Who are Your Forex Broker

Choosing a Forex Broker

The Best Forex Broker for You

The best brokers are those that offer the tightest variable spreads possible with no discrimination.

• Every client should get exactly the same spread regardless of account size or trade size or type of customer.
  
• The broker should not engage in the practice of providing hidden kickbacks to introducing brokers or white-label partners.
  
• As a client, you should also have access to real-time spreads that are clearly displayed next to quotes, and published spread data from the last seven days.

Brokers that offer fully automated trading, end-to-end, with no direct human involvement and no dealer intervention are able offer the tightest spreads.

Switching Brokers

If you're already trading in the forex market, switching to a broker with a better spread policy can result in a big payoff in terms of your profits. And the cost of switching is low -- essentially the cost of a wire transfer.

Before making the switch, a proper competitive analysis is well worth it. But it takes time and effort, and possibly an investment. At the very least be sure to:

1. Understand what spreads are really costing you and how lower spreads would improve your return. For details, see Forex Spreads.
   
2. Understand the spread policies of various brokers. In detail. For help, see Spread Questions for Forex Brokers below.
3. Understand different brokers' quality of execution, given your trading style:
   
• Open an account with more than one broker and try them out. It will be money well spent.
  
• See what their existing clients have to say by asking for references, or consulting the broker's or market maker's (uncensored) bulletin board.
  
• Finally, try various brokers' demo platforms. But beware: demo platforms often execute much better than the real ones.

Spread Questions for Forex Brokers

Transparency with respect to spreads enables you to understand not only what you're paying, but under what circumstances and why. It will quickly reveal the presence--or absence--of value.

The following is a list of questions to help you evaluate forex brokers with respect to spreads:

• What are the typical spreads?

Not just for one or two of the more popular currency pairs, but for all of them. You don't want to be constrained from trading new pairs later on. "Loss-leader" pricing has no place in forex markets.

• Are the spreads fixed or variable?

The interbank forex market has variable spreads. If you are trading with fixed spreads you are, in effect, paying for an insurance premium (unless you trade only around news announcements when markets tend to be more volatile) since fixed spreads are traditionally higher than variable spreads. Is it worth it? That depends on your trading pattern.

• If fixed, are there any exceptions to the fixed-spread policy?

If you read the fine print, there may be. And, if so, you are paying for insurance without getting full coverage. Make sure the exceptions are clearly spelled out. And find out when the policy on exceptions last changed to gauge how frequently the rules change.

• Are there any restrictions on trading or entering orders around news announcements?

Again, if there are, then what are you paying insurance for? Make sure any restrictions or conditions are spelled out.

• Do the spreads differ depending on ticket size?

In the interbank market, spreads are wider for larger ticket sizes. When you review typical spreads it is important to understand the ticket sizes that they apply to. And if spreads differ depending on ticket size, find out what the typical spreads are for different ticket sizes. All too often, brokers offering matching platforms display very tight spreads, but these spreads apply only to very small ticket sizes.

• Do all clients on the platform get the same spreads, all the time?

Or does the spread depend on who you are, how large your account is, or who introduced you to the broker?

• Are there clients who get rebates or volume discounts?

If so, guess who's paying for the rebates? If different clients get different spreads, then find out what you have to do to join that privileged group that gets a better spread.

• Does a portion of the spread for any client go to anyone other than the firm?

Forex brokers frequently agree to pay third parties, such as introducing brokers and sales agents, a portion of the spread on your trading activity. While some firms argue that introducing brokers are not really getting a portion of the spread, don't be fooled. Ask if the introducing broker is being paid in direct proportion to your trading activity. There is nothing inherently wrong with this practice, but it is a fact worth knowing. Only then can you decide if the introducing broker is providing enough added value for the amount you are (indirectly) paying him/her. And you should also ask if you could get better spreads by cutting out this middleman and trading directly.

• Or more generally: does anyone other than the firm itself get paid as a result of your trading activity?

You'd be surprised, but some firms pay their traders and sales agents in proportion to the firm's profit on your trades: a nice conflict of interest that raises inevitable questions about quality of execution.

• Does the firm have an open, uncensored forum where their clients can post trading experiences?

Open, uncensored forums are a good place to get an initial understanding of what existing clients think of the broker's platform and quality of execution. It is important to have access to all posts for at least the last 12 months. If this sort of information is not available, ask why not. And note that "chat rooms" are something different, typically because their purpose is not to warehouse the historical information you need. But beware: since the Internet allows for anonymity, it is often very difficult to determine who is really behind a post. How do you separate real concerns, real problems, and real compliments from, say, posts by agents working on behalf of a particular broker? There are some generally recognized guidelines. Note the total number of posts made by any individual, and read some of their previous posts to judge their credibility. Discount extreme comments by traders who are new members or who have posted only a few messages. These individuals are most likely guerrilla marketers who blitz forums--sometimes overtly, at other times covertly.

• How does the demo platform differ from the real platform in terms of execution and spreads?

A demo platform can be useful to observe how prices and spreads vary under different market conditions. And it can give you an idea of how good the quality of execution is, but only if the demo platform behaves exactly the same as the real one. Beware: rejected trades, delayed execution, price-skewing and stop-hunting often happen only on the real platform. And sometimes, even spreads may be different. Also ask if there's a time limit or "trial period" for using the demo platform. One of the best uses of a demo platform is to test new trading strategies over time.

• What is the minimum to open an account, and what is the minimum trade size?

Unfortunately, the only way to truly test quality of execution is to try the real thing. Some brokers will impose a minimum account opening balance or require a minimum trade size, which can make testing a platform prohibitively expensive.

article source http://knol.google.com/k/choosing-a-forex-broker#

Online Trading

Forex Online Trading

The Basics of Trading the Forex Market (Foreign Exchange)

Basics of Forex online trading to help you get started. Foreign exchange market terminology is provided.

Before you begin trying to trade the Forex (foreigh currency exchange), you should be familiar with the main terminology and ideas used in this market.

Pip

Pip stands for "percentage in point". This is the basic unit of price in the Forex market. This is similar to stocks, for example, which use dollars and cents to as the base numbers. Pips can refer to the number of ticks or units a currency pair has moved. For example, assume you are trading the EUR/USD (the Euro Dollar and US Dollar) pairing. If the price has moved up from 1.5480 to 1.5485, that is a 5 pip movement.

A pip is also a unit of money you are trading. A standard lot is based on a 100,000 units and each pip is valued at approximately $10.00. Typically, to trade a standard lot, you will need approximately $1,000 per lot (or unit). Using the same example, that 5-pip move up would have been equal to a $50 move. There are also mini accounts that allow you to trade with much less capital, while also reducing the pip value. Typically, most brokers with mini accounts will base their mini lots on 10,000 units per lot, with a pip value of approximately $1.00 per pip. With mini accounts, you will need approximately $100 per lot/unit you want to trade.

Spread
This is also called the bid/ask spread. This is the price difference between what a currency pair is being bought and sold for…or a difference between the bid and offer price.

The bid is the price at which the Forex market maker is willing to buy the base currency in exchange for the counter currency. On the other hand, the ask price is the price at which the Forex market maker is willing to sell the base currency in exchange for the counter currency.

Remember that all trades involve the simultaneous purchase of one currency and the sale of another.

Spreads will vary from pairings to pairings. This spread is where your broker will make their money. Every time you make a trade, they make the spread. This is why they charge no commission – because there is no need for it.

Depending on the broker and the pairings, you will find spreads from as little as 1-3 pips – the smaller the spread, the better off you will be.

For example, a broker may have a 2 pip spread for the EUR/USD pairing, which means that a typical bid/ask quote would look something like this: Bid: 1.5280 Ask: 1.5282
Using that example, if you were to buy, you would be buying at 1.5282 and if you were to sell, you would be selling at 1.5280

When you buy a pair, you have the expectation that the base currency will do better than the quote currency. For example, let’s assume that we have done our homework using our technical and fundamental analysis and feel that the US economy is headed for a recession and that the Euro Dollar is going to gain value over the US Dollar. We see the quote: EUR/USD - Bid: 1.5280 Ask: 1.5282 We are confident about our analysis so we buy (at 1.5282) and watch the trade take place. We get news that the US Fed chairman has made some public statements that he is worried about the US economy and could be headed towards a slight recession. We look again and the quote is now: EUR/USD - Bid: 1.5300 Ask: 1. 5302 and decide we are going to take our profits and sell our Euros, now receiving 1.5300 Euros, making a profit of 18 pips on that trade.

This is a much simplified example, but it should give you an idea about the spreads and quotes.

Leverage

Leverage trading, or trading on margin, means you do not have to put up the full value of the position. As mentioned above, a standard lot is worth approximately $100,000. If there were no leverage involved (or a leverage of 1:1), you would need to deposit the full amount to trade one lot. However, all brokers will offer you leverage of 50:1 to 400:1.

While more leverage makes it much easier to trade more lots, there is a danger with it as well. Think of leverage as a double-edged sword. Yes, it can help you control more money, but if you have a loss, you can also lose more of your own money.

Here is an example: assume you have $5000 in your account. Your broker offers you 100:1 leverage. This means that you can trade up to 5 lots and control $500,000 worth of currency. This also means that for every 1 pip in price movement, you will gain or lose $50. Remember, typically for every $1000 in available margin at 100:1 leverage will control $100,000 in currency and that every pip (i.e. price movement) will be worth $10.

Using the same information: if a broker were to offer you 400:1 leverage, then your $5000 would be able to control $2,000,000 in currency. This gives you the ability to trade 20 lots at a time, which means each pip movement would be approximately $200…so that 5-pip movement from above would equal to a gain or loss of $1000!

So, you can see that while a higher leverage can help you control more currency and give you the ability to make more money, if you are wrong, you will lose more. Take the use of leverage seriously and with respect and you are already ahead of the game.

Margin Call
You never want to get one of these. Basically, a margin call is when you are contacted if your account falls below a certain level (you will know that level that is when you open your account with your broker.)

Here is a simple example: You open an account with $2000. You open a position with one lot. You have now have only $1000 in usable margin to either open another lot or to buffer any losses you had on your first open lot. Let’s say that you use that remaining $1000 to open another lot. You now have $2000 of USED margin, with ZERO remaining usable margin. Your trade goes against you by 10 pips (which with 2 lots is $200). Depending on your broker, they will either automatically close the trade and you will have nothing left in your account or you will be contacted via phone or other means saying you must deposit additional capital to cover the deficit. Fortunately with most Forex brokers, your risk is limited to the funds you had on deposit.

Price Quotes: Base Currency / Quote Currency
All transactions are based in pairs, buying one and selling another. The first currency quoted is called the base currency, while the second one quoted is called the quote currency. As an example, here is a typical currency quote: EUR/USD 1.5280

In this example, the base currency (EUR) is the Euro Dollar and the quote currency (USD) is the US Dollar.

So, using this example (if you were buying), the quote of 1.5280 means that you would have to pay 1.5820 US Dollars to buy 1 Euro Dollar. Conversely, if you were selling, you would receive 1.5280 US Dollars for each Euro Dollar you sold.

Technical Analysis
Technical analysis attempts to forecast future price movements by examining past market data. This involves using various technical indicators that help you decipher what is going on in the market i.e. are we in an uptrend, downtrend, or are we going nowhere?

Some of these technical indicators include: moving averages, stochastics, relative strength index (RSI), Bollinger Bands, MACD, Fibonacci retracements, and others. These are visual representations placed on a trading chart to help the trader make a decision whether to buy, sell or stay out of a market.

Fundamental Analysis
Fundamental analysis studies the main underlying elements and variable that help influence the direction of the currency.

Some of these elements are government policies, economic indicators (such as retail sales numbers, non farm payrolls, housing starts, Consumer Price Index, Producer Price Index, and Gross Domestic Product), etc. Basically, fundamental analysis attempts to use those economic numbers (i.e. news events) to help show traders where the economy and thus markets are headed.

One needs to be aware and prepared for the various news events that are planned to be announced. Many of the fundamental reports are posted at certain times of the day/week/month so it is fairly easy to get prepared for them.

NOTE: When trading, it is essential to use both fundamental and technical analysis to help you make decisions. While you may have technical analysis down pat, ignoring the fundamentals can cost you money.

For example, let’s say that your indicators are all showing an uptrend is continuing in a pairing consisting of the US Dollar. You feel it is rebounding. You ignore the fact that there is a major announcement scheduled at 9:00am EST about the credit market. The news comes at 9:00 that 2 major US banks and mortgage companies just announced they are going to lose $30 billion in the sub-prime mortgage fiasco. You are long in the US Dollar market…well guess what just happened? You probably just experienced a 50-200 pip drop in that pairing…in the matter of seconds!

There are a number of online financial calendars that you can use to help you keep track of the major key indicator announcements. These sites include: Bloomberg.Com, Briefing.Com, Yahoo U.S. Economic Calendar, CNNfn.Com, FXWeek.Com, and many others.

The point is: It is not that difficult to keep track of the major announcements. Don’t let laziness cause you to lose money!

article source: http://knol.google.com/k/webword/forex-online-trading/hcjlhuwq5uou/2#

Ac Markets

ACM (Ac Markets) is a Swiss company founded in 2002. The company’s headquarters are located in Geneva, Switzerland, with offices around the world in Dubai, Uruguay and in the USA in New York.  It is one of the leading brokerage companies, as managing director Nicholas Bang says “the company's site is the second most popular place to trade currency on the net”.

ACM (Ac Markets) provides a reliable and simple trading platform for 39 currency pairs and for gold and silver. Spread are on average 3 pips for the major pairs in standard account, and are 4 pips and over for mini account. The leverage is 100:1 for all types of accounts. The minimum deposit for mini accounts is $2,000 and for standard accounts $5,000. ACM (Ac Markets)also offers institutional accounts, in which the minimum deposit is $50,000 with spreads as lowas 1 pip, Demo accounts, offering real time prices and trading conditions for a period of 30 days.

Due to Swiss regulations, registration process is quite long, and requires filling in personal details, employment status and financial. You are also required to submit your bank details, passport number, a photocopy of your passport and a copy of a utility bill.

Deposits into your account can be made in the following currencies: USD, EUR, CHF, GBP, AUD & JPY.

ACM offers 4 trading platforms, the “Advanced Trader” which is a professional trading software,the “Advanced Web Trader” which can be used from any Web connection without any download, the “Advanced Mobile Trader” allowing to place trades and monitor your account from any wap enabled mobile phone and the "Advanced Flash Trader". All platforms are accessible with the same username and password. ACM (Ac Markets) website and trading platforms are offered in a wide range of languages (14), including: English, French, German, Spanish, Dutch, Portuguese, Arabic, Farsi, Chinese, Japanese, Turkish, Greek and Russian.

The trading platforms are user-friendly, intuitive and customizable. Charting tools are available on all platforms, and news, analysis reports and financial calendars are accessible on the platforms and in an external web site.

ACM (Ac Markets) offers a service they call “What you click is what you get”, meaning that when a customer clicks on a price, that price is “captured” as the execution price. Therefore if the market moves, the customer still gets the price he chose, erasing slippage from trading activities.

Quick, efficient and polite customer service is available 24 during market hours. Professional staff is available in real time by Phone, Chat, E-mail and Return call. Support is provided in English, French, Spanish, Italian, German, Greek, Farsi and Russian.

ACM (Ac Markets) provides educational material, such as an introduction to FOREX trading, a FOREX trading glossary, a telephone deals glossary, trading examples, and more.

Users’ experience with this firm is controversial. Being one of the largest FOREX companies definitely helps attract new clients, and during the first months of trading, users are generally happy with their services and user friendly platform. However, the larger the deals get, the more dissatisfied the trader become. ACM’s (Ac Markets) spreads are not fixed so they do vary widely during major market changes. This become significant due to the fact that the minimum lot for each trade is large, therefore the losses can be grave.