Best Forex Trading System

Why Automated Forex System Trading

Automated Forex System Trading

With the instability of many investments over the last 18 months, many people are turning to the Foreign Currency Market as an alternative, but why foreign currency investment instead of other securities?

The Online Forency Currency Trading or ‘Forex Trading’ possesses some unique characteristics:

1. Its trading volume is vast compared to other markets.
2. It possesses huge liquidity so buying and selling currency is never a problem.
3. The market operates 24 hrs a day for almost 6 days per week.
4. The Trading Floor is electronic, there is no ‘bricks and mortar’ exchange.
5. There are 4 major markets, Asia, Europe, London & New York, offering the potential of 4 opening movements every 24 hrs.
6. The market liquidity increases every year, irrespective of economic conditions.
7. Since the early 90s it has been open to Retail Investors

Many small investors, like to trade part time and still maintain a full time job. This can pose problems since they are restricted to when they can monitor the charts. Yes you can trade on a ‘Blackberry’, but you gotta be good to work off a screen that small! Anyway, this has caused an explosion in automated Forex systems for trading, often referred to as Forex Robots. Many of these Forex Robots had their origins in trading houses, where there was a requirement to trade small investor accounts. They were also developed to produce entry and exit signals for professional traders.

Tragically, many of the Robots that have been sold to ’Mom & Dad’ traders, have done little to improve their bottom line, in fact, many of the ones we have tested would have sent your account crashing to oblivion. They were bloody disasters! The sales claims were wonderful, but all based on historical charts (backtesting) never on real time trading accounts. Downloadable Historical charts are never 100% accurate, which also means claims are hard to verify, so true testing has to be done on a Demo account over the longest period possible to get any indication of real performance.

But there are a few which have produced very encouraging results, worthy of testing on a trading account.

We currently trade using 2 different EAs: Forex MegaDroid and FapTurbo.

Megadroid has consistently produced profitable trades and has been returning around 12% per month. This is on a restricted risk setting of 20%, which is tighter than the 30% recommended by the creators. We just don’t feel comfortable with a risk level as high as 30%. This still means we will grow our account significantly over a 12 month trading period and that’s got to be a good for anyone.

When we started trading with FapTurbo the results were dissappointment, though this was due more to our Broker than the software. At the time our broker was not an ECN broker, so spreads varied considerably and were often outside the FapTurbo trading parameters. When the spread is 2 – 3 FapTurbo trades profitably, but being a scalper, the trade profits are small and it needs to trade frequently to have a significant effect on any account.

After about 6 months of frustration our broker bacame an ECN facility and trading with FapTurbo improved, but was still not as good as it should have been. We then found the cause, and this is very relevant to anyone outside the US. Being Australian and using an Australian broker, we set up our account in Aus$, only natural, no problems with conversions etc if we wanted to withdraw some funds. BAD MOVE!!! This meant that FapTurbo had to re-calculate the currency and it ground to a halt. When we changed our account to US$ the trading frequency changed significantly, as did profits… they were up, big time!

Of the other Forex Robots we have investigated, most will cut your account to shreads. Some of the hyped ones are simply re-packaged free EAs, presented as the latest and greatest, but the only money they make is for their vendor. When you find they have problems, there is no support and the vendor has vanished with your money, so where Forex Robots are concerned, be very cautious. Don’t jump in on the latest and greatest, check it out very thouroughly first before hitting the buy button.

If you do buy a Forex Robot, have a look at Forex Tester, and consider running some tests over a much longer period, it could well save your trading account!

Popularity: 9% [?]

There is a vast number of Forex Trading Brokers eagre to offer you an account and help you with your Forex trading. Most are very professional and have support systems to assist you in your commencement. But as with so many high profile investment structures, there are a number of operations that at the outset, look very professional but then vanish into thin air, with your money.

Within the Forex industry, there are many reports of strange and underhand Broking behaviours, funds and accounts that go missing, reversed and un-authorised trades and other Scams that leave you high and dry with a zero balance, or it could be a simple as barriers and problems withdrawing funds.

So how do you start assessing a Broker for Forex Trading?

Here is a list of items you should investigate that will give you an overview of how a Forex Trading Broker might rate. It is not the ‘be all and end all’ only a starting point, as you undertake your due diligence, it is highly likely you will add others:

1. Where are the Broker’s Registered Offices? As soon as I see places like Panama, the Seychelles or other off shore havens, the warning bells start ringing. I am not saying they might not be very professional, I just check much deeper.
2. Is the Forex Trading Broker regulated by an official Government Body?
3. Contact information. Are they available by phone, or only via email or web enquiry service? Forex is a 24hr market, they need to be available on the phone 24hrs per day.
4. Do they have a recognised trading platform or an ‘In House’ system? Some big Institutions like Dukascopy have their own platform, but many Brokers use main stream platforms like MetaTrader, Currenex or Integral. Many EAs or Forex Robots require MetaTrader4.
5. What spreads do they offer?
6. What is their Broking structure? Are they DD (Dealing Desk) Broker, a NDD (No Dealing Desk) Broker, a STP (Straight Through Processing) Broker or an ECN (Electronic Communication Network) Broker? For a detailed explanation of the differences and how it affects your trading: Read this Article.
7. Speed of Execution of Orders? This is directly related to their broking structure, so investigate (5) above.
8. Leverage offered? Most Forex Trading Brokers will offer 100:1 but some will go much higher for established clients. When you are new, start with 100:1 it is better for your risk management.
9. Do they have minimum account balances? Some Forex trading Brokers require a minimum of US$50k or more whereas others will offer accounts as low as US$1000
10. Do they have access to all major Financial Markets?
11. Do they offer Demo accounts, how many and how long can you demo trade on them?
12. Do they provide PDA feeds and software for mobile trading?

 This should get you started on compiling a Forex Trading Broker ‘short list’. Spend time on your due diligence, it’s your hard earned money and you need to be 110% happy with where you place it.

Popularity: 7% [?]

When you commence online foreign currency trading, you are going to have to set up a currency trading account with a broker. They will provide you with a currency trading platform that will facilitate all your trading activities. One of the more common currency trading platforms is MetaTrader 4, which is provided free by the broker or can be downloaded from here. This it the interface that will allow you to either sell or buy foreign currency. MetaTrader 5 is currently in development and is due for release soon.

There is a vast variety of currency trading brokers and the new trader is often confused by the type of broker. There are two primary types: Dealing Desk (DD) and No Dealing Desk (NDD). You will then encounter NDD brokers which are either Straight Through Processing (STP) and or ECN.. Electronic Communications Network.

Let’s now put some clarity into this confusion:

The Dealing Desk Broker: A Forex DD Broker makes money on spreads and by taking the opposite position to their client. They are the ‘Market Makers’ because when you, the client, buys they sell and visa versa. They are literally making the market because they can manipulate the market, because you, the trader never see’s the true market quotes.

The No Dealing Desk Broker: The NDD Broker accesses direct to the interbank marketplace, all trades are virtually instantaneous with no re-quotes or delays in communication. This is particularly important if you trade during news periods. NDD Brokers usually charge commissions, though some can also derive income from spreads. A NDD broker will either be STP or ECN + STP

Straight Through Processing: This is where the NDD broker communicates directly with the liquidity providers, the banks that trade the Interbank marketplace. There are no intermediaries so everything is executed immediately. STP Brokers do have the ability to alter spreads, which gives them options as to how they make their money. They do not charge commissions.

Electronic Communications Network: These brokers allow traders to trade against one another within the ECN, these traders could be small retail traders up to Banks and Institutions. An ECN broker allows everyone to place and execute competing trades against each other within the ECN. For this reason, an ECN broker cannot make money on spreads but make their money on commission. An ECN broker wants you to make money, otherwise they don’t earn commissions.

So what type of Currency Trading Broker do you select? An ECN broker is the most transparent, dealing in the true market, everything is done automatically without anyone watching who is in the market since there is No Dealing Desk to monitor.

The Dealing Desk broker, has the ability to manipulate the market and one of the results is ‘slippage’ where the spread can change during the execution of an order. This can have a disastrous impact on your trading strategy, as it chucks your pre-determined setups out the window!

Popularity: 23% [?]

This World Banking Holidays Calendar give you all the dates the major Financial Institutions of the world are closed. It also provides links to each of these institutions.

These dates can be significant for International Currency Trading as it gives you the dates when the currency exchange trading can be flat or un-predictable due to certain market makers and/or influencers being closed for trading.

How you work with this information will depend on your trading strategy, but if you are a beginner, knowing these dates will allow you to watch the market and see the influence these holidays can have.

Popularity: 12% [?]

Forex Margin Level Calculator

FX Margin Calculator

Popularity: 66% [?]