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By Sacha Tarkovsky

Many new traders want to take FOREX Trading advice to give them success, but what should they look for from an advisory service?

How do you pick FOREX trading advice that can make you profits?

Let’s find out.

Here some of the things you should look for in terms of FOREX trading advice.

1. Know how the advisor makes trades

You will never make money following FOREX trading advice if you don’t understand the logic the trades are based upon.

Why?

Quite simply any FOREX Trading advisory service will lose money at some point.

They all do, (don’t believe track records that look to good to be true they probably are) so when the losses occur, unless you know how the advice is generated, you wont have the discipline to stay with it.

Currency trading success is based around the following equation

A logical method + the discipline to follow it = currency trading profits

If you don’t have the discipline to follow the advice you will never make money and this comes from having confidence that a system can overcome losing periods and lead you to currency trading profits

2. Look for a real-time track record

A lot of FOREX Trading advice is presented with a hypothetical track record (lets face it we can all make a profit if we know past data) and they all look great but the acid test is trading in advance.

Look for a real time track record of the advisor making money in currencies. That’s real dollars and account statements.

Today, many e-book writers offer advice with simulated track records and simply appeal to the greed and stupidity of buyers – Don’t fall into this trap.

Get a real time track record and make sure the advisor has put their money where their mouth is and have a track record of success.

No track record? Then don’t buy – PERIOD.

3. Does the advisors strategy suit your mentality?

Does the FOREX trading advice suit your trading mentality?

For example, they may make 100% annual gains but with 80% drawdowns at times.

Can you cope with this?

Or

Are you happier with lower profits and lower drawdowns?

Some traders like to preserve their capital and others like to be more aggressive, so only pick a FOREX advisory service where you can cope with the worst drawdown (peak to valley) they have had in the past.

4. Look for a satisfaction guarantee

Most reputable sellers of FOREX trading advice will give you a satisfaction guarantee if not delighted, so only buy from one who does.

Final words

There is some great FOREX Trading advice you can buy but you need to be careful to get a service that has made money, to inspire confidence and one that suits your trading mentality.

No matter how good the service is, make sure you understand the logic it is based upon, so you can stick with it for bigger FOREX Profits.

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On all aspects of becoming a profitable trader including info about legendary trader W D Gann who made a $50 million fortune trading go to our website for an exclusive Gann Trading Course visit our website at http://www.net-planet.org/index.html

Article Source: http://EzineArticles.com/?expert=Sacha_Tarkovsky

By Octa Arifiani

It’s a fact that forex trading became a highly preferable investment method in the last decade. Combined with the internet as a global 24/7 network forex is reachable to everyone. I’ll not give you about the basic explanation of forex trading in this article. I’m sure that i don’t have to tell what forex trading is. People which familiar or have an interest in an investment know forex already. Don’t they?

Forex trading is basically just an investment

As any other investment, there are always benefits and risks beyond forex trading. Many people/organization, especially forex brokers, its affiliate and those who earn their income by providing some forex related services says that forex trading have so much advantages compared to other investments; Forex is easy, with its non-stop 24 hours market, its wide range adjustable leverage, its automated trading platform, its offered better opportunity for income resource, and many more — you name it as much as you want to…

Blinded by its ‘beautiful dream imagination’, many small/personal traders, especially for the new ones forgot that forex trading is basically still an investment program. Traders should never have a thought that forex trading is an income resource.

Common Beginner Traders Scenario

Beginner forex traders are usually follow the trend of forex trading without preparing and providing them self with an adequate understanding about what’s inside forex trading. Their common scenarios are:

1. Know about forex trading
2. Have an interest in forex trading
3. Looking for an easy and profitable forex services
(Usually by looking for some services with less margin, high leverage, automated trading platform, and less risk? - which is too good to be true)
4. Start gambling with their trades
5. Unable to achieve profits as what their imagination
6. Repeating scenarios 3, 4 and 5
7. Repeating scenarios 3, 4 and 5 again… and again…
8. Realizing that they are loosing too much or that their imagination along these days/weeks/months is wrong (i doubt that it would reach years)
9. Give up and quit their trading for good.
Where did they do wrong in above scenario? Is that wrong to always searching for a better service to back up our trade? In my point of view, there are no mistakes in that scenario at all. But it’s just incomplete, and that’s the most dangerous mistakes made by most beginner traders.

How to Overcome Traders Mistakes and Begin to Make Some Profits in Forex

The facts are, there are just 5% of forex traders which successes with their trading. To become as they are, we should insert step 2.5 in scenario above. This step will simplify above scenarios by eliminating the fourth and eighth and changing ninth step became TRADERS GOAL ACHIEVED.

2.5 Preparing yourself with a solid basic knowledge of forex trading

- Know about the fundamental of forex trading

- Learn about what and how forex market really is

- Train yourself to getting familiar with the technical analysis in forex trading

- Learn how psychological factor affecting in the trading and define our best trading personality

- Be aware in our risk and money management

- Develop your most effective unique trading system based on your knowledge.

We should keep in mind deeply that forex trading is an investment. There is no way that we could be a master in some investment that we’ve just dive in to for days or weeks. We have to do it by the right way, and don’t forget to eliminate your rush in the goal achievement. You will surely find your best trading system that suits you, I guarantee that. But it would cost you some time for several trial and error system testing while you developing your experience in forex trading.

By using an analogical approach as a computer, forex broker is the application programs and operating system. We do need them to make sure that all we need its done, served and executed properly. But, how good the computerization execution speed and its performance are depends on the basic computer specification, which analogically as you.

How to Get Yourself Completely Forex Prepared

Learning and education materials are world widely spreading around us.

1. The first and the most value added a resource of forex trading is through book reading. Forex and investing categorized books are availabe in countless numbers in many bookstore and online bookstore. You should pick some of them to educate yourself with valuable knowledge of the theory beyond forex trading.

2. Try to get into some traders forum to know more about forex trading and the markets. Forex forum also a place to give you an information for forecasting the crowd psychological factor to forecast the currency price movement by examining on how do other traders react in some financial forex related world events.

3. Get a forex course. An expert forex traders or forex broker are offering this kind of forex educational method. The course are usually about the basic knowledge of forex, technical analysis technique usage and its tools, an expert trading advice or maybe in how to develop a particular tested forex trading system which profitable (if done right and backed by your forex basic knowledge).

4. Forex magazine subscription. Some forex magazines are published weekly, monthly and others might be yearly. These materials usually give you information about the updated forex market behavior overview and analysis which can be use for the input of the fundamental analysis of your forex trading.

Octa is a private investor, an online writer and the owner of a forex trading blog. She owns an online bookstore with a numerous collection of investment related books. Octa also a contributor in some finance categorized blogs.

By David Thorpe

Introduction

As we noted in our article ‘What is the Foreign Exchange Market’, the FX market has an average daily volume of roughly $2 Trillion making it the largest financial market in the World. It is not just the size of the market that makes it interesting but also the way it operates; the forex market is completely decentralised. This means that, unlike centralised exchanges such as the NYSE and LSE, there is no central location where each transaction can be traced and recorded nor do currencies have specialist market makers responsible for providing quotes for the entire market. Instead, the entities that act as market makers for the currency market are the World’s largest banks. These banks carry out transactions between each other on a regular basis, hence the term ‘interbank market’.

What Does This Mean For Us?

The vast majority of individual speculators and traders do not have access to interbank prices the same way a bank does. Access is reserved for large hedge funds and corporations that have established credit relationships with the banks. One example of such a corporation are the retail forex brokers that service the individual trader. These are the brokers that you open an account with when you want to trade FX. Examples include Easy Forex, Capital Spreads and FXCM. These brokers use the interbank prices as the basis for the quotes they offer to you, their customers. Although forex brokers are essentially operating in a decentralised, and in part deregulated market, they are governed and monitored by organisations such as the Commodity Futures Trading Commission and the National Futures Association (NFA) in the United States and the Financial Services Authority (FSA) in the United Kingdom. Strict financial standards and processes are imposed on retail brokers by these official bodies.

How Are Interbank Prices Determined?

A study conducted by “wall Street Journal Europe” in February 2006 concluded that 73% of all forex volume is done through ten large banks. These banks are the large brand names that we are all familiar with such as HSBC, UBS and Citigroup etc. The constant competition between these banks is what ensures tight interbank spreads. (Incidentally these spreads are passed on to a certain degree through retail brokers because of the increasing competition that exists in their market place. Of course spreads are slightly larger because brokers attempt to earn a profit from their spread). At every large bank there is a designated Foreign Exchange Sales and Trading Department whose job it is to make prices for clients of the bank and to offset the risk created by any transaction by dealing with other banks. The Foreign Exchange department is comprised of two teams; the sales desk and the trading desk. The sales desk is responsible for taking client orders (frequently in the $10 to $100 million bracket) while the trading desk is responsible for monitoring and executing these orders on behalf of the client. The process of placing an order via a bank is as follows:

Stage 1: Client calls the sales desk with an order stating size, currency and direction.

Stage 2: The sales desk checks with the trading desk for a quote based on the client’s specific requirements.

Stage 3: The sales desk relays the quote to the client for a final decision.

On a trading desk there are usually one or more market makers responsible for each currency pair. The number of dealers depends on the amount of volume seen during the trading day. For example, EURUSD (Euro US Dollar) and USDJPY (US Dollar Japanese Yen) currency pairs are likely to have two dealers each; one primary who gives quotes for the largest orders and a secondary who quotes for smaller orders. These dealers will act as specialists for their particular currency pair so that they become ultra familiar with the other players in the market and the way the pair moves. In general the dealer responsible for the USDJPY pair will make quotes for all JPY crosses such as CADJPY (Canadian Dollar Japanese Yen) and GBPJPY (Great Britain Pound Japanese Yen). The trading desk team also includes one dealer who handles AUD (Australian Dollar) and NZD (New Zealand Dollar) (out of Pacific trading hours, there are likely to be more during Australian and New Zealand working hours) and one final dealer responsible for exotics such as South American and African currencies. In order that client positions can be monitored 24 hours a day, each bank’s trading desk will pass on client position information to their foreign counterparts. i.e. At London close orders are passed to New York and so on.

Which Factors Are Used to Determine Price?

Bank dealers use a number of variables in order to provide their clients with price quotes. These include but are not limited to:

Current market rate

Required order size

Volume available in the market

Current bank inventory positions

Perception of current market direction

It is because of these constantly changing variable that banks do not offer fixed spreads, unlike many retail brokers.

Electronic Brokerage Service (EBS) and Reuters Dealing

There are two main electronic platforms that are used by banks to view the interbank market. Electronic Brokerage Service (EBS) and Reuters Dealing provide these services. They work in much the same way as a retail broker that provides an ECN service, although it should be noted that the quotes and order sizes seen on ECN feeds are not an accurate representation of the interbank market. Every institution using Reuters Dealing or EBS can see the best market rates currently available. However, due to the ‘approved-credit system’ in operation on the interbank market you may only deal at that price if you have an existing credit relationship with the bank quoting the rate. As you would imagine the larger the bank or financial institution the more credit relationships they have in place, therefore the greater their access to the most competitive rates.

How Do Retail Brokers Fit In?

The way that retail brokers fit into this system is fairly simple. The larger the FX broker (in terms of capital available and credit relationships) the higher the number of banks they can deal with and the greater their access to the best possible quotes. Therefore you would assume that, as an individual speculator, you would have access to the best quotes if you have an account with one of the largest FX brokers. It is also the case that more credit relationships bind the bank to provide liquidity during periods of high volatility such as economic data releases. This means that the largest retail brokers should enable you to trade during the news without requites and freeze-outs. The diagram below shows the relationship between the interbank market and the individual trader. (Diagram: http://www.passion-trading.com/Articles.Forex.TheInterbankMarket.htm)

David Thorpe is a senior contributor for http://www.passion-trading.com a free educational resource centre for traders and investors. The goal of the site is to stimulate the minds of its users, enabling them to achieve a greater understanding the art of trading, thus helping them to become more profitable.