Trading In Forex

When you hear market manipulation you may think is some big player like Goldman Sachs running a high frequency program or maybe a government trying to push their currency in their favor, but in the forex market your worst enemy may be your own forex Broker.

In March of 2006 Meta Quotes Software, the same company that created the most popular currency trading software, the MetaTrader 4, put out a Support Article on their Web Site explaining some of the features of a software your broker can purchase for an extra charge that can potentially manipulate your trades to maximize their profits.

Some of its features include:

=> Delaying customer’s orders by 5 seconds to give the customer the worst possible price.

=> Increase in spreads in order to trigger stops losses.

=> Watching symbols gaps, so stops are activated at the gap price and not at the client’s requested prices.

=> Disabling, setting, modifying or deleting pending orders during news times.

=> Automating the move of spread, limited and stop levels ahead of news event.

=> Reduce the leverage to force the liquidation of the largest positions of their customers.

=> And more…

MetaTrader is the world’s preferred Forex trading platform. According to some estimates more than 70% of all brokers offer the Metatrader platform and more than 90% of the total retail Forex volume is executed through it.

The name of this software is the “Virtual Dealer Plug-in”, this plug-in can be used to manipulate Stocks, CDFS, Gold, Futures and basically any other instrument your broker offers.

Now we will explain some of the plug-in features in more detail. When you ask MetaTrader for a Market order you would expect to get the current price as displayed on your terminal, but when the plug-in is running your order can be delayed up to 5 seconds, during the imposed delay, your broker will analyze the prices and it will try to give you the worst possible price, so the broker can pocket the difference, it could be just 1 or 2 pips or as high as 10 or 15 pips and if the price moves in your favor the broker can re-quote the price several times until it moves their way.

Not only you could get the worst possible price when you open a position, the broker can also manipulate the price feed to trigger your stop loss, and when you try to close a position the plug-in will try to split the price in the broker’s favor but never in the customers favor. These manipulations go usually unnoticed and if you ask your broker about it they will always blame it on the market, connection issues or other factors that are hard to corroborate.

We had an account that had been opened for several months and had a balance of around 8K USD, we had been trading a successful strategy from this account for the first three months, but then we started to notice re-quotes on almost every trade and other strange activity, we decided to open a new account with the same broker so we could compare the spread, executions times, re-quotes, profit and losses etc.

We opened a position on both accounts at the exact same time, and just on our first trade we noticed that the new account closed with a 15 pip profit while the same position on the existing account was re-quoted several times until it finally closed with a 5 pip loss. On other trades there were spread variations of 5-30 pips between accounts, which caused many positions to reach the stop loss while on the new account the same trades closed with a profit.

We repeated the process on different days with numerous trade combinations and obtained very similar results. These discrepancies were also clear when visually comparing charts side by side.

At the end of the first month our newly opened account had a profit of 181 pips while our old account had a loss of -46 pips while executing identical trades. By the third month both accounts started to perform the same way and at this point it became virtually impossible to make any profitable trades.

We confronted our broker with the facts and after some time of discussion they finally admitted that it was standard practice for most Forex brokers to run the virtual dealer plug-in. We of course closed our accounts immediately.

During an audit in July 2009 the NFA discovered that Gain Capital (aka: forex.com) was using the virtual dealer plugin to manipulate trades that benefited Gain to the detriment of its customers.

You can read the official NFA document below:

http://www.nfa.futures.org/basicnet/CaseDocument.aspx?seqnum=2461

You can find more information about the virtual dealer plugin by reading the official PDF document at the url below:

http://bit.ly/dYQquR

Regardless of what the hopelessly controlled mainstream feeds us with, fact stays the same that we are not in an economically stable era. On one hand where privatization has taken away the potential and security once promised by investment banks; on the other, the fall of the like of Lehman Brothers made the scenario all the more perilous for the wishful. However, with alternates such as trading foreign exchange, futures, bullion and options, investors still have remarkably apt investment options.

Although options such as FOREX, spot FX, and the like offer great potential, getting started with such forms of trading can be a real hassle. However, with the option of firms offering white labeling, institutions looking to enter the market through online trading have a remarkable seamless solution for establishing themselves in all investor markets.

White label programs promise numerous advantages to institutions planning to enter the marketplace by giving them the opportunity to gain rapid access to the highly profitable world of FOREX, Spot FX , futures, bullion, options, and the like.

Some of the key benefits promised by white labeling include:

• Simplified entry into the market – Going for while label programs give institutions the opportunity to gain rapid access to the marketplace with full support of finance as well as IT specialists.

• Back-office support solution – Created by a group of highly proficient finance and IT specialists, back office support promises impeccable account management and trading information to the users through up-to-date system enhancements.

• Real-Time Marker – Aimed at aggregating live prices and offering chart information, the marker provides a simply to comprehend yet extremely useful informational interface to the traders.

• Technology Support – In order to ensure that the white labeling program they offer meets the requisites of the institutions, firms offering such programs back their solutions with full technology support for ensuring seamless trading.

In order to apply for a white labeling program, institutions need to send its name, country, contact person’s name and title, management phone number, e-mail addresses for notification and support, technical representative, and support phone.

Although firms offering such programs can be easily discovered using any web search engine; however, before going with any of the apparently viable contenders, it is extremely important to ascertain the credibility of the firm offering the WL program. This is the reason it is recommended for institutions to check the reviews received by as many contending firms as possible before making the final picks.
 

Is the foreign exchange marketplace better off doing manual trading or did it really hit a technological breakthrough of improving the way we do live trading through automated forex trading robots? This is a classic question on both newbie and veteran traders who are making the decision whether or not to buy a forex trading robot for their live trading.

This Forex robot can be traded with ANY account size….BIG or SMALL.

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Forex megadroid is a new addition in Forex trading market. Many people ask a lot of questions about its working. Its efficiency and 95 % winning percentage is also a big attraction.

Here we will discuss that how this Forex robot is currently working in trading world. All said about it is true or just the hype.

Is it worth it to buy automated forex system trading software? This article compares traditional with automated trading.

Do you trade the forex? Do you use automated robots or Expert Advisors (EAs) as they are called? If you don’t have you ever wondered why some people have had so much success with them?

Looking for a Forex EA review? Trying to determine the best Forex EA software? Well I can help. With so many expert advisors out there it can be rather difficult to figure out which work and which are simply scams. But armed with the right knowledge you can figure this out quite easily on your own.

The forex auto pilot software also known as the FAP turbo was developed by Marcus Leary. It is automated software which was developed with the sole aim of helping the forex traders to ease out their trading practices. Right from its launch the autopilot has produced rave reviews in the trading circuit because of its efficiency. The forex autopilot helps you in managing your trading portfolio.

Among many automated forex trading systems there are two which I have tried namely the FAP Turbo and Forex Boomerang. Below is a comparison of the two.

Live exchange rates are offered by various websites online to help foreign exchange traders in their usual transactions in the foreign exchange market. They are up-to-date real-time conversion rates of different currencies. They are typically presented in pairs depending on the currencies that the traders want to monitor.
 
Live exchange rates are significant to foreign exchange traders because they can manage their investment portfolio effectively. These rates also help traders decide whether to buy or sell a particular investment. Using these rates, the performance of the chosen currency pair is tracked during the trading day. With these tools, the trader can also enter price points wherein the application will alert the trader when the currency pair has reached such set points so that the trader can make the necessary action.
 
Some of these live exchange rates applications also have forecasting capabilities to help the trader guess where half of the currency pair is moving in relation to the other half.

Current new items and historical data are also offered with these applications because they also have impact on the motions of the currency pair. Some applications also track certain indicators that have a solid history of influencing the performance of some currency pairs.

 
An application such as the real-time exchange rate enables a trader to develop one’s own perspective on the foreign exchange market and on the direction of movement of the two currency pair. Studying the historical movements of the pair against each other can help a trader formulate his/her own idea as to how this pair moves against each other. In time, the trader can identify factors precursors to an event which can help the trader in making investment decisions in anticipation of the happening of the event in order to realize a profit.
 
Live exchange rates typically have the currency symbol and the amount. The symbol is what a trader can typically find before the amount. It is typically a combination of the currency pair’s symbol. The symbol normally consists of 6 letters. The first three letters are the symbol of the half of the currency pair while the last three letters are the symbol of the other half of the currency pair. The order of the symbols is important. The base currently is symbolized by the first three letters. The last three letters symbolizes the term, counter or quotes currency.
 
The price or amount in the live exchange rates is also divided into two. The first part is the bid price and the last part is the ask price. The amounts are separated by a “/”.

In our time today, a lot of people would want to make a quick buck in order to pay for the bills and the cost of living. There are a lot of things you may invest in that can allow you to create great profits for yourself. If you are looking for something that you can invest in that would allow you a chance to earn large profits, chances are, you may have already heard about forex trading and how many people have made large profits with forex trading strategies.

The talks about forex trading may lure you to invest in it. You should know however, that even if forex trading can allow you to earn great profits, it can also cause you to lose your investments in a matter of time. This usually occurs with new traders that were not prepared enough to tackle the market and ended losing their investments. This would be something that you would want to avoid. You would want to make profits from your investments, not lose it but loss is inevitable when you begin to learn forex trading.

If you would want to start an account as a forex trader, the first thing that you would want to do is to find out as much as you can about forex trading. Having the right knowledge about the trade can allow you to have an overview on what you should expect. Right knowledge and information can be your best weapon to conquer the market and earn profits for yourself.

You should also formulate the right strategies that you can use in trading within the forex market. Formulating the right strategies can be done by having the right information and a bit of exposure with a similar environment. That is why it is very much advisable to practice in different forex trading simulations that are available. These simulations allow you to practice in a similar forex environment. You can try to formulate different strategies here and use them. You can then find out which one would work best for you.

The forex options market http://tubebreak.com/doubleyouraccount started as an over-the-counter (OTC) financial vehicle for large banks, financial institutions and large international corporations to hedge against foreign currency exposure. Like the forex spot market, the forex options market is considered an “interbank” market. However, with the plethora of real-time financial data and forex option trading software available to most investors through the internet, today’s forex option market now includes an increasingly large number of individuals and corporations who are speculating and/or hedging foreign currency exposure via telephone or online forex trading platforms.

Forex option trading has emerged as an alternative investment vehicle for many traders and investors. As an investment tool, forex option trading provides both large and small investors with greater flexibility when determining the appropriate forex trading and hedging strategies to implement.

Most forex options trading is conducted via telephone as there are only a few forex brokers offering online forex option trading platforms.

Forex Option Defined – A forex option is a financial currency contract giving the forex option buyer the right, but not the obligation, to purchase or sell a specific forex spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the forex option buyer pays to the forex option seller for the forex option contract rights is called the forex option “premium.”

The Forex Option Buyer – The buyer, or holder, of a foreign currency option has the choice to either sell the foreign currency option contract prior to expiration, or he or she can choose to hold the foreign currency options contract until expiration and exercise his or her right to take a position in the underlying spot foreign currency. The act of exercising the foreign currency option and taking the subsequent underlying position in the foreign currency spot market is known as “assignment” or being “assigned” a spot position.

The only initial financial obligation of the foreign currency option buyer is to pay the premium to the seller up front when the foreign currency option is initially purchased. Once the premium is paid, the foreign currency option holder has no other financial obligation (no margin is required) until the foreign currency option is either offset or expires.

On the expiration date, the call buyer can exercise his or her right to buy the underlying foreign currency spot position at the foreign currency option’s strike price, and a put holder can exercise his or her right to sell the underlying foreign currency spot position at the foreign currency option’s strike price. Most foreign currency options are not exercised by the buyer, but instead are offset in the market before expiration.

Foreign currency options expires worthless if, at the time the foreign currency option expires, the strike price is “out-of-the-money.” In simplest terms, a foreign currency option is “out-of-the-money” if the underlying foreign currency spot price is lower than a foreign currency call option’s strike price, or the underlying foreign currency spot price is higher than a put option’s strike price. Once a foreign currency option has expired worthless, the foreign currency option contract itself expires and neither the buyer nor the seller have any further obligation to the other party.

The Forex Option Seller – The foreign currency option seller may also be called the “writer” or “grantor” of a foreign currency option contract. The seller of a foreign currency option is contractually obligated to take the opposite underlying foreign currency spot position if the buyer exercises his right. In return for the premium paid by the buyer, the seller assumes the risk of taking a possible adverse position at a later point in time in the foreign currency spot market.

Initially, the foreign currency option seller collects the premium paid by the foreign currency option buyer (the buyer’s funds will immediately be transferred into the seller’s foreign currency trading account). The foreign currency option seller must have the funds in his or her account to cover the initial margin requirement. If the markets move in a favorable direction for the seller, the seller will not have to post any more funds for his foreign currency options other than the initial margin requirement. However, if the markets move in an unfavorable direction for the foreign currency options seller, the seller may have to post additional funds to his or her foreign currency trading account to keep the balance in the foreign currency trading account above the maintenance margin requirement.

Just like the buyer, the foreign currency option seller has the choice to either offset (buy back) the foreign currency option contract in the options market prior to expiration, or the seller can choose to hold the foreign currency option contract until expiration. If the foreign currency options seller holds the contract until expiration, one of two scenarios will occur: (1) the seller will take the opposite underlying foreign currency spot position if the buyer exercises the option or (2) the seller will simply let the foreign currency option expire worthless (keeping the entire premium) if the strike price is out-of-the-money.

Please note that “puts” and “calls” are separate foreign currency options contracts and are NOT the opposite side of the same transaction. For every put buyer there is a put seller, and for every call buyer there is a call seller. The foreign currency options buyer pays a premium to the foreign currency options seller in every option transaction.

Forex Call Option – A foreign exchange call option gives the foreign exchange options buyer the right, but not the obligation, to purchase a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option “premium.”

Please note that “puts” and “calls” are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

The Forex Put Option – A foreign exchange put option gives the foreign exchange options buyer the right, but not the obligation, to sell a specific foreign exchange spot contract (the underlying) at a specific price (the strike price) on or before a specific date (the expiration date). The amount the foreign exchange option buyer pays to the foreign exchange option seller for the foreign exchange option contract rights is called the option “premium.”

Please note that “puts” and “calls” are separate foreign exchange options contracts and are NOT the opposite side of the same transaction. For every foreign exchange put buyer there is a foreign exchange put seller, and for every foreign exchange call buyer there is a foreign exchange call seller. The foreign exchange options buyer pays a premium to the foreign exchange options seller in every option transaction.

Plain Vanilla Forex Options – Plain vanilla options generally refer to standard put and call option contracts traded through an exchange (however, in the case of forex option trading, plain vanilla options would refer to the standard, generic forex option contracts that are traded through an over-the-counter (OTC) forex options dealer or clearinghouse). In simplest terms, vanilla forex options would be defined as the buying or selling of a standard forex call option contract or a forex put option contract.

Exotic Forex Options – To understand what makes an exotic forex option “exotic,” you must first understand what makes a forex option “non-vanilla.” Plain vanilla forex options have a definitive expiration structure, payout structure and payout amount. Exotic forex option contracts may have a change in one or all of the above features of a vanilla forex option. It is important to note that exotic options, since they are often tailored to a specific’s investor’s needs by an exotic forex options broker, are generally not very liquid, if at all.

Intrinsic & Extrinsic Value – The price of an FX option is calculated into two separate parts, the intrinsic value and the extrinsic (time) value.

The intrinsic value of an FX option is defined as the difference between the strike price and the underlying FX spot contract rate (American Style Options) or the FX forward rate (European Style Options). The intrinsic value represents the actual value of the FX option if exercised. Please note that the intrinsic value must be zero (0) or above – if an FX option has no intrinsic value, then the FX option is simply referred to as having no (or zero) intrinsic value (the intrinsic value is never represented as a negative number). An FX option with no intrinsic value is considered “out-of-the-money,” an FX option having intrinsic value is considered “in-the-money,” and an FX option with a strike price at, or very close to, the underlying FX spot rate is considered “at-the-money.”

The extrinsic value of an FX option is commonly referred to as the “time” value and is defined as the value of an FX option beyond the intrinsic value. A number of factors contribute to the calculation of the extrinsic value including, but not limited to, the volatility of the two spot currencies involved, the time left until expiration, the riskless interest rate of both currencies, the spot price of both currencies and the strike price of the FX option. It is important to note that the extrinsic value of FX options erodes as its expiration nears. An FX option with 60 days left to expiration will be worth more than the same FX option that has only 30 days left to expiration. Because there is more time for the underlying FX spot price to possibly move in a favorable direction, FX options sellers demand (and FX options buyers are willing to pay) a larger premium for the extra amount of time.

Volatility – Volatility is considered the most important factor when pricing forex options and it measures movements in the price of the underlying. High volatility increases the probability that the forex option could expire in-the-money and increases the risk to the forex option seller who, in turn, can demand a larger premium. An increase in volatility causes an increase in the price of both call and put options.

Delta – The delta of a forex option is defined as the change in price of a forex option relative to a change in the underlying forex spot rate. A change in a forex option’s delta can be influenced by a change in the underlying forex spot rate, a change in volatility, a change in the riskless interest rate of the underlying spot currencies or simply by the passage of time (nearing of the expiration date).

The delta must always be calculated in a range of zero to one (0-1.0). Generally, the delta of a deep out-of-the-money forex option will be closer to zero, the delta of an at-the-money forex option will be near .5 (the probability of exercise is near 50%) and the delta of deep in-the-money forex options will be closer to 1.0. In simplest terms, the closer a forex option’s strike price is relative to the underlying spot forex rate, the higher the delta because it is more sensitive to a change in the underlying rate.

The Aussie just broke all time highs and the bears have been cleared from the market. There are no bearish set ups and the daily long target has just been hit. The short term trend is continuing to push this market higher and until we see a breakdown on the 15 minute chart there is only one option to play. If price does breakdown at the short term level look for a pullback on the daily level to take this market higher.

As revealed by the Bank for International Settlement, a ton of money is traded day in and day out in the biggest financial market known to man which is spot forex trading. Because the amount of money traded here is so large, it surpasses the trading equities of both the US and UK. Enticing a lot of fund managers in the process, a lot of attention has been garnered by the forex market doubling the amount of money that has been traded since 2001. Forex trading is always conducted in currency pairs. In the case of currencies, they may appreciate at one point and depreciate at another time. There are plenty of traders who still cannot figure out the appreciation and depreciation trends when it comes to currency trading. The equity trade happens on an exchange but this does not. Such a trade takes place over the counter or on an OTC basis. This kind of trading can both be direct and indirect but any trade leads to a price and contract.

Today, we have an efficient currency exchange system that takes two days per transaction and this is what will be discussed in the article, spot forex trading. These banks trade on behalf of clients, for either transaction related or purely speculative purposes, and for their own book, and their size means they effectively act as the ultimate market makers, setting the bid and ask prices, which form the basis of pricing across the world. You will not find any centralized exchange in this case allowing for varying rates.

Here is where the bid and ask prices matter tremendously and the narrowest spreads are only available to the few organizations who are financially able to participate in the interbank market. Trading with better prices are reserved for a few big time organizations but the growing volumes of retail trade allows brokers to be in this category of traders as they are able to pool their transactions. Retail spot forex spreads are now as low as just two ‘pips’. To decide if you want to buy or sell particular currencies, take a look at the quotes that are available in the market.

Not only is the forex market liquid but it is an avenue of trading where non-stop trading takes place. Traders can decide to join or get out of the market with ease. If you profit from this trading avenue then you should expect to pay a capital gains tax.

Foreign exchange pricing is famous for its volatility, the pricing of currency pairs is rarely, if ever, static, with a whole host of political and financial news affecting it. The movement of the value of currencies play an important role in determining whether or not a particular currency will appreciate or depreciate. Most currency pairs move on average less than 1 per cent on a normal trading day. With a small percentage of change, why are traders fussing over the market?

What is essential here is leverage. This form of trading can lead to huge profits even with the small movements and a marginal capital to start with. Those who participate in this kind of trading are able to gain some control over the transactions that take place.

As a trader you’re probably looking for free forex robots and trading systems that can actually work. In short there are plenty of excellent expert advisors and forex robots that are being given away for free that can yield fairly good results.

This Forex robot can be traded with ANY account size….BIG or SMALL.

Undeniable proof of fully automated income that everyone can put his hands on! See undeniable proof.. >> works fully automated while you sleep! >> Click here now >>

Forex has a wide range of robots that cater different needs for different traders. We are always in a hurry to label a product without thorough investigation which sometimes may be utterly wrong. This article gives you a good assessment of the two top forex robots namely FAP Turbo robot and Ivybot robo.

If we found out that something works well for us we treat it like a treasure and keep it safe.

Just the same in Forex Trading we always remember the things that we learn and keep enhancing them to retain the knowledge.

In Colorado Springs today a man was eaten alive by a Forex shark. What happened? Rick just found out about the Forex market and decided to start trading without any advice plans or education.

One of the high rated robots is none other than the FAP Turbo forex robot and is pretty popular these days. Just an internet connection is all that is needed to start trading right from your home.

The overwhelming acknowledgment of Forex robots has made a big impact on the life of most traders. Manual studying of movements and long hours spent learning the next possible trend in the Forex market have all gone.

This robot can do all the work at once from gathering data to processing them with accuracy and efficiency.

What you need to know if such product will help you or not. Actually if you are lucky enough to obtain a competent Forex robot then it is surely a big help. How would you know which to choose? This article will uncover some of the most critical factors that will help augment your bank account…

When using an online broker for stock trading, make sure to formulate a strategy as to how long to hold on to stocks before selling them. Trade stocks online, but start small and be careful not to lose money too fast, with advice from a futures and options floor trader in this free video on investing. Expert: Mark Griffith Bio: Mark Griffith has graduated in economics and philosophy at Clare College, Cambridge. He has been a futures and options floor trader at LIFFE (London International Financial Futures Exchange). Filmmaker: Paul Volniansky
Video Rating: 4 / 5