Category Archives: Currency Trading

If the market offers you money, take it

There are many traders who want to make money but they do not know the way. They think of following the professionals but they end up losing money. The professionals know what they are doing and they plan their trades. When they tell the traders they are going to use this strategy, you only know the name of the strategy but how they are going to set the trades is not known to you. If you use the same strategy, you need to make your own plan but following their strategy will not give money. Many traders also want to use the paid signals because they believe it is safer. The signal providers will tell you when to place your trades and this way you will be making a profit without doing the analysis and the other things. However, there are many times when the industry offers traders the profit. The traders do not know if it is a scam and that is why they do not take the chance. Many people do not take the offer because they want something even bigger. This article will tell you why you need to accept the offer and thus make a profit in Forex.

There are many traders who want to make money but they do not know the way. They think of following the professionals but they end up losing money. The professionals know what they are doing and they plan their trades. When they tell the traders they are going to use this strategy, you only know the name of the strategy but how they are going to set the trades is not known to you. If you use the same strategy, you need to make your own plan but following their strategy will not give money. Many traders also want to use the paid signals because they believe it is safer. The signal providers will tell you when to place your trades and this way you will be making a profit without doing the analysis and the other things. However, there are many times when the industry offers traders the profit. The traders do not know if it is a scam and that is why they do not take the chance. Many people do not take the offer because they want something even bigger. This article will tell you why you need to accept the offer and thus make a profit in Forex.

Learn to close your trades

The new Singaporean traders don’t know how to close their profitable traders at the perfect time. This is very crucial for your successes. Some people often say trading has nothing to do with your timing. In reality, trading is all about perfect time and proper trade execution. Never think you can change your life within a short period of time without doing the hard work. As a new trader, you must learn to trade the market by using demo accounts. There is no point of risking your real money when you can learn all the details by trading the market with the virtual dollar.

Though Forex trading Singapore is a very popular term very few people can actually master the art of trading. Being new to this industry you might not understand many things but this is very normal. Just focus on high-quality trade setups and trade the market with proper risk management. Try to develop a strong habit of reading as it will help you to make money in the long run. Always remember, patience is its own reward.

Even if the offer is small, still take the chance

The reason people like not to take the offer is that it is very small. Every trader wants to get rich and they plan to make $100 in one trade. It sounds easy but is in fact hard to make. If you are given the chance to place a trade and make few dollars with the trend, do not neglect this offer. You can still make a profit and it is better than losing money. You will know how to make a big amount but if you do not take a small amount, you will never know how to plan for a bigger amount.

It does not happen always

Not all traders get the offer. Most of the time you will have to wait for days until you get a good trend. The volatilities are not in your favor and if you manage to get a good pattern, it is best you place your trade. The professional trader does not make money by placing trades at every volatility. They wait for the perfect pattern and when it appears, they trade with the trends. Whenever you are offered money, take the chance and make some profit.

Never try to stay for a long time in the industry

The more time you spend on Forex the more confusing it can be. Spend a small amount of time and place your trades and end your trades. Staying for too long in the industry can make you lose money.

Learn to close your trades

The new Singaporean traders don’t know how to close their profitable traders at the perfect time. This is very crucial for your successes. Some people often say trading has nothing to do with your timing. In reality, trading is all about perfect time and proper trade execution. Never think you can change your life within a short period of time without doing the hard work. As a new trader, you must learn to trade the market by using demo accounts. There is no point of risking your real money when you can learn all the details by trading the market with the virtual dollar.

Though Forex trading Singapore is a very popular term very few people can actually master the art of trading. Being new to this industry you might not understand many things but this is very normal. Just focus on high-quality trade setups and trade the market with proper risk management. Try to develop a strong habit of reading as it will help you to make money in the long run. Always remember, patience is its own reward.

Even if the offer is small, still take the chance

The reason people like not to take the offer is that it is very small. Every trader wants to get rich and they plan to make $100 in one trade. It sounds easy but is in fact hard to make. If you are given the chance to place a trade and make few dollars with the trend, do not neglect this offer. You can still make a profit and it is better than losing money. You will know how to make a big amount but if you do not take a small amount, you will never know how to plan for a bigger amount.

It does not happen always

Not all traders get the offer. Most of the time you will have to wait for days until you get a good trend. The volatilities are not in your favor and if you manage to get a good pattern, it is best you place your trade. The professional trader does not make money by placing trades at every volatility. They wait for the perfect pattern and when it appears, they trade with the trends. Whenever you are offered money, take the chance and make some profit.

Never try to stay for a long time in the industry

The more time you spend on Forex the more confusing it can be. Spend a small amount of time and place your trades and end your trades. Staying for too long in the industry can make you lose money.

How Does Forex Come to Life

Forex (short for Foreign Exchange) means trading of currencies between countries. It is decentralised and world’s largest market for currency trading. For more information, you can visit here.

stock-broker

History

Trading or simply the exchange of goods dates back to centuries in Babylonia. Popularly called Barter system, exchange of goods took place then putting a value to goods to be exchanged. Interestingly, some currencies and paper notes existed and Babylonians are known to have exchanged paper notes and receipts, though there were no speculations.

Barter system had its own limitations. It necessitated that there should be a standard method of value in exchange of goods. Stones, feathers, and teeth and later metals formed a common base of value. Gold and silver were considered favorably. Trade between Asia and Africa took place with the use of above metals as exchange medium.

Big Steps

Today’s paper currency has its roots in the Middle Ages. It started as an I.O.U and was introduced by force to gain larger acceptance by the public. This was possible as the initiation took place from stable governments. Coins continued to be minted.

The See-saw and Bank Run

Prior to the First World War, there was a boom in the economy and a great deal of import. This led to gold being used heavily and money supply coming down in turn causing recession, inflation, and price rise. Economic activity decreased, interest rates peaked. Hence the erratic imports in a healthy economy led to a steep economic downturn.

Central Banks’ role was to support the currency by easy conversion to gold.  The country was witnessing the see-saw effect of the exchange value of gold that was evident with the rise and fall of the economy. These people realized that converting back to gold in large proportions was a herculean task.

This period saw the Bank Run and with withdrawals from everywhere, leading to political instability and inflation. There was demand for paper money and not gold.

It was an ideal setup for other countries to buy. Trade commenced, interest rates came down, gold and money supply restored the economy.

Recessions

The terrible inflation and deep recession led one thing to another. Series of things happened such as :

  • Year 1931: Removal of gold standards during The Great Depression
  • Years 1931 – 1973 : Changes in forex scenario. There were strict controls on forex to bring in economic stability

The decades between 1931 and 1973 was turbulent, which is mentioned below.

During the End of World War II

IMF, GATT, World Bank were created. USA initiated the Bretton Woods agreement in July 1944. In favor for US Dollars, New Hampshire rejected John Maynard Keynes’ suggestion for introducing new world currency in a conference at Bretton Woods.

The Bretton Woods agreement fixed the exchange rate of 1 US Dollar to 35 for 1 ounce of gold. The other main currencies were also fixed to a US Dollar.

Emergence of European Monetary System

The European Monetary System was established in 1979 by the European Economic Community, after the collapse of Bretton Woods in 1971 when President Nixon suspended gold convertibility, following difficulty to sustain US dollar as a single international currency.

The Maastricht treaty was signed in 1991 with a view to replace all the currencies to Euro in 2002 and bring in a greater stability to exchange currency. London was the epicentre of Eurodollar market in 1980s where the banks lent Dollars against Pounds to maintain their global leadership position. South East Asia and South America including other Asian countries also saw their currency being devalued against the US Dollar.

Later the coming together of banks, government agencies, insurance  companies, financial firms etc., formed world’s largest market for trading of currencies called the Forex market. The countries stopped bartering goods and adopted the foreign exchange to meet their purpose. For more information, you can check the facebook page.

Investment in Financial Market

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The Forex market (or Foreign Exchange market) is a sector of the stock market where someone can buy and sell foreign currency by phone, online or other methods any time of the day. It is now one of the very most profitable and largest markets on this planet, with over $3 trillion really worth of currency being traded every day.

In this unique market, currency is bought and sold using the fluctuation of exchange rates. You’re actually buying one type of currency with a different type of currency and profiting from the difference if you buy and sell at the right time.

Being in forex trading has alot of advantages and disadvantages. Sure you can at least imagine the positive benefits, of being financially independent, making money off from competing currencies, trade on the laptop on a yacht down the middle of nowhere.

So the big question are:

i. Are you constantly surfing the internet buying forex trading strategy?
ii. Are you confused as to what course to start with?

If you wish to get started in trading, one way is to buy a course online that teaches a certain method of trading, such as puchasing “Bridging to the Trillions Market” ebook, which will give you a high probability of placing an effective trade. Then, you need to examine and test the method over a demo trading account until that you are profitable.

Here are two principles to always follow:

Rule #1: Papers trade: Please don’t jump into the market with real money unless you are confident and totally comfortable using “Bridging to the Trillions Market” ebook training method. One surefire way of losing all of your current money is to jump into the market too soon, before testing a trading method.

Tip #2: Plan your trades: While traders, the only way to test a trading method is to stay with it religiously. Therefore, it’s imperative to jot down your plan or method for getting a trade, and stick to this. Just like anything we carry out in life, proper practice through paper trading is likely to make you able to enter the markets with confidence and will ensure you don’t get rid of your trading account.

How get started?

Bridging to the Trillions Market, as it’s name suggests contains 85 very quick and easy to follow forex strategies for you to make it in forex market place. This comprehensive and well-written book is going to take you by the hand and familiarizes you with the world of currency trading in case you had no previous knowledge of it.

It also explains the main factors contributing to currencies trends, as well as simple, exponential and weighted moving averages and how to use them when trading foreign exchange.
Find out why 90 percent of the traders failed. Learn how to create your very own strategy and signal and enhance your earning potential in currency market.
Grab one today and it comes in eBook and paperback format.
Interested, please visit: http://www.selfbridging.com

How to Choose a Forex Broker

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Having a broker is a necessary part of trading on the Forex market.  In a market that is already unregulated, having to choose the right kind of broker can be an intimidating process.  There are plenty of horror stories about bad brokers on the Internet.  Choosing the right broker can obviously make all the difference.  Here are some points to consider.

Is your broker internationally represented?  This is an important question, because the Forex market is, by its very design, international.  If your broker is not able to have an international presence, whether that is through office locations or culturally, then that is a real problem for this market.  Your broker should not only have an international presence, but also be able to represent a variety of languages.

Does your broker understand the software platforms?  What about a software program like MetaTrader?  This is a way of being your own boss with online trading, though technically you are still not completely without a broker.  The software is managed on two ends by the brokers of the Forex market as well as any clients wishing to utilize the platform.  If your Forex broker is not experienced with the various software platforms, especially Metatrader, then an investor should think twice.

Does your broker understand all the possible currency pairings and can assist you with jumping easily between pairs?  While it is a good idea for a beginner to start with a currency they are familiar with and stick with one pair until they learn the ropes, you want your broker to be able to transition you into other currency pairings eventually.

And that means ultimately, does your broker offer continuing education for you as an investor?  How willing is he or she to give you the ins and outs of the market – or does he or she just want to recommend a specific trade?  As an investor, you want to become as knowledgeable as possible.

Picking your broker with these ideas in mind will help you be at ease that you are getting talent, someone working in your best interests and who can help guide you toward future success.

5 Things to Keep in Mind when Going for Binary Option Investment

Binary option is often regarded as a quick money-making investment method. With just a single correct prediction, one can gather a huge profit. Though the entire process may sound very simple and easy, there are a certain things that need to be followed to avoid being duped and enhance your chances of winning.

binary option

Here are a few things that you need to keep in mind when you decide to invest in Binary options.

1)      Learn the process and keep ambiguity at bay: No doubt the Binary option is based on a yes/no proposition but before one gets involved in trading, it is necessary to understand the process fully, possible outcomes, and associated risks too.  It is important to decide carefully whether to invest in shares or assets and gather at least some basic understanding of market trends and conditions, trading, and chart analysis.

2)      Ask a financial consultant: Before taking any investment decision, it is always advisable to consult an experienced and licensed financial advisor, who will be in a better position to give to you reliable suggestions and recommendations to enhance your payouts.  A financial advisor helps you assess your financial risk-taking potential and gives you essential inputs on binary options tradingthat can give you an edge. But it must be remembered that their advice on making yes/no choice in the process of trading cannot guarantee a sure-shot win.

3)      Assess your financial risk taking potential: Impulsive and reckless binary trading can lead to huge financial loses and can even incur debt.  It is very essential to assess your financial circumstance correctly and set aside an appropriate amount for trading, whose loss is endurable. At the same time, you should be very careful that you do not become addictive to Binary options. You can always weigh your options and seek professional help from http://www.best-binaryoptionsbroker.com

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1)      Never be lured by publicity or advertisements: The web is flooded with numerous promotional advertisements of many trading sites which try to lure people by making tall claims of offering huge profits within less time.  Hence, taking an immediate decision to participate in such trading can have uninvited consequences. Such promotional ads should not be able to push you to trading without making prior analysis of various factors.

2)      Learn some winning strategies: Although there is no sure shot formula for success in Binary options, but some strategies can be learnt to get an edge in this highly unpredictable money-making process. There are innumerable trading strategies to learn and utilize so as to turn you from a loser into a victor. The Fibonacci retracement tool, The Binary Options Fence Trading Strategy, Use of Channel Identification, Long box trading strategy etc., are names of a few renowned strategies.

These suggestions are expected to enhance your chances of winning the bet and subsequently save you from falling into trap of any fraudulent broker or scam. A binary options trader is expected to do his own research and analysis rather than relying solely on these suggestions. This is a highly unpredictable yet profitable investment method; hence, individual discretion is highly encouraged.

Author Box:

Colin Beckett guides you on the investment process without pushing yourself into unnecessary risks. He recommends binary options trading and http://www.best-binaryoptionsbroker.com/ to you as the best method to invest your funds but only after you are complete with the research and analysis about it.

 

How to Choose an Online Trading Broker

Brokers are great to help find the best deals for your money. There are all types of brokers around, including mortgage brokers and insurance brokers. When it comes to online trading, you need to find a broker who is specialised in that area of finances. Here are some tips to help you choose an online trading broker for your needs.

online broker

Someone Experienced in the Field

Never just choose anyone. There are plenty of people pretending to know what they’re talking about just to get you to choose the most expensive option. After all, they take a commission based on the final amount you spend, so they want you to pay out more at first, right? Well, that could lead you to getting into a trading option that just doesn’t work for you.

Talk to the brokers or do some research online. Find out about their experience and whether they’ve conned others into spending too much money for their own greed. Those who are well experienced will know that the most expensive option is not always the best.

 

Someone Who Knows Trading 

It’s really important to find someone who knows the different types of trading. There are just so many including forex and stock marketing trading. A good broker will be able to discuss all your options and make sure you really do get the best for your needs.

Good brokers will want to know what you want to gain from your trading. Is this a short term goal or a long term one? That will affect the type of trading you choose, so you need someone who knows the ins and outs of the trading types to get the best option for your goals. It’s also worth finding someone who knows the trading platforms as there are so many now.

 

Check Out the Fees and Deposits 

All traders have fees. How else do they make a living? It’s up to you to find a broker who has fees and deposits that you can afford. Set your budget right at the start, so you don’t run the risk of losing all of your money and not having any for the trade.

Most online trading brokers will charge for every single trade you make. This could end up expensive if you start putting more money down at a later date. There are two types of fees to consider: commission and spread. The spread is the difference between the buying and selling price, whereas the commission will depend on the amount you trade or win (depending on the broker). Both have their pros and cons.

Learn everything you can about online trading brokers like CFD Spy, and find ones that are highly experienced in this area. This is the best way to make the most of your money and risk less when it comes to putting money down on trades. You’ll also need to consider the price. The last thing you want is to find out you’re paying thousands of dollars because of the amount you’ve gained from a trade.

Day trading for dummies with ForexFalcon EA

Day Trading

Automated trading offers a great way for traders, especially those with a full time job as well as complete beginners to trade the forex markets. Commonly referred to as an expert advisor, the forex EA’s are built on a mechanical trading system based on a strict set of entry, exit and risk management rules. Forex EA’s might not be that often mentioned when talking about day trading for dummies, but in reality, they make for an ideal solution worth exploring in the forex markets. Instead of having to watch the charts constantly, depending on the chart time frames that you trade, or having to check your trading account every few hours, having an EA do all the hard work for you can set traders free from the charts.

ForexFalcon is one such forex expert advisor, but unlike most others, offers consistency in the profits the ForexFalcon EA generates. Trading over 18 currency pairs, the expert advisor comes with built-in risk management rules so traders can set their own risk management depending on their account equity and risk tolerance.

The easy to use approach means that even beginners will find it easy to get the ForexFalcon EA up and running on their MT4 trading platform. The expert advisor is proven to generate over 7% returns per month, with an annualized 125% return on equity a year. Imagine having an extra income besides your regular job? ForexFalcon EA makes it possible for traders to earn a consistent and stable return on equity, beating even the high street bank’s interest on savings deposit.

Key features of the ForexFalcon EA

Here are some of the key features of the ForexFalcon EA that readers should know about:

  • Profit Factor of 1.76
  • 7% consistent returns month on month
  • 125% annualized return
  • EA is not influenced by slippage or news related risks
  • Works on forex majors and minors
  • Can be operated in both automatic and partially auto mode
  • Money back guarantee
  • …. and many more features

The verifiable results and performance, along with the consistency in generating stable monthly profits, makes ForexFalcon EA and ideal expert advisor especially for traders at all levels to start making profits with forex trading.

But of course, the choice is left up to the reader. One could either pick up a day trading for dummies book and learn the huge ocean of various modes of analyzing the forex charts, put them to test, lose money and start back at square one, or simply pick up an already proven and profitable forex expert advisor and set you up for success. If you are interested to learn more about ForexFalcon EA, visit the homepage which includes complete verifiable trading results from a reputable third party forex analytics website as well details on how much you can potentially earn with the ForexFalcon EA depending on the amount you wish to invest.

The ForexFalcon EA comes with a money back guarantee. Customers who have purchased ForexFalcon can get a full refund if the EA does not generate profits within the first month of using it. Can it get any better than that?

Make easy entry into Forex trading with Pips Canon Software

pipe-canon-review

Pips cannon software is for everyone who wants to make money. No one is ever satisfied with what they are getting in terms of income. They want more and more so as to be able to satisfy their ever increasing needs. People either learn to adjust with their so called meager incomes or go out and make more money. Making money is not that easy though. Doing things apart from job to make money is out of question as there is no time left for that in a day. Those who do, have to compromise on something like their beauty sleep, family, etc.

So how about just sitting at home and making money those extra efforts. Yes that can be done; forex exchange is the answer to it. And Pips Canon is the answer to Forex exchange. That is what this Pips Canon review is here to explain. Forex exchange market is too complex. It requires study of the market, its trends, analyzing it and then investing finally after one has got hang of it. However, even after all the studies and analysis, one invests with his fingers crossed. What if all the hard work in understanding the market proves wrong? That is why Pips Cannon is a great solution.

There is more to Forex. Even after devoting life to it, some people do get a proper hang of it. Wouldn’t it be great if someone else would tell us what to do, and when to do it? What to buy and what to sell. Indeed it would be great. Pips canon does that for you. You can trust it to increase your income without any hassle. This Forex software tells us which stocks to buy or sell and when. It is most easy to use.  It can be relied on and definitely it will earn large profits for you. The benefit of this tool is that you don’t need to have a PhD on Forex. In short you do not need to go in depth of the Forex which takes ages to master. All you need to do is buy this product with the help of Pips Cannon review and invest your money it tells you and see that money grow.

With pips cannon, great burden is lifted from the shoulder of the person who was had thought of setting his foot in forex, but did not know where to start and how to start. The fear of spending hard earned money in stocks based on own study is always a risky matter. If only there was some assurance that what you doing is right. This Pips Cannon review is to help a person understand that his money is going in the right place and he can invest without butterflies in his stomach.

Pips canon is your guide, mentor and friend when it comes to forex. It is user-friendly application, thus, anyone who wants to put his steps in Forex can use it. If you want to make more money but don’t have time to do so, this software is a great option for you. It gives perfect information. You can try it and decide for yourself.

How does Bitcoin custody work?

For Bitcoin (BTC) custody – which means making a certain amount of BTC available to another party as a guarantee for a particular contract or transaction – you can request a custody order. This order will be sent to another user and stored in an offline wallet for the duration of the custody contract. During this time, this other party will have no access to the BTC for any type of commercial trade or financial transaction: the currency will be held on your behalf, merely as a guarantee. At any time, this guarantee can be returned to the owner of the custody contract. By the end of the contract, the BTC is returned to the owner of the contract with an added charge of a transference fee varying from 0.1% to 0.4%. This type of custody can be used to guarantee property rental, hiring of staff and even in certain debt negotiations.

BTC can be considered a cryptographic commodity. It has no centralized issuer and no central authority is responsible for controlling the process.

Many available platforms employ cold storage systems that guarantee extreme levels of safety for users and their portfolios. That means your data is stored in a safe location, not connected to the web: a great safeguard against computer malfunctions. To further increase safety, many platforms are also employing mixed accounts that come with a special BTC track eraser – asides from erasing all information regarding the traded BTC, this function further guarantees safety by storing your remaining assets in an offline wallet!

What guarantees the other party won’t disappear with my Bitcoin (BTC) when the contract expires?

As per any agreement or business, the first step is guaranteeing a simple, but detailed and effective, contract will be drafted. Once this contract has been signed by all parties involved and their personal details have been proven by the necessary documentation and notarization, you can choose to include or not this contract in your custody transaction. Please note this contract will not be valid if you choose to transfer the BTC prior to it being signed, proven and notarized!

Once those steps have been taken, you are in business: the BTC will be held in custody just as any other asset would, to guarantee any type of contract you wish.

What are the differences between the storage, purchase, sale, trading, lending and custody Exchanges?

One of the key aspects of the Bitcoin (BTC) ecosystem is the Exchange. It works roughly as any stock exchange would, and it allows for the exchange of local currency for BTC and vice versa.

The Bitcoin Exchange is naught but a trading platform for buying and selling BTC. You start by making a deposit into your trading account and follow by getting a piece of the action for this once again rising trend. 

Storage Exchange!

Using a decentralized system, the blockchain, it allows for storing financial transactions without the need for a mediator: you can send and receive BTC without any cost! 

Purchase and Sale Exchange!

Using a similar decentralized storing system, it offers additional services such as buying and selling through centralized currencies – like Dollars, Euros and such – according to the country of origin for the particular platform.

Trading Exchange!

Also a Purchase and Sale Exchange, this type of platform focuses on trading currencies, earning small commission payments from both buyers and sellers!

Lending Exchange!

Is it possible to lend out money and acquire loans in the form of Bitcoin (BTC)? Yes: this type of transaction is called “peer-to-peer lending” or “p2p lending”.

BTC is a parallel economy and, as such, there are always superavit agents and deficit agents – or, in simpler terms, people who spend and people who save. Certain companies have decided to take advantage of that fact, and those are the creators of the “peer-to-peer lending” system.

These companies offer a secure location where users can create adds offering or requesting BTC loans, avoiding the red tape involved in a standard bank loan. To participate you need only register and create your add. In some cases, the “market” of the platform will determine interest levels. In other, the website itself will make those calculations based on your credit records (in the platform). Digitally signed contracts will guarantee lenders are safeguarded from a legal point of view, and also allow users to make some money from their BTC reserves.

Custody Exchange!

This platform also employs blockchain systems, allowing for financial transactions to be stored by a mediator. You can send and receive BTC, set up custody contracts to guarantee other agreements and business transactions and have access to the “peer-to-peer lending” system, which allows you to profit with each transaction made! 

Many available platforms employ cold storage systems that guarantee extreme levels of safety for users and their portfolios. That means your data is stored in a safe location, not connected to the web: a great safeguard against computer malfunctions. To further increase safety, many platforms are also employing mixed accounts that come with a special BTC track eraser – asides from erasing all information regarding the traded BTC, this function further guarantees safety by storing your remaining assets in an offline wallet!

We analyze and according to surveys, the two best bitcoin platforms for custody are Bits Payments (bitspayments.com) and Bit CXE (bitcxe.com).

Retail Traders in the Foreign Exchange Markets

Foreign Exchange Markets

The last decade has seen significant changes in the foreign exchange markets. Most notable is the immense increase in the number of retail investors who’re entering the markets often with only limited experience and know how.

The internet has led to unprecedented access and taken away established monopolies from the large financial institutions. This has forged the way for much smaller online brokerage services offering retail traders easy access to the foreign exchange, CFD and the commodities markets.

While the financial institutions applied themselves predominantly towards the needs of institutional investors and high net worth clients, the online brokers seemed to distinctly target people of lesser financial means.

Lowering The Barriers to Entry

A first tactic with which to widen their appeal among the general public was that many brokerages have trading accounts with the ability to trade on very small contract sizes, have extremely high leverage, and have exceedingly low balance requirements. This make them accessible to the average man in the street.

Although this increased level of openness and accessibility to FOREX has broadly been a positive development, some people have argued that the influence of this new group of “irrational” traders is leading to excessive volatility and lack of stability.

It’s well known that retail traders predominantly make use of shorter term quick win strategies such as swing trading, scalping and to some extent carry trades.

It’s also accepted that so called irrational investors may indeed induce a destabilizing effect on currencies by pushing prices away from fundamental values. Yet this influence of irrational behavior has always been the case in any open financial market.

Standard economic theory tells us that those investors who perpetually make irrational financial decisions will eventually be removed from the picture due to increasing losses. They are ultimately replaced by more rational investors or so theory tells us and asset prices move to fair values.

Meanwhile the loss aspect is supported by many studies and empirical evidence. Like this one from MSN that points out the fact that most retail traders (in all retail areas) achieve poor returns at least in their initial learning period.

Inexperienced traders often don’t research or educate themselves to any degree. They make investment decisions based on limited or inaccurate information and generally have a “follow the crowd mentality”.

Emergence of “Auto Trading” Accounts

The second reason that online brokers have flourished is their providing of so called copy trading accounts. Copy trading allows automatic copying of positions opened by another trader into the account of the copier. In this respect a less experienced individual can piggyback the trades of more experienced traders and so duplicate in proportion their own profits or losses in their own accounts.

This can be implemented technically by means of two mechanisms: One method is through what’s know as PAMM (percentage allocation management module). With this method the manager’s trade orders are scaled up to represent the entire pool of capital as allocated by the group of investors.

In the second method known as a trade signal the order flow is exactly replicated into the accounts of all subscribing investors.

Steve Connell at Forexop.com provides an overview of these mechanism as well as their pitfalls and the risks involved. What this mechanism does is allow investors with little or no experience to enter the markets and benefit from the experience of the more successful traders with a proven track record.

Most brokers offer their copy trading services in a format similar to a social network. Whereby it is possible to compare and analyze the performance of individual traders and study their behavior, risk profile and trading strategy.

In view of these developments its clear that the foreign exchange market will continue to evolve and greater accessibility only looks likely to continue.

By Kiyoshi Tanaka

https://lse.academia.edu/KiyoshiTanaka/Posts