Advice On Choosing The Right Forex Broker

Choosing the right Forex broker can be a pretty daunting experience. I have been trading for over 12 years in both stocks and Forex, and i have used many brokers in that period. Some good, some not so good. So how do you choose the right one?

There are 100s of Forex brokers to choose from, and they all want your business. Some brokers will offer you incentives to join them, like introductory bonuses or free commission periods. Some of these deals sound very attractive, but when you read the small print, the offers tend to be very restrictive, and weighted heavily in favor of the broker, so they are generally not really worth signing up for.

Tips for choosing the right Forex broker.

choosing the right Forex brokerThere are some rules that you need to follow when choosing a Forex broker. I am going to list them below, not particularly in order of preference, but you do need to consider them all before choosing the right broker.

Regulation.

You must trade with a regulated Forex broker in my opinion. You don’t want to be giving your money to any old Forex broker, just because he is offering you what seems like a great deal. Regulated brokers are far more trustworthy, and your money is held in client segregated accounts, with reputable banks, and not with the broker. So if your broker got into financial difficulties for any reason, you know your money is protected from any creditors that may come after the broker. I have heard some horror stories of clients losing a lot of money by dealing through unregulated brokers.

Commission Charges.

Commission charges are a major thing to consider when choosing a Forex broker. One of my students has just swapped from Fx Pro to IC Markets, and we have worked out at his current level of trading activity, he will be saving around £86.000 per year in commission charges by swapping to IC Markets.

Spreads.

Spreads are the difference between the buying and selling price of an instrument, and are also a big game changer when it comes to choosing the right Forex broker. Some brokers spreads are good on Euro Dollar, but very poor on all others. For example IG index have a spread of less than a pip on Euro Dollar, but Cable can be up to 3 pips. In their defence they are a spread betting company, that do not charge commission, but even so, 3 pips is a big spread if you are scalping the Forex market.

You need to find a broker with great spreads on all pairs that you intend to trade. Spreads on the major pairs with most brokers are pretty competitive, but i don’t just trade the majors, so i need a broker with great spreads on all the pairs i trade.

Slippage.

slippage in ForexSlippage is the difference between the expected price of a trade, and the price the trade actually executes at. You get slippage with all brokers, sometimes it goes in your favor, but most of the time it goes against you.

Because the market moves so quickly, the price you are quoted for execution, can change in the time it takes you to close or open the trade. Some brokers take advantage of slippage by nicking pips off you, and putting it down to slippage, this is not acceptable, and any brokers that do this are not reputable and should be avoided.

During major news announcements slippage can be more evident with your broker, and you may not get such a good fill during these times, but in normal trading conditions slippage should happen occasionally, and if you do get slipped, it should be no more than a pip with a reputable Forex broker.

Hedging.

Hedging is the ability to open an opposing position in the same pair, without having to close your original position. For example: If you are short Euro Dollar, and price is going up, you may not want to close your short trade, as you feel this could just be a temporary move up. You want to take advantage of this temporary move by going long, so you open a long position, which effectively hedges your short position. By hedging you are making money on the temporary move up, without having to take a loss on your short trade. You can close your long trade when you feel price is going to reverse, and when price comes back down again, your short trade comes back into profit.

Please note: Hedging can be a very dangerous game to play if you do not fully understand what you are doing, but it can also be a useful flexible tool if used correctly.

Most brokers these days offer a hedging facility, but some don’t, so make sure the broker you choose does offer this facility.

True ECN.

ECN stands for electronic communications network. ECN is the technology that allows price makers to send executable streaming prices (bids and offers) to the market, constructing a virtual order book in much the same fashion as a stock exchange would. By trading with a true ECN broker your orders are filled quickly, and at the best possible price. ECN trading offers clients a deep liquidity pool, and tighter spreads than non ECN brokers. Trading with a non ECN broker will lead to more re quotes, and wider spreads.

My Recommended Broker.

I hope that these tips have made the job of choosing the right Forex broker a little easier for you. My recommended Forex broker is IC Markets. They are a fully regulated true ECN broker, with incredibly tight spreads, and great commissions. They also offer hedging facilities to their clients, and scalping is allowed if you trade that way. You can also run expert advisors with IC Markets too if you need that facility.

If you enjoyed this article and you think it would benefit other traders, please like it on Facebook share it on Twitter, or bookmark it using the buttons below. Thanks for visiting my blog and have a great trading day.

Can You Use Price Action Trading For Scalping The Forex Markets?

I am not a scalper, but price action trading can be a very successful way of scalping the Forex markets.

What is scalping the Forex markets?

For those of you that are not aware of what scalping is, its basically the process of entering and exiting trades very quickly for just a few pips profit. Scalping trades can last anything from a few seconds to a few minutes. Scalping can be a really effective way of making money from Forex trading very quickly, but it can also be a very high risk strategy if you do not know what you are doing.

Forex Scalping StrategyMany traders end up as scalpers, as they do not really understand the markets, so they try to jump in and out of trades quickly, and make a few pips on each trade. When you do not understand how to scalp effectively it becomes a very high risk Forex trading strategy, as scalpers tend to have much larger stop losses than other traders, some scalpers even trade without stop losses.

If a bad scalper enters the market at the wrong time, price can quickly move against them, and a series of half a dozen winning scalping trades, can be wiped out with one single losing trade.

How can price action trading be useful in scalping?

Price action trading is all about understanding price, and predicting with high probability what will happen next. To be a successful scalper you need to have a complete understanding of price action trading, this will enable you to enter and exit the markets with precision and take your pips effectively, rather than just jumping in and out, and hoping you make some pips. This type of reckless trading is very stressful and can be very costly, and should be avoided at all times. Trading should be relaxed and calm, and you should be entering the trade logically, and with a complete understanding of what price is likely to do.

Can you teach me how to be a successful scalper?

The short answer is yes. I teach advanced price action trading. What i can teach you is as close as you will get to a perfect trading strategy. That is a bold claim i know, but i am 100% confident in what i do, and my strategy if followed correctly will produce a 90% plus win rate, so if you want to be a scalper following my strategy will make you a great scalper, if that is what you want to do.

Teach Forex TradingWhen you have completed my Forex training course you can trade how you want to trade. So if you want to be a scalper, you can do that, if you want to be a swing trader, you can do that. Whatever trading style you have, or wish to have, you can apply it to what i teach.

I am not a scalper as i said earlier, but i do scalp when i have to. I like to trade based on what the market is giving me. If there is an opportunity to make 50 pips i will take them, if the opportunity is there to only make 10 pips i will take them too. I trade logically, and i take what the market gives me, and to trade that way you need to have a complete understanding of advanced price action trading, which is what i teach.

So yes you can use price action trading for scalping the Forex markets, and in my opinion you do have to have that knowledge to be a successful scalper, but when you do have a complete understanding of price action Forex trading, why would you want to be a scalper and take 3 or 4 pips from a trade when you can take 50? 🙂

If you enjoyed this article please like it on Facebook share it on Twitter, or bookmark it using the buttons below. Thanks for visiting my blog and have a great trading day.