Forex Trading Platforms: Trading Forex Fits Comfortably from Your Own Home

Today, the institutions that most promising career choices and also the best ways to earn money is Trading in financial. More and more people have left their jobs to get an action in the financial market, because interested by the opportunity to earn a lot of money of   trading in the financial institutions. 


In fact financial market is the most liquid and the largest market in the world which involves all the countries, so that wouldn’t to trade in this market.  Besides, for people who are considering making a career out of trading, the forex market is the best choice.

The forex market  can go as high as 2 trillion dollars  each day in currency exchanges  and  operates 24 hours  a day.  Also ,  By the most liquids market  in the world , this market  give the easy for the traders  to enter  any time the want  and get their earns.
We must  say thank  to  communications technology  and  high speed internet  ,  because by that technology  usual  people now can trade and participate in the  world’s largest financial market. In the past only the large financial institutions and the big companies can enter the forex market.

Due to the forex market is a very lucrative industry and every day  more to be easier  for everyone to enter, forcing online Forex brokerage firms improve services and their accessibility. They also designed a trading platform that is easily accessible and  different for each different type of forex traders, their software from time to time are still being developed.

In general, they provide the opportunity for people to open a mini forex account, where with just $ 100 even smaller trader can make a deal.

You must have not a lot of things to start when you are interesting  to join the forex market.

The one of  important thing you must have is a computer with high speed internet connection. If you do not have a high speed internet connection you better forget about forex trading. Effectiveness in a forex trading depends on the Internet connection speed .  It will also minimize the risk of slippages that can cause you to lose money.
The next important thing is to choose a forex broker company that you will hire. These companies will give you a forex trading plafform, a simple software program that has an important role in online forex trading. This program can be downloaded and installed easily.

Here are some features of forex trading plafform that should be taken into consideration so that you can develop your profit and minimize the risk of losing money .
  •    Allow you to  practice in the dummy account
  • Provides accurate and up to date real time information, security, and stability
  • Provide information on at least 16 currency pairs
  •  Execute orders with just a click of the mouse
  •  Have charting tools to perform technical analysis
  • Have a recording feature that will store your trading history.
These are some of the things you should look for in a Forex trading platform , May be useful.

Practice Exercise #3 (Money Management Test on DEMO)


If you started this Practice Exercise #1 you probably notice that this isn't working on ranging market (we had some examples of 5% losses on the last couple of days, due to Cyprus situation).

Testing this, with a SL=30p, we notice that in a range market of let's say 50p, our profit target of 90p is almost impossible to reach even if our position run in profit, for a while. And the SL will be hit, eventually, unless the PA will break any side, to have that 50% to catch the new trend (based on flipping the coin math probabilities).

The first idea that we can think of, to improve the initial exercise, is to use the Position Management (to "lock the profits"). 

NEW:
The second idea that we can think of, is to use a double number of pips as SL = 60p. And of course to double the TP = 180p, as well.
The reasons behind this are described here.
In order to keep the same MM, we can't use 20 opened positions like in the Exercise #1 (since we've doubled the SL and we need to keep the same % of loss per trade ).
Then, we will have the next steps for this new exercise:

1. Open a DEMO account = $10,000 (or continue to use the old one)
2. Take a coin (yes a coin).
3. Establish which coin sides will give you the signals. E.q head = long, tail=short
4. Open 10 pairs on your platform (NEW)
(only pairs for not ruining the margins requirement. e.q no gold/silver/oil/indices, etc)
5. Flip the coin for first pair.
6. Enter (market order) using 0.01 lots (0.1 for $100,000 account), SL = 60p, TP =180p (NEW)
7. Go to the next pair and do the same entry technique, then the next...until 10 pairs (not 20 like in the previous exercise).
8. After having 10 opened positions, stop trading (NEW)
9. If any position run in profit, move the SL = Entry ± Spread ± few pips or use Trailing Stop
10. Let all the positions to run, until the new SL/TP hit.
11. If any position is closed (TP/SL hit), on the next day, open a new trade by flipping the coin, again (and move, the SL, for the profitable positions).


* Important note: Practice TEST on DEMO purpose, only!


As I expected, the last week exercise didn't offered us enough published results, due to the people lack of time (jobs, etc). As soon as I will have it, I will update it on the Exercise #2 post.

The result for this Exercise #3 will be published here, as soon as I will have it, as well. Probably this exercise will take us 2 weeks, since we've doubled the SL and TP levels (no of pips). If we will still have a range market, it will be hard to have sooner, some closed trades to count for it.


Best Regards,
^^_Lord_Ice_^^ 

Practice Exercise #2 (Money Management Test on DEMO)


If you started this Practice Exercise #1 you probably notice that this isn't working on ranging market (we had some examples of 5% losses on the last couple of days, due to Cyprus situation).

Testing this, with a SL=30p, we notice that in a range market of let's say 50p, our profit target of 90p is almost impossible to reach even if our position run in profit, for a while. And the SL will be hit, eventually, unless the PA will break any side, to have that 50% to catch the new trend (based on flipping the coin math probabilities).

The first idea that we can think of, to improve the initial exercise, is to use the Position Management (to "lock the profits"). 

Therefore after the step no8 ("
8. After having 20 opened positions, stop trading"), we can use the next formula to move the SL for the profitable positions:

New SL = Entry
± Spread ± few pips (i.e. 5p)

Or we can use a Trailing Stop = Initial SL
± Spread ± few pips (In case you can monitor the platform)

(Ofcourse you need to calculate this for every pair, since the Spread can vary from 2p up to +25p or more, for some pairs.)

Then, we will have the next steps for this new exercise:

1. Open a DEMO account = $10,000 (or continue to use the old one)
2. Take a coin (yes a coin).
3. Establish which coin sides will give you the signals. E.q head = long, tail=short
4. Open 20 pairs on your platform
(only pairs for not ruining the margins requirement. e.q no gold/silver/oil/indices, etc)
5. Flip the coin for first pair.
6. Enter (market order) using 0.01 lots (0.1 for $100,000 account), SL = 30p, TP =90p
7. Go to the next pair and do the same entry technique, then the next...until 20 pairs
8. After having 20 opened positions, stop trading.
9. If any position run in profit, move the SL = Entry ± Spread ± few pips or use Trailing Stop (NEW)
10. Let all the positions to run, until the new SL/TP hit.
11. If any position is closed (TP/SL hit), on the next day, open a new trade by flipping the coin, again (and move, the SL, for the profitable positions - NEW).

* Important note: Practice TEST on DEMO purpose, only!
I expect the results to vary, because not everyone can monitor their trading platform, during the day trading sessions (i.e. NY, London). Also, for the Trailing Stop command, the trading station must be on (computer).

I will update here, the average results posted by all of you in my Main Facebook Group, on the end of the next week. We will look for developing new ideas (new exercises) to improve the original statistic, too.


Best Regards,
^^_Lord_Ice_^^ 


Practice Exercise #1 (Money Management Test on DEMO)


One month ago, we started this Money Management Exercise, on my Main Facebook Group.
The main ideas was the importance of the MM in trading, the risk and how this can be managed properly (read more here).

In case you want to do this exercise, follow the next steps:

1. Open a DEMO account = $10,000
2. Take a coin (yes a coin).
3. Establish which coin sides will give you the signals. E.q head = long, tail=short
4. Open 20 pairs on your platform
(only pairs for not ruining the margins requirement. e.q no gold/silver/oil/indices, etc)
5. Flip the coin for first pair.
6. Enter (market order) using 0.01 lots (0.1 for $100,000 account), SL = 30p, TP =90p
7. Go to the next pair and do the same entry technique, then the next...until 20 pairs
8. After having 20 opened positions, stop trading.
9. Let all the positions to run, untill SL/TP hit.
10. If any position is closed (TP/SL hit), on the next day, open a new trade by flipping the coin, again.
* Important note: Practice TEST on DEMO purpose, only!
I know it might sound crazy, but what I need you to see, is what really means to trade with a good MM strategy (+ medium R:R ratio 1:3) and no strategy at all (50-50% to be right, short/long, by flipping a coin).

Also, this way of doing "automated" trades, might help you, if you are the emotional type person (bad for trading). You will understand what really means trading by the rules.

Average results:

Initial account balance = $10,000

Total trades = 50-200 trades / week
Positive/Negative = 1/3-5 trades in profit, only
Total positive pips = 150-250p / week
Total positive profit = 1.5%-2.5% / week

Negative account balance = NONE / week


* Total no of trades (and profits) are related to the time invested in testing this strategy. Some traders couldn't monitor their trading platform whole days, due to their daily schedule, jobs, etc. So their closed positions were spot in the next day, only (to open a new trade / that pair). This decrease their total no of trades, pips and profits.


Conclusions:

As I expected, nobody had a negative account balance / week, by now. Ofcourse mathematicaly, this is possible, but rare (using math probabilities). But the Draw Down wont be higher than 5% ( Signals Providers, offer a DD of max 15%, usually)

And as you can see, by using a good MM and a very bad strategy, or none - flipping a coin is just luck - you can still trade profitable, as a beginner.

The profits, can't be considered "spectacular", thinking that we are using for this exercise a $10,000 account. But if we will remember that by trading Forex, 95% of the traders wipe out their accounts in less than 3 months... (some statistic data present this no even higher, close to 99%).
Also, by using an "automatic" strategy, reduce the time involved to your trading activity. Not to mention, the stress.

We will continue this exercise, to gather more statistic data. Meanwhile, I will recommend you, new exercises, by replacing this "strategy" (flipping the coin) with some real trading strategies. And we will upgrade, later on, the MM, as well.


Best Regards,
^^_Lord_Ice_^^
   
+9 pips
- news trade, spread up to 15 pips
- half size


+18 pips
- all half size trades
- initial news spike in gbp/usd wasn't convincing so I exit it quickly





+4
+11
-I'm not really proud of my averaging in eurjpy, risking much for no good reason. If I don't know where to put stop or don't want to accept that it's time for stop it's better not to trade that trade
- I'm far better in those nice scalping situation when stop or gain is quick and definite




Petition to save Google Reader

If you use this product as much as I do I'm sure you will want to sign it. This petition right now has more then 100,000 signatures. It doesn't mean that it will make Google reverse it's decision of shutting down reader but if I ever wanted to express my opinion and vote it's now for this.

Change.org
+5 pips
- various sizes
- news trade with limit orders didn't work (no spike) so I canceled them




+3 pips


+9 pips
- this news trading turns out to be quite nice sport
- third of usual size because on previous reports there were whipsaws, in previous few occasions move wasn't so big and lasted really only as initial spike that's why I closed it immediately
- good news after bad news in which Google announced shut down of Google reader


+6 pips
- not so good not knowing where my actual stop is, wan't prepared for this type of market action, I expected something easier
- half size trades


+15 pips

- I don't know why I didn't use before those bracket limit orders before the news if execution on Oanda is so good
- half size trades
- again problem with second add on trade, I just lowered my overall profit, move concentration away from first trade and made an exit at worst possible time
- third trade ok
- last two trades maybe holding on one of them longer


March

1.
+26 pips
- this is market suitable for scalping




4.
+11 pips
- I'm irritated with turning profitable trades in to stop losses




5.
-32 pips
- first loss, then recovery, then some stupid trades, after I recovered half and it wasn't good enough so in the end I made bigger loss



6.
-10 pips




7.
+15 pips
- it's important to learn to have a positive day and keep it


8.
+16 pips
- NFP scalping
- slow exit on second trade
- third and fourth with not enough courage to hold because of need to cover previous losses



February

22.

-23 pips
- tilt or whatever 15 trades

< no chart >


26.

-8 pips


Understanding the Money Management in trading


I've always emphasized the importance of the MM in Forex, in my articles. Yet, many people failed to understand it properly.

Therefore I will take it, again, step by step from the basic theory.

Currencies Rates

The currency Rate is the value of one currency expressed in terms of another.

Common rates can be seen as: EURUSD = 1.3025

This can be read as 1 EUR = USD 1.3025

The first currency (EUR in our example) is the "Base currency" and the second one (USD in our example) is the "Quote currency".

Bid and Ask prices

EURUSD = 1.3025/1.3027

The first rate (1.3025) is the "Bid" and the second one (1.3027) is the "Ask"(Offer).

If you want to "Buy" the "Base currency" (EUR) and "Sell" the "Quote currency" (USD), you will use the "Ask" price.

If you want to "Sell" the "Base currency" (EUR) and "Buy" the "Quote currency" (USD), you will use the "Bid" price.

The difference between Bid and Ask is called Spread (in our example spread = 2 pips).

Pip

Pip = The smallest price movement on a currency. Also known as a "Tick size".
e.g. 1 pip = 0.0001 for EUR/USD, and 0.01 for USD/JPY.


Leverage & Margin

Leverage = multiplying factor that allow you to trade more money than you have into your account.
Margin = the amount of money, necessary to open a trade

E.q:
Leverage 1:50   = 1/  50x100 = 2% Margin (requirement)
Leverage 1:100 = 1/100x100 = 1% Margin (requirement)
Leverage 1:200 = 1/200x100 = 0.5% Margin (requirement)

So let's say you want to trade $100,000. By using a Leverage of 1:100, that means you will need a margin of just $1,000 (1%).

Trading using the Leverage might work in your favor if you are right, but can also take you to the bankruptcy, if the trade goes against you.

Here is an example:

Trader 1 have Initial Account balance = $3,000
Trader 2 have Initial Account balance = $10,000
Trader1 use as Leverage = 1:200 = 0.5% Margin = $500
Trader1 use as Leverage = 1:50 = 2 % Margin = $2000

Trader1 and Trader 2, want to buy $100,000, each.

Scenario 1:
Lets say both traders are right and their trade work in their favor with +100p = + $1,000

For trader 1 = +33.3% from Account Balance
While for Trader2 = +10% from Account Balance

Scenario 2:
Lets say their trade went against them with -100 pips = -$1,000 from the Initial Account Balance.

For trader 1 = -33.3% from Account Balance
While for Trader2 = -10% from Account Balance

Conclusion:
Even if for some traders looks more profitable to use higher Leverage, due to their small accounts, if their trades work against them, this will ruin their account. Ofcourse they might be tempted to use a high Leverage (smaller Margin) so they can trade a much higher volume.

Lot size

In Forex, we dont use Base currencies for the trade volumes. We use Lots.

1 Lot = 100,000 units (full Lot)
0.1 Lot = 10,000 units (mini-lot)
0.01 Lot = 1,000 units (micro-lot)

In our previous example is obvious that if the trade work against you, and you traded a huge volume, the loss is highly important, as the expected profit.

Trader 1 have 3 potential negative trades until he will ruin entirely his account. While Trader2, can afford 10 trades, for that.

You know what they say: "A rich man is a man who can survive longer, without having anymore income". Same as in trading. It doesn't matter how much you can pull out of a trade, but how many negative trades you can take and still be in the market.

Risk/Reward Ratio

Also known as R:R ratio, it means the ratio between expected profits and potential losses.
I don't recommend a R:R lower than 1:3. That means for any loss you might have, you must take at least (minimum) 3 times more from the profitable trades.

TP = 3 x SL

This isnt a random number. This is related to any strategy statistic.
You all know, that you can't have profitable trades, only. So your strategy statistic can be from 5-9/10 trades in profit:

  • min 5/10 since you can have 2 option on any market: buy and sell. So you can have 50-50% to be right on any trade. 
  • max 9/10 since you cant be right all the time.

So, in order to reach your profitable trades, you must be able (afford) to take those losses.

Ofcourse, I prefer to use a much more significant statistic for any strategy, like x/100 trades. Because this offer me a better understanding of the strategy on a longer period of time.
Imagine a 9/10 strategy might be less than 90/100 on a longer period of time (and trades).
What if those 10 negative trades will come, in raw, while starting to trade that strategy ?

Well, you must be prepared for that, as well. You need to still be in the market, when those profitable trades will come.

Money Management


I'm sure you all heard about "Money Management Rules". But what is this really means?

Well, you can consider it a "healthy" way to be in the market longer. Or how much negative trades you can take, in the worst case scenario.

For doing that you need to be able to calculate 2 main things: Volume (as no of lots) and Stop Loss (in pips) for your trades.

I wont develop here the calculations behind the mathematical probabilities of a strategy. All you need to know is that you should use these numbers, as beginner:

Max Risk/Trade = 2%
Max Investment = 15%

(take as example our previous exercise for the Trader1)

Example of MM Rules:

Account Balance = $10,000
Max Investment = 15% = $1,500
Risk = 2% = $200
Leverage = 1:100
EURUSD = 1.3025

How many lots can you trade?


1.0 lot = 100,000 EUR => Margin =1%=1,000 EUR =$1,302 (1000 EUR x 1.3025)

0.1 lot = 10,000 EUR => Margin =1%=100 EUR =$130

0.01 lot = 1,000 EUR => Margin =1%=10 EUR =$13,02

Lot size = Max Investment / Margin

Lot size = $1,500 / $1,302 = 1.15 lots (round it to 1.1 lots)

How much pips you can afford to lose ? (Stop Loss)
First we need to find out the pip value.


1 pip = lot size x tick size
( for Direct rates as: EUR/USD, GBP/USD, AUD/USD, NZD/USD )

1 pip = pip = lot size x tick size / current rate
(
for Indirect rates as: USD/JPY, USD/CHF, USD/CAD )

1 pip = lot size x tick size x base quote / current rate
( for Cross rates as GBP/JPY, EUR/JPY, AUD/JPY, EUR/GBP, GBP/CHF - where USD is not involved )


Examples by using the standard formula:
EURUSD = 100,000 x 0.0001 = $10
USDCHF = 100,000 x 0.0001 = 10 CHF
USDJPY = 100,000 x 0.01 = 1000 JPY

Then use these results vs your account currency rate, to find the pip value into your account currency! (in our example in USD)

Or use instead the other 2 formulas and then denominate these $ results with your account currency vs USD rate.


E.q 1:

1 pip = lot size x tick size / current rate
(
for Indirect rates as: USD/JPY, USD/CHF, USD/CAD)

For a trade of 10,000 USDCHF (0.1 lots):
USDCHF = 0.9290

1 pip = 10,000 (lot size) x 0.0001 (tick size) /
0.9290 (current rate) = $ 1.07


E.q2:
1 pip = lot size x tick size x base quote / current rate
( for Cross rates as GBP/JPY, EUR/JPY, AUD/JPY, EUR/GBP, GBP/CHF


For
a trade of 10,000 EURJPY (0.1 lots):
EURJPY = 121.35 and EURUSD = 1.3060

1 pip = 10,000 (lot size) x 0.01 (tick size) x
1.3060 (EUR/USD base quote) / 121.35 (current rate) =  1.07 $

Now, let's get back to our practice example:
Pip Value for 1.0 lot = $10
Pip Value for 0.1 lot = $1
Pip Value for 0.01 lot = $0.1

If the max Risk/trade = 2% = $200 and the pip value = $10

SL = $200/$10 = 20p / 1.0 lots
SL = $200/$1 = 200p / 0.1 lots
SL = $200/$0.1 = 2000p / 0.01 lots


So, in this example you can trade 1.10 lots.  The SL= 20p at this volume.

But if you want to use need a higher SL level for a trade, while keeping the same Money Management Rules, you can use smaller lot size ( mini-lots/micro-lots).

Eq1:
If you want to open 3 trades with 0.1 mini-lots/trade:
200p/3= 66p/trade (for each one of these 3x0.1 lots trades)

Eq2:
If you want to open 5 trades with 0.01 micro-lots/trade:
2000p/5= 400p/trade
(for each one of these 5x0.01 lots trades)

But what if you found a potential trade and you know the SL level ?
How many lots can you use for that trade ? ( this will be the only one opened trade, until is closed)

Lets say the SL = 90p needed for that trade.
This is how you can calculate the lot size according to your Money Management Rules:

Lot Size = Risk Amount* (in $) / Number of Pips x Pip Value
or
Lot size = (Capital x Risk%) / (Stop Loss in Pips x Pip Value)
*After each trade calculate the Risk Amount again or at least 1 time/week


Lot size = $200/90p x $10= $200 / $900 = 0.22 lots (for this trade example)
or
Lot size = ($10,000 x 0.02)/(90p x $10) =
$200 / $900 = 0.22 lots = 2.2 mini-lots = 22 micro-lots
(when Actual Account Balance is different, than Initial - we must calculate again the Risk Amount)



Best Regards,
^^_Lord_Ice_^^

January

10.

 +20 pips



14.

-52 pips





17.

-15 pips

- problems on start with add on position, if there is only one it would be much easier to stay objective
- later overtrading not knowing how to end a day on good note while profitable