Tag Archives: Brokers

Understanding Forex Commission Structures

Unlike most other exchange-driven markets, forex has an enticing feature that brokers take full advantage of in their continual bid to lure in investors: no exchange fees, regulatory fees, data fees, or commissions. To many first-time traders, this gives it a major advantage over other markets, but accepting such a bargain doesn’t always mean that you get the best deal available.

Read on to discover how to choose the commission structure that will work best for you…

Three Forms of Commission

Forex brokers offer three different forms of commission to their traders: fixed spread, variable spread, and commission based on a percentage of the spread. These options each have their advantages and disadvantages, which means that there’s no simple answer when it comes to choosing which of them will work best for you.

However, before you can make an informed decision, you need to understand what spread is. Spread is the difference between the price the market maker will pay you for buying the currency (the bid price) and the price at which they’re prepared to sell it to you (the ask price). It is calculated in pips. If your broker quotes you EURUSD – 1.5550 – 1.5552, the spread would be two pips, for example.

To work out how this translates into real money, it can be useful to use the trading calculators that some brokers provide.

Fixed Spreads

If you choose a broker offering a fixed spread, then the difference between the bid and ask price, and thus the spread, in the above example would always be two pips. This would not be affected by market movement, either positively or negatively. At first glance, this can seem like the best choice, as it provides you with certainty. For some people, it will be, but for others, it is worth considering the other options available to you.

Variable Spreads

For those who are not averse to risk, variable spreads can prove a wiser choice. These spreads will change in accordance with market movements. On the one hand, this could mean that they rise to as much as five pips; on the other, it can see spreads drop to as little as 1.5 pips.

Commission

There are also brokers who will earn money through charging a small amount of commission. The benefit of this type of broker is that they often have a good relationship with a large market maker who can pass tight spreads onto you.
Each type of commission will have a different effect on your trading. Of course, part of this will be influenced by your individual broker, but that doesn’t mean that it isn’t worth considering their individual merits and pitfalls. Which one do you think would work best for you?

US Department of Justice Expands Probe Into Forex Deals – Major Banks Involved

We’ve seen numerous inquiries over the last couple of years by government departments looking into the world of forex trading, and this past weekend saw the United States Department of Justice open up its own probe to include two additional banks, and those are Barclays and UBS.

Forex is an increasingly popular investment option for investors of all levels these days, and some may argue that current rules and regulations are struggling to keep up, which is one of the reasons we so often see these investigations. It’s not that the investors or smaller brokers that deal with investors, such as ThinkForex, that are doing anything wrong; it’s almost always been major banks either misleading or miss-selling products.

That is exactly the same case this time round, as the Department of Justice has reason to believe that both Barclays and UBS have been selling a variety of structured products without making it clear how much they were making on each of the forex trades. In this case, these products were not small-market; there’s reason to believe some major Swiss hedge funds bought into the products, and they may well have been the ones to alert the authorities that something was amiss.

Knock-On Effects

To the day trader, these kinds of investigations probably don’t appear all that important, but there is of course an interesting question to be raised – who is your broker’s broker? Many of these major banks are enabling the smaller brokers that you might be used to dealing with day-to-day, and they’re not invulnerable to knock-on effects. At the beginning of the year, we say major brokers including Alpari UK and LQD Markets go bust because they lost their liquidity. The situation isn’t exactly the same, but it certainly is worth bearing in mind.

As already mentioned, this isn’t exactly a new investigation. Several other banks are already under scrutiny by the Department, all with the same charge of simply not disclosing the relevant information properly to their clients involved in the forex markets.
In the coming days, we’re likely to see more information coming out, but at this stage we’re mostly in the dark in regard to specifics. The Financial Times first broke the news story on Sunday, but since then there has been no comment made by the Department of Justice, or indeed Barclays or UBS.

An innovative review of The CopyTrader feature from eToro

eToro is a Forex trading portal with a global edge that stands out from the crowd. If you are an online forex trader, you remain logged for the better part of the day for your dealings. In addition, you are bombarded with titillating invitations via newsletters from sundry online forex forums and your inbox is choc-a-bloc with such newsletters. However, you don’t know what you are missing if you’re not on eToro’s system.

The trading platform is powered by potential software that allows the trader to easy navigation through any and every aspect of forex trade-be it trading with currency pairs, securities, commodities or indices. Irrespective of wherever you are, the platform gives you immediate and peerless access to the forex markets around the world.

Nevertheless, eToro’s USP is the CopyTrader feature that allows you to imitate and emulate the trading practices of the crème-de-la-crème forex traders. Following in their footsteps allows the relatively new and hence wary trader to assess their investment ends and make optimum profits from their spread. Hence a CopyTrader review becomes imperative.

Since the site went public with its online forex trading framework in 2007, it has been creating waves and since its CopyTrader signature feature got underway, it hasn’t looked back. More than a million online traders are registered with eToro and they regularly trade on this forum after a CopyTrader review and keep referring the site to their friends and relatives. It’s time you hopped onto the bandwagon of traders on eToro.

You can make a large profit as a forex trader with CopyTrader:

If riding is one of your passions, then it goes without saying you will enjoy riding piggyback on the shoulders of experienced forex specialists and speculators who are a class apart. You can easily profit from the global FX markets by going for a CopyTrader review and thereafter, aping these traders, who trade on the premier investment network that is eToro. And getting started is simpler. You need to open an account- that is the first step. Next, you need to discover the best of the best traders. Thereafter, you opt for the one who you think would be your ideal calling card. Thereafter you assess how much you can afford to put on stake. So, you see getting started can’t be simpler.

You need to open an account with a minimum of $100 to copy traders although starting with $200 gives you more advantage and leeway. You’ll have at least 5 expert traders to choose from. The CopyTrader review relieves you from the burden of placing your bets manually. The platform will choose the best traders to trade with for you and you’ll receive email updates. In case you lose your opening balance of $100 by emulating a trader, you’ll receive a full refund. You also get a 25% bonus on your first deposit.

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Visit Intellitraders to know more about Forex copy trading feature introduced by eToro.

Dukascopy Smiles to Programmers, Launches Visual JForex

Dukascopy Bank SA

Swiss forex broker Dukascopy Bank SA has released a unique tool for fans of automated trading – the Visual JForex, which, as its name suggests, allows programming in a more friendly, graphical way. Thanks to Visual JForex, you can now program your own automated trading strategy and use it on one of the most popular retail trading platforms out there – Dukascopy’s JForex.

If you’d like to use this tool, you may want to have look at some of the video tutorials on Dukascopy’s website first – they are pretty informative and you’ll get an idea on what to do in about 20 minutes. Of course, some programming expertise is desirable. The next step is to simply click the “Launch Visual JForex” button and then the working environment opens.

This is indeed excellent news. I have used JForex in the past but never attempted to code EAs for it as I’m not really a programmer, but now given this new visual coding capability I will definitely play around with it and see if I can build me some automated trading strategies.

Let me know what you guys think of this, or join me in a discussion at the Forex Nirvana forum.

About Dukascopy Bank SA

Dukascopy Bank is a Swiss Forex broker operating out of Geneva. It is secure and well-regulated, and offers excellent trading conditions: very tight spreads and fast ECN execution through the SWFX Swiss FX Marketplace technology.

Dukascopy Spreads Reduction

Dukascopy Bank SA

Greetings everyone. I’ve received a news update from one of my recommended brokers and I wanted to share that with you all. The broker I’m referring to is Dukascopy and no doubt some – if not most – of  you have heard about them. The news – and it’s good news – is that they’ve recently reduced their spreads.

Checkout what they say In their newsletter/news update:

Please see the recent evolution of our average EUR/USD spreads during the European trading session:

  • October 2012 – 0.57 pips
  • January 2013 – 0.51 pips
  • February 21st, 2013 – 0.46 pips

A simple calculation suggests that we have achieved a 20% decrease of the EUR/USD spread over the last four months. Our next target is to reach an average level of 0.4 pips for the EUR/USD spread.

–end quote —

Whether or not you decide to trade on their platform is up to you, but it’s good to hear that if you do you’ll get really competitive spreads.

That’s it for now folks.

Happy trading.

Alan out.

How to Find Your Broker’s Server IP

metatrader

In trading latency is important, regardless if you’re trading from your home computer of from a forex vps. Have you ever wondered how you can find out the network latency between your trading platform and your broker’s servers? Well, if you have I have the answer! All you have to do is do a quick ping test (ping command sends ICMP packets to the server and times how long it takes the server to respond), but before you can ping the server you have to know it’s IP address. But most of the times you will not know the actual IP address of your broker’s server(s). Some brokers will tell you some will not, and some will make it easy to find out and some will not. So you’re going to have to take matters into your own hands and find out the IP for yourself.

I’ll show you in this brief tutorial how you can do so.

The first thing I suggest you do is ensure that you have no other web browsing or any other internet network connections running. I’d suggest either restarting your machine and close every program that uses the internet connection, or you can just close every internet related program. Once you’ve done that run your broker’s MT4 / MT5 platform, but make sure you start ONLY that. This will ensure that later on when we search for the IP we will have more accurate results.

OK, so step:

1) Ensure that you are connected successfully to your broker’s server

2) Open up a windows “command prompt”

Click on the Start Menu and go to All Programs –> Accessories –> Command Prompt

You can also (in windows 7 and windows vista) just type in “cmd” in the search box visible once you click on the start menu.

If you’re running windows xp you can just click on the start menu, go to run, and in the run box type “cmd” and hit enter or press ok.

3) In the command prompt type the following command: “netstat -n” (make sure you leave a space after netstat and before “-n”)

4) Now you should get a listing of all the network connections currently open on your computer.The IP address of your MT4 platform should be listed underneath the “foreign address” heading. MetaTrader uses port 443 for communication so next to the IP you will see “:443”. The IP address with the “443” port listed there is the IP address of your broker’s MetaTrader server. See the example below:

Now I should qualify my previous statement about the use of port 443. Sometimes brokers WILL use other ports (for example 80, 923, 1950, etc).

Now you see why I suggested that you open only MT4 and nothing else internet related 🙂 It makes it that much more simple.

5) Now if you did not follow my advice and opened ONLY the MT4 platform and no other applications that make use of the internet connection, then there is an additional step you have to follow.

Close the MT4 platform and go back to the command prompt window and type the “netstat -n” command one more mime. Compare the result with the previous step’s result and note the IPs that are MISSING. The missing IP in this case is the one that belongs to your broker’s server. See this example:

Beware that sometimes two different brokers can have the same IP address. This most likely is due to one of the broker being what’s known as a “whitelabel” of the other one (or vice versa). This means they do not actually have their own server(s). You can think of the whitelabel broker as a sort of forex broker equivalent of a “reseller.”

I must thank the people at the ECN FX Robot website for the inspiration for the article and the images.

If you have some questions or need further clarifications on the process outlined above feel free to leave a comment on this post.

Until next time,

Happy trading.

Alan out.

Why FXDD sucks for use with Forex MegaDroid

Hmm, well, it seems I have to give up trying to use Forex MegaDroid on FXDD. This broker just plain sucks for use with Forex MegaDroid due to the constant high spread during the Asian trading session (when Forex MegaDroid does its trading). I gave it a fair try and waited a week but I constantly get safe spread limit exceeded errors. Check them out:

2011.12.11 17:53:28 MegaDroid EURUSD,H1: Strategy2: Safe spread limit normalized: spread = 28
2011.12.11 17:53:25 MegaDroid EURUSD,H1: Strategy2: Using DayDirection filter
2011.12.11 17:53:25 MegaDroid EURUSD,H1: Strategy2: Safe spread limit exceeded: spread = 45
2011.12.11 17:53:24 MegaDroid EURUSD,H1: Strategy2: Using DayDirection filter
2011.12.11 17:53:24 MegaDroid EURUSD,H1: Strategy2: Safe spread limit exceeded: spread = 41
2011.12.11 17:53:21 MegaDroid EURUSD,H1: Strategy2: Safe spread limit normalized: spread = 37
2011.12.11 17:53:20 MegaDroid EURUSD,H1: Strategy2: Using DayDirection filter
2011.12.11 17:53:20 MegaDroid EURUSD,H1: Strategy2: Safe spread limit exceeded: spread = 44
2011.12.11 17:53:11 MegaDroid EURUSD,H1: Strategy1: Safe spread limit normalized: spread = 43
2011.12.11 17:53:07 MegaDroid EURUSD,H1: Strategy2: Using DayDirection filter
2011.12.11 17:53:07 MegaDroid EURUSD,H1: Strategy2: Safe spread limit exceeded: spread = 57
2011.12.11 17:53:07 MegaDroid EURUSD,H1: Strategy1: Using DayDirection filter
2011.12.11 17:53:07 MegaDroid EURUSD,H1: Strategy1: Safe spread limit exceeded: spread = 57

So this is a heads up to all of you who are thinking of using this expert advisor on FXDD. I would suggest you look elsewhere for a better broker. I am going to close my FXDD account in a few days and look for another broker. I’m not sure which broker I will choose but I have my eyes on FinFX which has been lauded as a good broker to use with Forex MegaDroid.

I’ll keep you all up to date.

Cheers,
Alan

FXCM Now Offers Micro Lots in Standard Accounts

fxcm

I just found out (fxcm mailing list) that micro lot trading is available to all new FXCM Trading Station II accounts. When trading with FXCM LLC, a trader’s maximum leverage is still 50:1. However, with micro (1k) lots, traders now have access to a greater range of trade sizes, providing more control and flexibility.

The leverage sucks, but what can you do this is the rule with all US brokers.

I used to trade with FXCM’s Trading Station II but I stopped as I got more and more into MT4 and automated trading. I’m curious to hear some feedback from Trade Station II traders though. How is the platform now? What do you think?

Alan