Monday, 17 October 2011

Forex Software — Choosing The Best

When it comes to forex trading the forex software you choose is essential. There are so many forex trading companies all competing for your business that choosing the right forex software can be quite a difficult task. Most of the forex software products available offers live online forex trading platforms but what other components are vital when it comes to your forex software.

Key Elements For Your Forex Software

Before purchasing any forex software there are a few essential items that should be included. The most important is security and your online forex trading software should include a 128 bit SSL encryption which will prevent hackers from accessing any of your personal details and information such as your account balance, transaction history, etc.

Providing the best security for your forex trading will include a company that provides 24 hour technical server support for your forex software, 24 hour maintenance should anything go wrong, daily backups of all information, and a security system that has been designed to prevent any unauthorized access. Along with these security protocols there are also some forex trading companies that use smart cards and fingerprint scanners to ensure that only their employees can have access to their servers.

Another important factor when it comes to choosing your forex software is to check what the company's downtime is like. When it comes to trading forex and particularly your online forex trading you need to ensure that the forex software you choose is reliable and available 24 hours a day. The forex software you choose for your forex trading should also have technical support available at all times should your session be cut short.

Ensuring that all the above features are listed in the forex software you choose will help to ensure your forex trading success.Anyway, a forex software is a must have if you want to earn money.

Forex Scams: How To Spot Them A Mile Away

In rcent years, investors have witnessed increased number of investment opportunities and offerings. While the complexity and success of these investment products vary, technological innovation has made the Forex market one of the fastest growth areas. Many of the leading Forex brokers reported up to 500% rise in the number of new retail customers. However, the growth of the Forex market has been accompanied by a sharp rise in foreign currency trading scams.

Many of these Forex scams are promoted on the radio, television, newspapers and the Internet. Investors who fall victim to these schemes, often lose all of their money. As an illustration, let's examine the facts of a recent case involving Forex fraud and its consequences. W learned of a foreign currency trading opportunity through an infomercial on the radio. K, the owner of a Forex asset management firm, spoke during the infomercial, promising viewers significant profits with minimum risk. After seeing the infomercial, W contacted K, and later attended a seminar presented by K and his firm. The seminar was so convincing that W wrote a check to K for $100,000.

Several months later, W received statements (which were false) from K's firm reflecting significant returns on his initial $100,000 investment. Thereafter, W attended another seminar and decided to invest more money. W took a loan and invested another $800,000 in K's Forex trading operation. Short while after W's second investment, the Securities and Exchange Commission filed a complaint against K and his firm for engaging in a scheme to defraud investors. K's firm's assets were frozen, including the $900,000 invested by W. A receiver was appointed to distribute the remaining assets of K's firm to defrauded investors. The assets were distributed on pro-rata basis with no legal preference given to any of the victims. Since K's firm's assets were not enough to satisfy all of the defrauded investor's claims, W received only about $22,000 of the $900,000 he invested.

Since a whole book can be written on the various tactics and methods used by Forex scam artists, in this article, I will focus on the major warning signs that one needs to identify to avoid falling victim to Forex swindlers.

1. Promises of Little or No Risk

If you encounter a Forex firm that claims to have developed a foreign currency trading strategy that carries very little or no risk, stay away. The reason Forex trading can be very profitable is because it also carries a very high risk of loss. The Forex market is very volatile, and, without good money management, an investor can lose most if not all her capital within few days. Thus, individuals and firms who make claims that are far from market realities, as is riskless Forex trading, are really after your money.

2. Guarantees of Large Profits

Beware of firms that guarantee large profits in Forex trading. These so called "guarantees" are mere ploys to entice investors and make them believe that their money is safe and that they will definitely make large profits. Such claims are simply untrue, because even the best professional traders cannot guarantee that they will make a profit any given day. The Forex market, as most financial markets, is very unpredictable. Hence, be suspicious of such claims and those who make them.

3. Employment Ads For Forex Traders

Many Forex trading firms use employment ads to attract individuals with capital to trade using their systems. The employment ads, which often appear in newspapers and on the Internet, state that a foreign currency trading firm is looking for individuals to teach them how to trade the foreign currency market using firm capital. Those who reply to the ad are convinced by the firm that they will make a fortune trading currencies if they participate in the firm's training program. During the training process, which often occurs on a demo system, the novice traders are encouraged and told that their demo trading records show that have made significant profits, that they are ready to make real money and would very successful. Despite the firm's assessment of the novice trader as a brilliant newcomer, no firm capital is provided to the trader, instead the excited novice is told to use her own capital to trade using the firm's platform. In addition to various fees imposed on traders using the firm's platform, the Forex firm makes money as an introducing broker. Each time the novice trader trades through the firm's system, a good part of the spread charged by the broker is shared and goes into the firm's coffers. After few months, the novice trader loses all of her capital and leaves. The Forex firm, having made money during the novice trader's short stint, moves on to new traders eager to become rich trading foreign currencies.

4. Is the Forex Firm a CFTC or NFA Member?

Before you sign a check and give your capital to a Forex company, make sure you investigate the entity. Check to see whether the Forex firm, with which you want to do business, is registered with the United States Commodity Futures Trading Commission or the National Futures Association. Many scam artists falsely claim that their firms are registered with the CFTC or the NFA to gain a perspective investor's trust. Do not trust anyone, research the firm and the background of the individuals involved before parting with your hard earned money.

The Internet has paved the way for many new opportunities for retail investors. The Forex market is both exciting and fast paced. Investor's who are careful and diligent are likely to avoid the perils of this market, and will profit from the growth and opportunities of foreign currency trading.

Sunday, 16 October 2011

Are Forex Brokers The Antichrist or is Broker-Bashing one Gigantic Witch Hunt?

In this article we would like to address the flip side to the argument we put forward in our piece 'Choosing the Right Forex Broker'. That article focussed on broker malpractices, but do we have the right to place the blame on these firms or are our expectations of them unrealistic?

Is It Fashionable To Blame The Broker?

There are a few sites scattered throughout the Internet (ours included) that offer you the opportunity to review your broker and it seems that there is a growing trend towards the negative. What I mean is that there are a far larger number of negative reviews than positive ones. There are several reasons for this: There is a tendency to jump on the bandwagon of bad reviews if you have lost money to the market and you have negative feelings associated with this. It may also be prudent to consider the fact that human nature seems to be drawn toward the negative; when you turn on the news how many negative stories are reported compared to positive ones? Is this because more bad things happen or because we find these stories more 'entertaining'? I believe that a lot of this 'broker bashing' is due to the fact that there are currently a larger number of 'bad' brokers than 'good' ones but I also believe that some of these reviews are not entirely fair because our expectations are not realistic in the first place. Let us take a look at and evaluate some of our common complaints.


Slippage is the difference between the price at which you set your order for execution (in the case of a stop order) or the price you attempt to have an order executed (in the case of a market order) and the price at which you are actually filled. It should be noted that stop-loss or stop entry orders actually become market orders once active i.e. once the specified price is hit, so they do not guard you against slippage. This is one of the most common complaints made against brokers by furious traders who see potential winners turn into losers and small losers turn into large ones.

A loss is an unpleasant experience at the best of times and if you feel that your broker is the reason for it, or the size of it, you are bound to direct your anger towards them (N.B. Trading Psychology and management of emotions comes into play here). This is where we need to check our expectations and put any complaints into context.

Slippage is generally associated with periods of either extremely high volatility or extremely low volatility. As an added ingredient the size of your order can also contribute. The most common times of high volatility in the forex market are at major news releases and it is no coincidence that this is also the time that traders experience the greatest amount of slippage. This is because economic announcements generate a large amount of interest and everyone is jostling for position at the same time.

Those traders that are active around these times will understand that a few pips here and a few pips there can make all the difference between closing the day with either a profit or a loss. A bad fill can be enough to make the difference and when you experience one it is natural to blame it on your broker for being too slow or for being dishonest and banking your money for themselves. However, the reality is that slippage at news times is very common and in some cases almost inevitable but rather than just blaming the broker there are steps that we can take to minimise or eliminate the bad fills, such as:

Be mindful of the times you trade: If you are not a news trader then you may wish to avoid the most highly anticipated news releases altogether. By doing so you will not be trading during times of massive volatility and your chances of experiencing slippage are greatly reduced. If you are a news trader then there are some precautionary steps that you can take (see below).

Enter with limit orders: A limit order will only be executed at the specified price or better thus eliminating slippage. However, traditional limit orders can only be placed above or below the market which requires you to enter on a retracement. This is an advanced trading technique and requires a good deal of experience. A limit order will only solve the problem of slippage on your entries and does not remove the threat of slippage on your exits if you want to cut your losses or take profit without the use of a fixed target.

Enter after the initial spike: The first move after a data release is oven extremely explosive creating what is known as a 'spike' in prices. If you wait for this move to play out then you are giving the market time to digest the news and you are avoiding the main body of volatility. This gives you time to plan your own trade based on the data released, possibly catching a retrace using a limit entry.

Choose your broker accordingly: If you use a broker with a dealing desk then you are more likely (in theory) to experience slippage than if you use an ECN style broker. It is likely that a human will actually be matching and filling orders on a dealing desk which leaves you open to an added delay, especially at busy times. An ECN broker doesn't have this limitation and that fraction of a second saved can make a huge difference. In conclusion, if you are actively trading at busy times then an ECN broker is probably most suited to your needs. On the other hand if you trade infrequently or you have a small account and cannot afford the commission fees that ECN brokers charge then a broker with a dealing desk may be adequate.

My Broker is Trading Against Me

This is an extremely common complaint that has lead to the conspiracy theory that most brokers actually want you to lose your money because they are on the other side of your trades. Let us step away from this theory for the moment and consider the fact that there is ALWAYS someone on the other side of your trades. For you to go short someone else must go long and vice versa so someone somewhere always wants you to lose! Now, some brokers claim that they match client orders at the dealing desk while others use their dealing desk to offset their clients' trades with their own overall position in the market, which is known as hedging. If a broker is perfectly hedged then they simply collect the spread that you pay them (which is greater than the spread they pay in the interbank market) and that is their profit. The conspiracy theory has come from the notion that most traders lose and so it would be more beneficial for brokers to trade in the opposite direction to their clients rather than go in the same direction and hedge themselves. Experiences of delayed orders, slippage and stop hunting have added fuel to this fire because they can be easily explained as brokers stealing your money rather than potentially legitimate problems incurred at busy trading times.


In this article we have attempted to point out to you alternatives to broker malpractice theories and a few ways in which you can minimise their effects. If you are a firm believer that your broker is trading against you and wants you to lose then you are developing a potentially self-destructive frame of mind. This belief may prevent you from identifying problems closer to home such as trading psychology and strategy inadequacies. But the fact remains that if you are unhappy with your broker or you are experiencing excessive slippage, multiple re-quotes, poor customer service, possible stop hunting, platform freezing and held orders then you should change brokers. At the end of the day the reasons for poor service are of secondary importance behind the effect it has on your trading. It may be that your broker is honest but technologically inept or it may be that you are the victim of a bucket shop but try to keep your complaints within the context of market dynamics. If none of the coping strategies listed above make any positive difference then it is definitely time to find a new broker.

Saturday, 15 October 2011

The Best Forex Broker: One for Everyone

Dishonest and illegitimate brokers who defraud their customers are a disgrace to the online Forex brokerage business. Many traders are rightfully scornful of those who lack the basic decency to allow them to withdraw their funds, even after losses. And sometimes traders can't help but feel that if they could just locate that best Forex broker hidden somewhere in the far reaches of the cyber-jungle, trading and profiting would give the taste of fine French wines, instead of the usual vinegar. But are Forex brokers really such a wicked lot that even the Evil One himself is put to shame by his incompetence in comparison? Is the oversight of multiple government agencies, newspapers and the trader community insufficient to convince them to behave like normal people? Most importantly, since retail Forex is like a shower of gold and silver for online brokers, do they really need to kill their Golden Goose by defrauding traders and destroying their Forex strategies through misquotes and stop-running?

The fact of the matter is that the number of fraudsters in the Forex market is a lot smaller than what many disgruntled traders believe. If you have the misfortune of being a victim of one of them, no doubt, our words will not do much to help you trust the brokers. But we invite you to recall the fact that there are a significant number of firms which have been in operation for many years in nations where regulation and oversight is strictest. Surely, a broker with a long history in Switzerland does not prove much about the reliability of Forex brokers, but others headquartered in New York, and monitored and authorized by the authorities for years cannot have had the skills to keep everyone blind for so many years. Forex is risky, and requires patient study, but it is no longer a shady corner of the internet world: it is regulated and monitored, and more and more a part of the mainstream of financial business.

And while we'd love to send you to the best broker in this article, the good news is that we don't even need to. There are a large number of firms operating online today which cater to different kinds of investors with different expectations and skills. If you're a professional, you will not be equally satisfied by the offer of a decent, legitimate broker which caters to beginners and average traders for the most part. As a beginner, you're unlikely to have all your needs expectations fulfilled by a well-established firm with excellent services and yet a significant minimum deposit requirement. It is this diversity of offers that makes online Forex the field of pioneers, and such an exciting place to be for traders. If you're one of those brave people who want to explore this brave new world, go check your Forex broker ratings now, and who knows, maybe you'll grow to become the next Martin Schwartz of the century. Anything is possible in Forex.

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