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Forex Robots Are Dangerous

Forex Robots
on December 11th, 2011 by - 3 Comments

Automated trading robots sound really impressive and claim that they can make money for their users 100% automated. What’s more, these websites will tell you that you can start making money even without any knowledge about Forex.

You must know the dangers of trading robots before you jump into these scam.

  1. First danger is that the risk settings are too high to begin with. Many developers are designing their systems with astronomical risk levels, often risking 5-10% of capital on a trade and sometimes even more! That’s crazy, and it’s no wonder that people end up blowing up their accounts and wondering why. Additionally, you should check that your leverage levels in the Forex brokerage account match up to the recommended system parameters, otherwise that’s another time bomb waiting to explode. By offering high leverage, the market maker encourages traders to trade extremely large positions. This increases the trading volume cleared by the market maker and increases his profits, but increases the risk that the trader will receive a margin call. While professional currency dealers (banks, hedge funds) seldom use more than 10:1 leverage, retail clients may be offered leverage between 50:1 and 200:1.
  2. Second danger is not so obvious in the short term is your own mental and emotional factors. While people often say that using automatic systems is a good way to eliminate emotional trading, it’s inevitable that your emotions will still get involved. For example, traders often get “cold feet” after a few large losses, and start second guessing their trading program or even abandoning it entirely. Or, they get too excited when the big wins start piling up, start getting overconfident and doubling/tripling their risk… only for the market to turn and destroy all their gains and then some. Whatever the manifestation of emotions in trading, it’s clear that you need to manage it just as much when you’re using Forex trading software as with any other form of trading.
  3. No stop loss.In order to have 99% wining trades, this automated trading robots is trading with a very large stop loss or no stop loss altogether. By trading without a stop loss, the unrealized losses in the account are open floating losses. This robot will not close the trade until it is profitable; hence, it will continue to hold the losing trade until the account gets margined out. You can have 99 wining trades, but with this technique, one losing trade could wipe out your entire trading account. Trading without stop loss is like playing Russian roulette with your money.
  4. Fake money back guarantee. A guarantee to give you the option of testing the program completely risk free so that you can experience the effectiveness of the automated Forex system first hand. You should be aware that it is extremely difficult to get your money back regardless of what the vendors’ guarantee says. Most of these guarantees are not protected or honored by companies like Visa, PayPal or MasterCard. Understand that there is always risk involved and use these five easy steps to detect forex robots scams.
Read more about forex fraud: Foreign exchange fraud(Wiki).
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“Best Forex Broker” Doesn’t Exist

Forex Brokers
on December 7th, 2011 by - No Comments


What are the best forex brokers available online? It is a fairly good question I must say. I do not really have an absolute answer. However, what I can tell them is what the top forex brokers should offer. The rest is up to them: A good forex broker always needs to suit your investor profile and your general trading strategy. With Best Forex Broker, I mean the following checklist:

User friendly Trading Platform: Try the platform using their demo account. Its always good to have a live chart option within the platform. Includes all the currency pairs that you wish to trade (including the commodities if any). More than 30 Pairs are offered by some brokers today.

Reasonable Spread: If the spreads are too high, your gains will be cut and your losses will be more important. This is a very tricky point. Some brokers offer a lot of bonuses but their spreads would just hunt you down! Compare the spreads at several time intervals, eliminate the highest ones. The reason is simple: You have to buy higher than the price at which you can sell, so if the difference is too big, remember that you will have to pay this spread on each and every one on your trades, therefore reducing your gains. Hopefully, spreads are usually the only fees charged by brokers. Make sure they are as limited as possible.

Forex Agent who submit to regulation by the major regulating bodies in their respective regions, they can provide a higher degree of comfort and security for their clients.In the U.S., Forex Agent can become members of the Commodity Futures Trading Commission, or CFTC. They can also join the National Futures Association, or NFA.If a U.S.-based Forex broker is registered with these organizations, you can check with them to see if the broker had any problems with membership. Uncovering such issues may affect your decision to do business with them.

Leverage options: Leverage is a very well-known characteristic of the forex market. It allows you to take a position that is larger than what you could normally afford. As long as you keep the margin required in your account, you are allowed to get the borrowing required to finance your positions. This allows you to multiply your gains, but your losses as well. If you use a 500:1 leverage, your profits are multiplied by 500 (on the base of your real money investment). Remember it works the other way as well, so it makes leverage a pretty risky tool. Nevertheless, I’m sure if you are willing to trade the forex, you are there for the money and you know the risks you’re taking, so high leverage is an interesting feature.

Phone support availability during all trading hours. Call back availability is a good option by some brokers. Email response within 12 hours. Again, the Best Forex Broker would never delay responding to his customers’ enquiries. Don’t underestimate this. When you need support for something related to money traded LIVE, you will be in trouble with every passing minute sometimes.

As long as you choose a broker that fulfills all of these requirements, you will definitely be using one of the best Forex broker services available in the industry today. Also, by searching for a broker that fulfills all of these requirements, you will also be able to make the most of every single trade you venture into as well. As a result of using the right broker, every single trade you execute may have a better chance of becoming a profitable trade for your portfolio than it would have if you were to use a mediocre Forex broker for your trades.

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Invest Your Time Into Forex Trading Course

Forex Education
on December 7th, 2011 by - No Comments

Involving ourselves in new things require proper knowledge. We don’t just enter into a scenario carelessly and not knowing what to do. There is always that particular stage wherein time is consumed because we want to learn something. We need to absorb new ideas and information so that we will be able to know how to do things the right way. The same thing goes if you want to enter into the forex trading world. You need to educate yourself about this trillion dollar industry.

The forex market is not an easy way to earn money. If you want to earn a lot, you need to risk a lot of money too. If you want to take it easy and play safe, then you can use a small amount of money. Whether you want to play it big or small, you need to have the proper training in order to trade successfully. A lot of people have been involved in the forex market but only a few have been successful in their career, this can mainly be caused by the knowledge and training that they have regarding forex trading. Credible Forex education also provide a trading mentor. In simple terms a trading mentor is responsible for you. They are there to provide support, strategic insight and generally make you into the best Forex trader you can be. The benefit is that even once you are more comfortable with your trading they are still available for you in case you need further guidance.

Who wrote the forex trading course you are considering learning from? Chances are if you have no clue who designed it than it is probably just a giant marketing scheme. Forex training courses that are written by actual forex traders will make the fact obvious. Aim to learn from a professional trader when learning how to trade forex, it will greatly shorten your learning curve and get you on the path to trading success much sooner. A forex trading training program is essential for anyone who wants to become a forex trader. If you want to have this type of career, you can start by reading books, magazines, and other publications that talk about the forex market. But this process takes a long time for you to understand how it works. It is best that you take up a forex trading course so that you can be taught well. The learning process in taking up a forex trading training program is much faster compared to learning it on your own. In summary, do not make the mistake of getting into Forex trading simply because you want to. In order to succeed, you will need to apply a mix of knowledge and strategic analysis into Forex charts. Whilst Forex trading can deliver great financial rewards, be patient until you are confident your Forex education mirrors that of top city traders and only then get started.

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Developing Your Own Forex Trading System

Forex Systems
on December 1st, 2011 by - No Comments

Technical analysis can supplement your trading strategy. Many professionals for example make use of moving averages along with other indicators. This method has an element of risk control – where a long position will be stopped out fairly quickly in a falling market generating a stop-and-reverse signal or a sell signal in a rising market. The primarily difference between trading system lies in their timeframes. You will find system either trading the movement within intra-day or from day-to-day movement. Other differences lie in their risk-reward ratio and entry method. At the initial stage you should rely on a logical system in having a view of the market. Discipline will be the keyword for establishing yourself as a successful trader. Your trading decisions should not be based on irrational emotions where you continue to experience losses with the hope of regaining the position. Your ability to limit your losses is just as important as determining the entry points.

There are also plenty of open source forex programs that you can get for free. However, you will need to keep yourself logged on that specific website throughout the duration of your use. There are also times when down times or lags may be experienced depending on the number of people currently accessing the site. But the great thing about this option is that it often comes for free. There are many factors to consider when going choosing the right forex trading system. These are considered below:

  1. Visiting Forums. Visiting Forex forums is a good way to find out what people Say about the system you wish to buy. Traders are continuously exchanging tips and experiences about services, profits, and overall satisfaction with the System they buy from personals who are expert in Forex. Just join a forum, or simply visit one to find out what’s hot and what’s disappointing. Is the seller of the system can show testimonials from other people that bought the system and is comfortable with it. You should do some research before buying a new system.
  2. Identify the profits: when choosing a new system, you must know how much profits you can achieve with the system. Profits are determined by the number of pips you can win on every trade. The more pips, the more profit. Every system must specify the number of pips you can earn in a given month or for a specified period. As stated above, you must confirm that the information given is true. Every forex trading system takes some time to achieve the specified goals. The results can be satisfied in the long term for long term forex trading system.
  3. Can it do advanced calculation skills?: Many forex programs today work by examining statistics when analyzing charts. If the system cannot do advanced calculations, it can miss you a trade and waste money. The automated system must be able to pick every opportunity of trading and make the calculation at high speed. You can make this manually but the system can facilitate the work for you.
  4. Make sure you understand it: when choosing a system, you must make sure that you understand it and know how it works. This is necessary to be able to make money with it and refund the money you spend when buying it. In order to know how easy the system, you must attempt to use it to see if you comfortable using it. Many forex traders today make the trading by automated programs. So when choosing the forex trading system, you can test if it can run on such automated programs. You must test on a demo account first before using real money account.
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Over trading will kill you

Blog
on October 24th, 2011 by - No Comments

Overtrading is a term in financial statement analysis. Overtrading often occurs when companies expand its own operations too quickly (aggressively) .

Please don’t over trade. Over trading can wipe out your account big time. I’m not saying that just because that is what the professional traders say, but because it happened to me in demo and real accounts. And those experiences lead me to write this article on how to avoid depleting your trading account.

I had signed up for the Avalon FX Pro demo contest the summer of 2009, which started, with a demo account balance of $100,000. First price was a Mac Book. I wanted that Mac Book but more I wanted to see how I would perform trading with $100,000 (I don’t even trade close to that amount right now). Well, I was doing pretty well in the beginning. In fact I was able to turn $100,000 to $211,000 in two and a half weeks. My strategy was sound – trading trend line and horizontal support and resistance and taking advantage of momentum. I did some trades around news time as well (not recommended) which helped. I had profit goals as well that once hit I stopped trading for the day.

But problems set in when I became greedy. Because I did so well, I began to over trade. I started to set unreasonable goals like reaching $300,000 in one week. I traded during low volatile illiquid times thinking I can take advantage of even small movements because I wanted to reach that goal quickly. I traded huge lot sizes. And, I was no longer using stops. Then losses set in. In my attempt to recoup from losses more losses set in. I’ve doubled up; I tried to hedge, but only to gain more losses. I kept trading. In the same day that the account reached $211,000 it dropped to $60,000. I’ve ended the contest with $23,000 left in the account.

Thank God it was a demo!

The best forex trading strategy or advice to beginners in foreign currency trading, is to just execute one winning trade a day. If your money management allows you to earn or lose 1% per trade, then 20 days trading in the FX market would already make the currency trader a handsome 20% profits per month!

 

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Why forex is more interesting than stocks

Blog
on October 22nd, 2011 by - No Comments

I was talking with one of my friends recently and he asked me the following question: “What do you think about stocks?” I asked him for precisions, because obviously it is hard to have a position on stocks in general. He said: “Well, you know, what would you have to say about stock markets since the United States decided to increase their debt ceiling on August 1st? Do you think they’re still safe?”

“There is at least one thing I know about stock equities in general since that day”, I said. “They were ripped off by low investors’ confidence and bad governments’ finances.”

I think the biggest 4 differences between the stock market and forex are as follows:

  1. Schedule: The US stock market is open Monday to Friday from 9.30am EST to 4pm EST. The Forex market is open 24 hours a day from Monday to Friday. This brings unlimited opportunities to traders worldwide.
  2. Variety: On the US stock market alone there are over 10.000 stocks. This means you have a lot of opportunities to trade but also a lot of complexity in order to find which stock you’re supposed to trade. On the Forex market, there are only 4 major currency pairs: EUR/USD, GBP/USD, USD/JPY and USD/CHF.
  3. Commission fees: On stocks you usually pay a commission when you buy or sell stocks. This commission can be based on the number of shares you’re purchasing or it can be a fixed commission like for example $10 for unlimited number of shares. On Forex the commissions are free. You don’t pay any commission by buying or selling a currency. The only cost is the spread.
  4. Leverage: On stocks, the leverage is usually 2:1 which means that if you have $2.000 in your trading account, you can buy up to $4.000 of a stock. If your account has more than $25.000 it can be considered as a day trader account and in this case, your maximum leverage might be as big as 4:1 for day trading only. On Forex, the maximum leverage is usually up to 200:1. This means that with $2.000 in your Forex account you can purchase up to $400.000 of your favorite currency pair. Some brokers offer even higher leverages that go up to 400:1!

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I don’t believe any automated forex trading software

Forex Software
on September 26th, 2011 by - No Comments

There are many reasons that forex trading software has made the forex market better. Forex trading software has smoothly integrated different currencies and their corresponding markets from around the globe. This integration has made it a reality for the Forex traders to be able to conduct business twenty fours of the day. Forex software has definitely improved the Forex market by leaps and bounds.

But when it comes to automatic forex trading software, I would say most of these are scam. With so many Forex automated trading expert advisors on the market today showing outrageous and profitable trading results, you may be tempted to purchase one of these automated Forex trading software. There are also folks who do not want to do any work at all and want a totally hands-off approach. They would rather let the program do “its’ thing” so that they can go off and do the things that they enjoy. They do not want to figure out when a good deal is available, read charts or make any trades on their own. Automatic trading software seems their best choice. But this is far from the truth.

Don’t believe all the hype about Forex trading software that will make you millions while you sleep, because there are many hidden dangers involved with using such programs to trade your capital in the currency markets. There’s not a day that goes by that I don’t hear about some unsuspecting new trader that gets burned badly because they weren’t aware of the risks involved, and made some serious mistakes. It breaks my heart to see dreams hindered or even dashed like that, when such mistakes can easily be avoided should you recognize the risks and dangers upfront.

In fact, the best trading software is your brain.

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The forex signals service – another SCAM

Forex Signals
on August 3rd, 2011 by - No Comments

From  Wikipedia, the forex signal service is actually an alert system that will make the trader to make certain purchases or sales of currencies in the forex market. Then you will make money!

Sound too good to be true, isn’t it? The best silver bullet against Forex vampires is to remember that no one has anything to give away. There’s no such thing as a free lunch. If someone promises you huge returns for little time and money invested, it likely is a scam. The foreign exchange market is a zero sum gamein which there are many experienced well-capitalized professional traders (e.g. working for banks) who can devote their attention full time to trading. An inexperienced retail trader will have a significant information disadvantage compared to these traders. How can everybody make money in this market using the same signal?

There are many ways to scam in Forex, but some scams are more common than others. You should always watch out for these, and to give you an idea, below are the top three Forex scams you should absolutely remember. If you follow any forex signals providers, at first glance of the charts, it seems as if the signals are picking great tops and bottoms, but watch it real time and you’ll see what a scam it really is. You will witness a swing high or low forming and then the reversal kick in, with no signals. 8 bars later, 20 pips into the move, a signal will pop up…. at the peak of the reversal 10 bars back! Then if you chase it and it turns into a poor trade, the arrow just disappears off the chart as if it were never there in the first place. I could go on, but why bother. Just stay away from it.

Conclusion

Whatever way they try to con you, remember: Your worst enemy is not the conman, but your own irrationality, which makes you ignore all the red flags, which tells you that you can win an infinite amount but lose only a hundred percent, and most importantly, that which convinces you that you don’t need to do the necessary due diligence to succeed at something.

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Biggest mistakes we all do

Blog
on July 18th, 2011 by - No Comments

Over 90% of Forex traders lose most or all of their money. Ever wonder why that is? The reason is that most traders make fundamental and stupid mistakes which cost them money each day and let the 10% successful traders laugh all the way to the bank.

  1. They trade too early. Most traders make their first trade before even finishing a single book on the currency trading market. Now, you don’t have to read books if you don’t want to. But you do need to get your information from somewhere. There are plenty of websites, forums, ebooks, and blogs that provide newbies with a proper foundation in which to build their Forex knowledge from.
  2. They trade too big. Before you can hit that home run, you first need to learn how to hit singles. I have seen way too many beginners get in over their heads on a single trade, trying to save a losing transaction. If you are just starting out, start small. Learn how to effectively and consistently choosing profitable currency trades at a smaller level. Once you succeed at this level, then you can start risking a little more.
  3. They trade based on emotion. Experienced Forex traders will tell you that you NEVER make trades based on emotions. You will lose your money quicker that you can blink. Hunches and “gut feelings” will cost you dearly when it comes to currency trading. Instead, base your trading decisions on facts, data, and trends.
  4. They change their trading strategy too often. Most newbie Forex traders (ie. unsuccessful traders) jump from one trading strategy to the next. If they don’t see instant profits, they’ll switch to a totally new strategy. The problem with this is that they end up never mastering any one strategy. How can you learn from your mistakes if you never stick to a strategy long enough to properly evaluate your losing trades? Do some research, pick one strategy, and stick to it for a least a few months.
  5. They don’t use software to help them choose their trades. Newbies think that they know everything. They think that they can look at a screen of currency prices and accurately pick the profitable ones. Funny thing though. Most experienced and successful Forex traders use some type of Forex trading software to assist them with their trading decisions. There are simply too much data for them to effectively analyze. They learned a long time ago that it is better to leave that sort of work to the powerful Forex software products on the market. Yet newbies still try to “wing it” and make these decisions on their own.
  6. Don’t be like the majority of newbie Forex traders who make these mistakes and end up losing all of their investments. Make better choices and you will be one of the few who actually make money trading in the Forex market.
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