Should It Be ECN or a Market-Maker Broker?

Author: fxtimes

One of the main reasons why most (90%) if not all individual retail Forex traders lose money is because they are doomed right from the start. It is no secret that the lot of individual traders who delve on foreign currency trading have very limited capital, but the lure of being able to leverage their small capital and parlay it into a fortune is simply irresistible. Unfortunately, the only affordable option they have to get into the foreign currency market is through the retail forex brokers, all of which are market makers.

ECN brokers are normally shunned by individual investors because of their high minimum deposit requirements ($10,000 minimum) which will expose them to greater account losses, much more than they can handle. It is normally the large institutional investors who course their orders through ECN brokers.

On the other hand, retail forex brokers are able to offer individual investors as low as $50 to open an account. They are more accommodating and are more accommodating with credit. However, if you have not realized it yet, the juicy offers dangled by retail forex brokers to individual investors to lure them into their fold are not without a catch. Once individual investors get into the fold of a retail forex brokers, they (the individual investors) become the milking cow of the brokers.

Here are the reasons why:

• As we mentioned earlier, retail forex brokers are also market makers which means they act as a counter party to your trade. This is a clear conflict of interest which interestingly has been allowed by regulators to go on. If you are on a losing trade they remain your counter party and pocket your losses. If you are on a winning trade they widen the spread or they simply pass on your trade to the ECN network for matching.
• That's right; they have access to the ECN network which means they know where the big orders are waiting to be executed including where the big volume trading stops and limit orders are. If you have been in the market long enough, you may have noticed times when prices run up quickly to certain price level before the start of the U.S. Market session (and just short of the price where unknown to most traders large sell orders from bigger players are waiting to be executed). This lures unsuspecting individual investors to buy in thinking the direction is still up triggering the price level where the large sell orders are trapping the individual investors in the process.
• They can also run the prices up or down during low volume sessions just to trigger your trading stops and force you to liquidate your positions at a loss. They also have the capacity to move their price quotes several pips away from your profit objective to prevent you from getting out at a profit.
• They are notorious for slippage particularly during volatile sessions. Leaving you with no option but to accept a raw deal.

It is definitely not a level playing field for retail forex traders. Their best option is to turn to ECN brokers. They may be required to put in a bigger deposit and pay higher commissions but they will get lower spreads and faster execution of their orders at definitely realistic quotes. Best of all, they will have access to order flow data and know where the big orders are lurking. They will have the luxury of trading along with the major players in the industry and increase their chances of profitability.

Article Source: http://www.articlesbase.com/currency-trading-articles/should-it-be-ecn-or-a-market-maker-broker-7220385.html
About the Author

readmore

Forex Signals: Understanding The Basics

By Husni Bourgi

Each day, millions of traders look to gain a competitive advantage in the Forex market. While conventional tools such as fundamental analysis and technical analysis continue to be the main catalysts of successful trading, several innovative tools have come into play.

A Forex signal is one of the many tools being leveraged by traders today. Simply put, a Forex signal is an analysis (technical, fundamental or both) a Forex trader uses to decide whether to buy or sell a currency pair at a particular time. A Forex signal is used mostly by day traders who are looking to execute many buy and sell decisions. The signal provides an execution to buy or sell a particular currency pair at a given time.

Forex traders have a multitude of Forex signals in which to choose. Some Forex signal systems are free while others charge a fee.

Some Forex signals are generated by an automated Forex robot that is provided by the signal provider. Others are generated by a human Forex analyst. Regardless of who analyzes and generates the buy/sell execution, most signals are communicated immediately through social media, phone text, email or website.

Below is a rundown of some of the common features that come with a Forex signal system:

- Entry, exit and stop loss figures for specific currency pairs
- Graphs and technical analysis for each signal
- Trade history for each currency pair, including profit/loss and risk/reward ratios
- Coaching, educational and account management services

Given the volatility associated with Forex trading, as well as the real market forces at play all over the world, there is no foolproof method guaranteeing success in the Forex market. This is also true for Forex signal systems. However, this does not mean signal providers can't help you. Like with any other investment strategy, a sound understanding of the financial markets, well-honed technical skills, a diverse, yet balanced portfolio and patience are needed to succeed. A signal system can certainly complement a balanced investment strategy, especially if you like to trade away from your desk.

Advancements in mobile technology mean you can take Forex trading on the road with you and download a signal app that can help you execute trades. While this is certainly not recommended for novice Forex traders still learning how to count pips, it can be a useful tool for experienced traders looking to capitalize on news events.

For late-breaking Forex news, currency analysis and investment tools, visit [http://www.fxtimes.com]http://www.fxtimes.com.

Article Source: Forex Signals: Understanding The Basics

readmore

How to Find Good Forex Expert Advisors

By Frank Breinling

Forex Expert Advisors (Forex EAs or Robots) are program codes specifically tailored for the purpose of reading the price feed from a Forex trader's data provider through their trading platform using algorithms. They are designed to search for pre-programmed price patterns and make decisions on behalf of the trader that follow rules programmed into their decision trees. These decisions carefully assess trading opportunities for Forex traders and provide them with advice which they can use to earn maximized profits from trades. Many FX traders want to find a good Forex EA for them. Well, the following are all the steps one must accomplish in order to find a good FX Robot:

Step 1: Determine what you need

The first step to find a decent Forex Expert Advisor, is to determine what you need. Different Forex Expert Advisors can be programmed to make different decisions. They can run on a multitude of different algorithms, which is why a person needs to first determine what they need from a Forex Expert Advisor before moving to actually finding a good Forex EA to ensure it offers everything they need.

Step 2: Create a list of all the Forex EAs who are capable of providing what you need

Once a person has determined what he needs from a Forex Robot, the next step would be to find each and every single Forex Expert Advisor in existence that offers what they require and create a list. A person should make sure that they enlist every single Forex Robot that offers all the things they require in order for a fool proof process.

Step 3: Check out all the Forex EAs on your list and start eliminating

The next step which a person needs to complete in order to find a good Forex EA, is to check out all of the EAs on their list and start eliminating the EAs that are either subpar or do not offer all of the things they require. It is only through the process of elimination, the process of choosing one Forex Expert Advisor out of the many Forex EAs in existence will be easier for a person. This process will result in a handful of options to choose from.

Step 4: Choose the Forex EA that has the most to offer to you

When a person is left with only a few Robots, which are the best of the best for them? All a person needs to do now is choose one of these EAs. How will a person be able to accomplish such a feat? Well, a person needs to closely examine all of the Forex Expert Advisors that they are left with, determine what each of them has to offer, and then choose the Forex EA that has the most to offer. What a person will choose while accomplishing this step will undoubtedly be a good Forex Expert Advisor for them.

Looking for a Forex Robot? Here you can download    RSI Robot for free, a Forex expert advisor. The RSI Robot was created for reliability, safe trading, and consistent returns. It's also super easy to use. There are no settings to adjust or configurations to learn. http://www.robotprofit.net

Article Source: How to Find Good Forex Expert Advisors

readmore