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Someone once said “It’s not whether you can be a good trader, it’s whether you can find the trading that’s good for you”

Give a bunch of traders a proven successful system, you can bet that not everyone will make money from it. We know the system is not wrong. So what is it that makes a person successful at trading? Lets find out.

In my opinion success comes when there a perfect fit between the person and his/her trading strategy. If you are still struggling at making profits from trading then it is not because you are lazy but perhaps you are simply trading in a way which is not in sync with your personality.

Points below will help you to find your own Forex Trading Niche:

Have you tried trading intra-day, swing and position trading? If not, then how you know that the current timeframe you are using the best one which fits you.

From experimenting I found that I mentally handle swing trades better than trades that last for months or few seconds like in case of News trading.

Most people dive straight into technical analysis based on indicators. How about fundamental based trading, or even news trading (not that I recommend news trading).

I’ve played around with more indicators than you can imagine. Bottom line, I was getting no where; there is no end at finding the best combination of indicators that would work. I stopped once I found my peace in Price Action and it is where everything came together.

Why trade Forex only and not Stocks, Commodities and Futures? Unless you attempt to trade all these markets how would know which one is best for you.

I am guilty of this myself. I’ve never traded any other market. I may be not performing at my best and I would never know until I try all other markets. The good thing about Price Action strategy that I currently use is that I can apply it on any other market. I’ll save this one for 2011 New year resolution.

One would think that once they have found the best strategy then there would be no need to make any changes ever. That’s just not true. On the contrary most professional traders constantly tweak their systems to match current market conditions.

I’ve modified the current strategy several times in the past, and I’ll continue to do so as I seem fit. On the other hand I keep working on variations of the same strategy to see if there is more I can get out of it.

This point brings everything together. It would take time to try all the combination above. If you just got started in trading then it can take some time before you discover your trading niche.

I did not succeed for the first two years, I was barely able to keep my account above par. I think I was too adamant to follow any gurus at the time, now looking back I think I should have followed someone which could have shorten my learning curve.

In Summary of discovering Forex trading niche, one would naturally excel when they find the right market, the right strategy and the right fit with their personality. On the side note, remember it is the journey that matters so don’t forget people you meet on the way

We all know Forex Brokers manipulate prices and spreads. How do they do it? Why not someone stops them?

It may come to you as a surprise that Forex market is not as transparent as its counterparts like Stocks and Options market. Unlike those markets, it is not centralized or regulated in the similar fashion, hence exchange rate of any given currency can vary between brokers. The main liquidity providers are the big banks and hedge funds, they are known as InterBank Market. With this in mind lets look at how ECN and Market Maker brokers fits into the picture.

As the name suggest they “make” the price, as in change Bid and Ask value. Say for example they receive 1 pip spread from InterBank Market on EURUSD, but instead for us they display 3 pips spread (spread is the difference between Bid and Ask). Brokers can vary this from time to time and sometimes even show tighter spreads on Demo accounts but when you open live account it is a totally different story.

Every time you open and close a trade you lose the spread. This adds up to a significant value if you trade frequently. Not only this but market maker brokers are notorious for creating spikes, they do it in order to take out customer’s stops. Some market maker brokers also freeze their platform during news announcements or increase spreads by 20-30 pips which is quite common. Since Forex is not tightly regulated as other markets there is not much NFA or similar organizations can do.

The only advantage of using a market maker broker is that they require less funds to open account and usually offer platforms that are easy to use. They also offer higher leverage, benefit s of which are debatable. Read Does higher Leverage in Forex Trading help?

ECN Brokers simply provides the best possible price i.e. the best spread based on current market participants. The price on their platform comes straight from the InterBank market and there is no manipulation of the spreads. Spreads as you know are the bread and butter of market maker brokers. Since there is no mark-up on spreads by ECN brokers, the only way they can money is to charge commissions / fees. This fees is not different from what you pay when buying or selling stocks. From my personal experience the commission are negotiable and you can bid one broker against another to quote you the lowest commission rate. Also paying commission works out economical than higher spreads on market maker platform. I’ve traded on several occasions when there was no spread at all (BID=ASK)

When it come disadvantages, the most common one is the lack of user friendly platform. Most ECN Broker’s platforms are hard to navigate and it takes time to get used to them. However once you are familiar you can take advantage of advance order types which are not typically available on other platforms.

To me it is quite clear, ECN brokers win hands down. There is not better way of trading. Having said that, they may not be suitable for everyone, for those specially who choose to start with less amount of funds and prefer higher leverage.