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Forex Markets

How To Find A Forex Trading Broker

One essential that you must have when beginning currency exchange trading is an account with a forex trading broker. The broker is your link into the markets and will cover you to trade margins.

But how do you go about selecting a good one? Here are 5 points to take into account when you are shopping around for forex brokerage accounts.

1. Reliability

This operates on several levels. Firstly, of course, you want a broker that you can trust, who will not suddenly disappear from the internet along with all of your money. The forex market is broadly speaking unregulated, so there are a huge number of brokers and some are more trustworthy than others.

Your first step is to check that the broker is regulated. In the USA this means that you want a broker who is registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA). Look for a forex broker with a clean record in any complaints logged against them on the NFA site. Other countries have their own regulatory bodies.

Then you need to think about whether the broker’s platform is reliable. This is their software that you will connect with whenever you want to trade. If it is often offline, it is likely to cause problems for you. You could miss out on either opening or closing a trade at the best time. Check forex trading forums for feedback from users on this point, although be careful not to be swayed either way by a single individual who may have his own reasons for being strongly for or against a particular broker.

2. Services

The forex markets are open 24 hours from Sunday night to Friday afternoon EST. Check that your broker’s trading platform is available all of this time (most are) and that they offer 24 hour customer support on trading days too.

Check that they cover at least the seven major currencies USD, AUD, CAD, GBP, EUR, CHF, JPY. Again most will, but it is worth being sure.

A broker should offer you charts, technical analysis, and instant execution of your orders at the displayed price.

3. Costs

Forex brokers do not charge commission but make their money from the spread, which is the difference between the buy and sell prices on any currency pair. Spread can be anything from 1 pip or less, up to about 3 pips, depending on the broker and the pair.

The size of the slice taken by the spread can make the difference between profit and loss in your trading account in the long term so look closely at this. If you know which pairs you are likely to trade most often, the spread on those pairs will be more important to you than others. At the same time, do not be drawn in by a special offer that may not last long once you have committed your funds.

You also need to consider how much is the minimum that you can invest. Most new traders are best advised to start small, so look for a broker who will let you open an account with $250 or less.

4. Margins

Margin requirements can vary a great deal from broker to broker. A lower margin requirement means higher leverage, and higher leverage gives you greater profits or losses on the same fund size. So low margins seem great when you are doing well, but losses will be bigger if things go badly.

5. Lot size

Lot size can vary from one broker to another. Generally 100,000 units of currency is a standard lot, 10,000 is a mini lot, and 1,000 is a micro lot. Some brokers offer fractional lots which give you more power to set your own lot size. This could be a bonus or just an added complication.

There are other considerations including the interest paid on your margin account, rollover charges and other policies. However, these are the main points that you should be looking out for when choosing a forex trading broker.

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Saturday, May 23rd, 2009 Brokers No Comments

Zen And The Art Of Forex Currency Online Trading

It seems to me that we need a little zen in the jungle of forex currency online trading. We especially need it when it comes to one particular skill. It is a skill that is absolutely vital to successful forex trading and yet people do not talk about it very much.

The reason for this is that it is something that most of us do not really like to hear about. Just the name puts us off. We associate it with dark cold schoolrooms from 100 years ago.

I will tell you what it is if you promise not to stop reading. Do we have a deal? You will read to the end of this article and I will disclose the secret word to you.

OK … it’s discipline. Or more accurately, self discipline. Now, as I said we tend to associate those words with old fashioned educational styles and even punishment. But that is not what it is about.

One dictionary definition of discipline is: behavior according to established rules. Applying this to the forex markets, it means trading according to an established system, and not deviating from that system.

In fact, if we want to get around the negative associations of the word, we could describe it instead as being consistent … acting consistently in accordance with the system that you have selected.

The opposite of self discipline is self indulgence: giving in to every desire without thought for the future. Translated into trading terms, this means acting on your whims … trading on impulse and on ‘feelings’. When you do this, you are leaving your profits in the hands of pure chance.

In order to be successful at most things in life, you need to act consistently and it is not always easy. Self discipline requires saying no to an immediate temptation for the sake of longer term success or happiness. If we are to reach our goals, future consequences must be more important to us than current satisfaction.

In everyday life terms, this means turning down dessert because you do not want to gain weight, or passing on the illegal parking spot because you do not want your car to be towed.

In forex currency online trading, it means accepting a loss without losing faith in your system.

It means looking for a reasonable profit in the long term instead of taking huge risks because you want to get rich overnight.

It means not giving into the fears that hold you back from making a larger trade when you know it is the right thing to do.

It means doing your research instead of believing that the latest great technique is going to work for you just because you want it to.

In short, it means seeing that the emotions which can feel overwhelming at times are not really so important. Strong emotion, whether it is fear, anger, greed or desire for pleasure, almost always relates to a short term wish, not a long term plan. We need to get beyond this to be successful.

Our lives do not have to be ruled by emotion. In fact the bottom line is that if you allow yourself to be constantly diverted by passing feelings like a sail boat in a hurricane, you will find it hard to earn a living in the forex market until you learn to see your fears and desires for what they are: just feelings that will pass, no more important than the itch of a flea bite.

But if you have trouble with this, do not worry. Help is at hand. Try an automated forex system. They are as emotionless as Spock and will do all of your forex currency online trading for you with the discipline of a robot.

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Saturday, May 23rd, 2009 Introduction No Comments