Nicknames for Currencies and their Pairs

Nicknames for Currencies and their Pairs

When You first start learning or trading Forex market, you might hear names like Buck, Swissy using by professional traders in news, blog posts, and videos. It is important to remember these names in order to More »

Everything You Need to Know About Currency Pairs

Everything You Need to Know About Currency Pairs

Forex trading is essentially the buying of one currency and the simultaneous selling of another. Therefore when trading currencies we will always see them quoted in pairs. When placing a trade we More »

Who Should Quit Forex Trading

Who Should Quit Forex Trading

  I wrote this article to help Forex traders who are in the wrong path. I am not saying Forex trading is bad or you should not invest in Forex market. I More »

FOREX MARKET TRADING HOURS

FOREX MARKET TRADING HOURS

The Forex market, unlike other financial markets is a 24 hour affair. That’s right, you can trade in and out of the Forex market day or night between the Forex market hours of 5pm Sunday More »

3 POWERFUL Types of Forex Market Analysis

3 POWERFUL Types of Forex Market Analysis

3 Types of Forex Market Analysis There are several different ways to analyze the FX market in anticipation of trading. Though categories of analysis may be plentiful, keep the end goal in sight which More »

 

Nicknames for Currencies and their Pairs

When You first start learning or trading Forex market, you might hear names like Buck, Swissy using by professional traders in news, blog posts, and videos. It is important to remember these names in order to prevent any confusion while you first start learning or trading currency market.

The list of Nicknames for Currencies and their Pairs:

USD (U.S. Dollar) = Greenback or Buck

GBP (British Pound) = Sterling

GBP/USD (British Pound / U.S. Dollar pair) = Cable

EUR (Euro) = Single currency or Fiber

CHF (Swiss Franc) = Swissy

CAD (Canadian Dollar) = Loonie

AUD (Australian Dollar) = Aussie or Ozzie

NZD (New Zealand Dollar) = Kiwi

USD/RUB (U.S. Dollar / British Pound pair) = Barnie

EUR/RUB (Euro / Russian Rubble) = Betty

GBP/JPY (British Pound / Japanese Yen pair) = Guppy or Gopher

EUR/JPY (Euro / Japanese Yen pair) = Euppy (pronounced Yuppy)

USD/JPY (U.S. Dollar / Japanese Yen pair) = Ninja or Gopher

EUR/GBP (Euro / British Pound pair) – Chunnel

 

Everything You Need to Know About Currency Pairs

Forex trading is essentially the buying of one currency and the simultaneous selling of another. Therefore when trading currencies we will always see them quoted in pairs.

When placing a trade we are speculating on which currency we believe will become stronger or weaker against the other with the goal of making a profit from the exchange rate movement.

The currency to the left is called the base currency. The currency to the right is called the quote the currency. The quote currency tells us how much it is worth against 1 unit of the base currency. So if we say the EURUSD is trading at 1.3000 it means 1 euro equals $1.30.

The base currency is the basis for the buy or the sell trade. If we believe that the Euro will strengthen against the dollar we would buy the EURUSD pair. This means we are buying the base currency – the EURO, and simultaneously selling the quote currency – the US DOLLAR.

If we believe the EURO will weaken against the US Dollar we will sell the pair i.e. we are selling EURO and simultaneously buying US DOLLARS.

When we are buying the base currency, in traders jargon we call this going long (looking to profit from the pair rising), and when we are selling the base currency we call this going short (looking to profit from the currency pair falling).

 

Major Currency Pairs

 

Major currency pairs all contain the US Dollar on one side – either on the base side or quote side. They are the most frequently traded pairs in the FOREX market. The majors generally have the lowest spread and are the most liquid. The EUR/USD is the most traded pair with a daily trade volume of nearly 30% of the entire FX market.

 

Pair Countries
EUR/USD Euro Zone/United States
USD/JPY United States/Japan
GBP/USD United Kingdom/United States
USD/CAD United States/Canada
USD/CHF United States/Switzerland
AUD/USD Austrailia/United States
NZD/USD New Zealand/United States

 

Cross-Currency Pairs or Minor Currency Pairs

 

Currency pairs that do not contain the US Dollar are known as cross-currency pairs or simply “crosses”. Historically, if we wanted to convert a currency, we would have had to first convert the currency into US dollars and then into the currency which we desired.

With the introduction of currency crosses we no longer have to do this tedious calculation as all brokers now offer the direct exchange rates. The most active crosses are derived from the three major non-US dollar currencies (the Euro, the UK Pound and Yen).  These currency pairs are also known as minors.

 

Pair Countries
EUR/GBP Euro Zone/United Kingdom
EUR/CHF Euro Zone/Switzerland
EUR/CAD Euro Zone/Canada
EUR/AUD Euro Zone/Australia
EUR/NZD Euro Zone/New Zealand
EUR/JPY Euro Zone/Japan
GBP/JPY United Kingdom/Japan
CHF/JPY Switzerland/Japan
CAD/JPY Canada/Japan
AUD/JPY Australia/Japan
NZD/JPY New Zealand/Japan
GBP/CHF United Kingdom/Switzerland
GBP/AUD United Kingdom/Australia
GBP/CAD United Kingdom/Canada

 

Exotic Currency Pairs

 

Exotic currency pairs are made up of a major currency paired with the currency of an emerging or a strong but smaller economy from a global perspective such as Hong Kong or Singapore and European countries outside of the Euro Zone.

These pairs are not traded as often as the majors or minors, so often the cost of trading these pairs can be higher than the majors or minors due to the lack of liquidity in these markets.

 

Pair Countries
EUR/TRY Euro/Turkish Lira
USD/SEK US Dollar/Swedish Krona
USD/NOK US Dollar/Norwegian Krone
USD/DKK US Dollar/Danish Krone
USD/ZAR US Dollar/South African Rand
USD/HKD US Dollar/Hong Kong Dollar
USD/SGD US Dollar/Singapore Dollar

Reading an FX Quote

As we have already said, when a currency is quoted it is paired with another currency.
So the value of one is reflected through the value of another. The base currency is to the left of the pair and the quote currency is to the right.

Let’s look at an example:

In this case the Pound Sterling is the base currency and the Japanese Yen is the quote currency.
Therefore: £ 1 = ¥ 149.50

However when we are trading financial instruments such as currencies we are offered two slightly different prices.

  • We have the sell price (also known as the bid price) and the buy price (also known as the ask price).
  • The bid price is the best available price at which we can sell to the market.
  • The ask price is the best available price at which we can buy from the market.

The difference between the two prices is what we call the spread and this is how our broker generates revenue. It is the cost of placing a trade.

In this case we can see the EURUSD has a bid price of 1.31819 and an ask price of 1.31849. The difference between the two is 0.0003 or what we call three pips. In our next article we will discuss the calculation and importance of understanding pips and pip values.

 

Who Should Quit Forex Trading

 

I wrote this article to help Forex traders who are in the wrong path. I am not saying Forex trading is bad or you should not invest in Forex market. I believe that huge number of retail traders are in the wrong path when trading currencies and it’s the reason why 90% of retail traders lose the money when investing in fx market.

 

Many people heard that they can get rich quick trading Forex market with little capital. So, they decide to get rich over night by trading big lots and using leverage. I have seen many beginners quit trading after 6 months of trading and some lost more than $20,000 and some tried to break even. You might ask that why these traders lost money and decided to quit Forex instead of keep going and invest in education and gain new skills and knowledge.

As we all know lack of knowledge always kills your confidence in any business and investment. Forex trader who do not have the skills and experiences to trade currencies the right way and cannot control their emotions when buying and selling currencies in different market conditions end up losing their motivation and self-confidence because they cannot believe they can do it.

If you find yourself dealing with one or more reasons why traders should quit forex market you might need to think again about trading currencies in forex market.

 

  1. Are you emotionally stable?

One of the most important part of being a successful trader is to be emotionally stable and make logical decisions in tough times. If you cannot control your emotions and keep making decision based on your fear, greed, or other emotions such as take revenge of the market or hoping that magic would reverse a trend in your favor these means that you are not ready be in the battle of bulls and bears.

For example, if you find yourself staring at your computer and cellphone for hours and do not allow yourself to catch a break or go to use the bathroom that means you are not ready and Forex trading is not for you now. You might Ask why? I personally had this issue when I first started to trade currencies. I was staring at my phone the whole time I had a position open and I did not care about the location or situation I was at. I was watching the exchange rates and pip movements the whole time even driving or sitting in a classroom. After a while, I understood I was wrong I am trading Forex to build my wealth and have freedom not to be a addicted to my phone and watching currency market all the time.

On the other hand, you might be making the amount of money that you desire, but due to your emotional instability you are stressed out all the time about market movements, data releases, and your profits and loses, I would recommend you quit Forex. I am not saying quit Forex forever, what I am saying is that your health is your valuable asset and it is important to take care of your health and learn how to control your stress because you will be paying 100 times the money you are making for medications and hospitals if you deal with health issues caused by your stress.

  • I would recommend YOU TO focus on trading psychology and gain knowledge about it before you start trading currencies.
  1. Do you have enough TIME for Forex market?

A LOT of people try to keep their 9-5 jobs, take care of their family, and go to bed on time and have solid traders where they can make couple 100$ a day without any analysis or trading plan. But it does not work like that if you want to stay in this market and avoid being part of 90% of retail traders who are feeding the market you need to sacrifice your time and part of your daily commitments. You cannot being to be 11 P.M. because you have to go to work at 9 A.M. if you want to be grinding In forex market. It is really important to spend time analysis market, follow news, change some of your daily habits.

So If you think you are not in the situation that you would be able to put enough time for forex market it is better for you to quit before losing all your hard earned money to the market.

 

 

  1. Do you have everything needed to be a successful trader?

Ask yourself these questions:

  • Do I have a reliable broker?
  • Do I have reliable funds?
  • Do I have a reliable trading plan and strategy?
  • Do I have access to my account all the time?

If the answer to any of these questions is no and you cannot turn that no to yes, I would recommend you quit Forex and invest your money and time in something else or start investing more time in learn about financial inelegance to the point you can make smart money decisions.

 

  1. Can you afford to lose?

I saw many new traders who cannot afford the loss. These people usually trade with the money they saved for something very important for example college tuition. I had a friend who tried to double the money he got from his parents to pay for college tuition trading big size lots however, he end up losing all the money due to lack of experience, knowledge, and solid trading plan. My friend couldn’t attend his college one semester because he couldn’t afford to lose the money he wanted to invest in Forex market.

If you are in a situation that you are not able to take a losses you need to quit forex before it gets to late.

The key is to trade Forex with the money you have saved for investing which I recommend you consider that money gone as soon as you deposit that money in your Forex account because it helps you reduce your stress and stop making decisions based on fear and other negative emotions. Based on the example I mentioned above my friend Matt could save the money he was spending on video games and other luxuries and invest that money in long-term Forex position, create a trading plan, and constantly learn about the market without worrying or panicking about the short time-frame he had at the moment or the money he needed for his college tuition.

 

 

 

FOREX MARKET TRADING HOURS

The Forex market, unlike other financial markets is a 24 hour affair. That’s right, you can trade in and out of the Forex market day or night between the Forex market hours of 5pm Sunday (EST) to 5pm Friday (EST).

While this provides a great opportunity for traders to take advantage of the world market, it does have its drawbacks.

In this lesson we’ll take a look at the various trading sessions that make up the Forex market as well as the advantages and disadvantages that come with trading a 24 hour market.

 QUICK VIDEOS THAT TEACH YOU MORE ABOUT FX TRADING HOURS




The 24 Hour Market

 

At this point you may be asking, if Forex is indeed a 24 hour market, why can I only trade Monday through Friday?

This brings me to a very common misconception in the Forex world – the idea that the market closes on weekends. In truth, the Forex market never closes. The only thing that closes is the ability for retail traders to participate.

What is a retail trader, you ask? Put simply, a retail trader is someone who buys or sells for their personal account, and not for another company or organization. So unless you are an institutional trader, you are a retail trader.

So although the ability for retail traders to participate is halted over the weekends, the Forex market as a currency exchange is alive and well. This is what creates so called “gaps” when the market opens at the beginning of the week. It’s simply the result of your broker updating their charts from last week’s price action to the current price action at the start of the trading week.

We’ll get into gaps in a later lesson. For now just know that the market never closes due to the needs of international trade, as well as the needs of central banks and global industries to conduct business.

There are various sessions that occur around the world which make up the Forex market hours each day. Let’s take a look at those market sessions.

Forex Market Sessions

 

Because this is a 24 hour market, there is always at least one active trading session. There are even times when these sessions overlap.

The easiest way to visualize how these Forex market sessions operate is to imagine the earth relative to the sun. Wherever the sun is shining, the Forex market is open. This is of course a simplified way of thinking about it, but it does help to visualize the Forex trading hours in this way.

The chart below shows the different Forex market sessions in Greenwich Mean Time (GMT).

Here is a breakdown of the chart above in Eastern Standard Time:

  • New York opens at 8:00 am to 5:00 pm EST
  • Tokyo opens at 7:00 pm to 4:00 am EST
  • Sydney opens at 5:00 pm to 2:00 am EST
  • London opens at 3:00 am to 12:00 noon EST

As you can see from the chart above, there are several market sessions which overlap. The most obvious, and the most heavily traded, is the London / New York overlap. This is when liquidity is at its highest as many Forex market participants prefer trading during this time.

Which Session is the Best to Trade?

 

One of the most common questions among Forex traders is, when is the best time to trade? Like most things, it’s all relative to your trading style as well as your lifestyle. Obviously if you’re located in a part of the world where the London / New York session overlap occurs at 3 AM, this may not be the most advantageous for your lifestyle.

The great thing about trading price action on the higher time frames is that market hours and market sessions don’t particularly matter. For example, if you spot a bullish pin bar on the daily time frame, you would simply set your pending order and let the market decide what becomes of it. It doesn’t particularly matter which session triggers the order.

Advantages and Disadvantages

 

Like most things, there are advantages and disadvantages to the Forex market being a 24 hour market. I will note, however, that the disadvantages typically reign true with those just starting out. In fact, I feel confident in saying that the disadvantages below are what make the Forex market one of the more challenging markets to conquer as a beginning trader.

Let’s start with the advantages:

  • The 24 hour market offers the ability to trade at any time of the day regardless of your location in the world
  • No market closings during the week means very few gaps from one day to the next
  • Because it’s a 24 hour global market, there is much greater liquidity than that of other financial markets

Now for some disadvantages to Forex market hours:

  • The 24 hour nature of the Forex market can lead to traders over-thinking their positions
  • The Forex market requires more self-discipline to take breaks away from trading due to the market never closing

One thing that becomes immediately apparent to new traders is the Forex market’s ability to draw them in for hours at a time. Many new traders find it hard to take breaks from the market because they feel the need to monitor their positions at all times.

This is one of the more destructive habits of new traders and is enabled by the fact that the Forex market never closes.

 

Source: dailypriceaction.com

by: Justin Bennett

3 POWERFUL Types of Forex Market Analysis

3 Types of Forex Market Analysis

There are several different ways to analyze the FX market in anticipation of trading. Though categories of analysis may be plentiful, keep the end goal in sight which is to use the analysis to identify good trading opportunities.

We will look at the three main areas of analysis and how to learn more about them. Then, try out each of these areas to determine which of the three methods or combination of the methods works well for your personality. The three areas are:

  • Fundamental
  • Technical
  • Sentiment

 

 

 

Fundamental

Forex fundamental centers mostly around the currency’s interest rate. Other fundamental factors are included such as Gross Domestic Product, inflation, manufacturing, economic growth activity. However, whether those other fundamental releases are good or bad is of less importance than how those releases affect that country’s interest rate.

As you review the fundamental releases, keep in mind how it might affect the future movement of the interest rates. When investors are in a risk seeking mode, money follows yield and higher rates could mean more investment. When investors are in a risk adverse mentality, then money leaves yield for safe haven currencies.

The Gatewayforex.com website offers a lot of assistance on identifying how a fundamental release could affect the value of the currency.

Technical

Forex technical analysis involves looking at patterns in price history to determine the higher probability time and place to enter and exit a trade. As a result, forex technical analysis is one of the most widely used types of analysis.

Since FX is one of the largest and most liquid markets, the movements on a chart from the price action generally gives clues about hidden levels of supply and demand. Other patterned behavior such as which currencies are trending the strongest can be obtained by reviewing the price chart.

Other technical studies can be conducted through the use of indicators. Many traders prefer using indicators because the signals are easy to read and it makes forex trading simple.

Technical versus fundamental analysis in forex is a widely debated topic. There is no one right answer but I’m confident you’ll find a style that fits your personality.

Sentiment

Forex sentiment is another widely popular form of analysis. When you see sentiment overwhelmingly positioned to one direction that means the vast majority of traders are already committed to that position.

Perhaps this could be more easily explained with an example. Let’s assume that an overwhelming amount of traders and investors are bullish the Euro. They think the Euro is going higher. Since people vote with their trades, we can assess through Speculative Sentiment Index (SSI) that the EUR/USD sentiment shows a majority of traders are buyers in the currency pair.

Since we know there is a large pool of traders who have already BOUGHT, then these buyers become a future supply of sellers. We know that because eventually, they are going to want to close out the trade. That makes the EUR to USD vulnerable to a sharp pull back if these buyers turn around and sell to close out there trades.

 

 

Source: 

LEARN Forex Technical Analysis Step By Step

When you trade Forex, you should carefully implement an analytical approach as part of your trading strategy. If you have been around the markets for any length of time, you will have heard of technical analysis. This is one of the two primary forms of currency analysis. And, I believe, the more essential part of the trader’s arsenal. So in this article, we are going to discuss what technical analysis is and how you can incorporate it into your trade analysis for better market timing.

What is Technical Chart Analysis?

Technical analysis, as it relates to forex, is an on-chart examination of the respective currency pair in an effort to find price patterns that can provide clues into future price movement. Fx technical analysis relies on past Forex data, which is taken into consideration when determining potential support and resistance levels. It is commonly accepted that if a Forex pair bounces from a specific level or pivot point, the pair is likely to conform to this level in future.

As such technical trading at its most basic level involves using horizontal and diagonal lines in an attempt to find and trade support and resistance zones . This type of trading is often referred to as pure price action trading. Other assistant tools, which technical traders sometimes use, are technical analysis indicators.

By combining different technical tools, Forex traders are able to perform a detailed chart analysis of Forex pairs to ultimately hone in on the best trading opportunities on their chosen timeframe.

Support and Resistance as a Primary Technical Analysis Tool

If you want to learn technical analysis, you should start with understanding what support and resistance is. Support and resistance are psychological levels on the chart. These are levels which the price action tends to conform to. If the price creates a top at a certain exchange rate, an eventual return to this level often causes the price action to hesitate. Sometimes the price breaks the level and continues its progress. However, in many cases reaching an already created level might cause the price to bounce. For this reason traders use support and resistance levels for entry and exit points of their trades. But what is the difference between support and resistance?

Support Levels

A price support level is a specific level on the chart, which the price tests while it is decreasing. In this manner, supports are located below the price action. If the price meets a support on its way down, there is a good chance that the price will bounce off in a bullish direction. On the other hand, if the price breaks a crucial support area on the chart, then we expect the decrease to continue to the next lower level of price support.

Imagine you are in a short trade in the EUR/USD and the pair is decreasing in your favor. Suddenly, the price meets an old support level, which has been tested and has held on prior attempts. In this case, the respective support level would be a good exit point. You would close your trade in anticipation of a minor or major reversal off the support zone.

Now imagine instead, the price breaks that support. In this case, assuming that your bias is still to the downside, You can reopen your trade in order to catch an eventual further price decrease.

Resistance Levels

Resistances on the chart act absolutely the same way as supports, but in the opposite direction. When the price is increasing and starts hesitating at a certain level, we say that the price has found resistance. In the case of another price interaction with this same resistance area, we might expect another bounce from this level. Same as with support levels, if the price breaks a resistance level, we expect a continuation of the rally. As such, resistance areas are used to set entry and exit points when trading – similar to supports.

Let’s assume you are in a long trade in the GBP/USD, and the price is steadily increasing. The price action then meets a resistance level on the chart. In this case, this resistance is a good exit point from the trade. You can exit the trade in anticipation of a minor or major reversal off the resistance zone.

However, the price might go through this level, right? If this happens, you can then reopen your trade after the breakout for an attempt to catch a further price increase.

Let’s look at this price chart below, which illustrates support and resistance levels in action:

Above you see the H4 chart of the Swissy (USD/CHF) for Feb – Mar, 2016. Note how the price action is squeezed between two well defined levels on the chart. We have the resistance at the level of 1.0000 and the support at 0.9890.

Notice that both levels are many times tested and they both contain the price action for a relatively long time. At the same time, there are a few cases where the price manages to go below the two psychological levels, but proved to be false breakouts. So the bottom line is that the majority of the price action managed to stay within the corridor formed between 1.0000 and 0.9890. The resistance gets tested approximately 7 times and the support about 6 times. The 7th time the price tests the support leads to a real breakout through that level. After breaking the support, the USD/CHF begins a sideways movement and eventually tests the already broken support as a resistance. The price then bounces downwards, creating new lows.

Every price bounce from the support at 0.9890 could be used to open long trades, which could be closed when the price interacts with the 1.0000 resistance. In addition, every price interaction with the 1.0000 resistance could be used to open short trades. When the price meets the 0.9890 support you would look to close these trades. Then when you spot the breakout on the support side, you would prepare to go short on an assumption for a further decrease.  More aggressive traders would enter on be breakout candle and less aggressive traders would wait for the retest before entering into the short position.

Forex Technical Analysis Using Trend Lines

Another important building block when trading with technical analysis in currency pairs are the use of trend lines. The trend line acts as a diagonal support and resistance which measures the scope of a price tendency (trend). A Trend line is an on-chart straight diagonal line, which connects the tops and/or the bottoms of the price action, depending on the direction of the overall trend. Let’s now dive into the different trend lines you can use on the chart.

Bullish Trend Line

The bullish trend line is a straight line, which connects the sloping candle lows on the chart during an uptrend. In this manner, the bullish trend line is always located below the price action. Since the bullish trendline is located beneath, on its way up the price is frequently bouncing from it. Therefore, the bullish trend line acts as a support for the price movements.

If there is a bullish tendency on the chart, and the price returns to the bullish trend line and bounces upwards, then we have a nice opportunity for a long trade. In this case you can buy the currency pair on an assumption that the price is likely to increase for a new leg up. However, if the price goes through the bullish trendline, then we say we have a bearish breakout in the trend. When a bullish trend gets broken, we expect the price to change direction and begin to move to the downside.

Bearish Trend Line

The bearish trend line acts the same way as the bullish trend line, but in the opposite direction. Bearish trendlines are used to visualize and measure the price action during bearish tendencies on the chart. In this manner, bearish trend lines are located above the price action and they connect the tops of the candles during downward moves. When the price is in a down run, it frequently bounces in a bearish direction from its bearish trendline.

When the price returns to its bearish trend line and bounces from it, we expect a further price decrease. However, if the price goes through the bearish trend in a bullish direction, we say the trend is broken upwards. In this manner, we expect the price to interrupt the bearish tendency and to reverse to the upside.

Let me now show you how a trend line acts on a chart:

Above you see the weekly chart of the Cable (GBP/USD). The period it covers is Mar 2014 – Jun 2015. The image illustrates a bearish trend on a chart. The blue bearish line is the respective trend line of the downward price tendency. The black arrows on the chart point to the moments when the trend is being tested. The red circle on the chart shows the moment when the price creates a bullish breakout through the trend. The last two arrows at the end of the trend show the moment when the bearish trend turns from a resistance into a support. The green arrow indicates the reversal in the price direction after the breakout in the trend.

Forex Technical Analysis Indicators

Many technical traders use indicators in addition to horizontal and trend line support and resistance lines. There are two types of technical analysis indicators based on the timing of the signals they give. These are the lagging and the leading indicators. Let’s now discuss each of these types.

Lagging Indicators

Lagging indicators are also known as trend confirming indicators. The reason for this is that the signals of the lagging indicators come after the event has occurred on the chart. In this manner, the signal has a confirmation character.

The biggest benefit of Lagging indicators is that they provide relatively high success rate of signals. The negative though is that the lagging indicators put you in the trade fairly late. Because of this you will typically miss a relatively big part of the price move.

Some of the most popular lagging indicators are the Moving Averages (simple, exponential, volume weighted, displaced, etc.), Parabolic SAR and the Moving Average Convergence Divergence (MACD).

Leading Indicators

Leading indicators are typically the oscillator type. They are considered leading because these indicators give you a signal before the potential reversal has actually occurred on the chart. As such their signals tend to lead the events on the chart. The biggest benefits of leading indicators are that they can put you into a potential reversal early.

However, the biggest negative of oscillators is that they can provide many false signals leading to a relatively lower success rate. This is why leading indicators are not good single standalone analysis tools for executing trades. Traders that utilize leading indicators should combine their analysis with other tools such as candlesticks and support and resistance when implementing their daily technical analysis in FX.

Some of the most widely used leading indicators are the Stochastic Oscillator, the Relative Strength Index, and the Momentum Indicator.

Now let me show you one of these indicators in action – the Stochastic Oscillator. The Stochastic gives two signals – overbought and oversold. In this manner, the indicator has three areas – an overbought area, an oversold area, and a middle area. When the indicator enters the oversold area we get a long signal. When the price enters the overbought area, we get a short signal. When the price is in the middle area, we get no signals.

Take a look at some of the signals that are provided by the Stochastic Oscillator:

This is the hourly chart of the USD/CAD Forex pair for Nov 18 – Nov 25, 2015. At the bottom of the chart we have attached the Stochastic Oscillator.

The red circles on the indicator show three overbought signals that led to price reversals. The green circles point out the valid oversold signals. Each signal has its adjoining arrow, which shows the move as a result of the signal. As you see there is a relation between the indicator signals and the price behavior. When the Stochastic enters the overbought area, a price decrease comes afterwards. When we see an oversold signal, we then see the price increasing.

Forex Price Action Trading

Pure Price Action trading is a subset of technical trading, which relies more on price and chart analysis than the use of trading indicators. Price action technical analysis in Forex is based on support, resistance, trend lines, chart patterns and candle patterns. Since we have already discussed supports, resistances and trend lines, lets now turn our attention to chart patterns and candlestick patterns.

Candlestick Patterns

Candle patterns are specific formations, which are created by individual or multiple candlesticks on the price chart. There are two main classifications of candle patterns – reversal candlestick formations, and continuation candlestick formations.

Reversal candle patterns are candlesticks, which tend to reverse the direction of the current price. Some of the more reliable reversal candlestick patterns are: hammer, shooting star, hanging man, engulfing, morning star, and evening star.

Continuation candle patterns are candlesticks, which tend to continue the price movement in the same direction. Some of more reliable continuation candle patterns are: mat hold, deliberation, method, and concealing baby swallow.

What is important to note is not the actual names of the candle patterns themselves, but the price action that they create. Once you are able to recognize the price movements that comprise the formations, you will be able to take advantage of trading them in an informed manner.

Classical Chart Patterns

Chart patterns are specific formations, which are created by the general price action on the chart. Same as the candle patterns, chart patterns are also classified in two types – reversal, and continuation.

Reversal chart patterns are likely to be followed by reversal price movement on the chart. The most reliable reversal chart patterns in trading are: double top,double bottom, triple top, triple bottom, and head and shoulders.

Continuation chart patterns are used to predict the continuation of the general trend. The most popular among the continuation chart patterns are flags, triangles and rectangles.

The image below shows how price action based technical analysis works:

This is the H4 chart of the USD/CHF for Dec 30, 2015 – Jan 15, 2016. The image shows a few interesting on-chart events, which lead to potential trading opportunities.

The image starts with the price moving after a bullish trend line (red). Suddenly, the trend gets broken in a bearish direction, which creates a short breakout signal. The price starts to decrease afterwards. Two bottoms are created on the chart. The second one ends with a Hammer Reversal candlestick. As you see the price starts reversing to the upside shortly afterwards. On the way up the blue bearish trendline gets broken.

The two bottoms on the chart create the well known Double Bottom reversal chart pattern. The yellow resistance on the chart indicates the top between the two bottoms of the chart pattern. Therefore, the yellow resistance is the trigger line of the pattern. After the price action closes a candle above the yellow resistance, we expect a price increase equal to the size of the formation. So, the trend was bearish (blue line) and a Hammer candlestick, trendline breakout, and a Double Bottom chart pattern forecasted the reversal of the bearish movement.

 

Conclusion

Technical Analysis in Forex relies on analyzing previous price behavior of currency pairs to determine potential price moves in the future.

The most important tools in technical analysis are:

  • Support Lines
  • Resistance Lines
  • Trend Lines: bullish and bearish

Other trading tools that currency technical analysts use are trading indicators. They are two types of trading indicators:

  • Leading Indicators: give the signal before the event has actually occurs on the chart
  • Lagging Indicators: gives the signals after the event has actually occurred

Pure Price Action analysts rely on technical analysis using price and chart analysis exclusively. Some of the common things that technical Price action traders utilize include:

  • Chart Patterns: reversal, and continuation
  • Candle Patterns: reversal, and continuation
  • Support and Resistance Lines
  • Trend Lines

 

 

 

Source: forextraininggroup.com

Forex Introduction to Bid Ask Spread

Like any financial market the Forex market has a bid ask spread. This is simply the difference between the price at which a currency pair can be bought and sold. This is what accounts for the negative number in the “profit” column as soon as you place a trade.

Before we go any further let’s define the two terms, “bid price” and “ask price”.

Bid Price – Used when selling a currency pair. It reflects how much of the quoted currency will be obtained if buying one unit of the base currency.

Ask Price -Used when buying a currency pair. It reflects the amount of quoted currency that has to be paid in order to buy one unit of the base currency.

Note: The bid price will always be smaller than the ask price.

Remember from the lesson on Forex currency pairs that the base currency is the one in front while the quote currency is the second. So using the example of EURUSD, the Euro is the base currency and the US Dollar is the quote currency.

It sounds tricky but it’s actually quite simple. It’s essentially how much of one currency you can get for the other and vice versa. The most important thing to remember is that the bid price is used for selling while the ask price is used when buying.

At the end of the day all of these intricacies are taken care of for you by your broker. All you need to know is whether you want to go short (sell) or go long (buy)and your broker does the rest.

 

Which Currency Pairs Have the Lowest Spreads?

 

It’s important to have an understanding of which currency pairs have the best (lowest) spreads when trading. While the major currency pairs and even some crosses have decent spreads, some of the more exotic currency pairs can have wide spreads, creating a large deficit as soon as you enter a trade.

The currency pairs with the lowest spreads are those with the largest daily volume. Essentially we’re talking about the major currency pairs, which are:

EURUSD,  USDJPY,  GBPUSD,  USDCHF,  AUDUSD,  USDCAD,  NZDUSD

These currency pairs typically have the lowest spreads, with EURUSD, GBPUSD and USDJPY being the lowest of them all.

One advantage to trading the higher time frames, which is what I teach on this site, is that the bid ask spread isn’t quite as important as if you were trading the lower time frames. This is because on the larger time frames we’re interested in the larger moves and also making fewer trades. Compare this to the day trader who can make dozens of trades in a single day and may only be in a trade for a matter of minutes.

Make no mistake though, the spread on some of the less-liquid currency pairs can be significant and should certainly be considered before taking a trade, even when trading the higher time frames.

The Bid Ask Spread During Different Trading Sessions

 

We all know that the Forex market is a global market consisting of different trading sessions. These sessions are:

  • Sydney
  • Tokyo
  • London
  • New York

The bid ask spread for a currency pair can vary depending on the current trading session. For the most part the bid ask spread will be the lowest during the London and New York sessions as these carry the largest trading volume.

However there is a three hour window that occurs immediately after the New York session closes and before Tokyo opens in which the spreads can considerable. This is especially true for some of the currency crosses and exotic currency pairs but can also effect the major currency pairs.

Although the Sydney session opens as soon as New York closes, it isn’t nearly as liquid as the New York session and therefore produces much larger spreads. It isn’t until Tokyo comes online three hours later that volume picks up and most spreads return to normal.

It’s important to keep this in mind if  you plan on trading during this three hour window. In fact as a general rule you should always check the bid ask spread before entering a trade regardless of the current trading session.

In Summary

Before we close out this lesson, here are a few key points to keep in mind when it comes to the bid ask spread.

  • The bid price is used when selling a currency pair
  • The ask price is used when buying a currency pair
  • The major currency pairs generally have the lowest spreads
  • The bid ask spread for most pairs is considerably larger during the three hours immediately after the New York session
  • Always check the bid ask spread before placing a trade

I hope this lesson has helped you to better understand the Forex bid ask spread as well as when to take extra care and watch for larger-than-usual spreads.

Now that we have a better understanding of the two prices that make up the Forex bid ask spread, let’s take a look at how the spread is represented in the next lesson.

 

 

 

Source: dailypriceaction.com

How to make Money Using Forex Fundamental Analysis

The fundamental analysis in Forex intends to predict the valuation and market trends of a currency’s quotation by analyzing the current economic conditions, government policy and social factors in the context of a particular economic structure with cyclical cycles. Fundamental Forex analysts study the economic status of a country through the following macroeconomic indicators:

  • Announcement of interest rates
  • Gross Domestic Product (GDP)
  • Consumer Price Index (Inflation) and Expenditure Indicators
  • Employment Indicators
  • Trade and Consumer Confidence Indicator
  • Excessive or Deficit Trade Balance
  • Governmental Fiscal and Monetary Policy

 

We do not intend to explain here the definition of the previous indicators, because as we shall see below our approach to markets will be exclusively through technical analysis.

However, the fundamental idea of the fundamental analysis is that if a country has a healthy economy and growing its currency, it must strengthen itself or be valued. We all understand that if an economy is strong it attracts investment and generates new business. These investments to be carried out lead to a greater demand for the currency of that country, which causes the equation of supply and demand of currency to be modified, and in this case to value the currency in question.

With regard to macroeconomic indicators, and in practical terms for the conduct of your trading, it is important that you take note of the following:

 

  • Every first Friday of each month US employment indicators are presented. You will surely hear from traders and analysts of the ‘NFP’ or Non-Farm Emplyoment report. This monthly report always produces a high volatility in the market and it is my advice to be out of it at that moment, unless you have a strategy designed for this purpose.
  • Central bank interest rate announcements are also a factor to take into account and often cause volatility in markets, especially when the announcement of the rate value is different from what analysts have estimated.
  • GDP (Gross Domestic Product) represents the total market value of all goods and services produced in a country over a given period of time. At the end of each quarter, GDP figures from the previous quarter are released and it will be worth noting whether the evolution was positive or negative (especially in the USA, Europe, England, Japan and Australia). Values ​​very different from what was expected can also have a significant impact on the market.
  • Although the analysis I do in the markets is 99% technical, I do not fail to pay attention to the points mentioned above, advising all who analyze the market by technical means to adopt the same methodology.
HOW TO ANALYZE THE MARKET? TECHNICAL ANALYSIS OR FUNDAMENTAL ANALYSIS?

Simply put, the question to ask yourself is as follows:

  1. A) I prefer to look at the movement of the price in the market and use this information to predict future movements in the market?
  2. B) Or do I prefer to give importance to economic news and decide based on them?

If you prefer the first hypothesis will analyze the market using the Technical Analysis, if you prefer the second will analyze it using the Fundamental Analysis.

From my point of view is the technical analysis that best serves the interests of a trader. If we all know that the Forex market is strongly driven by news of the change in the interest rate or by the presentation of GDP results in a particular country, the truth is that in the globalized world where we live and where news is given minute by minute there are many Variables that may affect the market. From a local war conflict, to a natural catastrophe, to a terrorist attack, or to the release of constant economic data in every part of the globe, theoretically any of these occurrences can lead the market to move.

As I have already mentioned, traders who resort to technical analysis, where I personally include myself, believe that all this news is already reflected in the price movement that the graphs show us, and that it does not make sense the complicated task of keeping up with the news every minute To negotiate in the market.

Traders who do their market analysis exclusively through fundamental analysis argue that the movements that prices have gone through in the past are irrelevant and do not justify predicting future prices and should not be considered to help us in this prediction.

Traders who work with technical analysis challenge this decision and argue with facts. Let’s look at the following chart of the Forex market and that represents the USD / CAD pair:

 

From the analysis of this graph we identify through the red horizontal line positioned below a zone that supports the price in February and then in May. It is legitimate to say that the value reached in February, and then rose, could help us to foresee that a few months later the price could return substantially to the same point, which actually occurred in May. Just as it is legitimate to say that in a few months the price can again reach the upper red horizontal line, reaching a point that we call resistance, that is, a point where the price is likely to be difficult to overcome.

It is therefore at least very debatable whether or not it is false that past prices are irrelevant and do not justify our forecasting future prices. Any one of us who studies the price movements in the graphs will easily come to the conclusion that there are levels of support and resistance that are clearly significant and that can predict with good probabilities of correct future price movements. And if, on the other hand, as fundamental traders argue, technical analysis is irrelevant, how can there be traders who operate on the basis of price movements and who are proven to be successful?

Trading in the news-based market is the same as playing roulette at the casino, as we can not get a chance in terms of the odds for our trade to work out. Obviously there are times when the market reacts exactly as expected when news comes out, but there are other moments that react precisely to the contrary, which makes it impossible to delineate a strategy to enter the market based on news releases. Let us give an example: the news is announced that the European Central Bank has cut its benchmark interest rate to 0.5%. By knowing the news at the time, and now the price of money is cheaper, you will expect the Euro to devalue. Possibly what will happen is that the market reacts in reverse and the euro will appreciate. Because? Because this news was long awaited and what should happen now, (the price goes down) happened at the time the rumor came out in the press. If the ECB cut the rate to unexpected values ​​and exceeded market expectations, it might move in the direction of the news, so it was “discounted” and the market went in a direction contrary to the news. Do not forget that the market operates based on future expectations and for this reason is often said this famous phrase: “buy the rumor and sell the news”.

In conclusion and not removing relevance to the fundamental analysis, my advice is that you never carry out your operations in the market based on news. Follow the price movement through the charts that already incorporate all the relevant facts and complement that analysis with the main news (only as confirmation), but never decide based on them.

 

Source : http://www.richforextraders.com

 

Forex Market Sentiment Analysis For Beginners

The Basics of Forex Market Sentiment Analysis.

We will not exaggerate in case we claim that all Forex traders in the global Forex community will always have an opinion concerning the Forex market. Additionally, everyone has a personal perception of why the FX market is moving in a particular way, and it’s during trading that FX traders reveal this view in any trade they take. Frankly speaking, it doesn’t really matter how convinced a Forex trader is that the markets will move in a certain direction. In addition, an irrelevant factor is how nicely trend lines line up, because eventually the trader may up losing.

A Forex trader must understand that the Forex market is a synthesis of different views, ideas and opinions. The more market participants there are, the more individual elements mentioned above exist. All this forces us to claim that the combined feeling that market participants possess is what is known under the name of Forex market sentiment. In other words, it is the prevailing emotion or idea that the vast majority of the Forex market feels best explains the current direction of the Forex market.

Sentiment analysis

 

Trading and investing financial symbol with a two icons representing the bear and bull markets with a wire frame chart and ticker investing graph on a black background.

The action of price should theoretically reflect all available information of the Forex market, although you should take into account that this is far beyond being a simple task for Forex traders. The Forex markets do not just reflect all of the information out there, because traders will instantly act in a similar way. At this point sentiment analysis comes into play. You may wonder what makes this type different from technical and fundamental analysis. Sentiment analysis is a kind of Forex analysis that concentrates on indicating and consequently measuring the overall psychological and emotional state of all participants of the foreign exchange market. This kind of Forex analysis strives to quantify what percentage of FX market participants are bullish or bearish, in other words being optimistic or pessimistic. When the majority market sentiment Forex is successfully identified, a certain analyst will take up a position on the opposite side on the hypothesis that the crowd is mistaken. Trading only on sentiment is a contrarian technique depending heavily on bear and bull ratios and other sentiment indicators. Instead, sentiment analysis is frequently applied in synthesis with fundamental or technical analysis to add more depth to a trader’s comprehension of the Forex market. You should be aware that utilising all three types of analysis simultaneously can be overwhelming, but worth the effort.

Applying market sentiment to your advantage

Market sentiment is a relatively new calculation that polls market experts, analysts and strategists on their general feeling on the market. The purpose can be described as the following; the time you look at sentiment in the Forex market, you want to see what investors’ thoughts are on the market. Undoubtedly one of the oldest sentiment surveys is the American Association of Individual Investors, also known as AAII Sentiment survey. The poll now is performed online and released every Thursday.

Certain businesses take into consideration trading data such as block trades or short interest, and also trends in stories published by financial news publications. There is also something known under the name of ten-day advance decline line for S&P 500. That is the metric which tabulates the number of stocks that were up versus the actual number of stocks that were down, and more than ten days the more negative the number, and consequently the more oversold it is in the Forex market.

There is an apparent paradox with the Forex sentiment. These polls or readings are just reflecting where the market has been and not where it is actually going. Most of the time this has lead to the survey forecasting that the market will go against the vast majority. That means, in turn, periods of high bullishness leading eventually to sell-offs and periods of downturn, as well as market bearishness signalling a market bottom. If everybody is bullish on the Forex market at the same time, then there are less people to persuade to get into the market, so that there is less future demand. Conversely, when most amount of people are bearish, they are going to become bullish in case market turns around. As a consequence, this is going to end up creating more demand for stocks.

Sentiment indicators

It would be a mistake to omit sentiment Forex indicators in this article. What is a sentiment indicator? This is a numeric or graphical indicator made to show how a certain group feels about market or business environment and perhaps about other factors. Sentiment indicators are aim to gauge the mood of the Forex market. You can find a lot of them on the internet. We would like to outline three indicators that you may find useful as an example:

  1. Contrarian methods with sentiment indicators
  2. Commitment of traders report
  3. Volatility index (VIX)

We are going to briefly examine each one further.

Contrarian methods with sentiment indicators

Crowd behaviour is the basis of contrarian investing. That is to sell when optimism is at its peak, and purchasing when pessimism has peaked and the market has actually bottomed out. This approach exists only due to the fact that prices are defined by market sentiment. The behaviour of the crowd is a combination of a large amount of biased thoughts and processes, and thus it is virtually impossible to quantify. There are some tools, which are included in the category of sentiment indicators that we may use to define bullish or bearish sentiment. There are a lot of them and an unlimited number of ways to interpret them. Sentiment indicators should be combined with other indicators and with fundamental analysis as well. Moreover, Forex sentiment indicators are transparent and most often freely accessible.

Commitment of traders report

The COT can provide up to date information about trends and the power of the commitment traders have towards this trend, by detailing the actual positioning of speculative and commercial traders in the diversity of future markets. You should bear in mind that the spot Forex is an over-the-counter market, so the future market is utilised here as a proxy for the concrete spot market. Additionally, the Commodity Futures Trading Commission (CFTC) publishes a new COT report each Friday. You may use it to get an idea of Forex market sentiment for the particular time period. The COT report in fact contains a lot of other useful information, however the essence of the report is data that shows the net long or short positions for every available futures contract for both commercial and non-commercial traders.

Volatility index or VIX

The VIX has a fair amount of popularity in the Forex trading community. This is generally because VIX is the sentiment indicator to measure an implied volatility. As you already know, volatility is the magnitude of move that a price diverges from the mean price over a set period of time. Furthermore, the VIX gauges the implied volatility rate rather than historical volatility of the options bought and accordingly sold on the S&P 500 Index. This is the peculiarity of this market sentiment Forex indicator. In case we regard options as a protective method against a corrective price movement against a major trend, then we undoubtedly understand the following. The bigger the implied volatility is, the stronger is the fear among the certain trend following traders that the Forex market is reaching an extreme.

Conclusion

As you can see, Forex sentiment plays a huge role in Forex trading and investing. The mainstream mood on the foreign exchange market is an identifier of market directions. Adhere to what traders talk about, whether they are bullish or bearish. It actually helps in gauging the psychological and emotional attitude of all market participants. You can apply this analysis to predict market movements based on the current situation – this is where sentiment analysis differs from other two types. Furthermore, to make your analysis more precise and useful, you should use sentiment indicators. They can provide you with an insight into the underlying power of market movements. We advise you to look for extreme readings as a signal that prices are set to reverse. By understanding all mentioned above, you will understand what is market sentiment.

 

 

 

 

 

Lesson by: 

How to Choose Trusted Forex Brokers in 2017

Forex Broker 101

There are many forex brokers in the retail forex market these days, and most of them call themselves the best in the entire market. It can be very challenging task to sort out between them seeking those that are best suited to your needs, however,

I have learned some of most key features of a trusted broker by reviewing some of the most reliable brokers in the market. Here I would like to explain the importance of the various criteria according to which you can screen the brokers we have reviewed, and make your choices. Due to the vast diversity of options, it is not possible to speak of a broker who is perfect for all kinds of traders. Instead, you should carefully consider your own expectations from trading, and compare that with what is offered by the broker, and choose the one that is best suited to your needs.

Security

What is the point of opening a forex account if the funds we deposit will be unsafe with the broker, or worse yet, will be stolen and misappropriated? What is the logic of studying analysis and currency fundamentals if the profits that we make are pilfered by shameless crooks, or squandered by irresponsible individuals who cannot even manage themselves decently?

Thus, the first necessity for the right broker must be the safe and reliable track record of the firm. On the other hand, it is clear that the retail trader possesses neither the tools, the time, nor the expertise for determining which of the brokers are reliable, and which are not. Fortunately, the regulatory authorities in this country and in other financial centers of the world do their best for screening and weeding out the unreliable ones among the many decent firms. Our best course is to ensure that the broker we choose is a member of NFA, and is registered with CFTC in the US, and with other relevant authorities in other parts of the world.

And last but not least, to make the task even easier for you, we have reviewed some of what we believe to be the best and most reliable firms in the market. All that you need to do is to go and check out the relevant section.

Initial Deposit

Unavoidably, the second most important variable in our equation for comparing brokers is the initial deposit requirement. Many traders prefer to begin their careers by risking very small amounts which leads them to seek the broker offering the lowest initial deposit requirement naturally. This reasoning certainly has its merits; however, the initial deposit requirement should in fact be one of the last considerations in choosing the best broker for you, unless you really have a very small amount of capital that you want to risk for forex trading.

A serious broker offering excellent services may choose to keep the initial deposit requirement relatively high (around $500, for example) in order to ensure that the clients are serious about their trading practices. In addition, forex is usually so volatile that a less than optimally capitalized account is highly likely to be wiped out during the ordinary fluctuations in the market. We have already discussed the difficulties associated with undercapitalization, and those who have read that article should have little trouble in understanding the reasons behind our deemphasizing the importance of initial deposit requirements.

It is self-evident that a beginning trader should only risk the amount that he can comfortably afford to lose. In that sense, the initial deposit requirement of the broker should never be more than what we can afford. On the other hand, beginning our career with a pittance like $10-50, and trading at 10:1 leverage cannot be considered a wise choice. Trading with such small sums is similar to trading in a demo account, and the emotional lessons gained will probably be of little value.

Spreads

Spreads are extremely important for forex traders, seasoned, or novice. Since the broker usually receives the compensation for its services by widening the bid-ask spread beyond the quoted values in the wholesale interbank market, a wide bid-ask spread represents a larger amount of money leaving your pockets, and entering those of the broker’s. You pay this fee regardless of the profit or loss you make with your trade: so there’s always good sense in ensuring that you choose the broker which offers one of the more competitive spreads in the market. Sometimes it may be advisable to open an account with a broker that charges slightly higher spreads in exchange for the safety offered by its long history and track record. But even in that case, a spread beyond three for the EURUSD pair, for example, is not a very good idea.

Deposits and Withdrawals

It is not a good idea to trade forex if you cannot withdraw your earnings with ease. Conversely, the broker must facilitate your termination of the account in case that you’re not entirely satisfied with the services offered, regardless of the reasons. This should be non-negotiable: since the broker is only the custodian of your funds, there’s no justification for any unreasonable delays or excuses when you make the request to withdraw your funds.

Similarly, you, as the client, should have no headaches at all when depositing funds with the broker. Come to think of it: if the broker is not even capable of ensuring that your deposit process is smooth, how likely is he to guarantee a painless and satisfactory trading experience for you?

Margin Requirement

Margin requirement and leverage ratios are the second most important aspect that must be considered during the choice of the broker. For the beginner, the lower the leverage the better. Since higher leverage is only advisable for traders with a proven track record of profits and success, the beginner should be uninterested in the maximum leverage offered by a broker. Instead, since he must be allowed to get used to leverage on a step-by-step basis, the minimum leverage available is far more useful as a criterion.

For an experienced trader, evaluating the value of a high leverage options can be a bit more different. Since, by definition, successful traders use highly divergent techniques in their trades, there is no general rule for determining the optimal leverage ratio for a seasoned trader. However, for traders who plan to hold a position for long term, 10-to-1 may well be the highest sensible value.

In short, beginners should choose brokers that offer the lowest minimum leverage option, and the greatest customizability. With such a setup, it is possible to increase leverage gradually, in tandem with our improving and developing skills.

Trading Platform

In online forex trading, almost all activity is conducted through the trading software. Indeed, for a safe trading experience, this is also a must: in order to ensure that the broker doesn’t temper with your trades, and misquote currency prices to you, you should always seek those offers which allow the greatest automation, and reduce human interference to the lowest level possible. This is only possible with a successfully implemented trading platform.

What should you look for when choosing the trading platform? Does it offer a wide array of charting tools and technical indicators for evaluating the price action? What about financial news? Is the interface clean and uncluttered? Since you may spend a long time looking at the graphics and examining charts, is the appearance of the platform physically pleasing and relaxing?

Are the servers of the broker reliable? Do you have connection problems in the middle of something important while using the demo account? How wide are the spreads during market volatility and news releases? Is slippage and misquoting a problem? Can you customize the platform to suit your trading needs and language requirements? Does the platform receive frequent updates and bug fixes?

These are the most basic issues related to the trading platform. Needless to say, an advanced, easy-to-use, and uncomplicated trading platform can make the task of the beginner a lot easier. But even the seasoned traders will find that using a well-crafted, well-maintained forex software can greatly reduce the element of stress during trading.

Customer Service

Software is prone to generating errors. This has always been the case, and will remain so for the foreseeable future. When there are problems with the trading software, or delays, or issues with deposits and withdrawals, you will need to seek the aid of the customer service.

A friendly, patient, and helpful customer service can be profit multiplier if used correctly. In those cases where the customer service is run by individuals with trading experience and understanding of economics and analysis, you can even hasten the learning process by asking questions.

Before opening your account, it is perhaps a good idea to read our reviews on customer service of various brokers to receive a preliminary impression of how competent the people are. While we cannot just pick a broker because its customer service department is professional, success in this department is certainly a promising sign for overall competence.

 

Regulation

Find a broker that is regulated. Ideally, find a broker that is regulated by an authority people have actually heard of, like the UK Financial Conduct Authority (‘FCA’).

If a broker has a licence to operate, this ensures that they are expected to meet the highest of standards and very specific capital requirements at all times, that they handle deposits as required by legislation and not as per your worst nightmare, and that they act in accordance with all accepted codes of conduct.

Account Types

Some brokers offer a large number of account packages. Others choose to offer one package with many customization options. In general, the number of account packages is not very important, provided that the broker offers a highly customizable main offer with adjustable leverage and margin requirements suitable to the needs of clients from different backgrounds and experience levels.

Currencies Offered

Finally, it is a good idea to choose a broker that offers the widest array of tradable currencies. In evaluating the currency pairs offered, you should try to make sure that different currency pairs of different classifications are available, instead of concentrating on just the number of the total offers. For example, if a broker offers three pairs of major economic powers, three pairs of emerging nations with floating currencies, three of fixed or pegged currencies, and three rare pairs (like the Saudi Riyal, or the Chinese Yuan), the offer is much better than that of a firm which offers 12 pairs all of which belong to major, developed economies.

Such details are especially important for the experienced trader, but the beginner can focus on the more important, basic aspects of the broker’s package before worrying about the intricacies of the various currency pairs on offer.

 

 

 

Sources:

http://www.financemagnates.com

https://www.forexfraud.com