Posted by March 19th, 2010
by Rapid Forex
You just discovered online forex trading and you want to get started trading forex with the best online forex broker. Where do you turn when there are so many different brokers offering seemingly different offers? In this post I’ll help you pick the best online forex broker for your needs.
There are five main things to consider when picking online forex brokers:
- Do you like their forex charts? They all have free charting software included, but each broker’s forex charts will be different. You can usually try the forex chart software for free in a demo (practice) account.
- Do you like their platform? You should be able to easily navigate any online forex broker’s platform. Placing market, limit and stop orders should be easy for you to understand and do. You can practice this in a forex demo account.
- How much to open an account? The minimum will vary according to the forex broker. This could be as low as $25, or several thousand depending on the online forex brokers you look at.
- What’s the spread? The spread is the difference between the bid & ask price. Tighter spreads (smaller numbers) means more money for you. Most brokers will be fairly competitive.
- Are they legit? Although legitimate new forex brokers emerge online from time to time, avoid brokers that are brand new, don’t have a professional website, don’t have a decent alexa rating (should be under 200,000). Alexa Tip: search for a website and you’ll see it’s alexa rating. If they aren’t in the top 200,000 worldwide, they are too new or too rinky-dink for you to mess with them.
So how do you pick the best forex brokers online?
Option #1 (laborous, full due dilligence): If you want to go through lists of online forex brokers to make sure you’re getting the best deal, you can check out forex-ratings.com for comparisons of online forex brokers. They’ve got a list 49 top online forex brokers along with ratings. I don’t fully agree with the ratings personally, but it is a good list to examine if you’re looking to do some research.
Option #2 (easy, follow my picks): Over the past 10 years, I’ve seen plenty of online forex brokers come and go. Here are my top five picks for the best online forex brokers. I’m picking them because I’ve either used them, or people I know and trust have used them. My picks also all pass my 5 guidelines above for good forex brokers.
- Fxcm (Forex Capital Markets) – I’ve always liked FXCM. I started in my first demo account almost 10 years ago with them, and I’ve always liked using their platform. I’ve found it easy to use and they are a completely legitimate online forex broker. Plus with their micro-lot account, you can now trade forex for only $25!
- ACM – The favorite of many forex traders that I know. Their platform is a little more advanced, but when you trade forex online for awhile you’ll start to like ACM more (like when you try a MAC, you understand how difficult windows is).
- Easy Forex – The name says it all. A good broker for beginners. They are well established and have a great reputation for an online forex broker. Their platform and free forex charts are easy to use & you’ll enjoy using them.
- eToro – this broker has managed to emerge everywhere online virtually overnight. They may have gotten a higher ranking on my list (as they did on forex-ratings.com), but I haven’t had a chance to check them out yet, but from what I can tell they are a decent forex broker. This is one broker I will be checking out soon, but I believe you’d be safe if you checked them out before I did
- Oanda – this is a major forex broker that’s been online for a long time. They cater to slightly more experienced traders, but beginners can use them successfully. They call a demo account an “fxgame account,” but it works the same as a demo.
There are certainly other good forex brokers online, but these are my top 5 short list of the best online forex brokers. If you were to pick any one of the 5 forex brokers above, you’ll probably have a great experience with their demo account, trading platform, and forex charts. If you want even more forex broker choices, feel free to explore 49 forex brokers & reviews to choose from!
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Online Forex Bokers
Posted by March 18th, 2010
by Rapid Forex
In the past few days I’ve blogged about technical indicators for online forex trading. Along with moving averages, the MACD is one of the valuable forex trading tools you’ll have online.
MACD, which is an acronym for moving average convergence divergence, is a momentum oscillator, meaning that it reflects the strength at which the market is oscillating (remember that the market moves in price swings, or oscillations). The MACD is one of the most popular technical indicators for online forex trading.
Components of the MACD
First, the MACD includes a line that represents the difference between the 26-period exponential moving average (the slow EMA) and the 12-period exponential moving average (the fast EMA); this line is often referred to simply as the MACD.
Second, the MACD includes a line that represents a 9-period exponential moving average; this line is known as the “signal” or “trigger” line and is used in conjunction with the first line.
The first indicator that the MACD reveals is based off of those first two lines. When the MACD (the difference between the fast and the slow exponential moving averages) crosses over the trigger line it offers a buy (bullish) signal.
When the MACD crosses under the trigger line it offers a sell (bearish) signal in online forex trading.
The smaller circles highlight points where the MACD crosses 1) over the trigger line (the buy signal) and 2) under the trigger line (the sell signal). As it is in this chart, the MACD is usually represented by a red line while the trigger is usually a blue line.
Another aspect of the MACD indicator is the histogram (which you can see in green in the following screen capture image). The histogram is a good momentum indicator, offering information about the strength of price movement. While the histogram does not reveal any direct buy or sell signals, it is a useful tool to use in conjunction with other indicators when analyzing possible reversals (if the market is slowing down it may be headed toward a reversal; this slow down would be reflected by lower bars in the histogram).
The MACD used in Online Forex Trading
A third aspect of the MACD is that it is plotted against a zero line. In essence, the difference between the fast and slow exponential moving averages is converted mathematically into an oscillator that fluctuates above and below a zero line.
MAC Signals For Online Forex Trading
The MACD gives the following signals that can be used in forex trading online:
- When the MACD line crosses over the zero line it offers a buy signal.
- When the MACD line crosses below the zero line it offers a sell signal.
Take a look at the MACD forex chart shot to see these signals. The two larger circles represent the market 1) crossing under the zero line (sell signal) and 2) crossing over the zero line (a buy signal).
The fourth aspect of MACD is that its trends (swings) can be compared to the price swings (trends) in the online forex trading market.
MACD divergence is when the MACD line is trending (swinging) in one direction while the market is trending in another.
This divergence can offer information about the future movement of the market. If the divergence is positive (MACD is trending upward while the market is trending downward) the market may be headed toward a rally (that, then, is a buy signal).
If the divergence is negative (MACD is trending downward while the market is trending upward) the market may be headed for a price drop (that, then, is a sell signal).
Looking at the movement of the histogram can also reveal divergences between prices and the MACD (the histogram may reveal those divergences before the MACD does).
In addition to the MACD, stochastics are also commonly used in online forex trading. I’ll be posting about stochastics in the next rapid forex blog post.
Posted in
indicators
Posted by March 18th, 2010
by Rapid Forex
In this day and age of instant gratification and vicariousness, people want thrills without risks, wine without alcohol, more money without effort, beer without calories and, yes, a profitable currency trade as soon as they can get it.
Look, if I could give you one QUICK piece of advice, in regards to this necessary mental skillset, it’s this: The forex market knows better than you and I when the time is ripe. Don’t rush it.
The successful trader realizes that patience pays! Every successful forex trader has a special talent for ‘watching and waiting‘ and waits until forex trading behavior has dictated when to enter the market. The prudent Forex trader specifically applies patience to his/her advantage by:
Listening To The Forex Market
The market is continually donating valuable forex information, and you must get into the proper frame of mind where you are in reality taking your orders from the action of the market itself or the signals your trading system is sending you.
Your judgment will become poorer from the very time that you decide you know more about the market than the market itself is telling you, and you throw patience aside and give in to fear or hope.
Sitting On The Sidelines While Waiting For a Forex Trend to Develop
It has often been said that looking at one’s screen during the online forex trading day is like sitting in front of a slot machine and trying to resist gambling. It’s hard. Just as the one armed bandit tempts recreational gamblers, the constant stream of quotes on a computer screen tempt seasoned and novice traders alike to make hasty trading decisions.
Successful traders in the FOREX have learned that they cannot buck the major price trend of the individual currency-pair they are trading. Or, even if you’re not a long-term or position/swing tradinf forex sailer, but daytrading, you still don’t want to let impatience cause you to trade against the short-term trend – buy on a micro-downtrend or sell on a micro-uptrend.
The successful FOREX trader will enter his/her trades in the direction of the prevailing trend or wait until a new trend is established. Several hours, or perhaps days/weeks, may elapse before this trend becomes apparent.
While patience is important not only in waiting for the right trades, it’s also important in staying with the trades that are working. Although trades are held for much shorter windows, as a daytrader you must know how to wait patiently for the optimal time to sell. Selling a winning trade too early is not going to allow your account balance to increase exponentially at an ideal rate.
This is where a the ‘persistence’ mental factor comes in as well. You can be ‘patient’ until the cows come home but if you don’t persistently control your impulses and don’t persistently follow your exit rules, then your profits won’t balance out losses overt time. As a famous trader William Eckhardt once said, “while amateurs go broke by taking large losses, professionals go broke by taking small profits.“
Be patient with winning trades; be enormously impatient with losing trades. Remember, it is quite possible to make large sums trading/investing if we are “right” only 30% of the time, as long as our losses are small and our profits are large. – Dennis Gartman (forex trader)
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forex mindset
