Tag Archives: broker
3 Critical Tips For Choosing A Forex Broker
The importance of choosing the right forex broker is often underestimated. New traders with dreams of getting rich quick often look for features that are not important, and can even do more harm than good. In this article, we describe the three most important things to look for when choosing a forex broker.
1. Choose a broker who is subject to strong forex regulation.
The importance of this cannot be understated. Unregulated forex brokers are able to take advantage of you in ways you do not even realize. A prime example is slippage. Slippage is the difference between the price your trade is executed at, verses the price that was quoted when you placed the order. Slippage is a normal part of trading, because prices fluctuate all the time, and can easily move in the short time between when you place an order, and when it executes. However, unregulated brokers can pass the unfavorable slippage on to you, but keep the favorable slippage for themselves. This increases your transactions costs, and the effect can be significant over time, especially if you are a scalper.
The CFTC & NFA have arguably the strictest forex regulation in the world, and they audit their brokers regularly to make sure that slippage practices are neutral. This is just one of many ways that forex regulation can protect you as a trader.
2. Choose a broker who obeys the law.
This may seem obvious. However, it may surprise you to know that as of May 2015 there are only two forex brokers left in the United States who have never been fined by the regulators. The rest have been fined or banned from doing further business. Even in the face of strong regulation and regular audits, forex brokers still try to get away with cheating their clients. Do you want this kind of broker handling your money? Of course not. If you screen for United States forex brokers from this broker review page, you can easily see which brokers have been fined, and which have a clean regulatory record.
3. Choose a broker with low transaction costs.
Transaction costs are a lot lower than they used to be, and you may think this does not matter much to your trading anymore. If so, you are mistaken, and the following example illustrates why:
Say your starting account balance is $20,000. You have a simple trading system with a 30 pip stop loss and a 30 pip take profit level. You leverage 10:1 and you win 55% of your trades. Broker A offers a spread + commission of 2.5 pips, and Broker B offers a spread + commissions on only 0.7 pips. You make 450 roundtrip trades per year, which is just under two trades per day. The following chart shows the results after one year:
The chart shows that with Broker A:
• 83% of your gross profits get lost to transaction costs
• Your net profit for the year would be $4,500 or 22%
With Broker B:
• Only 23% of your gross profits get lost to transaction costs
• Your net profit for the year would be $20,700, or 104%
In this example, you are clearly better off with Broker B. The difference in transaction costs will have the greatest impact to your trading if you trade frequently, or have a narrow trading edge.
This article was kindly provided by Forex Scam Alerts, who provide advice about the risks of forex trading and how to avoid scams.
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Thanks for stopping by, and have a great day. 🙂
Testing A New Forex Broker.
I have been testing out a new Forex broker for a few weeks, and i am very happy with the results. The broker is IC Markets
I had heard good things about them so i decided to give them a try and i can highly recommend them. The spreads are nice and tight, and the commission is $3.00 AUD each way per contract (100k) for C Trader, which works out at $2.85 USD or £1.80 GBP, and $3.50 AUD each way per contract (100k) for MT4, which works out at about $3.30 USD or £2.00 GBP.
They are a true ECN broker with institutional grade liquidity provided by 50 of the worlds top banks.
You can have up to 500 to 1 leverage, and trade 60 currency pairs. You can also trade 17 major indices and futures contracts including the FTSE 100 and Dow Jones Index 24 hours a day, with a spread of 1 point. You can also trade Gold Silver Brent crude and WTI oil CFDs and Natural Gas.
Min opening account balance on MT4 is $200. C Trader is $1000.
All client funds are held in client segregated trust accounts, with AA rated Australian banks.
The commission is what attracted me initially. This really makes a difference to your account balance at the end of the month. If you are using IG index for example, its less than half of what they charge. If you are a professional Forex trader, you need a really tight spread, and good commission. and IC Markets give you that.
I recommend you give them a try, you will not be disappointed. They opened my account within half an hour of my application, which is really fast, i have waited days for some brokers to open an account for me.
I really cant find fault with them so far. Click on the banner on the right if you want to give them a try.
Thanks for stopping by and have a a great trading day.
Making Money While You Sleep.
I had a couple of nice trades this week that i entered a bit late in the day, so i had to set my profit target and go to bed. I don’t normally let trades run overnight, but i do enjoy making money while i sleep.
Its nice to get up and open the charts to see your profit target hit, and a nice chunk of money in your trading account to start the day off.
The last couple of weeks i have been testing out a new broker, so i have been taking a lot of more trades than i would normally take, to see how they perform. I am quite happy with the results so far. The commission on the new broker is almost half of what i am currently paying, and that equates to a lot of money over the course of a month.
I will test them out for another couple of weeks, and then offer my students the option of moving their accounts over to them too. I am in the process of negotiating a deal with the new broker to see if they can offer us some financial incentives if we all move over. The deal i am currently getting is very good, but if they can offer us something more by trading as a group, then that’s a bonus.
I am also in the process of setting up managed Forex trading accounts with this new broker, where i will be able to trade clients money by copying the trades i take through my own trading account, direct to clients trading accounts. More information on my managed Forex trading service can be found here
I have been approached by a number of clients in the past to offer this managed account service, so if the demand is there, then why not. Its not really that much extra work to offer the managed service, so it will not impinge on my current activities too much.
I have a new student starting this week from Canada, so i am looking forward to that. My current guys are doing well, and i have a few more interested parties, so everything is ticking along nicely at the moment. I am hoping to take a holiday sometime in the next couple of months, so i am looking forward to that too.
That’s all for now folks. If you are trading this week, keep your stops nice and tight. Thanks for visiting my blog, and have a great trading week. 🙂
Thursday And Friday Trading.
We have had a couple of good days trading. As i mentioned yesterday we had a nice trade on EJ that triggered in the Asian session.
We went short at 10382, and closed at 10339 for 43 pips. I don’t generally like setting trades up while i am not at the PC, as i like to manage them rather than set entries and take profits, as the market is constantly changing, and i like to take full advantage of the situation. But this trade was too good an opportunity to miss so i set a pending short order with my broker, which i then managed Thursday morning.
We also had an AUD short yesterday. Another great entry at 10404 and which we shorted down to 10368 for 36 pips profit.
Today we took another EJ short at 10349 down to 10327 for 22 pips. It was a bit of a quiet day today. I expected a bit more volatility than we had, but we managed to get another trade in on Euro, short at 10363 down to 10318 for 45 pips.
Another good week of trading for us. We took a total of 16 trades for 301 pips. Which averages out at just over 18 pips per trade.
We set ourselves a target of 100 pips profit per week, but we always exceed that. We have made some good money this week, long may it continue. 🙂