Forex Trading Risk Management

forex risk managementThere is no denying that there is a certain amount of risk when trading forex. With every trade that you make, there is always a possibility that you will lose some money.

So, the next step would be figuring out how to manage risk with forex trading. This can help to prevent you from losing money or, at the very least, minimize how much you end up losing. Here is how you can do the forex risk management:

Have a Money Management System

One of the main reasons that forex traders have to give up so early on in their careers is because they end emptying out their account. You should avoid doing so at all costs. So, what can you do to prevent this? Well, first, you should never use money then you are willing to lose in one trade. If, in comparison to the rest of the amount, you can’t justify the amount, you should lower it.

At the same time, you will also need to think about how risky a particular trade is. You can feel comfortable with putting a greater amount on a low-risk trade. However, if the odds aren’t in your favor, you should only trade with a minimal amount or not at all.

Practice on a Demo Account

There are numerous forex brokers that offer their traders the use of a demo account. If you have this opportunity, you should definitely take it. A demo account lets you place theoretical trades without having to put money up as collateral. This way, you get to see what techniques and systems work for you and which ones don’t. As you continue to practice, you will learn more and more. Therefore, when it comes to a real trade, you will be much more prepared and much less likely to make mistakes.

Do Your Research

One of the most common misconceptions regarding forex trading is that it is easy. This, however, couldn’t be further from the truth. When traders make this claim, what they really mean is that is relatively simple (and affordable) to enter the market.

The actual trades, however, are far from simple. You should be aware of the various forex markets as well as what factors will impact them the most. You will also need to be on top of new regulations, changing situations, and news from around the world. This, coupled with experience, will prevent you from falling into numerous pitfalls.

Be Careful with Leverage

Another common folly among new traders is not controlling their use of leverage. On the surface, leverage can seem like the ultimate weapon. It gives you the opportunity to make a considerable profit after only making a minor investment. At the same time, it is quite easy for the tables to turn on you. Remember, leverage can cause your losses to be amplified quite a bit, throwing you into debt. So, when choosing your position size, keep your account in mind. If you don’t have a lot of capital, keep your positional minimal. It will prevent you from losing more than you can afford.

Use Stop Loss Features

One of the main benefits of forex trading is the Stop Loss feature. This is when you give an order to close out your trading position when you have lost a certain amount of money. As mentioned before, you need to decide just how much you can stand to lose. Once you have decided this, the stop loss order will ensure that you will not have to give away any more than you are capable of. You can think of stop loss as a safety net.

These are just some of the techniques involved in how to manage risk with forex trading. While it is not a comprehensive guide, it does provide you with the most significant points.

Forex Brokers

Forex trading is a lucrative international trading platform that deals in the exchange of currencies. And perhaps you are thinking that you want a piece of the action.

This article will help you understand the elementary matter of getting into the game with a reputed and established broker. This page contains all the tools you need to make it as a successful trader. So let’s get right into it.

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Choosing A Forex Broker

Forex brokers are numerous all over the world. However, whichever one you choose will be a decisive move indeed in your career as a trader. All of them look promising, but not all of them deliver on their promises. So your best choice lies with a broker that is strictly regulated by the government and has superb reviews from the majority of clients. Once some fitting candidates are selected, you can get a little nit-picky and scrutinize these details to cipher out the right one for you.

  • Service quality: A lot of this depends on whether the broker is licensed and regulated by an authority such as the CFTC and registered with the FCM. Usually you do not have to pry any further than the broker’s official website to find out what’s what?
  • Spreads: A spread explains the discrepancy between the buying price of a currency and its selling price. It is calculated in ‘pips’. A spread essentially how the brokers earn money in lieu of receiving a commission. So unless you have a soft spot for your broker at the expense of your own financial returns – unlikely – you should look for a broker with as low a spread as can be found.
  • An assortment of tools and information: Each Forex broker has its own trading platform online that customers can access to do their trading. Usually, this platform contains additional information such as charts and other kinds of data in real time and commentaries.
  • Options in leverage:Leverage is a huge deal in Forex trading. It comes across as a ratio between the total capital relative to the real capital – the amount lent to you by the broker to trade. With ratios expressed up to 250:1, it exponentially enlarges your winning potential but also your loss if the trade does not work out as you has predicted.
  • Types of accounts: Forex Brokers usually afford multiple accounts to their traders. There is the mini account which requires a minimum trade of around $250 to activate at high leverage. The standard account enables you to work different leverages but requires a much higher initial deposit of $2000. Finally, there is the premium account which requires a still higher initial deposit to be activated and comes with more tools and services along with differing leverages.

What To Look For In A Forex Broker

Now that we have covered the essential features to look for in a broker, let us now learn what we hope not to see in a Forex broker.

  • Sniping/Hunting: These terms describe dodgy moves made by brokers to make some extra green for themselves. Naturally, no broker has readily admitted to have ever done it but no of them can be totally cleared of suspicion. The only way to pinpoint the issue is by talking to other traders who have been unfortunate enough to experience it.
  • Rigid terms on margins: If the funds you are trading with have been lent, your broker has some control over the amount of risk you stake it at. And so, the broker can buy or sell on its own terms and that can be a costly error for you. Again talk to other traders and find filter out potentially crooked brokers.

Hopefully now you have a better understanding of how to go about selecting your broker to give you a good start into the Forex market.

How to Be Successful in Forex Trading

Forex trading is a good opportunity to make an impressive profit. At the same time, there is also the chance that traders can lose a considerable amount of money.

If you want to avoid an unfavorable scenario, you have to know how to be successful in forex trading.

This means understanding what things you should be doing while also being aware of the steps that could lead to a bad trade. Here, you will find a comprehensive guide on how you can maximize your success:

Choosing the Best Broker

One of your main concerns involves choosing a legitimate and a fair broker. However, your search should take another thing into consideration – compatibility. First and foremost, you should find a broker that caters to traders with your expertise level.

If you are a beginner, for instance, find one with plenty of learning and support tools that will help you learn as you trade. Also, look for trading software that has a slow learning curve or that is very user-friendly and intuitive.

Deciding on an Approach That is Right For You

No two traders are alike. This is why the first step to getting you onto the path of success involves creating a plan of action that is right for you.

This means deciding on a time frame that you are comfortable with, choosing the best possible system, and finally settling on trading instruments that are compatible.

The timeframe that you will settle on will largely depend on whether you want fast results or are willing to weather some uncertainties.

When looking for a system, however, it is all about testing and retesting them, even after you have found one that works for you. In the same vein, make it a point to test out your system on the various trading instruments. This will help you to figure out which instrument works best with your particular system.

Start Small and Allow for Organic Growth

One of the most fatal mistakes that any trader can make with forex trading is starting off with high leverage. In the beginning, always start off with small amounts and with a basic account. Let your account grow naturally, via the profits that you make from your trades.

You will need to resist the urge to get higher and higher leverage if a particular account begins to fail. If your account is just losing money, the last thing that you want to do is to incur more debt in an attempt to stem the bleed.

Employ Risk Management

There is no denying that every forex trade has a certain amount of risk attached to it. Therefore, there is always the possibility that you will lose at least some money. Fortunately, there are a few ways to minimize how much risk you can incur.

The first thing you need to here is to avoid using gambling techniques such as the Martingale strategy or to place fast trades to make a quick buck. You should also always be aware of the odds of your trade being successful beforehand.

This will help you to determine just how much of your account you are willing to risk on that particular trade.

Monitor Your Emotions

Forex trading, or really any type of trading for that matter, has a tendency to trigger extreme emotions. These include panic, euphoria, greed, and even the odd adrenaline rush. However, if you want to be successful, you need to be objective.

A good way to do this is to set a plan for yourself once you have calculated the amount of risk involved. Then, once the plan is put into motion, stick to it and don’t make any deviations, regardless of whether you are feeling giddy from a win or anxious about a loss.

This is what you need to know about how to be successful in forex trading. This is not something that will be achieved over night. Instead, it will require learning, research, dedication, and common sense. Only then will you be able to claim victory.

How to Decide on Currency Pairs to Trade With

With forex trading, one of the things that you are going to need to narrow down fairly early on is which currency pairs you want to trade. Now, considering all of the options available to you, this can be quite tricky.

For instance, should you simply pick at random? Do you stick with the majors or decide on lesser considered pairs? Are there pairings that are more superior to others? In this article, we discuss how to decide on currency pairs to trade with. Here is what you need to know:

Start Small at First

Before you go any further, there is one piece of advice that you should adhere to in the beginning. Typically, it is best to start off with one pair, at least until you are more comfortable with forex trading. Many traders believe that by choosing several currency pairs, they are giving themselves a better chance at success. However, what usually happens is that they end up juggling too many duties and end up losing out with one if not more of the pairs.

The Major Currency Pairs

There are some currencies that are more well-known or widely used than others. At the very top of this list is the United States dollar. Since they have the largest economy which constitutes about 25 percent of the gross world product, it is usually the favored reference currency. Not to mention, it is largely considered to be the reserve currency of the world.

Along with the US dollar, other important currencies are the Euro, Japanese Yen, British Pound, Australian dollar, Swiss Franc. These are what are frequently traded against the dollar. Together, they make up what is known as major currency pairs.

Now, most people assume that these major currency pairs are the best ones to trade with. However, while the major currencies are the most traded pairs, they are not always the best. These pairs tend to be the most volatile as they experience fluctuations throughout the trading day. This volatility, though, gives you just as much chance to make money as to lose it. The most important thing to remember about major pairs is that they have favorable trading conditions due to lower spreads. Despite this, these may not be the best for you.

Choosing a Compatible Currency Pair

When choosing a currency pair, any currency pair, information and analysis will be your most powerful tools. This will help you to gain a better idea about the direction in which the price of a given pair will move during a particular time period. You need to be able to understand what influences price changes, whether there is volatility, and how one currency can work against another.

It is the conditions mentioned above that prove that choosing major currency pairs is not always the best option for everyone. Rather, you may find greater success with choosing pairs that you are familiar with. Since you have a greater understanding of the value as well as the factors that influence it, you have the upper hand. Oftentimes, traders find that dealing with their local currency can be quite helpful.

As a rule of thumb, stay away from currency pairs with high spreads and stick to those with 0 – 3 pips. The higher that you go, the more expensive that it can get for you. Anything over six pips may prove to be too costly for the average trader.

Good Options for Beginners

If you are looking for something relatively easy to start off with, you may want to try USD/EUR. This is largely because of its low spreads and that the technical analysis that is involved is quite simplistic. Also, these pairs experience minimal volatility so you don’t have to take on a lot of risk. The USD/JPY can be just as profitable for new traders.

This is how to decide on currency pairs to trade with. You should consider what you are comfortable with along with what can provide you with the greatest profit.

Forex Trading Strategy

Getting a forex trading account is really not far off from signing up for an equity account. There is one very real difference. And that is with a Forex account, you will need to sign an agreement that specifies that the funds you are trading with are lent to you by your broker that therefore retains the right to interfere with a trade to prevent any losses on its part.

A Basic strategy for Forex trading

Coming up with strategy for Forex trading can be a part of two kinds: technical analysis and fundamental analysis. It is worth noting that with Forex markets, technical analysis appears to be the more prevalent type of strategy used by traders. Nevertheless, it is helpful to understand both in some measurable detail regarding how they affect Forex trades.

Technical analysis

Similar to equity markets, technical analysis has a lot to do with price trends in Forex markets. However, unlike equity markets, Forex markets function 24 hours a day so some elements of the methods of technical analysis would invariably require some tweaking and adjusting. We have listed some of the most popular forms of technical analysis below.

  • Parabolic SAR
  • Fibonacci studies
  • Pivot points
  • The Elliot Waves

Such studies are combined by technical analysts to draw out sharp predictions regarding the market.

Fundamental analysis

If you have ever undertaken fundamental analysis, you might get why technical analysis is usually the more preferable strategy with Forex Trading. Fundamental analysis here is a lot more complicated but getting it right enables you to see clearly into long term trends. There are several different indicators of currency values. We have listed a few of them below.

  • Durable goods
  • Consumer Price Index
  • Non-farm Payrolls
  • Purchasing Managers Index
  • Retail sales

Aside from the aforementioned reports, other factors such as commentary from meetings can have a similar influence on the market. The meetings in question are often prompted by a need to talk about matters that deal with currency values such as inflation and interest rates. We would humbly remind the chairman of the Federal Reserve that with great power comes great responsibility.

So what is your strategy?

The truth is your strategy is bound to be as unique as you are. Pretty much any successful forex trader has been working on their trading strategy overtime and perfecting it as they go along. Experts suggest employing elements of both technical and fundamental analysis so that traders have an accurate idea of long-term happenings as well. As far as we are concerned though, there is no greater teacher here than the simple trial and error method. Only you as a trader can truly know which strategy will best serve your interests.

Just be careful to consider the following.

  1. Start off with a demo account work with it until you are confident enough to trade with real funds. That leverage potential is always intimidating enough for you to hold off yur real funds until you have gotten enough practice.
  2. Remember that facts do not care about your feelings. If you make a move based on how you feel instead what is logically valid, you just increased you chances of making a loss. Stay sober about reality and make your trades about little else except cold hard math.
  3. Always keep a watchful eye on the trends. There is no good reason to swim upstream here. Going with the trend almost always gives you a much higher success rate.

Conclusion

And that is just about all you need to know about coming up with your ideal Forex trading strategy.

5 Reasons To Start Trading Forex

Not too long ago, trading in currency was not really an option for the everyday trader as it would require a plenty of funding that was mostly possible with international corporations and inordinately wealthy individuals. However, with the growing unpredictability of the current global economy, more and more opportunities and interest have been generated making it accessible to the average trader.

Top 5 Reasons to Think About Forex Trading

Forex is short for Foreign Exchange and is essentially a market in which currencies are traded. There many reasons why one might hope to be involved in this market as it is a tool by which you can do transactions internationally and can settle accounts with your native currency. Plus, the ever changing exchange rates can offer some great profitability. Let us now go into 5 major reasons why you should think about investing in the Forex market.

1.Diversity

It is a given that the currency of any country has the capacity to drop as much as it can rise. In the Forex market, traders are not limited to dealing in a single currency. If your currency of choice is experiencing a drop, or you sense that it will drop in the near future, straight away, you can invest in any number of other currencies that show signs of being on the rise.

Unlike with stocks, no currency is completely unaffected by another. If the value of yours is going down, the value of someone else’s is going up. You just need to have the right sense of direction.

2.The game is fair

Any information concerning the market values of different currencies is readily available in real time for traders to access. The game is by no means rigged. The strings are simply too vast for that. The actual value of any currency really depends on the economic state of its country. So traders can do some solid homework and accurately determine for the most part how the value of a currency might change.

3.A Global hedge economically

Currencies are a-changing. And as a Forex trader, you have the liberty of selecting a currency that you think is going to go up in a short while. And you can do this with multiple currencies across the globe therefore giving you a better chance for landing profits from the ever changing macroeconomic climate.

4.Capital appreciation

One aspect in which currencies are similar to stocks and commodities is their capacity for capital appreciation. If your currency goes past what the dollar is worth, you will get a profit. Else, you will incur a loss.

5.A hedge against risks in politics and events

You can take into account current significant global events such as new elections, revolutions, wars, taxes, economic depressions, changes in financial policy, political uprisings, natural disasters, Legal boundaries etc. when deciding on which currencies you want to be trading in.

The risks and the rewards

As a trader, accurately assessing the risk factor involved in Forex trading not only mean that you should stay informed of how your currency is fairing within your own country but on an international scale as well. You need to be able to perceive what will happen over what is actually happening.

That is key to reaping success in the Forex market. The risks and rewards are astronomically augmented by the leverage factor. Leverage is usually an intimidating ratio, up to 100:1 in some cases. That is easily enough to surpass the actual amount of funding in your account.

What it does mean however, is that you can make a significantly high profit from a tiny investment but you can also make just as big a loss if your trade goes south.

The Forex market is not a difficult place to invest in so long as you stay updated on real time information and develop an intuition for spotting good opportunities.

How to Choose a Forex Broker

If you want to be involved in forex trading, one of the first things that you will need to do is to find yourself a broker. Now, these types of brokers are a dime of dozen. What you need to focus on is how to choose a forex broker that is right for you.

How to Choose a Forex Broker That is Right for You

By employing a broker that is compatible with your needs and expertise level, you are much likely to be able to trade more successfully. Here are some of the tips you can follow for finding your best possible option:

Is the Broker Regulated?

As mentioned, you will find no shortage of brokers on the internet. This can make deciding between the legitimate ones and the scams quite difficult. If you want to be assured that you are making the right decision, then it is best to opt for a broker that is regulated by an authoritative agency.

Each country has a regulatory association that is responsible for forex brokers within their borders. For the United States, this is the National Futures Association and the U.S. Commodity Futures Trading Commission, while in the UK it is the Financial Conduct Authority and the Prudential Regulation Authority.Australian brokers are managed by the Australian Securities and Investment Commission whereas the Swiss brokers have to be regulated by the Swiss Federal Banking Commission.

In Germany, there is the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) while France and Canada adhere to rules set by the Autorité des Marchés Financiers.

What are the Account Offerings Like?

Each broker is going to make various promises regarding the leverage and margin, commissions and spreads, as well as the minimum initial deposit. It is a good idea to make comparisons between the brokers to decide which one is making the best offerings for you.

Each broker is going to have different accounts and then ask for varying minimal deposits. It is always a good idea to stick with an account that you can afford so that you don’t run out of cash too quickly.

If the leverage that is offered is competitive, then you can significantly increase on your initial deposit. However, to avoid falling into debt, you should remember to limit how you use the leverage.

There are two ways that brokers make money – commissions and spreads. Those that are involved in commissions generally charge a certain percentage of the spread. The brokers that don’t charge commissions, though, and make money from wide spreads. As such, it is best to stick with more popular currency pairs with these type of brokers.

What Currency Pairs are Offered?

There are some currency pairs that are known as majors. These include the EUR/USD, USD/JPY, GBP/USD, and USD/CHF. If you are interested in trading with these or others that are similarly popular, you are in luck as almost every broker is offering these. If you want something more exotic, though, you will have to first ascertain that a broker that you are interested in actually offers these pairings.

What is the Trading Platform Like?

If you aren’t able to use a particular trade properly, there is a good chance that you will make numerous mistakes with your trades. As a result, you can lose a lot of money. To avoid this, you will need to find a trading platform that you are comfortable using. All of the controls and features must be easy to use and you should have no problem entering or exiting a trade. Similarly, it should offer you a lot of trading tools to choose from. Trading alerts and automated trading options can also help you a great deal when trading.

How Easy it to Deposit and Withdraw Money?

To make quick trades, you are going to need to deposit money into your account quite quickly. So, in addition to bank transfers and checks, you should also be able to place money into your account via credit cards and PayPal for faster options. Now, you should also look at the methods as well as the terms and conditions surrounding your withdrawal options. These tend to be tricky so you should ensure that you can take your money out with minimal hassle and cost to you.

This is how to choose a forex broker that is right for you. With some research and due diligence, you should be able to decide on one that is reliable as well as profitable.

Forex vs Stock Exchange

brokersWhich is best for you – Foreign Exchange or Stock Exchange? To answer that question, we must weigh both of them on the same scale and see if one can tip the balance over the other.

If you are the conventional ‘long only’ or buy-and-hold investor, you have some very good reasons for staying involved in the stock market. Statistically speaking, investors tend to get profitable returns from stocks and the taxation is sufferable.

But if it is trading you are keen on, you might want to hold your horses and take long hard look at Foreign exchange as well because it too has its own share of unique benefits.

Let us now go over some of the considerations that you would have need before choosing between them. Is it going to be Forex or Stock? Let’s find out.

1.Do you prefer fundamental analysis or technical?

If you are into assessing things in technical terms, then Forex is the better suited art form for you. On the other hand, if you are more about inherent value and subjective evaluation, your trading strategy is better suited to stock exchange. Your preferred method of analysis will come in very handy in your activities as a trader.

2.Leverage

Forex markets differ a lot here from any other kind. While in stocks you will usually  come across a ratio along the lines of 2:1, Forex can give you ludicrous ratios up to 100:1. So with Forex trading, whatever returns you get are exponential as per the given ratio of leverage. The upside is, you can make a heck of lot of green off of a very small seed. The downside is you can lose the same amount if your trade goes south.

3.Self-control

Bad trades come with the burning desire to make up for lost bounty. But can you actively control and suppress that desire when logic dictates you take leave it alone and reassess your trading strategy. You can never really know until the situation presents itself. This is an essential skill you need to make Forex trading work for you. With stocks, any potential losses are unlikely to go beyond your initial investment.

4.Bearish bets

Bearish bets with Forex trading is a rather simple matter. For instance, if you are predicting the Canadian dollar will end up higher compared to the US dollar, simply sell the Canadian dollar vs. US Dollar in the market.


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5.Number of positions

Number of currencies you can trade in a Forex market is obviously finite. In fact, as of 2013, only four of them account over three quarters of the trillions of dollar worth of trades executed each day. They are the US dollar, Euro, Japanese Yen and the English pound. Other major currencies include the Australian dollar, Swiss Franc, and Canadian dollar. A stock trader however has a veritable options list numbering in the thousands, and that is just in US.

6.News feed

Is your focus more toward a macroeconomic perspective on events or do you prefer doing some thorough searching in the sewers of whatever corporation or industry you are trading in? If you prefer the former, currency exchange should be right up your street.

7.Risk management

Your approach toward potential risks is a key factor to consider when choosing between trading stocks and trading currencies. If you are not suited to taking on risky moves, do yourself a favor and play stocks instead of Forex.

So which is it to be then? Hopefully, with the considerations listed above, you now have a clearer idea of which kind of trading would suit you best.

How to Start Forex Trading

In very simple terms, Forex trading is the most lucrative department of online trading you can be involved in. It is the market where all the currencies of the world are traded and daily transactions regularly amount to trillions of dollars.

The market is open 24 hours a day on all week days except holidays. There are many ways to get in on the action and many fortunes and losses to be made. However, if you are considering getting involved as a trader in the Forex market, there are some fundamental early steps to be considered before you can stand any chance of making a successful turn of it.

Here are some of the key variables and methods you should know about before starting out in Forex trading.

What should you know beforehand?

It is imperative that you get to know the trade before stepping into it. In the case of Forex, getting to know the trade outside of being involved is only half the job. The other half involves getting to know you as a trader. Forex trading is not for everyone. There are certain aspects of your personality that could give you an edge in thriving in this environment. Characteristics like high intelligence, patience, a natural intuition for trading and understanding of human psychology should all be abundantly present in a successful Forex trader.

If you feel that you do not adequately possess these faculties, you should probably second guess your decision to participate in Forex trading unless you have a strategy to circumvent your shortcomings. It is nothing to be discouraged about. Some people are just more adept at trading than others. Regardless of whether someone is theoretically capable of making an efficient trader, it will still be a trying experience in Forex Trading.

Where should you start?

Once you have gained a good amount of background information, you are almost ready to start trading. But before that, you must secure for yourself the services of a broker to enable you trade. In this regard there are some key factors to look for in taking your pick.

  • Licensed and regulated: If the broker is licensed and regulated by a government agency, you have added assurance that it is not a scammer.
  • Trading platform: Make sure the platform is user-friendly and easy to access so you can make trades unhindered.
  • Account types: The types of accounts on offer and how they are maintained is largely subjective to each broker. And so your ideal choice here will be best suited to your personal style of trading. It would be a tremendous added benefit to select a broker that offers the option of maintaining a demo account.
  • Leverage: This too is subjective to each broker. It is the ratio of the required margin relative to the value of the currencies being traded.
  • Customer service: Make sure the broker offers reliable customer support and is easy to contact on any given working day.

Are you ready yet?

After doing some elementary research in advance and picking a broker to collaborate with, you now have the two bare essentials to help you open your account into the Forex market. However, you cannot be completely sure of how those two will work together. To help straighten things out even further, you can start off by activating a demo account. It will enable to make trades in real time but without requiring you to stake your personal funds and run the risk of losing them.

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More importantly, you will be able to gain first experience into the market as it is without it being filtered to you through a book, a website or somebody’s advice. You will know what it is like to play the real game.

Now you are ready

Once the knowledge and experience to be had from the demo account has run its course, it is time to open a real account, deposit your real funds into it, and start really trading. You will be able to bring in all the knowledge and skills you have honed through the preparation stages to become a formidable trader in the market.

Start With Forex Trading

Decide wisely about getting involved, learn all that you can before getting involved, choose the right broker with which you will be getting involved, get a real idea of what it is like to be involved and finally, really be involved. These are the crucial steps you should take in order to make it as a Forex trader.

Best Forex Brokers

If you are new to the world of Forex trading or perhaps an experienced player who has hit a bit of a rough patch financially, you might find it helpful to reconsider your strategy in the game.

A big part of that strategy involves what broker you choose to get you into the game and equip you with the tools.

Choosing the right broker is not an exact science. While there are official ratings of brokers to consider how good their services are, what really matters is how well equipped they are to comply with your personal trading style. Before you take a look at the types of accounts on offer, bonuses, trading assets, platforms and so forth you need to find out it if the broker is licensed and regulated by a government agency. No matter how attractive the other features are, the lack of official regulation can make you a lot more vulnerable to being scammed.

Once you know the broker is legitimate, you can probe into its other features to find out how well it will stack up with your preferred financial strategies and devices. Here are our top candidates for you to consider as your ideal broker in Forex trading.

And now, onto our top three selections of the best Forex brokers you can trade with right now.

eToro

eToro is based in Limassol, Cyprus and was founded in 2007. It is licensed and regulated under the FCA, ASIC, CySEC and MiFID. It is currently home to world’s leading network in social trading. Traders are able to communicate and discuss different strategies and experiences.

The minimum initial deposit required to open an eToro account is $100 except in Middle Eastern countries where it is twice that amount. As ever with Forex brokers, it is important to consider the two main categories that make up the cost of trading: spreads and commissions. Apart from day traders all other traders also have to consider swap rates which refer to overnight charges. Fortunately, those rates are displayed on the official website. Maximum leverage stands at 400:1.

There is also a practice account available for the benefit of novice traders as well as a demo account with access to the social trading platform. However, trading profiles and activity is only accessible for real account holders.

Social networking has been majorly integrated into the online trading as of late and eToro has been quick to make good use of this rising trend by encouraging active communication between traders learn, invest and share knowledge of trading. The most successful traders are even featured on the landing page along with elementary details like their gain percentage, win ratio and number of copiers. This is no doubt, hugely beneficial for other traders.

A dynamic range of trading options are offered by eToro including assets in financial markets and commodities like precious metals and crude oil. Bitcoin has also been included as an option to trade in. However on eToro’s platform, it factors in as a stock rather than a currency and is traded as a CFD.

AvaTrade

Founded in 2006, AvaTrade is one of the world’s leading Forex brokers with subsidiaries in Dublin, New York, Sydney, Tokyo, Milan and more. It is a regulated Forex broker under the Central Bank of Ireland, Australia’s ASIC, Japan’s FSC, the B.V.I Financial Services Commission and is licensed by the MiFID of the European Union.

Traders get just one account to trade with which requires a minimum initial deposit of $100. Leverage stands at 1:400. Beginning from 0.9 pips, both fixed and floating spreads are available by this broker, some of the most competent spreads anywhere.

AvaTrade is one of the pioneering brokers in implementing CFD trades and trading in digital currencies making Bitcoin accessible to retail traders. Their trading platform is user-friendly and available in English, French, Spanish, Portuguese, German, Italian, Chinese, Japanese, Taiwanese, Russian and Arabic.

The types of orders a trader can make on the AvaTrade platform include Entry Stops and Trailing Stops, Stop Loss orders, Limit orders, Entry Limits and Market orders. More advanced orders like IF Done orders and One Cancels Other orders can also be made.

Plus500

Plus500 is a broker based in the United Kingdom. It is regulated under the FCA, ASIC and CySEC. When it comes to spreads and commissions, this broker usually charges a floating spread worth 0.8 pips during high activity hours in the market on the EUR/USD currency pair. Meanwhile for GBP/USD, the spread is usually 1.9 pips and for USD/JPY, 1.7 pips. Happily, Plus500 charges absolutely nothing on commissions.

Plus500 offers a high quality CFD trading platform consisting of over 2000 instruments including around 50 ETFs, shares, indices, commodities and Forex pairs covering over 20 global markets. To activate an account requires a minimum initial deposit of $200.

This broker also offers some useful options for a trader’s risk management. Traders have the ability to manage their leverage by trading high, low or no leverage at all. They can also quote price levels for particular products as ‘Close at Profit’ or ‘Close at Loss’. It is a unique mechanism for risk management that is not offered by most other brokers. Also, you can activate price alerts to let you know when the market reaches a particular buy or sell price. Plus500 also offers a tool called trailing stop which is essentially seals profit for the trader and saving them the trouble of constantly monitoring a position and readjusting the stop price.

To get the hang of it, traders are entitled to using a demo account for an unlimited amount of time until they are ready for an active account. The trading platform itself is easily negotiable and available in 32 languages.

Conclusion

These are currently some of the most reputed and highly rated Forex brokers you can select right now, but of course, the really important thing to know about any of them is that they are compliant with your own personal tactics and strategies as a Forex trader.

US Forex Brokers

There are not an awful lot of Forex Traders operating in the United States – not licensed and regulated ones at least. That is because the United States imposes strict regulations and laws on its finance industry in the interests of financial security for all of its citizens.

A considerable variety of trading forms available have in turn provided need for establishing different governing bodies that offer licenses and regulations.

USA Forex Brokers

Of the various trading forms currently operating in the United States, Forex trading is one of the most prevalent. It is in fact the leading form of online trading internationally. In the U.S, it is fairly limited compared to many other countries, a testament to the rigorous standard upheld by prevailing government agencies. The Primary authorities in charge of overseeing all Forex trading activities in the United States are the National Futures Association or NFA, and the Commodities Futures Trading Commission or CFTC. The key thing to understand about these institutions is that their regulations are not based so much off legal procedures so much as ethical ones for the online trading community.

Here are some of the top Forex Brokers currently available for traders based in the United States.

Forex.com

Forex.com has been around since 1999 and is run by Gain Capital Holdings. It is one of the highest rated Forex brokers anywhere in the world and it meets the licensing and regulatory protocols under the jurisdictions of seven government authorities including the NFA, CFTC, FCA and ASIC.

At Forex.com the types of accounts available to traders are a standard trading account and an Active trader account. Where the standard trading account requires minimum of $50 worth of an initial deposit to be activated, the Active Trader account requires $20,000. The added benefit of the latter is that traders are supplied with a so called ‘Relationship Manager’ to further assist their trading activities. There is also a demo account available for all traders with an initial deposit of $50,000.

When it comes to trading costs, spreads and commissions are two very important factors a trader must consider when choosing a Forex broker to work with. For currency pairs such as EUR/USD and USD/JPY, the usual floating spread charged by Forex.com is 1.7 pips. For a GBP/USD pair, it is normally 2.1 pips. For holders of an active trader account, these spreads can be a lot lower. For instance for EUR/USD currency pair, it can go down to 0.4 pips.

The trading platform is another important feature offered by a broker. The one offered by forex.com is simple and easy to operate with virtually no room for confusion. Trading options are available in binary, spot forex and CFDs in over 3200 markets.

The main criticisms with this broker is that it offers no bonuses or promotions and variety of available accounts is limited to just two.

FXCM

FXCM or Forex Capital Markets is one of the first brokers to implement online trade. It was started in 1999 and is based in the United States. Its headquarters are situated in New York and subsidiaries in the United Kingdom, Australia, France and Italy. It is licensed and regulated by the authorities of each jurisdiction that it operates in, most notably the FCA, NFA, and ASIC.

A diverse range of account types are offered by FXCM to suit novice traders as well as experienced traders. The standard account requires an initial deposit of $5000 to be activated while the Active Trader account requires $25,000. A mini-account is available as well and requires a minimum deposit of $50. It offers 50:1 leverage for traders based in the United States and 1:200 for traders based overseas. Training accounts are also available at FXCM for 30 days. There are also two types of demo accounts: the standard demo account is available with $50,000 and the mini-demo account comes with $2000. The trading platform used on all these accounts is exactly the same. However, you do need a separate password and ID to access each one.

When it comes to trading platforms, FXCM offers the widely used MT4 platform. It is quite easy to navigate and can be customized to your individual preferences. The available assets to trade include day trading, trailing stop/limit orders and entry orders, and stop loss and take profit.

Customer support from FXCM is available 24/7 in over 20 languages inclusive of weekends and other days when the market is closed. As a trader, you can get in touch over the phone, through email or online chat.

Nadex

Nadex is part of the global financial services provider, IG which is worth over 2.2 billion pounds and based in Chicago. It is a derivatives exchange regulated by the CFTC and only offers assets with limited risks. Its design is mostly in the interests of retail traders. Although, primarily a binary options broker, Nadex offers traders access to financial markets including Forex, commodities, stock indices and crypto currency bitcoins with over 2400 binary option contracts on a daily basis.

When it comes to accounts, traders can maintain just one completely free until they place their first trade. To continue thereby would require an initial deposit of $250. Apart from that, the account must also hold enough capital to pay off any loss that may result from a trading position. Fortunately, a demo account is available with a handsome deposit of $25,000.

The contracts on offer at Nadex can last anywhere from 5 minutes to a week so traders have numerous trading options to consider as well as being able close off a position before its designated time of expiry.

Bonuses are available here as well. The offer from Nadex rather peculiar. Called the Free Holiday Bonus, it involves traders getting full days where they can trade without being charged with any exchange fees.

Nadex offers support to its customers via phone and email 24 hours a day starting from 6 pm on Sunday to 4:15 pm on Friday.

Conclusion

These Forex brokers are currently some of the best ones operating in the United States as well as internationally. However, as a trader what is most important to consider when choosing which one to trade with is not their popularity so much as how well they can suit your trading style.

Can a Beginner Make Money with Forex

Many people get started with forex trading for the wrong reason. They believe that is a way for them to get rich quick. As with any legitimate trading avenue, however, this is not the case. The short answer to whether a beginner can make money with forex would be ‎‎‎‎‘yes’.

This doesn’t mean that every new trader will make money or that it will be an easy process. Forex is an industry that is advantageous to individuals who understand the specifics and inner workings of it. On that note, let’s take a look at what it takes for a beginner trader to make money with forex:

1) Mastering the Basics of Forex Trading

To be a good forex trader, you first need to equip yourself with the necessary tools. Here is what you need to know about the fundamentals of forex trading:

A Good Broker Is Essential

The key to starting off with an advantage is to choose the broker that is right for you. It is best to stick with a broker that is licensed by the Futures Commission Merchant and regulated by the Commodity Futures Trading Commission. Depending on where you live, you may need to find a broker that is affiliated with an authoritative agency that pertinent to the region.

The other thing to consider when looking for a broker is low spreads. Spreads are the difference between the purchase price and selling price of the currency. They are calculated as pips. In certain trading industries, brokers make their money via commissions. With forex, however, the brokers rely on spreads.

Due to the fractional price deviations with forex trading, traders need their brokers to offer them leverage. You should decide on a broker that gives you the option of either low or high leverage. Depending on the situation, you may need to make use of either of these.

Many brokers need to borrow large sums of money to equip their traders with leverage. They acquire these loans from banks and other large lending organizations. You should look for brokers that are backed by reputable banks to minimize fallout in the future.

Adopting a Strategy

The strategies in forex trading are based on either fundamental analysis or technical analysis. Fundamental analysis typically depends on news reports regarding the various factors impacting currency. Technical analysis, on the other hand, is about identifying the various price trends in the market. Traders can choose to use a strategy that consists solely of these types of analysis or they use one that is a combination of the two. In the end, it is about finding and using a strategy that is in accordance with your trading style.

2) How Beginners Can Make Money with Forex

Now that you know what is needed, how can you make money with forex as a beginner? Here are a few guidelines:

Start with a Demo Account

Most brokers offer traders the opportunity to use a demo account, at least for a limited period of time. A demo account lets you make practice trades without actually investing any real money. This helps you to learn how trades are made and also gives you an opportunity to test out your strategy. All of this prepares you to make your first trade and improves the chance of you being successful.

Do Research

When you don’t have experience at your disposal, you need to utilize the next best thing: knowledge. Fortunately, the forex market has been well researched along with the many strategies that you can use. Reading books, joining forums, and asking questions are all essential to learning how to trade better. It will give you a better idea of just how this form of trading works.

Trade with the Trend

When you are just getting started, your greatest advantage will be to trade with the trend. Trading against the trade could offer better profits but tends to be a riskier option. This is why you should follow the trend unless you have strong evidence to go against it.

3) Forex Trading Mistakes to Avoid

One of the reasons that beginner traders tend to fail is because they make too many mistakes and are unable to recover from them. Here are some of the common ones to avoid:

  • Not being patient and playing the long game when necessary
  • Making too-large trades
  • Letting emotion cloud your trades
  • Focusing on making profit rather than preventing losses
  • Trying to get rich quick

A beginner can make money with forex but you need to understand that it is not simple. It requires study, effort, and most important of all, patience. Only then will you begin to make profits.