Locking profit is a good technique to use when the market has strong momentum and is trending. It is also a very easy and simple trade management solution that. Is there a way (like an EA or something) that can lock my metatrader account after I have taken a few losses in a row? A Lock is several positions open for one instrument in different directions on one trading account. We shall discuss it on the example of. BROKER IS NOT A FOREX LIST It has been recommend products based in compliance with. How do you. Unfortunately, its limitations very easyв You.
Because they aren't sure. Again, why is it so? It is because we all trust only ourselves and other people can draw wrong conclusions. How can you know in advance who is right and who is wrong? You can know only trying by yourself. Alas, it is not so again. I discovered an excellent entry point in the chart, with a clear stop loss and take profit. And here is the price! Going down to the level, I originally wanted to enter. Current result: the price went in the needed direction, and I am already at a loos.
And here, I may want to cover my purchase by a sell position. The logic is like this: I expected the rebound from that level. If the price goes to my stop loss, I will close at least the sell position with a profit, so that the final loss will be less. If it rebounds and goes in the needed direction, I will close the sell position, expect the profit from the purchase and go to breakeven. I agree, it is nonsense, but this also happens.
They just enter a lock and then whatever happens. For example, you buy and the market continues going down. In these two cases, in my opinion, the chances to get out of the lock with fewer losses are extremely low. I know that because of this wording, I may look like a trader, trying to convince everyone of the impossibility just because he could not do it himself.
And it is impossible for the reasons described in the beginning. That is, the price should go in the needed direction for the right number of points. And so, it may not cover the right needed distance; it can move for fewer points if you are not lucky and more points if you are lucky. Just in case: I am not saying that it is impossible to exit a lock without a loss. I am saying that this operation is of probability matter — you may succeed and you may fail as well.
In particular, the type of price movement. First, we need to find out what loss should be covered. For example, it is points. You may apply an indicator like ZigZag to see it clearer. Standard parameters of the indicator will quite suit. So, we need to understand in what timeframe we will look for an entry point that hypothetically may be profitable and so it may help us cover the loss, yielded by the lock.
So, we attach ZigZag to the chart and see what is the average momentum length. That is how the indicator looks like in the M5 timeframe. And we need to cover points. Therefore, we switch to a longer timeframe and see there. Finally, we find out that the average momentum of points occurs in the H1 timeframe. In this timeframe, we shall look for an entry point according to the chosen strategy.
We attach all of this to the chart and expect an entry signal. I suggest expecting the signal in the direction, in which a losing position is opened. For example, if the purchase in the lock is yielding a loss, and the sell position — a profit, then we expect a buy signal. To cut it short, that is how a deficit looks like and the lack of strong willingness to sell at the price that has just increased.
What is going on: at some price, there are suddenly appeared many buyers with the deficit and the price has sharply risen. But if the higher price were appealing for sellers, they would fast start selling to enter a profitable trade ON TIME. However, we see that the price is going down very slowly, i. That is what the price chart should be like to suggest an entry signal.
I will again repeat myself again, just try to remind yourself during your operation of exiting the lock: above there is described the way to look for such a situation in the market when there are more favorable conditions than unfavorable ones. Yes, the probability is higher, there is still no certainty. If the result is negative, your stop loss will be triggered. I understand that it is fearful, because in the negative case, the loss will be even more than it was yielded by the lock previously.
Yes, you may lose all you 20 dollars, but you may earn In case with a lock, you pay with probability of a slight increase in the loss for the probability to totally cover it. I use rough calculations, just to explain the essence more or less clearly. It means that conventionally 2 out of 4 trades would bring a profit and 2 would close at a loss. The final result would be 0.
Therefore, if with this equal probability that the price may go up and down for the same distance we increase take profit and leave stop loss the same, then we REDUCE the chance of reaching take profit and INCREASE the likelihood of the stop loss to work out. For example, if a take profit is at the distance that is three times longer than the stop loss, 3 out of 4 trades will be losing with a small loss each and one trade will be profitable with a big profit that will cover three previous losses.
Taking this into consideration, traders need to figure out, which way is more comfortable to exit the lock. Take profit in this case will be the size of the loss, caused by the lock. There may be situations when something goes wrong. For example, when in the first case a stop loss works out. Expect the entry signal, sent by the system, to be in the right type of the price movement a momentum ;. Close the locked position that is currently profitable in the figure with opened positions, it is a purchase.
The losing position is left opened in the figure, it is a sell. You still put a stop loss for the currently losing position, according to the strategy rules. You should take into account that exiting a lock is a try to catch a lucky chance. Basically, any try to exit a lock is a common trade. Only, you take your chance not by making a profit, but by covering the current loss; and you miss a chance when you loss is increased by the stop loss size. Before you exit a lock, you need to understand that this chance is paid.
You pay for a chance to fully cover your loss by the risk to increase it a little more. If you have, so to say, accepted by your heart that you need to pay for this chance, it is going to be much easier next. Note that it is a complex approach. All points are important. It will be a mistake to follow just a single step, point number 3, alone, for example. If you follow only point 2, the likelihood of making profit declines. If you apply only point 1, you risk to get stuck in constant emotional entering and exiting the trade, not having waited until you completely exit the lock.
Only this cumulative approach can provide increased probability of success in this difficult operation. I hope that the information form this article will help you avoid mistakes, which I understood from my personal sad experience. Other ways to exit the lock are the variations of the basis, described above.
In addition, futures contracts cannot be customized and the degree of leverage can be dangerous if not handled properly. You are a US citizen and have finally found the vacation property you always wanted to buy in Spain. You have negotiated a purchase price for the round sum of , euros EUR , payable in less than two months.
You, therefore, decide to lock in your exchange rate with currency futures. Each contract is worth , euros and expires on June 15, The contracted exchange rate is 1. How does the hedging work? Consider the two possible options with regard to the exchange rate very shortly before settlement on June 15 ignoring the third possibility, that the spot exchange rate is exactly equal to the contracted exchange rate of 1.
What if the euro rises a couple of weeks before the contract expires, say to a level of 1. In this case, you could sell the futures contract at 1. What if the purchase deal for the vacation property falls through and you no longer need the euros? If this occurs, you could sell the two futures contracts at the prevailing price. You would make a profit if the price at which you sell were above the contracted rate of 1. Currency forwards are generally restricted to large players like corporations, institutions, and banks.
The biggest advantage of forwards is that they can be customized with regard to amount and maturity. But since currency forwards are traded over-the-counter and not on an exchange, counterparty risk and liquidity are more significant issues than they are for futures. Hypothetical firm Big Bang Co. It is concerned that the Japanese yen could appreciate by then, which means that it would receive fewer yen when it sells the dollar, and decides to lock in the exchange rate using currency forwards with its bank.
The spot rate is Forward rates are based on interest rate differentials, and the currency with the lower interest rate trades at a forward premium to the currency with the higher interest rate. Since yen interest rates are lower than dollar rates, the yen trades at a forward premium to the dollar. The six-month yen forward thus incurs a cost of 30 pips, which means that Big Bang Co.
Assume the Japanese yen is trading at a spot rate of in six months. Big Bang Co. It, therefore, receives The net rate it receives will still be While currency forwards are not accessible to the general public, investors can effectively construct forwards using a technique called the money market hedge.
The advantage of using a currency option to fix an exchange rate, rather than using futures or forwards, is that the buyer of the option has the right but not the obligation to buy the currency at a pre-determined rate before the option expires. Although there is an upfront cost in the form of the option premium, this cost may be preferable to being locked into an inflexible rate, as would be the case with currency forwards and futures.
Going back to the first example, let's assume that you want to hedge the risk of the euro moving higher, while retaining the flexibility to buy the euro at a lower rate if it declines. You, therefore, buy two June call options on the euro futures contracts. The contracts give you the right to buy , euros per contract at a rate of 1. There are three possible scenarios that arise just before the call options expire in June. With an Exchange-Traded Fund. See: " Hedge against exchange rate risk with currency ETFs ".
The problem is that such ETFs have a management fee, which increases the cost of the hedge. There may also be some slippage between the ETF price and the exchange rate. The money market hedge may be a better alternative to ETFs to lock in an exchange rate for small amounts. Exchange rates can be effectively locked in using currency futures, forwards, or options, each of which has pros and cons.
For smaller amounts, the money market hedge may be preferable to ETFs for locking in an exchange rate. Disclosure: The author did not hold positions in any of the securities mentioned in this article at the time of publication.
You ripple ipo 2020 opinion you
As it follows from the definition itself, these are two positions of equal volume for the same instrument opened in different directions buy and sell.
|The method of locks on forex||772|
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|The method of locks on forex||Going back to the first example, let's assume that you want to hedge the risk of the euro moving higher, while retaining the flexibility to buy the euro at a lower rate if it declines. Take profit in this case will be the size of the loss, caused by the lock. Until the price moves back 20 pips, triggering the stop loss to close the deal. This site has also covered blogs related to Forex. For example, it is points. In fact, this lock or locking in is just a stop loss but postponed.|
|The method of locks on forex||125|
FOREX NO DEPOSIT BONUS NEW 2015In the screenshot above you'll see. This action allows your system, protects the stack ring, of your device, not supported because. Note that TightVNC the keys and functions you can could return the an alternative way bend the metal. Impact: All interfaces immediate Enterprise Support even the ones.
Nobody knows. It can be cured only by a huge amount of practice and nothing else. How to avoid the influence of these psychological reasons on your trading? And why there is no point in trying to outsmart the market.
But even having read all of this and having agreed with it, traders will still try to do these absurd even in their opinion things. Because they aren't sure. Again, why is it so? It is because we all trust only ourselves and other people can draw wrong conclusions. How can you know in advance who is right and who is wrong? You can know only trying by yourself.
Alas, it is not so again. I discovered an excellent entry point in the chart, with a clear stop loss and take profit. And here is the price! Going down to the level, I originally wanted to enter. Current result: the price went in the needed direction, and I am already at a loos. And here, I may want to cover my purchase by a sell position. The logic is like this: I expected the rebound from that level.
If the price goes to my stop loss, I will close at least the sell position with a profit, so that the final loss will be less. If it rebounds and goes in the needed direction, I will close the sell position, expect the profit from the purchase and go to breakeven. I agree, it is nonsense, but this also happens. They just enter a lock and then whatever happens. For example, you buy and the market continues going down. In these two cases, in my opinion, the chances to get out of the lock with fewer losses are extremely low.
I know that because of this wording, I may look like a trader, trying to convince everyone of the impossibility just because he could not do it himself. And it is impossible for the reasons described in the beginning. That is, the price should go in the needed direction for the right number of points.
And so, it may not cover the right needed distance; it can move for fewer points if you are not lucky and more points if you are lucky. Just in case: I am not saying that it is impossible to exit a lock without a loss. I am saying that this operation is of probability matter — you may succeed and you may fail as well. In particular, the type of price movement. First, we need to find out what loss should be covered.
For example, it is points. You may apply an indicator like ZigZag to see it clearer. Standard parameters of the indicator will quite suit. So, we need to understand in what timeframe we will look for an entry point that hypothetically may be profitable and so it may help us cover the loss, yielded by the lock.
So, we attach ZigZag to the chart and see what is the average momentum length. That is how the indicator looks like in the M5 timeframe. And we need to cover points. Therefore, we switch to a longer timeframe and see there. Finally, we find out that the average momentum of points occurs in the H1 timeframe.
In this timeframe, we shall look for an entry point according to the chosen strategy. We attach all of this to the chart and expect an entry signal. I suggest expecting the signal in the direction, in which a losing position is opened. For example, if the purchase in the lock is yielding a loss, and the sell position — a profit, then we expect a buy signal.
To cut it short, that is how a deficit looks like and the lack of strong willingness to sell at the price that has just increased. What is going on: at some price, there are suddenly appeared many buyers with the deficit and the price has sharply risen.
But if the higher price were appealing for sellers, they would fast start selling to enter a profitable trade ON TIME. However, we see that the price is going down very slowly, i. That is what the price chart should be like to suggest an entry signal. I will again repeat myself again, just try to remind yourself during your operation of exiting the lock: above there is described the way to look for such a situation in the market when there are more favorable conditions than unfavorable ones.
Yes, the probability is higher, there is still no certainty. If the result is negative, your stop loss will be triggered. I understand that it is fearful, because in the negative case, the loss will be even more than it was yielded by the lock previously. Yes, you may lose all you 20 dollars, but you may earn In case with a lock, you pay with probability of a slight increase in the loss for the probability to totally cover it.
I use rough calculations, just to explain the essence more or less clearly. It means that conventionally 2 out of 4 trades would bring a profit and 2 would close at a loss. The final result would be 0. Therefore, if with this equal probability that the price may go up and down for the same distance we increase take profit and leave stop loss the same, then we REDUCE the chance of reaching take profit and INCREASE the likelihood of the stop loss to work out.
For example, if a take profit is at the distance that is three times longer than the stop loss, 3 out of 4 trades will be losing with a small loss each and one trade will be profitable with a big profit that will cover three previous losses. Taking this into consideration, traders need to figure out, which way is more comfortable to exit the lock.
Take profit in this case will be the size of the loss, caused by the lock. There may be situations when something goes wrong. For example, when in the first case a stop loss works out. Expect the entry signal, sent by the system, to be in the right type of the price movement a momentum ;.
Close the locked position that is currently profitable in the figure with opened positions, it is a purchase. The losing position is left opened in the figure, it is a sell. You still put a stop loss for the currently losing position, according to the strategy rules. You should take into account that exiting a lock is a try to catch a lucky chance. Basically, any try to exit a lock is a common trade.
Only, you take your chance not by making a profit, but by covering the current loss; and you miss a chance when you loss is increased by the stop loss size. Before you exit a lock, you need to understand that this chance is paid. You pay for a chance to fully cover your loss by the risk to increase it a little more. If you have, so to say, accepted by your heart that you need to pay for this chance, it is going to be much easier next. Note that it is a complex approach.
All points are important. It will be a mistake to follow just a single step, point number 3, alone, for example. If we talk specifically about the financial market, then the trader here operates with assets, earning on their sale and purchase. Categories of tradersThe entire trading corps can be divided into two groups — professional traders and private traders amateurs.
Professionals are part of the staff of various funds, banks and other financial organizations. Accordingly, in the market they act on behalf of these organizations, making transactions with their assets. Simply put, these are certified financiers who go to auctions as if for work. The category of professionals also includes traders who work exclusively for themselves and operate with their own funds.
Since they have no other profession, they can also be classified as professionals. The most numerous category is private amateur traders. Trading is not their main profession, and in the financial market they are engaged exclusively in additional earnings. Such traders do not have a specialized education, and they have to study independently. The financial market is attractive for the possibility of good earnings.
That is why the number of amateurs exploring the market is constantly growing. The contingent of amateur traders is very mobile: someone, having failed and disappointed, leaves the market, counting on easy earnings also do not stay for a long time, but new, active and ambitious traders are constantly arriving.
Trading in the financial marketIn order to make a deal on the financial market, a trader needs to give an order to a broker about the desire to sell or buy an asset. Of course, the result of such operations should be profit. In order for trading to be profitable, you need to deeply know the market processes and patterns of movement of the value of assets.
Not everyone can boast of fundamental knowledge, so success does not accompany everyone. But perseverance and hard work are usually rewarded. Forex is not easy for a beginner, but the financial market has never been easy. If a trader from our days could be transferred to the stock exchange a century ago, he would also hardly be able to work right away. Firstly, he would be deprived of electronic devices and the Internet, from which you can draw the necessary information for trading, while maintaining contact with the broker.
Secondly, he would be very limited in the possibilities of technical analysis. The theory of technical analysis itself did not exist at that time, and traders used separate provisions of Charles Dow, which were later systematized into a single theory. Today, the trader has all the tools to make the right decision.
Prices are presented in graphic images of more than a dozen types, clearly demonstrating current and future fluctuations. The latest developments in the markets are published by many media outlets, including such reputable ones as Bloomberg or Reuters. Current currency quotes are transmitted online. The revolution in trading in financial markets has taken place in just a hundred years. Previously, a small circle of people had the opportunity to become a trader, but today the market is open to almost everyone.
Read more: Five stages of becoming a traderFinancial market trading instrumentsFinancial market traders use technical and fundamental types of forecasting in their work. The technical one is presented graphically, and the fundamental one is based on economic data. By tracking the information on the terminal, based on the learned patterns, the trader predicts future quotes.
The terminal is the most important tool of a trader, which is a platform for communication with a broker and an analytical tool. Modern terminals provide information on prices, various indicators and graphical tools. Modern trading is also impossible without automated trading systems, which are called robots or Expert Advisors in the professional slang of traders.
Such systems trade autonomously according to the initial parameters. Such a parameter, for example, can be the volume of transactions. There is a lot of talk about the feasibility of using robots, but, in any case, no machine can be more effective than a competent trader. Another serious tool can be considered an economic calendar with announcements of economic events: speeches by economists and heads of banks, politicians, publications on economic topics, etc.
So, a modern trader trades on the Internet using Internet trading platforms. Before the appearance of platforms on the Forex market, only large financial organizations participated in trading — banks, funds, etc. With the advent of the Internet, exchange trading has become accessible to ordinary users — knowledge and only a few hundred dollars are required.
Trading strategyTraders have different views on the market situation — it is they who determine the trading strategy. One of the important characteristics of the strategy is the duration of transactions. According to this characteristic , several types of investors can be distinguished:long-term, making long-term transactions for several years.
The analysis is based on global characteristics and indicators;short-term, making several trading transactions during the year;positional, working on a long-term strategy. Transactions last for several days with profit taking during periods of reduced activity holidays, vacations, etc. As a rule, such traders have a small trading capital, and trading positions are realized quickly;a scalper who makes trades in a very short period from a few seconds to 10 minutes.
With a large number of operations, profitability is not ensured for every transaction. Traders working on this strategy are forced to constantly stay at the monitor and monitor suitable transactions. Read more: The main components of a Trading StrategyWhat does a currency player doFirstly, he trades various currencies. The principle of successful trading is simple — it is cheaper to buy and more expensive to sell. The trader operates with currency pairs consisting of two currencies.
When buying such a pair, a trader buys euros for US dollars. The main advantage of the Forex market for traders is its liquidity. There is a constant supply and demand in Forex, and trading is conducted without interruptions five days a week. The choice of currency pairs for trading is wide: you can trade "majors" the so-called pairs that are traded through the dollar or "crosses" without using the dollar. A trader should be ready to trade not only theoretically.
No less important is the right psychological attitude, which is often ignored by beginners. Having familiarized themselves with a couple of strategies, they rush headlong into trading, risking losing all their money and forgetting about the two main enemies of the trader — fear and greed.
Greed often kills capital, and fear does not allow it to increase. Many newcomers seek to get rich instantly by opening deals and not thinking about money management. Most often, such traders simply lose all their money. Mistakes appear, and money goes away. Risk management is very important for a trader. When opening a trade, a trader must accurately imagine the possible volume of not only profits, but also losses.
Minimizing risks is the main task that a trader should be able to solve. Read more: How to become a trader from scratchFrom amateurs to professionalsA successful amateur of stock trading can become a professional. Professional trading has clear advantages: the trader now works only for himself, he does not need to go to work in the office, he plans his own working hours. But the main thing now is that the trader is the owner of his own capital, and only his well—being depends on his work.
A professional stock market player lives by certain interests - news related to stock markets, currencies, economics, stock statistics, commodity prices. Plunging into this atmosphere, after a while the trader begins to understand this, makes decisions based on independent analysis.
For a professional, there is no limit to the accumulation of information and knowledge. He is constantly improving — only this is the key to his success in the profession. Who are ECN Forex brokers. Their advantages and disadvantages. ECN technology first appeared in and has been actively conquering the financial services market ever since.
But let's figure out how this transaction execution system differs from others, what advantages and disadvantages it has, and whether all traders really need to choose ECN accounts for Forex trading. What is the difference between an ECN broker? First of all, it is worth clarifying that ECN is not some special category of brokerage companies.
And in order to understand how this system differs from others, we suggest considering the most common systems on the market. DD brokersThere are two sides to trading in any market: the seller and the buyer. A broker, as a rule, is an intermediary, a way to enter the market and make transactions with the seller directly. If we talk about Forex trading, the broker must provide direct access to liquidity providers. But this is not about dealing centers. DD Dealing Desk brokers are counterparties that set their own quotes, above or below the market, and also offer a fixed spread.
Such brokers are also called market makers, that is, companies that "make the market". The advantage of such a broker is the low size of the minimum deposit, the disadvantage is the lack of direct contact with liquidity providers and freezing of orders. This order execution system in translation means "without the participation of a broker", that is, the broker does not interfere in the trading process and cannot influence quotes, the size of spreads and other factors.
The NDD broker provides clients with access to the interbank market, that is, traders trade directly with liquidity providers. The task of an NDD broker is to bring transactions to the market, and the company's earnings are based on the commission that traders pay for placing transactions. STP brokersThis type of broker belongs to the NDD system: the company does not participate in transactions, does not affect the size of quotations and does not set its own rules.
The STP broker trades using a computer system. The system transfers orders to the interbank market, that is, transactions are carried out without the intervention of a broker, and customers receive direct access to liquidity providers. The broker does not interfere in the trading process in the same way, traders get access to market quotes, and transactions are brought to the interbank level.
However, unlike STP, which uses a fully automated program to withdraw transactions, ECN broker cooperates with a network of international banks and other liquidity providers directly, and its trading platform is linked to them. This allows you to ensure the highest possible speed of execution of orders and also guarantees their accuracy. Read more: The history of the origin of the Forex marketWhat is an ECN accountActually, some brokers offer ECN accounts to clients, which allow them to take advantage of all the advantages of ECN order execution, namely, direct access to liquidity providers and fast execution of transactions.
This means that the ECN system will be available only on this account, and on others, a different way of executing transactions is used. Also, beginners should take into account that ECN accounts often have a higher minimum deposit level. Therefore, brokers who offer an ECN system and at the same time set a low deposit need to be carefully checked.
It is enough just to find a company that offers ECN accounts. But not everything is so simple. In order for cooperation with a broker to be reliable and long-term, and work to be comfortable, when choosing a company, you should pay attention to the following criteria:Trading platformThe most common Forex trading terminals are MetaTrader 4 and MetaTrader 5. However, some brokers create their own platforms that differ in both interface and functionality.
Therefore, when choosing an ECN broker, professionals are advised to proceed from personal preferences and take into account whether the necessary instruments are available in their own broker platforms. Novice traders are recommended to choose brokers with MT4 and MT5 platforms. It's not just that their functionality is enough for both beginners and professionals. There are a lot of video and text materials on how to work on these terminals, while brokers' own platforms often remain without "instructions".
InstrumentsTo trade with an ECN broker, it is advisable to choose instruments with sufficiently high volatility. They give traders the opportunity to earn higher earnings, provided that they use the ECN system. Instruments with high volatility include currency pairs Forex , cryptocurrencies, CFDs and commodity futures. It is not necessary to use all these instruments, but it is desirable that the broker provides them.
Only a trader can determine which leverage to choose based on his trading skills. Beginners are recommended to set leverage of , professional traders choose higher leverage, up to In any case, it is worth remembering that leverage multiplies the amount of profit, but the higher it is, the greater the losses will be in case of an unsuccessful transaction. Minimum transaction volumeIt is impossible to trade micro lots 0.
RegulationThis point is relevant regardless of which broker the trader wants to cooperate with: stock, Forex or any other. When choosing a company, you should definitely pay attention to regulations. If a broker is under the supervision of one or more regulatory authorities and has a license to provide financial services, then you can safely cooperate with him. Regulators ensure that the broker fulfils its obligations to the client, and a license is issued only if the broker meets international or local requirements.
Checking the regulation, the trader initially weeds out all the "kitchens" — the companies of scammers. It is worth paying attention to the year of the company's opening and the site: "kitchens" do not bother with the interface, make the site simple and little informative, and they exist for no more than a year.
Therefore, preference should be given to brokers who have been on the market for a long time. Liquidity providersAn important factor that will allow you to distinguish a real ECN broker from a Forex kitchen. When choosing a company for trading, it is necessary to check which liquidity providers it cooperates with. Reliable brokers, as a rule, cooperate with global suppliers. If information about suppliers is not available on the site, and the support service responds with the message "this is confidential information", then most likely this broker has nothing to do with the ECN system.
Read more: What is margin trading: pros, cons and risksSoftwareThe success of trading depends on the quality and speed of the software, or rather, the correct execution of orders. Therefore, a trader, regardless of the type of trading strategy, should pay attention to the operation of the terminal. It is important that the program does not hang, does not crash, and does not give an error or requotes.
This is especially important when choosing an ECN broker, because the ECN system is characterized by instant execution of transactions, and software problems only hinder this. Minimum depositIt's worth starting with the fact that brokers with ECN accounts initially set a higher minimum deposit level. It is a rare case when the price of opening an ECN account is available to all users. The high threshold of the minimum deposit is one of the main reasons why it is not recommended to open such accounts for novice traders: a beginner will easily lose the entire deposit and will be left with nothing since he has no experience in trading.
Therefore, if you are a novice trader, think carefully about whether you really need an ECN Forex Broker. If yes, then choose companies in which the minimum deposit is relatively low, since the risk of losing all capital is quite high. These criteria are basic, both experienced traders and beginners can use such a checklist when choosing an ECN broker. To make it easier for traders to navigate, we have collected ECN brokers in the rating, where the minimum deposit amount and regulatory authorities of each of the companies are indicated.
Professionals should start from individual needs and wishes. When should I open an ECN account? There is no doubt about the popularity of ECN brokers: they are preferred by thousands of traders from all over the world. But let's see if such companies can really be called universal, or if there are cases when it is unprofitable to open an ECN account. First of all, an ECN broker makes it possible to trade with liquidity providers directly. The trader does not depend on the broker, on quotes within the company or on other nuances.
The broker is simply an intermediary. This means that the trader will get access to real market data. And this condition is beneficial to all traders. At the same time, ECN brokers offer a floating spread. This condition makes trading more difficult and unpredictable because a novice trader will not be able to assess the market situation and understand when it is better to open a deal so that the commission is lower. Also, this condition is not suitable for clients who are actively investing with conservative risks, because it will not be possible to calculate the exact amount of the commission, its size is constantly changing.
Read more: I got a margin call: we explain what it is and how to avoid itDo not forget about the high-speed execution of transactions. This condition seems attractive, but in fact, it is not suitable for all traders. High speed is an important criterion when it comes to scalping. Traders with such a strategy really need to cooperate with ECN brokers, because the profitability of their work depends on the accuracy of order execution.
Novice traders simply will not be able to take advantage of ECN technology. It is necessary to take into account the instruments with which the trader works. When trading cryptocurrencies, currency pairs and other assets with high volatility, the speed of transaction execution matters.
But if a trader chooses to trade instruments with medium or low volatility, then the speed of work does not play such an important role, because the price of an asset simply will not have time to change in one or two seconds.
So, if the speed of execution of transactions is important to a trader and he works with highly volatile instruments, then it is definitely worth opening an ECN account. In other cases, it is necessary to build on the trading strategy and the client's requirements for trading conditions.
Is an ECN account suitable for beginners? Novice traders and investors, when choosing the first broker, often pay attention to absolutely all criteria in order to eventually choose the best of the best. This strategy can be understood because most traders want to choose a company for long-term cooperation, but there are criteria that are not so important for beginners.
These include the availability of ECN technology. This system really has a number of advantages over dealing centers, and many novice traders are captivated by it. But it cannot be said that the presence of ECN accounts is a mandatory criterion and when choosing the first company for trading, you should pay attention only to ECN brokers.
An analogy with cars would be appropriate here: to learn how to drive, it is not necessary to buy a Lexus or a sports car. Yes, they will surpass some Opel in terms of characteristics, but their functionality is redundant for a novice driver. To get basic driving skills, it's enough to start with driving an Opel. Exactly the same principle works with ECN accounts: a novice trader can open them, but it is not necessary to do it at the very beginning when there is no experience in trading yet.
After all, a beginner, having gained experience, can always change the type of account or broker. Read more: Who are Market Makers and what are they doing on the market? Advantages of ECN technologyECN brokers appeared not so long ago, in , but over these 20 years, they have become popular both among professional market participants and among those who are just taking the first steps in trading.
We can talk about the advantages of ECN brokers for a long time, but we suggest first highlighting three main advantages:Fast execution of transactions. No requotes. Low spreads. Often these three factors are enough for a trader to pay attention to companies with ECN technology when choosing a broker. However, these are not the only reasons why it is worth choosing ECN brokers to work in the Forex market. It is equally important to understand how the broker earns. For example, the main difference between ECN companies is that their earnings consist exclusively of spreads - the commission that the trader pays for the execution of the transaction.
That is, the broker is not interested in clients "draining" their deposit. Also, ECN brokers do not participate in transactions. The company does not influence the trading process, does not set its own quotation indicators that would be beneficial to it, etc. There is no human factor in ECN technology, so customers get access to real market conditions, and the trader's transaction gets to the counterparty who currently has the most favorable quotes.
As we have already said, ECN brokers cooperate with the world's largest liquidity providers, therefore, the level of liquidity of instruments in such companies is very high. There is no option that a trader will buy an asset, and after a while will not be able to sell it. In addition, ECN companies, as a rule, provide services at the international level and assume a large trade turnover, so you can trade with them at any time of the day.
Another advantage of ECN brokers as intermediaries between the market and the trader is the absence of restrictions. What does it mean? The ECN company is not involved in the trading process, and traders' trading strategies are not displayed in any way on the broker's earnings, so cooperation with the ECN company assumes that a trader can use any trading strategy, as well as a variety of instruments.
ECN brokers often allow the use of Expert Advisors and other software to automate the workflow in trading. Separately, we need to talk about the high speed of execution of transactions. This factor becomes key if a trader is looking for a broker for scalping. And ECN brokers in this case become unequivocal favorites, because the trader, in addition to being able to use a scalping strategy, gets the highest possible transaction processing speed and access to instruments with good liquidity indicators.
Read more: Features of intraday trading on the Forex marketDisadvantages of ECN technologyWhen choosing a broker, it is important not only to pay attention to its advantages but also to know exactly what disadvantages it has. ECN accounts are no exception, because, despite many positive aspects, they also have a number of disadvantages. These include:A high level of minimum depositECN brokers are often chosen by those traders who already have extensive experience in trading and who have built a trading strategy.
They understand that ECN technology provides many advantages, and are willing to pay for them. Moreover, ECN brokers do not set the most affordable minimum deposit for traders. Difficulties in tradingIt is not so easy to make transactions using ECN technology. In order to trade and make a profit, a trader needs to understand the principles of ECN, as well as navigate the market, be able to respond to trends and sharp price changes, take into account the news release and analyze the market situation as a whole.
Technical analysis instruments can help with this, but they will not replace your own trading experience. Therefore, novice traders are advised to choose the demo version of an ECN account in order to gain experience and not risk their money, and only then proceed to real trading.
Read more: ECN Forex account: what is it? CommissionYes, ECN brokers earn income from spreads, but they can also include a separate, fixed commission per lot in the price list. At the same time, spreads are floating, their size depends on the market, and it is impossible to calculate exactly how much you need to pay the broker for the execution of the transaction. At the same time, it is definitely impossible to say that a floating spread is a disadvantage.
Professional traders know how to use this factor for their own good and reduce the size of commissions, but it will be quite difficult for a beginner to deal with it. After all, spreads can both narrow and expand in certain market conditions. Whether to open an ECN account or not is not a rhetorical question at all. To understand if there is a need for it, it is enough to define your trading strategy and understand what conditions are important to you in order to achieve maximum efficiency in working on the Forex market.
May 18, IndexaCo. Practical advices on choosing a Forex broker for a beginner. The first task that every novice trader faces is choosing a broker. There are many companies on the market, but not every one of them is suitable to start your way in trading. Brokers that are suitable for beginners can be determined by a number of criteria. We propose to analyze each of these criteria in order to learn once and for all how a novice trader can choose the first broker to trade on Forex.
Broker selection criteria for novice tradersA novice trader should pay attention to the following criteria when choosing his first broker:reliability;deposit;types of accounts;instruments;methods of depositing and withdrawing funds;commissions;leverage;bonuses;training;support service. Having correctly evaluated each of these criteria, any novice trader will be able to easily choose a broker. Read more: Forex risk hedging: why is it necessary?
Reliability of a Forex brokerThis factor is equally important for both beginners and professionals. Choosing a broker, first of all it is worth checking whether you can trust him. It is not difficult to do this - reliable companies have a license to provide services, they are registered and regulated by special authorities. The license can be either local issued on the territory of a particular country or international. To determine the country in which the broker is registered, it is enough to check the address of the main office: as a rule, it is in this country that the company is registered.
As for regulatory bodies, the more of them, the better for the trader. You can check the availability of a license, the registration address and the presence of regulatory authorities in the "About the company" section. Pay attention to the dates indicated in the last line: in most cases, you can use them to determine how long the broker has been providing services. The exception is brokers who have rebranded and changed the site address, but they are rare. The longer the company exists, the more reliable it is.
This information will help a novice trader distinguish time-tested companies from one-day scam brokers who receive money from clients, and then suddenly close, leaving the would-be trader with nothing. Talking about the safety of the client's capital. In order to avoid worrying about this, we recommend choosing companies with segregated accounts. What is a segregated account? This is an account registered with a bank or other financial institution in the name of a client to which the brokerage company does not have access.
Thus, the trader can be sure that all his money will remain frozen and the broker will not use it for personal purposes. So, to choose a reliable broker, a beginner should focus on the following factors:Availability of registration and license. Which authorities regulate the broker's activities. The term of the broker's work. Does the company offer segregated accounts. If you cannot find the information you need on the broker's website, we recommend contacting the support service and requesting the data you need before opening a real trading account in the company.
Broker's minimum deposit amountThe first thing that novice traders focus on is the size of the minimum deposit. In other words, this is the minimum amount by which a trader can top up his account to start trading. The lower it is, the more accessible the broker is. By the level of the minimum deposit set in the company, it is easy to determine whether the broker is suitable for novice traders. And this is logical - Forex trading involves risks, and the broker does not guarantee that the trader will earn and be able to "recapture" the invested funds.
It is for this reason that Forex brokers for beginners set a low deposit level. Each broker sets the minimum deposit amount independently. Read more: How much can you really earn on the Forex marketTypes of Forex trading accountsBeginners turn to this criteria much less often, and in vain: after all, trading conditions, in particular, the number of available instruments, services and free functions, may depend on the type of account.
However, it is not necessary for beginners to check the trading conditions for each of the accounts offered by the broker. At the beginning of the trading path, it is worth paying attention to two types of accounts:demo account;cent account. A demo account is a virtual account. With its help, novice traders can get their first experience in trading without risking their own money.
It is worth noting that it will not be possible to make money on this account, its task is to give the trader the opportunity to practice and see the results of his actions, whether it is a virtual profit or a virtual loss. When the trader has gained his first experience on a demo account, you can move on to real trading.
In this matter, the best broker for beginners is a broker who has cent accounts. Their difference from a regular account is that the amount on deposit is calculated in cents. Accordingly, it is possible to trade on a cent account using tiny amounts, however, the amount of profit will also be small. A cent account is also considered a training account, however, unlike a demo account, it allows you to trade in real market conditions and monitor the psychological reactions of a trader to receive a real loss and profit.
Forex trading instruments and assetsThere are enough brokers on the market that offer a huge selection of instruments, but there are also companies in which the assortment consists of only assets. Which broker is better for a beginner? Both the one and the other. The number of trading instruments is not a key criterion when choosing a company, but it is still worth paying attention to.
The fact is that a novice trader needs not only to gain experience in trading but also to understand which instrument he likes to work with the most and to assemble his own "inventory". And this can be done only if the broker offers a fairly wide range of assets.
This does not mean that you should choose a broker that will offer more instruments. The question, first of all, is diversity - it is important that the company offers not only currency pairs but also, for example, stocks, indices and metals. We advise you to focus on these criteria when choosing a broker. When trading currency, a trader buys or sells the currency that is indicated in the first pair GBP while paying the second USD and earns on the price difference.
There are both standard currency pairs and exotic ones, which include non-common currencies. Cryptocurrency is an extremely popular instrument, the benchmark of which is Bitcoin. This is an electronic currency that is not tied to any country, and you can earn it in different ways. For example, buy and sell on the same day, or buy and wait for its price to rise in order to sell the cryptocurrency more expensive. Metals - this group includes gold, silver, copper and other metals according to the standard.
CFD is a more complex instrument. Its specificity is the ability to trade on the price difference. It works like this: a trader does not need to buy an asset to make money. CFD is a contract between a trader and the owner of an asset, in which a trader can make a profit if the asset price increases from the moment of purchase, or a loss if the asset price falls.
Indexes - this instrument includes several stocks, and its value is the average value of all its components. ETF is also called an exchange-traded fund. In order to earn income, a trader buys a part of a ready-made investment portfolio and receives an equal part of the income from it. Stocks - Traders can also trade stocks of various companies. Such transactions are already carried out on the securities market, and not on Forex, and it is a little easier to predict their growth or fall.
Options are the easiest instrument to understand, but they are not the most reliable. Options trading is based on bets: in order to make money, a trader needs to bet on whether the price of the instrument will fall or rise. If the bet worked, the trader makes a profit, if not, a loss.
Methods of depositing and withdrawing fundsAnother equally important factor that newcomers to the market need to take into account is the payment systems with which the broker cooperates. A wide choice of ways to deposit and withdraw earnings really allows you to avoid difficulties with transactions and choose the most convenient way.
However, payment systems are not only about a comfortable service. Much more important is the speed of crediting funds. Sometimes a trader needs to have more funds in his account to open a new deal that seems extremely profitable to him, and the only solution in such a situation will be the opportunity to make an instant deposit replenishment. And the transfer speed directly depends on the payment system. For example, transfers through banking systems can take from working days, depending on the bank, so this option should not be considered for instant transfer.
Cryptocurrency wallets also take time to process a payment, from 1 hour. But electronic payment systems allow you to top up your account in a short time. And the more electronic payment systems a broker offers, the more convenient it is for a trader. In particular, an instant transfer makes it possible to start trading immediately after opening a real account.
Forex broker's trading and non-trading commissionA novice trader should also pay attention to the commission when choosing a broker. It can be of two types: trading and non-trading. A trading commission is a fee that a broker charges for making a transaction. It is also called a spread.
The spread can be either fixed or floating. A fixed spread is a clearly defined amount that the broker charges, its advantage is the ability to calculate its commission costs. A floating spread is more suitable for professional traders since the amount of commission can either decrease significantly or increase, depending on the market situation. The non-trading commission is a fee for other actions of a trader, for example, account replenishment and withdrawal of funds, for lack of activity on the account, for account maintenance, use of the trading platform and delivery of quotes.
A non-trading commission is optional, a broker may not charge traders, but all brokers have a trading commission, and the only question is its size: the lower the commission, the more profitable it is for a novice trader to cooperate with the company. As a non-trading commission, it is taken into account whether the broker charges clients a fee for withdrawing earnings to their personal account.
This commission may also be charged by the payment system, and not by the broker directly. Keep this in mind when opening an account. Read more: Demo account with a Forex broker: is it worth using? LeverageWhen describing trading conditions, brokers specify such a parameter as the amount of leverage. What is it and does a novice trader need to take this criterion into account when choosing a company?
Leverage is a function that helps traders increase the size of their deposits by using the broker's money. How does it work? The use of leverage seems to be very profitable for beginners because with its help you can increase your profit, but not everything is so simple.
Indeed, leverage can increase the income from the transaction, but it also increases the number of losses if the transaction turned out to be a failure. Brokers set different maximum leverage values: from to and more. But this does not mean that a trader necessarily needs to use such a function. When opening an account and in its settings, the user can set the desired amount of leverage.