How They Earn a Living

The traditional definition of a forex broker is one who puts buyers and sellers together for a commission or fee. Many forex brokers make their money by charging you a spread, the difference between the buying and selling prices for a currency pair.

Spreads greatly impact your forex returns and vary depending on the type of account you open. As buying low and transacting high is the trader’s goal, a wider spread means you have to pay more when you buy and wind up with less when you sell. In some cases, your broker gets the difference, which is added onto the price of the trade. Spreads often narrow or widen depending on market liquidity and other factors.

Pips (Percentage in Points) are the smallest price unit of a forex currency, which is quoted to the fourth decimal point. Spreads, one of the primary costs of your forex trading, are measured in pips and the slightest variances can make a big difference.
I have worked with many different types of forex brokers and have witnessed the haphazard ways in which clients’ investments were distributed. In many cases, the trading transaction would go into a ‘bucket’, and never actually execute. My heart would go out to the scores of clients who had quit their day jobs, anticipating income from trading forex, only to learn their profits had disappeared due to some alleged violation. In reality, there was no profit to deliver since the buy/sell trade never happened and the broker had to come up with an excuse. These types of brokers operate in what’s commonly known in the forex industry as a “bucket shop.”

From Electronic Communication Networks (ECNs) to retail forex companies, the type of forex broker chosen is a factor in the timeliness and return on your investment. ECNs do not trade against you and act as an Interbank broker in the free market by connecting the major banks and brokerages with individual forex traders. The spreads may be smaller but you know upfront what you’re paying for the service – either a flat fee or commission.

Retail forex companies are glorified bucket shops and are often referred to as market makers, since they essentially create their own trading markets. Spreads are arbitrarily decided, trades are made against you, and profits are distributed at the broker’s discretion. Retail forex companies are attractive to newcomers and those short on cash because they don’t require large investments. If you don’t mind running the risk of having your profits disappear on a whim, then retail forex companies are a good place to learn the ins and outs of forex trading. They allow you to demo trade on their platforms until you know what you’re doing and give you unusually high leverage.

Of the two types of brokers, a forex ECN broker is the more legitimate. They provide a place where banks, traders, and multiple market makers can enter competing bids and offers around the spread amount. Unlike a dealing desk, bank quotes are consolidated and orders are matched to the best bid/offer price on which traders are permitted to trade. Although minimum trade requirements are often higher and leverage is lower, prices are not manipulated, profits can be more stable, and trades are passed to a real trader, the Interbank.

When honestly executed, forex spreads can be a valid indicator of what’s happening with your trade. After years of mistakes and believing everything I was told, I now know to look for the red flags, such as reverse pips, rejected transactions, tight spreads, and delayed executions. These are common strategies used to deceive many forex traders.

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The Biggest Mistake Novice Traders Make Which Sees Them Get Wiped Out Quickly

Forex Education

It's a fact 95% of Forex traders lose money trading and while anyone can learn to trade and make great profits, the novice trader makes a fatal mistake which is enclosed and should be part of any novice traders Forex education...

Forex trading is different in terms of the skills you need to make money in Forex to the skills you need in everyday life. Some explanation will make this clearer.

Let's look at the fatal mistakes novice traders make.

1. Consulting an Expert Will Bring You Success

Most people who claim to be experts are not. You have seen them, the $100 buck robots and sure fire courses, offering you an income with no effort and guess what? They all fail.

In normal life we are taught to consult an expert, to fix your car or a burst pip and they can give you a guaranteed result. This is not so in Forex, as your not dealing with certainties and mathematical formulas. In Forex you deal with the odds and your best off to get the right Forex education and do it on your own.
2. Hard Work will Give you a Reward

This is actually good news!

You can learn Forex trading in a few weeks and soon be making big profits but for this you work smart not hard. Avoid the myths, and making huge effort and expecting a result that may work in a 9 - 5 job but not Forex. Simply learn the right way and cut your work load. All you need is a simple system and the mindset to succeed which is covered in the next point.


3. Being Clever is an Advantage

A huge myth you would think the best group of traders had a background in mathematics or something else complex but the most successful group are actually ex poker players! Why?

Because they know that a simple plan, playing the odds is the way to win which leads me onto the next point. Simple systems work best and always have and that a fact, make a system to complicated and it will have too many elements to break.

4. Mindset is more important than Method

Yes it is! - Because you have to apply any method with discipline and even the best Forex trading system, will fail unless you do. Most traders cannot trade through periods of losses and keep them small, all systems have them and you must get through them.

You don't just get discipline though without effort, it's based on education and confidence in what you have learned. If you want to win, you need to stay on track through losing periods until you hit a home run.

If you can't trade your system with discipline you don't have a system! Trading discipline is the big variable between success and failure.

The Real Way to Make Big Gains and You Can Do It!

Forex trading success is open to all but many try and apply the wrong logic as we have seen and you will lose.

If you want to win all you need to do is get the right Forex education and have the discipline to apply what you have learned. It sounds simple and it is - but most traders simply won't do it. They don't get the right education and or they are simply lazy and want to follow others.

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Miscellaneous

It's a good idea to talk to other forex traders in an effort to find out who are the better forex brokers out there. As in any industry or business, there are some dodgy ones. Forex brokers are no exception.

There are many forums on the internet these days that are dedicated to discussing all areas of forex trading, including the discussion of forex brokers. These are great resources you can use allowing you to find some valuable information that could just save you being ripped off by some unscrupulous forex broker.

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Need To Know About Technical Analysis Of Equities

The foundations to technical analysis can be found in the understanding that stock price movements are predictable. All the factors affecting the value of a stock are reflected in the stock market with the greatest efficiency that can be found in any type of market. Movements in the stock value follow predictable historical trends, coupled with the efficiency of the market make it possible to predict the direction the stock is going to go.

Technical analysis is a very short term method of investing because the potential long term growth of a company is not taken into account through this method. Trades are timed to exactly reflect the upward and downward trends in the market so nothing is left to chance. Because buying and selling go through at specific times, losses can be minimized if the market does not move in the predicted manner.

Many methods of predicting the movement of the market have been developed for use in technical analysis. These methods for the most part are based on the 'support' and 'resistance' concept. How this works is that, support is the level by which a downward price is predicted to increase by and resistance is the level by which an upward price is expected reach before coming down again. To put this in clearer terms prices tend to fluctuate between a support and resistance levels.

Market movements are predicted for a large part through the use of charts (mostly bar charts). The horizontal axis represent time be it a minute, hour, day or week, while the vertical axis represents the price of the stock. By looking at the chart a trend for the stock value can be traced.

A trained analyst studies the chart and can see certain patterns in the chart that they can then use to predict for future movements in the price of stocks. As is the case with most things there is no one single pattern that fits all. There are hundreds of different types of movements, indicators and patterns that can be used. By combining a number of different indicators technical analysis can make it possible for an investor to become very successful on the stock market.

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Credit Market - What's Going on Basically?

After a boost of top economic event risk, the USD has come through this past week with a more promising outlook for growth as well as diminished potential for a Fed rate hike this year. After the policy board announced its intentions to hold the benchmark lending rate at 2.00 percent and offered rhetoric that was more or less in line with the group’s middle-of-the-road commentary from previous months’ statements, the probability that the central bank would raise rates by the end of the year dropped from 71.6 percent to 59.9 percent. However, with evidence that the financial and credit markets are stabilizing, economic activity is turning up from the worst and upstream inflation is cooling, the Fed may be emboldened to tighten well before the consensus and continue to raise rates to a level well beyond the 75bp over the next 12 months overnight interest rate swaps are currently pricing in.

There is no change as [ForexGen.com] consider it as for USD being stronger, never the less and even though the EUR went up by a few pips today we still think it might get bullish especially against the EUR and AUD which are the clearest patterns in the technical analysis by fibo graphs.
As mentioned yesterday in an article published, the initial EURUSD target is not before 1.5230. The initial AUDUSD objective is at 0.9152.

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While Placing Stops what can we take into consideration

Stop placement is where we separate the kids from the adults.

Stop placement is the sole responsibility of you as the manager of your trading business. It is one buck that you cannot pass.

You are the end of the line when it comes to placing stops.

Let me show you why you, and only you, can decide where to place the stop.

There are several considerations:

The size of your margin account has the greatest effect on stop placement. When you look at a trade and see where the stop should go, or where you would like it to go, you then have to look at the size of your margin account and determine whether or not you can even consider the trade.

Your comfort level. Although you may have sufficient margin to place the stop where you would like to, and although the stop is logical for the trade, you may not feel comfortable with the stop being so far away (or even so close), and so you will decide not to take the trade with the stop far away, or move the stop back if it appears too close.

Volatility. You must take into account market volatility when placing your protective stop. If a market that normally ticks two ticks at a time suddenly begins to tick five ticks at a time, you must certainly take the level of volatility into consideration. You may find out that you have to place your stop too far away for the size of your bank or your comfort level.

When you use mental stops, there are two other considerations which you must ponder when placing your protective stop. They are: Your speed in placing the order, and the speed at which your broker can place the order. Let's look at each.

The speed at which you can place the order. This depends upon how fast you think on your feet. There are three factors here: Perception, decision, and action. How long does it take you to perceive that NOW is the time to pick up the phone and place your stop in the market if you are calling the broker? Or, NOW is the time to enter your stop via your electronic trading platform?

Then, once you make the perception, how long does it take you to decide to do something about what you have perceived? Are you quick to decide upon your perceptions? Finally, are you quick to act once you have made a decision?

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