To find a systematic method that can help you avoid emotions and discretionary judgement is just the first step. I can’t emphasise enough how important is to then develop the right mindset. Hopefully the tips above help. What do you do to Maximise Trading Performance?

Related Posts:

• ECN vs Market Maker Forex Brokers
• Are You Using Right Charts For Forex Trading?
• Stop Letting A Winner Turn Into a Loser

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.

Related Posts:

• 7 Tips to Maximize Trading Performance
• Are You Using Right Charts For Forex Trading?
• Stop Letting A Winner Turn Into a Loser

Before I put even a single dollar on the line I like to test my strategy on demo account. Demo trading helps me speed up my learning time many folds and it also acts as initial qualification of a strategy’s potential of success. I can then safely test the strategy over several pairs and identify the most profitable pairs.

Demo trading is the best way to make yourself familiar with the brokers platform. Whenever I use a new broker for live trading, I download their demo and press every single button and check all options. You can’t break anything in demo anyways.

Demo softwares can also be used to download history data which then can be used with Expert Advisors to backtest your strategy. However if you use strategies based on Price Action, like I do, it is harder to code them into a Expert Advisor. Indicator based strategies can be coded quite well with Expert Advisors and hence backtesting becomes quite painless.

If you are new at trading then I’ll highly recommend that before going live, wait until you have doubled your account in demo trading. If you can’t mentally handle losses in demo account, you have no right doing live trading. If you demo account trading reflects more like your poker table habits then you need to spend more time learning psychological aspect of trading.

Forex Demo accounts mostly provide real time data and they can be safely used for your live trading, unless until you trade on 1 min charts where prices can vary from broker to broker. I personally like MT4 charting platform, however don’t like placing trades on it. I use other ECN brokers to place live trades and use MT4 for charting.

Related Posts:

• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers
• Are You Using Right Charts For Forex Trading?

Due to Forex 24 hour nature each broker has a different time for the new daily candle depending on the location and server time. As we know that daily candles are formed once in 24 hour period. However not all brokers are same and they differ as to when their charting platform opens the new daily candle. Our goal is to find the broker whose charting platform is the most ideal for technical analysis.

Going back to stock market, where it all began and New York being the center location for all stock trading activities. A typical trading session ends at 5 PM EST. This is the time when most bank and institutional traders look to analyze daily trades. Hence this is the time we should also be looking at when placing and analyzing daily trades.  The idea is to look at the same price action as them so as to match their actions with ours. By doing this you would more accurately draw tread lines, accurately analyze  candlestick patterns and indicators would sync up better.

To obtain FXDD charting platform simply go on their website and register for an Demo account. Once you have finished the demo account period, you can open a new account from the MT4 platform itself. Click on File Menu and then click ” open an account”. You can repeat this process as long as you wish. Also feel free to use any other broker which meets our requirement. The whole idea is to follow the bank and institutional traders.

Related Posts:

• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers
• Stop Letting A Winner Turn Into a Loser

We all know that fear and greed is what drives most of the new trader’s decisions. Though a very simple concept to understand, it is very to hard to put into practice. The primary reason why new traders let their winning trade become a loser is due to lack of trading plan. Before placing any trade we should know when to take profits and set the stop loss.  We will cover ways of setting profit targets and stop loss in another article.

Now we covered the psychological point of how it works, lets look into how we can avoid falling in this trap.  First divide the profit target into three parts. These three parts don’t have to be of equal size. They can very based on support / resistance or any other criteria. When placing trades always trade in lots divisible by 3.  Close first third when trade reaches third of your profit target. Do NOT move the  Stop Loss to starting point yet. Once the trade reaches second profit target close the second third and  move the  Stop Loss to starting point. The last third is now a free ride.

Trading this way not only reduces your risk but also locks in profit as you move along. However always keep in mind not to trade more than 2-3% of account equity in one trade. You can read more about Money Management Here.

Related Posts:

• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers
• Are You Using Right Charts For Forex Trading?

Forex Lots

A Forex Lot is the amount of currency you buy or sell. Say for example you wish to buy 100,000 USD, 100,000 is basically your trade size.

Forex Lot is basically representation of Trade Size in a different format. A Standard Lot would represent 100,000 of any currency, whereas a Mini Lot represents 10,000 and a Micro Lot represents 1,000.

So essentially 10 Mini Lots make 1 Standard Lot and 10 Micro Lots make 1 Mini Lot.

100,000 of a currency represents one Standard Lot or ten Mini Lots or one hundred Micro Lots in Forex market.

100 Micro Lot = 10 Mini Lot = 1 Standard Lot

When you place orders online you should know what account you have and how your broker lets you trade. For example with MBT, you can have an Standard Forex Account and still place trades in Mini Lots. On the other hand with Dukascopy you can only trade Standard Lots.

You may also want to read about Different Type of Forex Accounts.

Related Posts:

• What is Forex Leverage?
• What is Forex Pip?
• 7 Tips to Maximize Trading Performance

No matter what trading style you use, it always pays off to watch and monitor your trades once you have placed them. There are several way of doing it and it is up to individual to work out the best method based on his/her personal situation.

If you happen to use MetaTrader then you have a feature of placing audible alerts.  Once set  properly MetaTrader would alert you when the price reaches a certain point, it can be your  Stop Loss or Take Profit level.  To set it up simply press “Ctrl + T” and then select “Alerts” Tab. Right click and select “Create”.  I personally use this feature a lot, it helps me get away from PC and do other things around the house while still trading at the same time.

Unless you are very good at programming I won’t recommend creating your own Expert Advisor for managing trades.  However there is an popular free Expert Advisor called “ManageTP” available on  several forums which works just fine. It helps you to automatically place  Stop Loss and Take Profit levels  and move them as per price action. Simply Google the name you would find the Expert Advisor along with instructions on how to use it.

While on your desk looking at charts it helps if you have multiple monitors.  You can then place charts on one monitor and work on something else on the other monitor at the same time.  I’ve a setup of 4 x 22” monitors dedicated for trading.

Using PDA to monitor trades comes in very handy while on the road. MetaTrader and several other Brokers offer PDA versions of their trading platform. Before buying a new PDA check with your Broker support to see if it is compatible. You can also use a laptop with a wireless internet to do the same.

Do you know more ways of monitoring trades? Feel free to share your ideas.

Related Posts:

• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers
• Are You Using Right Charts For Forex Trading?

Forex Forums

Forex Forums are widespread these days and they are very helpful in collaborating and meeting with like minded traders.  However Forex forums also add to the already existing noise and makes it harder if not used carefully.

In this article we will look at the best Forex forums:

Best Forex Forums

This is by far the best Forex forum when it comes to Fx trading. There are lot of active members and plenty of free Forex systems to get started. The highlight of this forum is their “Trading Systems” section which contains good Forex systems and it is the most active section of ForexFactory. If you are into Forex this is the forum to join.

Though second in our list this Forex trader forum has fairly less number of active members.  The section to check out is “Fundamental Analysis” which seems to be quite active on this forum.  All in all you can do without this Forex forum.

Babypips is a Mecca for Forex beginners. They have excellent tutorials under “School” section. In the forums you can meet a lot of newbies, so if you are one of them then this is the place to start. It is by far one the top three best Forex forums.

This forum has the large number of members focused primarily on MT4 programming and creating Forex Expert Advisors. There is also a Elite member section which provide access to EAs tracked and maintained by the Host.  If you are looking for some help in creating an Expert Advisor then you can try this Forex forum. Also visit http://www.mql4.com if you only want MetaTrader Expert Advisor.

So these were the top four Forex trader forums I think are worth joining. There are many other Forex forums and you may also want to check them out. Below is the list of such forums sorted by Alexa ranking:

Free Forex Signals are Back. Click Here To Get Started

http://www.trade2win.com
http://www.moneymakergroup.com
http://www.talkgold.com
http://www.traderslaboratory.com
http://www.goldage.net
http://www.traderslog.com
http://www.moneytec.com
http://www.forexforum.net
http://www.forexforums.org
http://www.piptrader.com
http://www.forexboards.com
http://www.einvestorsforum.com
http://www.fx-forum.net

Have I missed any Forex forum? Feel free to suggest more.

Related Posts:

• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers
• Are You Using Right Charts For Forex Trading?

When you open a position, Forex broker requires you to put aside certain amount from your account balance called Margin Requirement.  This margin requirement is based on the leverage the Forex Broker has provided you with.

Say you have a $10,000 account and your Forex broker has provided you with 100:1 leverage.  When you open a $100,000 position you would be required to put aside $1000. If the position goes against you then you will have until -$9000 to hold the position. Any further loss and you will get a Margin Call and your Forex broker will automatically close the position leaving you with $1000 that you initially put aside.

Now say you are an experienced trader and you know all about Money Management.  You have decided not to risk more than 3% per trade and hence maximum loss you would take is $300. It doesn’t matter what leverage you have because you will always have sufficient funds left in your account even after taking loss. Even if you want to open multiple positions at the same time you won’t need leverage higher than 100:1 You may also want to look at “Forex Money Management : A new Approach“

Higher leverage is not all bad news. It does help in one scenario. When starting off a lot of people don’t like to invest a lot of money. Say you want to start only with $500, in such case a Micro account 400:1 leverage can help to get you started. You can then perhaps open a $1000 position with only $2.5 margin requirement.

You may also be interested in reading “Margin Call“

Related Posts:

• What is Forex Leverage?
• 7 Tips to Maximize Trading Performance
• ECN vs Market Maker Forex Brokers

A typical Forex Broker would let you borrow 99% of the total value required to open a trade and you only need to come up with the remaining 1%. So if you are about to trade $1000 then you only need to have $10. Big difference from normal stock trading. Also Forex broker won’t charge you interest on the borrowed amount.

Leverage In Forex Market

Note that in case of stock trading you will liable to pay up $500 (or more) you borrowed in case of a loss. In Forex, your broker will close out all open trades as soon as your account available balance reaches zero.

The above table is only a guide, when trading live the Required Margin will change based on currency pair. In my personal opinion one should not go beyond 100:1 leverage in Forex trading. However your opinion may differ so feel to add comment with your preferred Forex leverage and why.

You may also want to read about “Does higher Leverage in Forex Trading help?”

Related Posts:

• What is Forex Mini, Micro and Standard Lot?
• Does higher Leverage in Forex Trading help?
• What is Forex Pip?