Trading Tools Archives - Currency Trading Success

Four Reasons To Open A Forex Demo Account

You may be a seasoned stock trader or perhaps you’ve been trading options for a while and assume that you don’t need to bother with a forex demo account. But not so fast!

Too many new forex traders think that they don’t need to concern themselves with opening up a demo account. Unfortunately, far too many open up a live account and start trading right away; big mistake.

I guess I don’t need to point out how importance it is to get your “feet wet” via learning about the forex in a demo account. Trading in a demo account is an absolute must when you’re just learning how to trade the forex and any time you’re trying out a new strategy or fine tune one.

Before all the technology we have today, demo trading the markets was done on paper; it was cumbersome, but it served its purpose. “Paper trading” however had some major drawbacks.

First of all, it was done just on paper, make believe trading and simply didn’t feel that real for many traders. Let’s face it, losing ten thousand dollars on paper is just not the same as losing ten thousand dollars of your hard earned cash. Paper trading simply lacked the emotional component that is part of trading real time and real money.

Also, paper trading didn’t happen in real time. Trading decisions were made without the pressures of trading a live market. In addition to that, depending on the broker or platform, not all trading tools may have been available when paper trading.

Today however, all of that has changed. You can and should open a forex demo account and trade in it just like you would trade a live account. You’ll have the same price data, the same platform and all tools will be available to you just like they would if you were trading in a live account.

There just is no excuse not to open and trade first in a demo account anymore. As a matter fact you should have a demo account open at all times and here is why.

1. Get to know your way around the trading platform.

You want to test drive a new trading platform well before you ever place a live trade. You don’t want to get caught trading live and not knowing how to adjust an entry, move a stop or how to close and get out of a trade. It might cost you dearly!

2. Know where to find indicators and technical tools on your platform.

If you base your trading decisions on technical analysis it’s crucial you know how to access your technical tools on the new platform. Inability to utilize trading tools or hesitation in finding them will lead to losses and cost you money.

All of this is twice as important if you trade small times frames and scalp the forex. When scalping there is absolutely no room for errors related to moving a stop, finding indicators or figuring out how to close a trade.

3. Get to know the broker while learning the platform.

You want to be very familiar with how your broker operates before you ever place any live trades. How easy can your broker be reached? Do they answer the phone or do you have to send them an email or chat with them after your connection dropped and you need to close out a trade. Again, this one could cost you money!

4. Test drive new trading strategies.

When you think about trying out a new trading strategy or fine tune an existing one, demo trade it first. Trade it in your demo account at least over 20 to 30 trades before continuing on with it.

Once you have demo traded your new strategy, next trade it in a micro or mini account, which is ideal for testing it out in a live environment. And then, and only then are you ready to take your new strategy live.

The benefits of opening a forex demo account are clear. And today, most brokers offer demo accounts that do not expire but stay active as long as your live account stays with the broker.

So what are you waiting for? Open your forex demo account today!

How To Find The Best Forex Broker?

By Jack Leave a Comment

Once you’re ready to start trading currencies, one of the first things you’ll need is a brokerage account. Ideally, you’ll find and open an account with the best forex broker available to you from the get go.

Your broker provides you access to the markets, very commonly provides the trading platform and market data. Your broker also provides you with leverage and enables you to trade on margin. Margin gives you leverage, which is one of the factors that makes forex trading so attractive.

So how do you select the best forex broker from the many brokers available today? While there is much to take into account here are 5 factors you must take into considerations when selecting your broker.

1. Minimum Trading Funds Required

Often this is the first thing traders look at when considering a broker. I am sure you have noticed there are different minimum account requirements amongst the various brokers.

You will find brokers offering standard accounts for traders who have $10,000, $50,000 or more to invest. Others offer mini forex accounts which might typically require around $1,000 minimum deposit to get started. Others yet offer micro accounts which in some cases can be opened with as little as $100 or perhaps even less.

Many brokers today offer retail traders a range of accounts, where you may get started with a micro account and can later trade up (no pun intended) to a mini or even standard account, should you want to.

It’s usually best to go with a broker whose client base is mainly traders with similar sized accounts to yours. That way there is a good chance that the level of services, support and costs will work for you.

2. Market Access & Broker Access

Does your prospective broker provide 24 hour access to their trading platform? While most to, verify that this is so and don’t get caught in making assumptions.

How about broker support? Is support available 24 hours, in case you have a technical problem? How can support be accessed: by chat, email or telephone?

The time to find out all those details is before you open your account and not when you need to get out of a trade… now!

3. Currency Pairs

You will also need to check that the broker offers all the currency pairs that you likely want to trade.

This should no longer be an issue today, certainly not if you trade the majors. However, if you plan on trading cross pairs or exotics make sure that your broker can provide you with access to those pairs.

4. Trading Platform

Take a close look at the charts, indicators and other technical tools provided by the broker. Does the prospective broker provide access to forex news, chart alerts or news alerts? Make sure to open a demo account and see what the platform has to offer.

Most beginning traders rely on the broker platform to provide them with the above trading tools and save on trading expenses if those tools are part of the trading platform. As traders become more experienced or become professional traders this is less important, as they often have accounts with dedicated news and charting service providers.

5. Spreads

The spread is the difference between the bid and ask price for a currency pair and is the fee charged by the broker on each and every trade. Regardless if you have a winner or a loser, there is still the spread to be paid.

Unlike in the stock market where you pay a commission to trade, most forex brokers do not charge commissions. However, they do charge the spread and this is how the broker earns money.

The amount of the spread varies according to broker, the currency pair traded and the time of day traded. Expect to pay 1 to 3 pips on most of the majors and perhaps 7 plus pips on cross pairs or exotics. You will pay less spread during average trading times and higher spreads during volatile trading and/or slow market times.

While a slightly higher spread should not keep you from trading with a great broker, it’s still a good idea to know what you will be paying for spreads, particularly if you mostly trade crosses or exotics.

Make sure to do your due diligence. And… best of luck in finding the best forex broker… the one that’s just right for you.

Choosing the Right Forex Trading Tools

By Jack Leave a Comment

Just like tools in any other field, when trading you also want to have the proper tools. Having the right forex trading tools in your toolbox is of particular importance when you set out to scalp or day trade the forex.

While accuracy is important, regardless if trading short term or long term, it is of particular importance for scalping strategies when trading the forex.

Typically, scalpers stay in the market only for short periods of time relying on exact entries and exits to make their profits. To be successful you must be able to trust that you have the ability to enter and exit the market when you need to. So what trading tools are required for short term trading?

Computer and Internet Connection

Even though this sounds obvious it’s important enough to mention.You must have a computer to access the internet. You also must have an internet connection that is reliable and operates at a high speed. Dial up connections simply cannot handle the fast paced forex trading environment. The last thing you want when in a scalp or short term trade is for your connection to drop.

For most everybody today those concerns are no longer an issue. Just about everybody has the right computer setup to trade. If you do not, you must get the right equipment; this is one requirement that is not negotiable, particularly when trading short term forex.

Broker and platform

Your next consideration is choosing a broker and a platform you can trade through. Select a broker that has been in business for some time, a solid track record, quality customer support, fast and reliable trade execution and low spreads.

Take your time and do your homework here. Check out the brokers you consider trading through by going to the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). Also check the forums for the experiences of other traders with these brokers.

Your final choice of broker most likely will determine the platform you’ll trade on, unless you decide to go with your own charting package.

Regardless of your final decision, here is a short list of key considerations to keep in mind when evaluation a trading platform.

How many and which currency pairs can you trade through the platform?
What order types are offered?
What account types are available: standard and mini accounts only or do they also offer micro accounts?
What research can you do and what news is available via the platform?
What type of technical and trading support is available?
What charts come with the platform?
Does the platform integrate with third party charting packages?
What technical indicators are available through the platform and are the indicators you need offered?
And finally what is the amount you need to open the account and to keep it open?

The most important Forex trading tool: your trading strategy

One of your most important tools in your tool box is your trading strategy. Will you scalp or will you day trade? Will you trade with the trend or will you trade counter trend? Will you trade the London open or will it be the London Close?

You want to be clear on what your trade setups are and when the conditions for your trade entry have been met. You want to know what the conditions for optimal trade entry and exit must look like before you ever enter any trade.

Pay particularly close attention to this part of your trading tools. If you don’t have a trading strategy or choose not to follow it, all your other forex trading tools simply won’t matter.