There is a very wide choice of currency broker companies online and when you are starting out in forex trading it can be difficult to find the best. We tend to be attracted by advertising, assuming they are all working in the same way. In fact this is not true. Foreign exchange brokers have very different business models which affect the way that they operate. In some cases, you may be surprised to hear that they could be working against their clients instead of for them.
Of course traditionally a broker carries out his clients' instructions, placing orders for them in the market. Originally brokers worked with telephone orders and simply placed the order for the best price that they could get through their dealing desk. These days, everything is done online so that clients put in their orders for a certain price. However, you do still need a broker who will connect to the market through their software platform.
Many brokers still work in the old way, placing orders for clients as they are instructed. These are often the brokers who run standard forex accounts with minimum investment of $10,000 and upward. But the internet has opened up forex trading to people with much lower investment funds. More recently, companies have come on the scene to cater for these smaller investors and they do not necessarily follow the pattern of traditional brokers. To cut costs, they usually do not have their own dealing desks and they may operate in some very different ways. This can have important consequences for your funds and how they are managed.
So let's take a look at the types of business model that you may come across in your search for a currency broker.
No Dealing Desk (NDD) Currency Brokers
NDD brokers work in a similar way to brokers with dealing desks, but they use a range of liquidity providers to actually match their clients' orders in the market. Competition between liquidity providers keeps the spread low, even though the broker usually increases the spread to cover their own costs and make some money.
Electronic Communications Network (ECN)
Forex brokers who use the ECN can access an online network where trades are filled. Many market makers work this way, as well as some brokers, banks and other large currency traders. Spread is usually low but you may be charged a fee per trade.
Market Makers
Market makers are not brokers in the true sense because instead of placing your order in the market they will match it themselves and then cover themselves against any loss by taking a position in the ECN or market that offsets their commitment to you either partially or fully. Market makers set their own prices, although of course these will be related to market prices. They often do not like clients to use scalping strategies because the very short term nature of these trades makes it hard for them to offset their risk. Some traders are happy to use market makers but others consider that they have a conflict of interest which may work against you as a trader.
Bucket Shops
Forex bucket shops are like bet takers in that they simply match your trade without necessarily taking any position in the market. They may not even have any connection into the real currency market. They win if you lose, so if you are successful they will probably close your account and return your funds. There is really no point in getting involved with a bucket shop unless you just want experience at very low levels of investment, and plan to lose money. They are illegal in some jurisdictions, and do not deserve to be described as a currency broker.
Saturday, December 26, 2009
Friday, December 25, 2009
Forex trading best time
You can trade currencies at any time of the night or day. Monday through Friday, the forex market never sleeps. Nevertheless, there are some times of day that are better than others for most traders.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
Most traders prefer to get involved in the market at the busiest times of day. This is especially true of day traders and scalpers. They are looking for plenty of activity so that they can get in and out of a market in a short time and still make a good profit. It is less important for longer term traders, but if you plan to use day trading strategies at all you will need to know the busiest times for forex trading.
So which time slot has the most forex trading activity? The answer, not surprisingly, is the 3 hour period when it is business hours on both of the top two currency trading floors. These are London and New York.
Although the British pound is not the most heavily traded currency (it comes fourth after the US dollar, euro and yen) the London market is the most active. Most of the major European financial powers including Switzerland and Germany are within one hour time difference of London.
New York is of course the home of the US dollar, and it is the second busiest currency trading center. Eastern Canada is in a similar time zone. Business hours here are 8 am to 4 pm EST. London is five hours ahead, so at 8 am EST it is 1 pm in London and the trading day has three hours left to run.
Therefore, the busiest forex trading hours are 8 am to 11 am EST, which is 1 pm to 4 pm British time. Of course, this is not the only time that you can trade. If you are unable to get online at those times, you will certainly find other opportunities. However, it could be good to get as close as you can. For example, if you live in the eastern USA and cannot trade during New York business hours because you have a regular job, consider trading in the early morning before you leave for work. The London market opens at 3 am EST.
On the other hand if you are in Britain or continental Europe and cannot get online during business hours in your own country, the evening will be better for you because New York will still be open. The New York market closes at 9 pm British time, or 8 pm Central European Time.
For anyone just starting out with forex trading, it is best if you can get online during some of the busier times of day. Quiet times are not easier or less stressful. In fact, during times when there is very little activity in the market, or if you are tempted to trade a less common currency pair, you will find that price movements can be much more unpredictable. Spikes happen with frightening regularity and can knock out your stop losses, leading to many small losses. It is better to stay with the crowd and trade currencies during busier times.
Monday, December 7, 2009
Best Forex Trading Indicator for Swing Trading
will be the best forex trading indicator for swing trading trading in view of overbought / oversold areas within the main trend. Here, we will do as you said, see, with the stochastic indicator and show you a simple powerful method for big profits.
Swing trading is easy to do, logical and easy to understand and can be very effective. The stochastic indicator with a valid support and resistance in combination provides a robust simple strategy you can learn fastercan be very effective in making big forex profits so here it is.
Introduction
George Lane developed the stochastic indicator, which was based on the assumption that the trend in an uptrend, prices high and close to them, of course, close to a downward trend, the opposite occurs, the price to close near their minimum.
This simple logic is the basis of the stochastic indicator, despite its simplicity, but it is a powerful tool.
Our point of view should, in combination with a stochasticAreas of support and resistance and are used to take positions when price momentum vanishes in an upward trend of resistance and strengthens the resistance decrease.
Mathematics
If you're technically minded, is the stochastic calculus is described below. If you do not do not worry, because most of the services plot the stochastic large and can easily see, the crowd is up visually - here it is:
The stochastic draw two lines% K, a fast line and% D, a slowLine.
The% K line is more sensitive than% D
The% D line is a moving average of% K.
The% D line triggers the trading signals.
The lines are plotted on a scale from 1 to 100
"Trigger" lines on maps stochastic set to 80% (overbought) and 20% oversold () levels. A signal is generated when the stochastic lines cross.
The Stochastic can help you enter trading signals in a number of ways, and here we have the 3 most important ways that you can use to explainin a swing trading strategy.
How overbought oversold
When do the 20% and 80% trigger lines are crossed look at the following regarding the opening of trading signals. Take a long position and buy when the stochastic moves below 20% and then rises above this value. To take the other hand, the sale of a short position when the stochastic rises above 80% and then back below that level.
Stochastic Crossover against the trend
This is a very reliableSignal
You can buy online when the% K above the% D line is rising, and sell when the% K line falls below the% D line
The most reliable and high crossover rates occur when the% K line intersects after the peak of the line% D.
Stochastic variations
Divergence between the stochastic and price trends have warned that a possible change is that of the previous day on the road, and are a leading indicator of major trading signals.
For example, if the prices of a number of newUps and trend upward and downward moves the stochastic crosses downward price or quantity of motion and speed, then becomes weaker and of course, the opposite happens in a bear market.
Why it works
The reason that works, and we believe the best indicator forex technical trading swing is about human psychology.
A long-term price to go not only in a straight line - there are ups and downs on the road. Forex traders push prices too much and too fastPrices then back to fair value. These are moves in the long term trend, you want to capture swing trader - so combining the stochastic with simple support and resistance is very effective.
If you're new, then swing trading Forex Trading with stochastic provides a simple method that works and the stochastic is the best way to use forex technical indicators, and while there are others such as stochastic, with levels of support and resistance that the great lineProfits.
Swing trading is easy to do, logical and easy to understand and can be very effective. The stochastic indicator with a valid support and resistance in combination provides a robust simple strategy you can learn fastercan be very effective in making big forex profits so here it is.
Introduction
George Lane developed the stochastic indicator, which was based on the assumption that the trend in an uptrend, prices high and close to them, of course, close to a downward trend, the opposite occurs, the price to close near their minimum.
This simple logic is the basis of the stochastic indicator, despite its simplicity, but it is a powerful tool.
Our point of view should, in combination with a stochasticAreas of support and resistance and are used to take positions when price momentum vanishes in an upward trend of resistance and strengthens the resistance decrease.
Mathematics
If you're technically minded, is the stochastic calculus is described below. If you do not do not worry, because most of the services plot the stochastic large and can easily see, the crowd is up visually - here it is:
The stochastic draw two lines% K, a fast line and% D, a slowLine.
The% K line is more sensitive than% D
The% D line is a moving average of% K.
The% D line triggers the trading signals.
The lines are plotted on a scale from 1 to 100
"Trigger" lines on maps stochastic set to 80% (overbought) and 20% oversold () levels. A signal is generated when the stochastic lines cross.
The Stochastic can help you enter trading signals in a number of ways, and here we have the 3 most important ways that you can use to explainin a swing trading strategy.
How overbought oversold
When do the 20% and 80% trigger lines are crossed look at the following regarding the opening of trading signals. Take a long position and buy when the stochastic moves below 20% and then rises above this value. To take the other hand, the sale of a short position when the stochastic rises above 80% and then back below that level.
Stochastic Crossover against the trend
This is a very reliableSignal
You can buy online when the% K above the% D line is rising, and sell when the% K line falls below the% D line
The most reliable and high crossover rates occur when the% K line intersects after the peak of the line% D.
Stochastic variations
Divergence between the stochastic and price trends have warned that a possible change is that of the previous day on the road, and are a leading indicator of major trading signals.
For example, if the prices of a number of newUps and trend upward and downward moves the stochastic crosses downward price or quantity of motion and speed, then becomes weaker and of course, the opposite happens in a bear market.
Why it works
The reason that works, and we believe the best indicator forex technical trading swing is about human psychology.
A long-term price to go not only in a straight line - there are ups and downs on the road. Forex traders push prices too much and too fastPrices then back to fair value. These are moves in the long term trend, you want to capture swing trader - so combining the stochastic with simple support and resistance is very effective.
If you're new, then swing trading Forex Trading with stochastic provides a simple method that works and the stochastic is the best way to use forex technical indicators, and while there are others such as stochastic, with levels of support and resistance that the great lineProfits.
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