, veteran currency traders have sophisticated tools and experience at their disposal the to help them to understand and predict these support and resistance levels. As you are likely already aware, it’s these seasoned traders dominate who dominate the forex.

When an novice Forex trader looks at currency pricing charts, the prices on the charts may appear to move randomly. However, if the same novice forex trader were to use an online forex trading system, those same pricing charts might well look different to them.

Good news! There are sophisticated software tools available to the general public that allow you to view those pricing charts and identify the pivot points quickly and easily. These powerful software tools help to even the playing field between the seasoned, professional currency traders and the novice traders.

You also need to understand that trading is emotional — it’s based on fear and greed. Having a good understanding of this will help you to see when price reaches their support and resistance levels. Traders tend to act upon these levels. Many of them will enter or exit positions at the same time. This can move the market in the opposite direction or cause it to rest at that point for a period of time before it then makes it’s next move.

How else can you learn about currency trading? Besides software tools, there are also many, many books available on this subject. These books can teach you every aspect of trading the forex market. You can learn about currency, forex market, forex trading, technical analysis and other detailed side of forex from reading many books on this topic.

Make sure you have a full understanding of these markets before taking on the pros.

Filed Under Forex Alerts, Online Forex Trading, Trading Systems

Forex Alert

Typically, on this website, we discuss online forex trading strategies. When we mention forex trading strategies, we usually are discussing software tools to improve your Forex trading experience. However, this article is about a different topic. It’s about the risks inherent in currency trading.

Is currency trading risky? A government agency thinks so. They think it’s such a concern that they have issued a formal alert. The Washington State Department of Financial Institutions has issued a Consumer Alert. The government agency report indicated that there is significant risk involved in Forex trading. Their report mentions that forex trading may be more suitable for professional traders rather than for the average retail investor.

The agency goes on to mention that traders should make certain that the Forex investment broker that they are using for their Forex trading activity is reputable. They suggest that you make sure that the broker is licensed. You can verify that your broker is licensed by visiting the National Futures Association’s website.

This is good advice. However, it’s not specific to the forex. Before making any investment decisions, you should always perform the appropriate due diligence. Make sure that the company and/or the individuals that you are dealing with are reputable, licensed, and (if applicable) that your investments are appropriately insured.

Currency trading on the forex is on the rise. By 2008, there was twice as much currency trading activity taking place in the Forex market as there was in 2001. There are more people trading on the forex than in the past. Forex trading, as with any type of trading involves some level of risk. Please make sure that you understand the risks involved in whichever market that you are trading in.

Filed Under Forex Alerts, Online Forex Trading, risk « go back — keep looking »