Forex Trading How To

How to Choose the Best Forex Currency Market

If you're not sure how the Forex currency market works and you don't know all the little details that can make or break you, then it's best that you start out by choosing just one currency rather than two or three.

One currency refers to currency pairs such as the United States Dollar and the Euro (USD/EUR). By the way, the USD is still the most widely traded currency. So how do you know which currency pair is the best one for you to pick?

You would look for the currency pair with the smallest spread. A spread means it's the difference in what you pay to buy the currency (or the ask price) versus what you'll sell it at (the bid price).

For example, let's say you see a quote for a currency pair of 1.3121/1.3119 - the spread here equals two pips. A pip stands for percentage in points. Now say you see a quote for a currency pair that's 1.3140/1.3170 - then the pip is thirty points.

To put it in everyday language, think of the spread like a simple math problem. When you look at the major currencies, look for the pairs with the smallest number to subtract. A broker makes his or her money by spreads.

The larger the spread, the more you pay and the less you see back in your pocket. If you use a broker, don't choose one who offers a wide spread. The smaller amount of pips, the more money you stand to make.

When you're involved with Forex trading, just like in any other business, you want to sell for more than what you paid. If you don't watch the pips, you'll end up with less profit, or worse, none at all.

Where can you get the information on the currency pairs in order to choose the best Forex currency market? You go back to the beginning. You get the information you need by using technical analysis that will allow you to see and follow currency movements. The charts are a part of technical analysis and the Candlestick charts are generally the best ones to use.

By using a mixture of technical analysis and fundamental analysis, such as charting, moving averages etc. and paying attention to which country's economy is doing what, this will help you choose the best Forex currency market for you.

How Do Managed Forex Accounts Work?

Does getting involved in Forex sound like your type of risk? Do you thrive on the possibility to gain (or lose) thousands within a short time frame, but busy as you are, you don't have time to monitor the Forex trading yourself?

Consider letting established brokerage firms do it for you by using a managed Forex account. Managed Forex accounts allow a brokerage firm to make investments on your behalf. 

But your money will still be safe. Most brokerage firms only have limited power over your account. For instance, while a broker may trade for you, but he may not make withdrawals or deposit from your account.

While managed Forex accounts generally need a larger initial investment, the potential to gain more is higher. But don't allow greed to blind to you to a few things you'll need to know before signing on the dotted line.

Track Record

How long has this company been in business? Examine a website using the Who Is database. If the company claims to have been in business for ten years but the domain has just been registered recently, there's reason to suspect unethical behavior.

Membership

Reputable companies are often members of Futures Commission Merchant (FCM), Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA). Search the Background Affiliation Status Information Center (BASIC) for further information on the track record of this company.

Returns

If this company offers unusually high returns, it might be a scam. You can always search for a company and the word scam to learn if it's a well-known scam. Watch for red flags. Companies no one seems to have heard of, that claim to be "risk free" or invite you to gamble on your mortgage or retirement funds can be risky. Remember never to gamble on something you can't afford to lose in the first place.  Consider finding another brokerage firm.

Commission

How much is the commission? Will you pay a monthly fee? Many brokerage firms still charge a fee, even if you don't gain anything that month.

Liquidity

Can you liquidate your account at any moment you choose to, regardless of the time of day or night?

Fine Print

The desire for quick cash causes many people to overlook this small but too often costly detail. Always read the fine print.

Finally, remember to look for a brokerage firm with experience and know-how in the Forex trading world.

How to Find the Best Forex Broker for You

Just as you know that there truly isn't a "one size fits all" business approach, the same is true in Forex trading.  There is no one best Forex broker - rather it's about finding the one that best complements your own personal business style and instincts.

A good Forex brokerage firm can be an invaluable resource to an investor that has done his homework. Like all professionals, you're looking for someone with experience, valuable insider knowledge, and the room to let your portfolio expand.

For instance, if you start a micro account, you're going to want a broker who has the knowledge and insight to help you expand your portfolio. First, look for recommendations. Reliable online and offline recommendations can be a good indicator of a trustworthy broker. 

But watch out for scams. While no one can entirely avoid scams, there are things you can do to minimize your risk of falling for a scam. Use a search engine to search for the brokerage firm name and the word scam or complaint. If you don't feel comfortable with the results, consider another broker.

If you like the results you find then proceed with the next logical question. Does this broker claim to have a membership in the Futures Commission Merchant (FCM), Commodity Futures Trading Commission (CFTC), and the National Futures Association (NFA)?  Many brokerage firms are often affiliated with sound financial institutions such as a local bank.

Next, you'll need to know if the broker you're considering is a member in good standing with these organizations. You can check that by using the Background Affiliation Status Information Center (BASIC).

BASIC allows you to search by firm name, individual name or by NFA ID number. Using BASIC will allow you to see a NFA member's standing as well as any disciplinary action taken against him.

Once you've checked this, you need to consider if this brokerage firm is insured against fraud and bankruptcy. If the firm is not insured, the money you plan on using for your vacation to the Bahamas could quickly and quietly disappear.

Next, you'll want to examine the customer service. Spend a few minutes on the phone with customer service. Observe how the customer representative answers your questions, their tone and level of professionalism.

Finally, start a demo account with two to three of the potential brokers. Learn to use their trading systems and note advantages and disadvantages. And before making that final decision, remember to read the fine print.

How to Get the Best Forex Signals

If you don't want to be chained to your computer watching and analyzing the market, trying to decipher when is the best time to buy or sell, you might want to consider using a professional signal trading company.

This is a group of people who keep an eye on the market for you and will let you know via a signal when it's time to act. This way, you get to have a life away from the computer.

What exactly is a signal? A signal is an alert sent to you using SMS (Short Message Service) or more simply, it's a text message with limited characters, hence the short in the definition. You can also have the signal appear on your computer screen alerting you when it's time to sit still or make a move.

There is software available for you to help you get the most out of your Forex trading, but first you have to know what kind of trader you are. Are you a beginner and not one hundred percent comfortable being involved with Forex trading on your own? You might want to consider getting software that can do it all for you.

Or maybe you have some experience with markets and you're knowledgeable enough to have your hands in some of the trading, if so, look for software that allows you to have some input.

If you're comfortable handling everything from start to finish, then consider just learning the ins and outs of Forex and going from there without using software. But if you've decided you do need software, there are some things you need to consider.

To choose the best Forex software, make your decision based on how easy the software is to use, what kind of support system the company has in place and what is the profit ratio using the software.

For beginners who are new to Forex, you might want to consider purchasing the FAP TURBO software. This software is somewhat on the pricey side at $399 normally but the site is having a sale at this time and the software is priced at $149.

Another software you can try is Forex Autopilot but even with the seventy five percent off coupon on the site, the price is still just under $300.

A third option in software is Forex Assassin, which comes with a guarantee of fifty-six days and the asking price is $97.

Keep in mind that in order to get the most from either signals or the Forex software, it would be beneficial to you to have an understanding of how the Forex market works before you begin.