At the start of each trading session, you will receive an email with the author's new posts. In this article of FX Trading Revolution's educational series, we will show basic facts and terminology that some traders will probably know. However, we will present these facts in the correct way. In the article we will move on to the facts about Forex, which you probably do not know, but which you must know to trade in the financial markets profitably.
It is the biggest and the most liquid financial market in the world. A daily turnover is currently more than 5. Forex is a site for connected phone and other electronic systems.
The site is based on supply and demand, and trades are executed. The system connects banks, brokerages, insurance companies, investment funds, corporations, and investors together if we are talking about a true interbank market. However, if we are talking about the trading conditions of the vast majority of all the regular retail traders — then their trading accounts are only connected to one single market maker.
One way or another there is a conflict of interest between the trader and his broker. A special category are governments and central banks, which use financial markets to intervene and set monetary policy. Long-term trading strategies are usually based on fundamental analysis. Forex is considered to be one of the fairest types of investments in the world, because the market is not influenced by quarterly statements of classic stock companies. You can make money whether markets rise or fall.
This is correct — because every buyer needs a seller to execute his orders. However if all client orders are sent by your broker on the real interbank market without any conflicts of interest — you can then make a profit from trading financial markets.
The main problem is not a principle of financial markets — that they are considered a zero sum game. The most important problem is a conflict of interest between small retail traders and their brokers. These traders usually have to use some type of automated trading. Intraday, swing, or long-term trading is suitable for manual orders. Also, high volume orders are often executed at the price levels of important minimums or maximums of a market — there are often stop-losses of traders accumulated.
This is an absolute waste of your finances. At the same time, these services are totally against the principle of logic. If any of these sellers truly had a profitable system, they would never need to sell anything. At the same time, you will find various indicators, automated systems, and scripts for free on the Internet.
Coding services based on your needs could also be provided by your broker if he has an interest in getting good results for his clients. These facts are very important, but more important is the choice of broker; to determine whether you will be able to achieve profitable results, or if you choose a low quality broker, you will lose your good opportunity for any potential profits. The main issue is not the principle of how the financial market works, the main problem for the vast majority of all traders is how the brokerage business for small traders works.
On the interbank market, the spread is always variable. If you are trading with a fixed spread, you are not trading on the real market. The vast majority of brokers across the world execute the trades of their clients only with negative slippage.
Only real results show unbiased information about the huge differences that exist between brokers. The same trading strategy will always achieve different trading result on real accounts. Please note that foreign exchange and other leveraged trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved, seeking independent advice if necessary. Any news, opinions, research, data, or other information is provided as general market commentary and does not constitute investment or trading advice.
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