Way to Choosing a Forex Broker That Wont Rip You Off

At the best of times Forex currency trading can be a risky business with a huge potential for profit or loss. As a fulltime trader i have seen the best and the worst that the forex market has to offer, the dizzying highs of large wins, and the gut wrenching lows of people going bust.


You might be a forex trader yourself, or maybe you are just curious about how forex markets work, whomever you are, you need to learn how to seperate the legit forex brokers from the scam merchants. The internet has a great deal of genuine forex dealers offering quality services, it is also unfortunately infected with just as many thieves dressed up as companies who will gladly take your money and then dissapear. This fear of being taken advantage of puts a lot of people off the idea of trading forex, this shouldn't be the case.


Now there are a few key differences between stock markets and forex markets that you are going to have to learn:


1. Forex has no centralised exchange house.


2. Forex trading is 24/7.


3. Forex is a largely unregulated market.


Looking at that list, it kind of seems that the forex market is akin to a wild west town full of outlaws and gunslingers. In this market there is noone to complain to, noone who will hold your hand. So how can you find the genuine dealers amid all the garbage? Do not trust any broker whose reputation cannot be confirmed, and whose company is not tied to the forex market.


The attraction of the forex market can be overwhelming. The scent of huge profits often overpower the common sense of the average person. They enter eagerly, just waiting to invest their life savings.Lying in wait are the scammers with huge promises, they capture the new investors money, and suddenly dissapear.


The good news is, is that many genuine forex brokers do actually exist. Easy-Forex, Oanda, and many more have proven track records that justify their positions in the market. Usually if a company is small, has no affiliation to forex or a financial institution, then stay away. Also a word on looking for reviews about brokers online. You can find honest reviews on forex brokers online, however there seems to be a habit of late of competing forex companies, and/or traders engaging in negative marketing of each other. Dig deeper and you will usually find an honest answer.


So remember:


1. Validate the companies reputation.


2. Make sure they are tied to the forex legitimatly.


3. If the company is small and unheard of, stay away.


4. Finally if the broker has a proven online track record, a legitimate financial institution affiliation, and a few good reviews, give them a try.


My ultimate advice is, if unsure, invest the smallest amount you can, and find out for yourself. This is how i usually used to find brokers, and it worked for me.

A Tool For Serious Traders - Forex Simulator

Many novice traders rush into forex trading enticed by broker ads of 400:1 leverage; free real time demo accounts or simply by the thrill of getting into the action. Even those that test their signals service or trading strategies in real time to see how they perform don't do so adequately. In any case, there is a limit to how much you can gain from real time practice: testing trading strategies with live demo trading accounts is only useful if you know what you are doing.

The first step in refining your trading skills and strategies is to accept that this is a process that involves repetition, practice and reinforcement. This is where a Forex Simulator is very useful. It can save you money and ensure that you don't start out a loser.

Unlike a live forex demo account which functions in real time, a forex simulator enables users to upload, view and review historical data at any given point in time. Used to confirm one's understanding of pattern recognition and trading signals, data can be rewound and fast forwarded to test and retest your knowledge and understanding.

Using a Forex Simulator enables you to get months of training in just a few days work because you can pause, rewind, fast forward. You can set up 5 minute timeframes to up to what ever you choose. You can take snapshots of trades. You can use any indicator you like. You can keep a trade journal and refine your strategy.

Remember buying those PC games and being able to save a mission before coming back to it, repeating it over and over again until you got good enough to pass the stage? Well a forex simulator works in a similar way. Practice, reinforcement and repetion until you get good. Imagine getting a year of practice in a month!

When you are finally ready to open a live demo account you will see your confidence skyrocket. Why? Because you are finally starting to understand what you are doing. A Forex Simulator is a serious tool for serious traders who want to learn to trade first before trading with real money.

The way to Riding a slow train to profit

Trading success doesn't mean you must get rich quickly. Here, we look at three strategies on weekly S&P 500 data to examine how to make money over the long term without trading excessively.For many traders, the S&P 500 and the ?-mini are their speculative vehicles of chutee, with huge daily volume and open interest. These contracts present opportunities for day-trading profit and serve as a key tool for long-term equity investors and hedgers.

The long-term investor is willing to overlook blips and corrections to achieve the big move when it occurs.Long-term investors have different goals than short-term day-traders. The long-term investor may be interested in holding out for a big move, willing to overlook the blips and corrections along the way. These investors are typically satisfied with lower rates of success for the payoff of bigger profits when profits come. For these traders, the S&P 500 also offers significant opportunities.

The methods used to carve out those opportunities, however, may nor he created equal. We will compare three models and see how much of the long-term moves we can catch. Our data set will he the closing price of the cash S&P 500 on a weekly basis. We will test a 52-week simple moving average model, a 105 -week exponential moving average model and a priceaction indicator with a one-year reference.

Most charting vendors provide simple and exponential moving averages, so following the models should he simple.The strategies are straightforward. On the first two, the marker is sold if the current week's close moves below the average and the market is bought if the current week's close crosses above the average. The price-action indicator is computed by taking the current week's close and subtracting from it the price one year earlier (52 weekly bars).

A simple three-week moving average of these prices is used to generate signals.We can reduce false signals with the same two restrictions on all three indicators. One, we require the reading to be at least one point higher or lower on the breakout (so, a reading of -0.79 would be insufficient) and two, any reversal within four weeks following the prior signal will be ignored because it is easy to have choppiness when these signals turn.

Positions will he entered immediately tin the positive signal and the trade will be maintained for tour weeks regardless of a reversal signal.Our data begins in 1950, but the threepoint range of the first three years makes the effective start 1953. First, we equalize the three methods. They may begin trading when the first strategy signals a trade.

That date and price are fixed as the start. In this case, it's the close on Jan. 22, 1954, at 25.85By way of a benchmark, the S&P gained a net of 1 ,076.57 points between 1954 and December 18, 2009 (see "Field of dreams," right). Of course, it traded much higher in the interim reaching 1 561 .80 on a weekly closing basis for a maximum gain of 1,535.95 on the long side.

Reversing to short at that price and holding to the present time would have brought the total gain possible from just two hypothetical trades to 1,968. But a steadfast buy and hold strategy from 1954 would have yielded 1,076 S&P points.We require any successful system to exceed 1,076 points, and will judge a system a significant success if it achieves even 65% oi our total ideal of 1 ,968 points, (i.e. 1,279 points before slippage).

The fewer trades it takes to yield such points, the more successful the system will be, since every trade adds die potential for slippage and error.A 52-week moving average should enable us to smooth out most of the chatter one might expect from a fouror eight-week mewing average. Adding the filters we have imposed above also should help in theory.

To our surprise, a simple 52-week moving average is a very poor system. It trades 80 times and only 45% of the trades are winners, including one open trade.The gross point gain is 1484.24 before slippage. If we add 0.30 points for slippage and commissions (i.e., $150), this reduces the gross gain to 1460.24 points.

The model gave a buy signal on the close of July 24, 2009, booking a gain of 351 points from its sell signal on Jan. 4, 2008. Ironically, almost exactly 30% of the model's gain was earned in the last closed trade. The best trade was a gain of 561 points from the trade between January 1995 and August 1998.

This model, with 55% losing trades, was much worse than the accuracy level we desire, and we deem it a relative failure, although it did exceed the target of 1,279 points with an average gain of 18.25 points per trade.The 1 05- week exponential moving average fared worse in accuracy and in net gain. It traded far fewer times: 26. There were 1 1 winners, or 42.3%. The gross point gain dropped to 1,369.84, including an open trade profit of 1 75.91 points.

The net gain after slippage is 1,362.04. The average trade gained 52.38 points. Of the three models, the 105 EMA is the only one remaining short with a trade initiated on June 23, 2008, at 1278.38, and an open profit of 299.12. The EMA trades far less often and is less sensitive to chatter than the SMA, but also is slower to respond, in part due to its longer period. Almost all of the gain was earned in a single trade begun on Aug. 27, 1982, and culminating on March 16, 2001, for 1,033.42 points.

The model stayed long for almost 19 years.Finally, our third model is the one year indicator based upon a simple philosophy. If current price is better than one year ago, the market is improving and we want to be long. If the SckP is lower than one year ago, the market is declining and we want to be short. Again, we use a three-week average of the difference to try to eliminate any chatter and apply the same filters as in the previous two models and start on the same date.

This model also had 12 winners, but only traded 19 times including an open profit of 34-47 points; 63.15% winning trades. The gross gain was 2,156.73 points and the net after slippage is 2,151.03. Notice that this exceeds the ideal hypothetical of 1 ,968, so we conclude this is a resounding success. The best gain was a long on Feb. 10, 1995, closed on Nov. 10, 2000 for a gain of 883.54 points. The average trade gained a resounding 113.21 points.In the 105-week model, only three of the 28 trades (11%) had gains exceeding 100 points, including the open trade.

In the one-year indicator, six of the 17 trades (35%) exceeded 100 points, including the current gain. Eight of the 80 simple moving average trades (10%) exceeded 100-point gains. On the losing side, the 52-week average had four losses in excess of 100 points. Neither the longer-term average (worst loss: 92 points), nor the one-year indicator (worst loss: 43 points) suffered a 100-point loss on a closed trade (see "Long-tenn Titan," page 40).The ideal trade is to have bought at the bottom and sold short at the top, always good advice in any market, because you only need to stop by to trade twice in a lifetime.

That's good work if you can swing it. That said, our models indicate the following:a) Trading less may be better,b) The longer-term exponential moving average is interior to the shorter-term simple moving average,c) The one-year indicator is significantly superior to both moving averages,d) The one-year indicator is better than the ideal trade and may be of significant assistance to the position traderAn investor or a long-term trader can certainly benefit from these tips. Interestingly, most of the money from all of these systems was made on the long side.

The best short trade in the one-year system started in 2000 and ended in 2003.The stock investor could simply move to cash when the one-year strategy signals a sell or reduce long exposure by some measure, such as switching to defensive positions. The commodity trader or the more aggressive stock investor could put on short positions in the SckP 500 futures market.It must be pointed out that this was a rudimentary treatment of the indicators.

A trader possibly could improve his performance by adding other filters or trailing stops or profit targets. None of this was done for this analysis to keep the comparisons between the systems free of non-strategy-based interference.Short-term traders also can benefit from this knowledge. A day-trader should test a 30-day indicator - today's price vs. the price 30 calendar days prior. A five-minute trader could look at the current bar compared to the same bar on the prior day - or one 60 minutes or 1 20 minutes earlier. While the actual strategy may not necessarily hold up on these untested time frames, what most likely will is the tenet that success doesn't have to happen overnight.

What's The Sentiment landmarks for forex

Detecting a trend is an important part of predicting direction in a currency pair. Tomorrow's prices usually follow or continue today's trend. There will, of course, be reversals and ranging behavior within the trend but it is easier to trade with a known trend than to predict when it changes. The task of the forex trader is to detect variations or waves of sentiment. The trader needs to ask: is there a shape to changes in sentiment and can it be detected? To answer this question, we can turn to price break charts (also called three-line break charts). In recent months, Bloomberg Professional stations added these charts. They also are available in many retail charting programs such as eSignal and ProRealTime.

Price break charts show only a new high close or a new low close. For example, if a trader using a candlestick chart of a daytime interval converts it to a three-line price break chart, he would see the price action from a different vantage point. The price break chart would only show consecutive new day high closes, or consecutive new day low closes. If no new high or new low is reached, then no additional bar would appear. But when the price reverses, it shows a new column only if the price reverses three previous highs (downward reversal) or three previous lows. This is why it is called a three-line break chart. The conditions for a bullish and bearish reversal are easily identified.

Three-line break charts enable significant insights into the shape of sentiment in the price action. A trader can derect the prevailing sentiment, how strong it is, whether a change in sentiment has occurred and project where the next trend reversal will occur. Several examples of using the three-line break as an indicator occurred in the GBP/ USD pair in 2009.

The year started with a series of three consecutive new lows. It then reversed to a distance of four new consecutive highs. The sequence reversed back to four new consecutive lows followed by three consecutive new highs. In April, we see a very significant sentiment event, a flip-flop. This is a new downward reversal followed immediately by an upward reversal. In other words, market sentiment did not continue into a series. When a flip-flop occurs, it is rarely followed by another immediate reversal and therefore is a signal that the trend direction after the flip-flop will continue for a longer distance. This is exactly what occurred. The GBP/ USD flipped from a low of 1.4252 on March 30 to a high of 1.5002 on April 15.

Also in the pound, we see a long sequence of 20 new consecutive day highs that occurred between May 1 and June 11, taking it from 1.4490 to 1.6598. While the ultimate length of the sequence is not predicable, what was clear tei the trader was that the previous highest uptrend sequence before the long run up was five new consecutive highs. When a previous sequence of highs or lows is broken by a new sequence, this is an alert that the sentiment is becoming stronger than ever.

After the 20 new consecutive highs were achieved, GBP/ USD no longer had the energy to repeat this sequence. It entered into a series of smaller consecutive new daily highs, and reversals into consecutive new lows. GBP/USD ended with a reversal up with two consecutive new daily highs.

Price break charts can be used for any time frame. Scalpers could use a one-minute price break to spot what is the intrahour prevailing sentiment. While price break charts do not predict the duration, or the distance of a new trend, they reveal the strength of the prevailing sentiment. That can be enough to get an edge tor the scalper or the long-term trader.

Copyright Futures Magazine Group Feb 2010

Provided by ProQuest Information and Learning Company. All rights Reserved

Hong Kong's forex reserves rise to 257.1 bln USD in January

HONG KONG, Feb. 8 (Xinhua) -- The official foreign currency reserves of Hong Kong rose to 257.1 billion U.S. dollars at the end of January from 255.8 billion U.S. dollars a month earlier, the Hong Kong Monetary Authority said Monday.

This makes Hong Kong the world's seventh largest holder of foreign currency reserves, based on the latest published figures.

The foreign currency reserves of 257.1 billion U.S. dollars represent over nine times the currency in circulation or about 55 percent of Hong Kong dollar M3, the broadest measure of money supply.

Copyright 2010

Provided by ProQuest Information and Learning Company. All rights Reserved.

Consider Learn to Love Your Losers

Ok, so no trader truly enjoys taking a losing trade. But if you want to succeed in this business of day trading, learning to love your losers (or at least accepting them) is one of the most important lessons you can learn. Psychologically, human beings are not well designed for trading financial markets. We hate losing, we hate being wrong, and we get buffeted about by those twin emotions - fear and greed. This leads us into all sorts of self destructive habits. Moving stop losses further out - just to give the trade time to turn round. Or grabbing a profit as soon as it appears - just in case we have to give it back.

The simple fact is that most successful traders lose as many, more likely more, trades as they win. What separates them from the rest is their ability to cut a losing position and run a winner for as long as possible. The arithmetic is simple. If your average winner is twice the size of your average loser, then you can be wrong on 50% of your trades and still make very good money.

In fact, you can be wrong 66% of the time and still break even. Improve the ratio by more than two to one and you can make massive amounts of money in the markets. Unless you can learn the art of letting winners run and cutting your losers short, you will never get those big winners that make the difference, and you will never reach that magical relationship where your average win is at least twice as big as your average loss. This fundamental concept holds true no matter what time frame you trade and whether you’re a day trader, swing trader, or even if hold your trades for over a year.

The key to reaching this state of affairs is to develop or adopt a high probability trading system and stick to it. The more you can automate the trading process, the less likely you will fall into bad habits. This will take the psychological problems away and allow you to be less controlled by your emotions.

So don’t be afraid of losing trades. They are part and parcel of this business. Learn techniques that will allow you to minimize and control them and the profitability of your trading will improve more than you can imagine. Fail to master this concept and you set yourself up for disappointment and frustration.

Of course, getting the mental bit right is only part of the answer. There is a plethora of moving parts when it comes to trading. Learning how to pick good trades, understanding entry and exit signals, and spotting when a move is coming to an end are vitally important, too.

How to Choosing a Forex Third Party Signal Provider

With the growing popularity and easy access to the foreign exchange (ForEx) market, more and more people are drawn to it as their financial vehicle of choice. Along with this popularity come all the extras. This includes all kinds of software, trading systems for sale, books, videos, and third party signal party providers. Today I’m going to touch on a few points when seeking out a third party forex signal provider.

Before we get into choosing a provider we need to have a good understanding of what a third party signal provider is. A signal provider is a trader or analyst that generates trades that in turn get placed on your account. You can have several signal providers trading your forex account or just one.

Like anything else, all third party signal providers are not created equal. At first glance a trader may look like a home run. That same trader may well end up completely torpedoing your entire account in one afternoon. To help make sure this doesn’t happen we’ll set down a few guidelines. These guidelines will give us something to look for when choosing our third party signal provider.

1. The first thing I look at is weather the trader is a winner or a loser. This may seem obvious to nearly everyone, but I often see losing signal providers with 50-100 people trading their signals.

2. The next thing I look at is how long they have been a winner. If a trader has been winning for a week that means nothing to me. I recommend that you don’t trade any signal provider with less than a few months of results to show you. Any one can place a few good trades one week and get lucky. If you are going to be trading this trader’s signals they need to be established.

3. Look at the max draw down. This is the largest peak to trough draw down in equity that the trader has historically had. Some traders refuse to take a loss. This causes them to hold on to losing trades forever or until they turn to a winner. Turning a loser into a winner sounds great, but it will eat up a huge chunk of margin and may never turn around. If it doesn’t turn in your direction, you will have your entire account destroyed by a trader that could have taken a 30 pip loss but held on until it was an 800 pip loss.

4. The first three are easy to look at. They will be displayed right on the main screen of signal providers to choose from. Once you get a few signal providers you are thinking of using, its time to dive a bit deeper into their history.

a. Look at their actual trades. Do they have a good win rate because they have opened a ton of trades all at the same time on the same currency pair? They may have 20 winners in a row. This looks great, but if you look a bit deeper you will see that its really only 1 winning trade places 20 times. Not as impressive is it?
b. Look at their draw down on individual trades. Do they let a trade go 300 pips against them and then close it out when it hits 5 pips of profit? This is a trader who lets their losses run out of control and cuts their winning trades short. It’s not a trader that you want in control of your money.
c. Do they add to losing positions? A trader who constantly adds to losing positions hoping it will turn for them is not someone you want trading your account.

5. Choose a signal provider that suits you. Some traders may provide larger returns over time, but take bigger risks leading to bigger draw downs. This might be OK with you. If you are more conservative and cannot stomach large drops in equity you probably should choose a more conservative trader.

These are just a few things to look for when choosing a third party signal provider to trade your forex account. You should always trade a demo account before opening a live account with real money. Remember it’s your account. In the end you choose the signal providers, and you are responsible for what happens.