Forex Broker of choice

Our preferred MT$ Forex Broker is FOREX,com UK “Forex.com acts as the clearing agent and counterparty to customers margined forex transactions introduced by “PracticalFX”. FOREX.com is a trading name of GAIN Capital - FOREX.com UK Limited and is authorized and regulated by the Financial Services Authority. FSA No. 190864.”

FOREX.com UK operates on the MT4 trading platform which is a professional sophisticated charting program with an array easy to use tools that allow the trader to open multiple charts and time frames on a single terminal.

The software allows us to change chart properties including the colour, style and scale. Windows can be configured within the terminal to suit individual trading needs and allows us to import or create our own custom indicators and automated trading software called EA’s or expert advisors. The program also allows us to set alerts that notify us when predetermined trading conditions have been met.

The program comes with dozens of the most popular indicators and EA’s which are easy to use.

Forex.com offers 37 real time currency pairs with commission free trading and are compensated through the bid ask spread on the various currency pairs. PracticalFX receives a rebate of 1 pip per round turn trade from forex.com. This rebate is not an additional charge to the client and has no effect on the normal bid/ask spread offered to its clients.

Standard or Mini accounts can be opened, the latter can be opened with as little as $250. Stop Loss and Limit orders are guaranteed to be filled at your price up to $2,000,000 under normal trading conditions. Placing contingent orders (Stop Loss/limit orders) may not limit your losses to the intended amount during Major Fundamental Announcements or outside of FOREX.com’s normal trading hours.

Forex.com also offers a practice account with up to $50 000 virtual money, allowing traders to test their trading strategies and familiarize themselves with the software prior to opening a live account.

Note: “FOREX.com UK is not currently accepting account applications from residents of the People’s Republic of China and Nigeria.

Governmental restrictions and our policies prohibit us from opening accounts from the following restricted OFAC sanctioned countries: Afghanistan, Burma (Myanmar), Cote d'Ivoire (Ivory Coast), Cuba, Democratic Republic of Congo, Former Liberian Regime of Charles Taylor, Iran, Iraq, Libya, North Korea, Sudan, Syria, Unita (Angola) and Zimbabwe, as well as other individuals specifically sanctioned.”

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Chosing a Forex Broker

When searching for a Forex broker to facilitate your trading there are a number of important factors to consider.

• Be certain that they are a registered financial concern based in their country of origin. There are many brokers who operate out of the major cities of large countries; but are registered in some small obscure country whose financial laws are inadequate to protect traders. Lodging a complaint with financial regulators in their city of origin will not help as they are not regulated by that country.

In the United States the Forex market is regulated by NFA and CFTC and by logging on to http://www.nfa.futures.org/basicnet/ we can obtain the facts about the Forex Company. We can search for the firm by name to ascertain if there have been or are any pending complaints against the firm.

Recently the NFA have instituted changes that have had a detrimental effect on our ability to trade the market successfully.

1. These changes affect the placing of market orders like one cancels the other (OCO) used to bracket a trade.
   
2. Certain contingent orders like stop losses and limit orders will be affected by the new FIFO rules.
   
3. Hedging a strategy used to trade the same currency pair both long and short has been completely outlawed.

These new regulations have made it more difficult for traders to control risk and place pending orders.

Some brokers have instituted temporary measures or fabricated solutions which could back fire against them.

Others have simply instituted the changes to the detriment of their clients, whilst many have recommended that their clients move their funds to a reputable offshore broker regulated by European or British financial authorities.

Until these archaic and draconian measures have been removed by the NFA it will not be possible to recommend any of the US Brokers
.

• We also need to check the net reserves of potential brokers as client funds are not always protected in the event of insolvency.
• There are many websites dedicated to monitoring the activities of the numerous forex brokers world wide. A check on one of these sites can help ascertain whether your potential broker has a good reputation or not.
• A word of caution here, there are few if any Forex brokers who do not have allegations of misconduct posted on these websites. Many of the complaints are posted by reckless, unsophisticated, uneducated or malicious traders.

Whilst there is no doubt there are certain brokers who are charlatans and crooks, simply out to relieve the unwary public of their hard earned cash there are also reputable brokers who offer a good service to traders with fair and honest dealings who are slated by traders who lose their money.

• Client service is also of vital importance when choosing a Forex Broker. This is a market that runs 24 hrs a day 5 days a week, and being able to obtain trading assistance via phone, chat, or email at all hours is paramount.
• Another important consideration is the trading Platform the broker uses. This could be propriety software unique to that broker or a popular trading program like Meta Trader.

Some of the factors to consider are:

1. Is it professional user friendly charting software? Here we need to determine how easy it is to place orders and customize the charting to suit our needs.
   
2. Do they offer demo accounts? Most new traders want to be able to familiarize themselves with the workings of the platform before trading real money on a live account. Experienced traders also use demo accounts to test new trading strategies before implementing them on their live accounts.
3. Is order execution fast and efficient? Only by placing trades can we determine if the order execution is efficient. What we need to watch for is the time lag between placing the order and broker execution.
   
4. Do they have an adequate number of indicators? Trading indicators are used to assist us in our daily trading decisions so we need to be certain that we have all the indicators necessary for us to make those decisions.
   
5. Is their chart pricing reliable? The only way we can check pricing is by comparing prices with other reputable brokers. If there are repetitive price spikes that do not appear on other brokers charts then we need to be wary.
   
6. What are their charges? Most brokers do not charge a commission on trades so be certain you are dealing with a commission free broker.
   
7. Are their spreads competitive? Brokers charge a spread fee. (This is the difference between the buying and selling price) Spreads can vary from broker to broker so be sure the spreads are competitive.
   
8. Here we also need to consider if our broker is offering fixed spreads or multi bank liquidity feeds. Many brokers choose not to use liquidity providers and take the other side of the trade, effectively trading against you. Others offer anonymous order execution and therefore have no dealing desk or interest in whether you make or lose money on each trade.
   
9. Can the software be customized to sit your needs? Many traders use customized indicators or automated systems to trade so be certain that your trading software can cater for your trading needs.
   
10. Is price feed reliable? When trading forex real time pricing is vital. Brokers who are frequently off line or who have numerous price freezes should not be considered. What is the minimum account size? Here you need to determine if your broker can cater for the amount of capital you are willing to risk.
    
11. What is the minimum transaction size.Transaction size is relevant to the amount of capital you invest in your trading account. There are standard accounts, mini accounts, and micro accounts available. It is financial suicide to open a standard account with a small amount of capital. Rather opt for a broker who can offer a mini or micro account to suit your capital.
    
12. Do they cater for your trading style? Many brokers take a dim view of scalping, and penalize traders for the activity, often only raising the issue when the trader tries to with draw their profits.
    
13. Most brokers these days widen their spreads when there are major high impact news releases and consider all pending orders market orders which could be detrimental to the trader. If you are a fundamental news trader you need to consider if the brokers rules will suit your trading style.

These are some of the factors necessary to consider when opening an account with a Forex Broker.

The Awesome Fibonacci Road Map

Fortune Favors the Brave

As a Forex trading mentor I have found that teaching students to use Fibonacci retracements and extensions has always proved to be the most difficult aspect of their education. Many do not persevere with it and choose what they consider to be less complicated method’s to enter and exit the market.

The following recent sequence of trades shows the true profit potential of trading Fib’s. The 1.618 and 2.618 Fib extensions are natural profit taking points in the market where there is always a potential for a reversal or correction at these hidden support and resistance areas; and to my mind is therefore a low risk, high reward area to enter a trade.

If we accept that these points are where buyers are taking profits and in order to close their trades are in fact selling the base currency to exit the market; and that this is also the point where sellers are taking their profits and in order to exit their trades are buying the base currency to close their positions.

If we can accept that; then surely it is also an ideal place to reverse our position in addition to closing existing positions.

Chart 1 Click to enlarge

The above chart shows price hitting the 1.618 profit target off our point C which is the .786 Fib retracement. We enter the trade short at the 1.618 profit target price of 1.6663; and immediately price drops about 100 pips, to our previous high in the first 2 hours.

On the next chart we set our new fib range from the high at 1.6663 to our previous low at 1.6423 to establish our new fib 1.618 extensions for the profit target on the sell we just entered.

Chart 2 Click to enlarge

As we can see from chart 2 the market tanked at our new 1.618 fib target at 1.6275 where we closed our position with a 384 pip profit; at which point we reversed or position and entered long in the market. We set our new fib range from 1.6274 to 1.6319 with a profit target of 1.6464.

Chart 3 Click to enlarge

Our profit target is reached at 1.6464 where we had a correction of 59 pips. We closed our long trade at the 1.618 for 186 pips profit and entered a short trade with a 35 pip stop loss. This trade was closed out with a 35 pip profit and a new buy order was entered 10 pips above the previous 1.618 aiming for the 2.618 profit target.

The market rallied and our new order was entered at 1.6474 aiming for 1.6581 with our stop just below the previous low at 1.6404. The target was hit at 1.6581 where we closed our long position for 103 pips profit. We immediately entered the next trade short at the 2.618 profit target.
Chart 4 Click to enlarge

Once again the 2.618 profit target was reached where our short trade was closed and a new long trade was entered. The profit on that trade was 200 pips. As there is no recent high to establish my new A- B range I have gone back to my previous low and used my next high to establish take my new 1.618 target.

This trade produced about 225 pips profit and a new short was entered at the 1,618. Price immediately reversed to the 1.382 fib extension (Purple Fib) approximately 150 pips before a small correction to the current market price.

Chart 5 Click to enlarge

These targets are not coincidence, because the market more often than not hits these points and then reverses.

The price swing from 16273 to 1.6591 was also a .618 fib retracement which was more evidence to trade long off that 2.618 low on chart 4. I also use a very specific sequence to find the correct swings but more often than not the high or low of the previous price swing determines the ultimate 1.618 target. For all the trades off the 1.618 targets I use a 35 pip stop loss.

Chart 6 Click to enlarge