MM and ECN: Making A Killing with the Right Forex Broker

If you have already figured out your forex trading strategy by now, you are not in the clear yet. Now comes the part where you get to choose the type of brokerage firm that will fit in seamlessly with your plan.

A forex broker in essence, is the one that will keep an eye on the markets for you, and acts up as your partner in setting up your orders.

There are two major kinds of forex brokerage firms. Knowing their differences is important on your way to dominating the market. Not understanding the advantages of each can set you back a lot of time and/or money.

MM: Market Makers
What is important to understand about Market Makers are the fact that they are the ones who set the asking price and the bid price. As your trading partner in buying or selling, you grant them authority in handling your money.

An MM institution acts as an exclusive liquidity provider, giving services that is otherwise not found on any other brokerage set-ups. In simple terms, they sell for you as well as buy for you. Think of them as a place where they do all the work for you.

Understanding how MM makes a profit is simple. When you finally decided to buy, you buy from them. They in turn will go to other brokers and buy at slightly better rates to sell to you. The difference in rates is their profit. Think of it as the exchange from the work they have done you would have otherwise done yourself.

The advantages of MM:
1. They have set spreads, freeing you from the anxiety of the fluctuations in the market.
2. Since they work for you as a partner, your orders are assured.
3. They are usually user-friendly, easy to access and understand. Software and platforms are easy to get.

ECN: Electronic Communication Networks
Electronic Communication Networks on the other hand, place your order in a bid and lists all the asking prices for it. The asking prices come from many market participants, if their sell order matches your order.

If there is no match, then your order will not push through.  ECNs are not obliged to fill your orders; rather, it is up to you if you will agree on the other ways' bid/price.

The advantages of ECN:
1. Prices are more aggressive, so scalping is ideal here.
2. You can also take the role of an MM and mediate between trades, making a profit for yourself in the differences of rates.
3. Because there are many sources, bid/ask prices are better and more diverse than MM prices.

Choosing which one to put your focus on depends entirely on the kind of strategy you have, whether you plan to trade conservatively or aggressively. Different brokers fulfill different demands, and the services they give set them apart. These two are just the major kinds, and now you can seek out that broker that leans on the type you consider will best work out for you.

The advantages of the two help a lot of diverse-thinking forex traders apply their strategies. Most of them maintain a strong account on both in order to maximize the potentials they have. Learning to play in both fields is a step closer into bringing about a successful career in forex trading.

Its More Than One: Kinds of Forex Robots

Forex or the foreign exchange market is one of the biggest trading markets and also among the most volatile.  Forex trading can either be done manually or buying and selling through a broker or a financial brokerage firm. It can also be done by using the automated process like using a software or an expert advisor also known as a Forex robot.

Generally speaking, Forex trading is dealing with the international market. Forex market deals with all the currency trading the world. Because of its high level of unpredictability, some would refer the Forex market like gambling.  Currency values change very fast, that you would need good analysis and at the same time, luck, to be able to land a good transaction.

There are about $3 trillion worth of  turnovers every year in the Forex market.  More and more traders, newcomers and people are getting interested in sharing the pie.  But it is not as simple as that.  Tools are necessary to be able to succeed in Forex trade. Forex trading is not also for those who are constantly indecisive and fearful at heart.  It takes a lot of decisiveness and courage for you to be able to put your account and investment at risk so that you would be able to gain profit.

This characteristic of the Forex market made some programmers and trading experts to come up with a support system that would enable those who are relatively new in the business to be able to cope with the competition.  Thus, the automated Forex trading systems and Forex robots called the expert advisor or EA.

The are two types of Forex trading indicators.  These indicators would help you determine if the price is going up or getting down. These indicators would also help you in deciding whether you are entering or exiting a transaction.  These indicators are also how kinds of Forex trading robots are called.

• Velocity/Momentum Robots

These robots analyze the price changes, fluctuations and other movement.  Upon analyzing the movement of the price, patterns are defined and organized.  These patterns would be grouped together and would be used to understand or as a reference when entering a deal or trade.

The rise and fall of the prices would be displayed and therefore would help in determining a pattern in the movement of the price.  This would help the trader understand the factors that trigger price movement and at the same time identify opportunities.  These trading robots would help you get oriented with the weak and strong points of different markets.

• Continuation trading robots

These kind of robots deal with averages.  This kind of robot is ideal for Forex markets that show trends.  This robot would determine if there are trends the market by monitoring the up and down movement of the currency trading.

Determining and understanding trade by averages would provide flexibility.  At the same time, this would allow you to trade outside the technical factors of trading.

These two kinds of robots, operating based on the kinds of trading indicators, show significant impact on improving Forex trading transactions. Although, not all Forex  robots can be entirely relied on to finish deals for you.  So, you would have to be careful when buying your own robot.  At the same time, it is important to remember that Forex robots are meant to support the trader, not to replace them.

Is Forex Scalping For You?

Forex trading takes in all styles, different methods and unique strategies from its diverse number of traders. One mode of earning in the forex market hits a popular and buzzing note- forex scalping.

What exactly is forex scalping and can it work for you?
Forex scalping is simply put, a method of earning profit in day trading by taking small earnings in a regular way. This accumulates to a big amount in the long run. Usually, it is done by day trading.  The problem is they do not work. This is considered to be just a big scam by others.

However, why is it so popular?
Because a lot of people are promoting it on the net, promising huge returns with minimal effort required. They support this with impressive track records that appear on their sites. This is the reason why they are so popular: marketing organizations promote their site on search engines, making it look like that a lot of people have already profited from it.

Another reason why it is so popular is the fact that many people motivated by greed and easy profit are naturally attracted to this proposition. Of course, when they join, they lose money. Not only do they lose money when they buy the system, they lose more when they trade with a faulty strategy. That is what creates the buzz.

Why doesn't it work? We can simply explain that prices and rates in day trading are very volatile. There is no assurance that you will profit. It is only made so by the stories of those who want to sell their mock software and plans. These juts simulated and hindsight plans did not really happen and in turn, did not really earn some money.

Scientific theories are just that- theories. If they have been proved, then they are no longer theories and hypotheses. Experienced traders have learned not to listen to them. Take a cue and follow suit.

Here are some tips to avoid getting caught into this scam:

1. Trade longer term and forget about day trading. In longer term, the profits are stable. You can also practice short term trading which is different from day trading in terms of time frames. The key is to understand that rates per day are too volatile to rest our investments on them.
2. Know that if it is too easy, then probably it is not true. If scalping works, then nobody would be trying to sell the method, right?
3. Get a full understanding and education of how forex trading works. Simulate first and try mock up trading. Learn and understand how the market works.

Will forex scalping ever phase out in the forex trading market? It probably will not be for a long time. They can repackage the system and presentation to lure other inexperienced, lazy would-be traders. Nevertheless, remember that if you trained properly and understood how the market works, then there is no danger of falling into their trap.

Bottom line is, ditch forex scalping. Forex trading was built on tested principles and unique strategies in predicting the closing rates and watching closely how the market flows. It is not some naïve market where you could bully your way to success with some scientific theory and fancy software platforms.

Forge Your Forex Trading Strategy

So you think you have the winning strategy for forex trading. Have you tempered and tested your winning formula yet? What you do not know is that there things you must take note before fully placing money on your strategy.

These are points tested and tried by those who have come before you. Understand the principles behind them and you may well be on your way to trading success.

Think twice before day trading.
So few get to be successful at day trading.  Most experts firmly believe that it does not work, because the volatility on such a short term varies a lot. You will be better off with a long term trading ventures where chances of profit are dependable.

Fundamental or technical?
Are you a fundamental or technical trader? Where does your strategy lay? It is hard to be both; combining the two paths and methodology are at times near impossible and at most difficult. It would be easier to start with a technical aspect of trading in your strategy. Not only would it take into account human psychology, but it will also be easier to work with.

Throw scientific theories away.
We all know forex trading needs and objective point of view. Nevertheless, when it comes with your personal strategy, it must fit with your assets, investments and plans. That is why it is difficult to rely on scientific theories alone. If there was truly a successful one, then why isn't everybody a millionaire?

The objective part of the equation should be the trading signals you need to use in determining your next move. Now you see that there is balance in the tempering of your strategy.

Discipline
You work in conjunction with your strategy. Are you both discipline din your tasks? Ego might get in the way of a successful and fair trade. What you think towards the market affects the design of your trading plan. Be fair and reasonable and you will profit, being over your head and thinking greedily will get you nowhere but down.

Confidence
Lastly, do you have absolute confidence with your unique plan? Testing and back testing with present parameters is essential to get that confidence. You may even want to start with a small amount first, testing your strategy with as little risk as possible. When it works, resist the urge to change it drastically. Do not over complicate your details.

Hypothetical track records are unreliable.
These kinds of track records are just keeping up and expecting the norm of currency track records. This is simply just too naïve. Playing it safe will not always make you safe. Forex trading is much more difficult than choosing which currency record is safer. In the end, you have to make money right? Not make sure bets and not losing, but end up not gaining anything either.

Is your strategy designed to use stops conservatively?
Stops are there to your advantage. Use them. Most people place them immediately after a trade. If you think hesitate a lot, you will end up taking more losses.

Simple and work reasonable
The design of your forex trading strategy should be simple, and requires reasonable amount of input and work from you. Too complex a plan and you might lose sight of your own unique technique. Too much work will take its toll from you, clouding your judgment more.

Forex Trading: Make Forex Signals Work for You

In forex trading, watching the market for entrance and exit points is the brunt of your work. Traditionally, you monitor the progress of currencies by feed reports. Either by watching the news or guarding the numbers in your laptop.

Here lies the problem- who would want to spend the rest of their day plastered to their laptops? Forex trading seems to be a perfect business ground for everyone: opportunities are near equal, and you could trade anytime, anywhere provided you have internet access.

The answer to this is to get a service that provides forex signals. Simply put, forex signal services are paid subscription services where they monitor and interpret the market to your liking. Your set of specifications, what to watch out for and when to alert you. They send you results by email, or directly to your phone.

Forex signal services are very popular nowadays. You may even refer to it as an indispensable tool for any trader. Brokers even provide their own unique platform that will cater your information requirements. When you sign in with them for an account, they give you this service with a fee or even free.

What usually happens is that they give you signals for known or popular currency pairs. For instance, you may be intent in watching the changes in Euros and American dollars, Japanese Yen and Singaporean dollars. If requested on your account, they can provide you with signals on less known pairs.  Whatever your strategy and currency trade is, they can fit their services for your needs.

How do they do this?

Well, forex signal companies use computerized systems to monitor pairs and make some analysis for their subscribers. Understand that they do not make decisions for their subscribers mind you; they are just signals, tools to help you make a decision. Once you make a decision right away, your broker and software can even do the trade right away.

However, there is a catch:  they are not a hundred percent accurate. They only provide leanings or advice on what decisions traders should make. The best signal service companies have good track records of providing great recommendations and near accurate signals. The service will cost you, but if you are a serious trader upping their game, then signals are a must.

Here are some tips how to make the most out of your service:
1. Ask about the features from your service provider. If the service comes from your broker, then consider if they are effective for you. Some are packaged into the type of accounts.
2. List down what are the things you need to monitor. You might save money on services by getting a less costly subscription that just gives what you need.
3. Invest on the reputable forex signal service companies. Their excellent service might be just what you need to gain an edge.

At the end, what you should remember is that forex signals are just instruments that help you. They are not meant to replace you decision-making process. You alone should decide the trade you have to make. After all, you would not risk all of your money based solely on a machine. You and your strategy must still take control. Forex signals makes forex trading more manageable and more enticing to other people.

Forex Robot Myths

Forex market is among the most unpredictable and frequently changing market.  Although, this kind of trade is high risk, there are still a lot of people who are venturing into this kind of investment.  There are a lot of experts who give advice to every newcomer in Forex trading,  it can be about using Forex robots, automated trading, or changing trading strategy.  How can we separate the right from the myths?

Let’s start with Forex robots.  What are the common myths about Forex robots and how can they be corrected?

• Clever and complicated Forex robots offer the best service

Unfortunately, this is not true.  The most simple systems are the ones that may work best. The good thing about simple systems is that they use just simple algorithms and requires fewer elements.

Aside from that, vendors would claim that their programs were designed by brilliant people.  Some would claim that their programs would be created by people in NASA or top programmers.  What does these people know about trading, anyway?

• Trading can be improved by scientific and predictive systems

Yes, Forex trading and automated trading systems use mathematical calculations to understand and analyze trading signals and their trends.  But, are the mathematical calculations some programs claim are really effective.  Some vendors would claim that they use Fibonacci and it could relatively improve trading systems.

These formulas could help you analyze the market, but it could never be used to PREDICT the outcome of a trade.  If you can, then there would be numerous people who have gone richer because they won in the Forex market.

• Forex robots can eliminate loss

There are Forex robots and automated system claiming to have zero losses.  Again, if this would be true then a lot of users would already be walking millionaires.  But that is not the case.  There are about 95 percent of traders who lose their money everyday.  So, the remaining 5%are just the successful ones, out of those small percentage, how many are using Forex robots?  It is perfectly normal for everybody to encounter a losing period.

• You can leave your Forex robots to operate on their own

Forex robots claim that you can just turn on your computer and system and let it operate on its own.  It can finish deals for you, without you even participating in the process. Any trading system has to be executed in a way where it can be monitored and still follow the trader’s trading strategy.

The reality is that you can let you equipment continue on trading, but it does not mean that the more trades that you have the more gains you will get.  It still depends on how you would make your robot work for what you want and you strategy, not the other way around.

• Success in demo accounts is the same for actual trade

Not just because you have proven the effectiveness of the program in a demo account, it could show the same results in the real account.  Everything could be risky.  This is why it is important to check customer reactions and comments about the products.  Most Forex robots website and forum would offer discussions about what are the  common problems encountered in real accounts and hot it was resolved.

Forex Robot Advantages

We might already have an idea what a Forex robot can do for Forex traders.  Forex robot manufacturers would claim that this technology enabled them to gain more profit, but aside from this, what other advantages can a Forex robot give.

It is not unusual for a trader to a lose because of backing out from a deal that they think would end up in losing, only to figure out that this trade would go for the better.  Emotions can influence traders and make them indecisive. This psychological factor is actually one of the major problems a Forex robot addresses.

Forex robots can eliminate the factor that human emotions could interfere with a deal.  Aside from human emotions, robots could also eliminate user and manual error.  Forex robots, deprived of any emotions, would be able to logically and rationally analyze the trading signals and determine if the deal is profitable or not.

A forex robot could maintain constant operation.  It could manage and trade your account without you having to do any manual trading on your own.  It constant monitoring would help a trader cope and analyze trading charts.  Forex robots do not only monitor a determined or particular currency pair, but could almost analyze and monitor all the currencies.

Being able to monitor all of the currencies in the Forex market, would help you identify possible trades where you can get more profit.  Its monitoring and updates are actually real-time monitoring.  Keeping in tabs with the development of the trading market real-time, could give you an edge if you would like to pursue the transaction.  There are some automated systems that would only monitor a currency pair, but Forex robots could analyze about 20 trading signals and determine deals of several currency pairs.

Aside from monitoring different currency pairs, you could trade in different markets, in different time zones.  But still, it would be based on the market and business hours.  But commonly, Forex market operates 24 hours a day weekdays.

It could even be programmed to determine points where you would like to place an order or exit a deal.  This characteristic would allow traders to be able to enter trading deals without being present.  This means more flexibility.  You could do other work while your program would do the trading for you.  This is great especially for those who has limited  time in trading because of time constraints.

A Forex robot could also trade in real time.  It could close on deals and handle transactions in seconds.  Manual trading would not be able to do this.  But mathematically speaking, robots could be a deal smarter than people. And Forex robots intend to determine the how you can get higher profits and trades in a short period of time given several indicators and factors.

In international trading like Forex trading, the most difficult part could be getting the payments.  Sometimes, there are risks of delayed and worse, non-payment.  Using a Forex robot would minimize this risk since the purchases will be coordinated with the software.

There are great benefits a trader could reap from using a Forex robot, you just to make sure that the robot that you would get will work for you.  So you have to do some research and look for your best option.  This would improve your profitability in the Forex market.