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10 Forex Tips and Tricks to Help You Trade Profitably

As with all forms of trading, making money in FX is about having a trading plan that you have the discipline to follow. You must know your entry and exit points. Risk and reward must weigh up before you enter a trade.

Here at Axcess FX are our 10 top Forex tricks and tips to put you on the right path to trade profitably.

1. Get a Forex education

Forex trading carries the risk of losing your capital. To manage risk, put in place a working strategy, and avoiding significant losses requires solid FX knowledge. If you are committed to starting forex trading, tip number one is to get a good Forex education.

From a basic understanding of how currency pairs work, you will want to learn how to analyze the market using fundamental and technical analysis and understand trading signals, trading tools, instruments, and study price action.

Beyond immersing yourself, online courses hosted or written by respected industry figures are essential. It is vital to learn the right way. They are also convenient for those that are in employment. UBS, the world class investment bank offer a one-day Forex course either as a classroom or virtual program which you can find out more about at their research academy.

Continuous education is also a necessity for experienced traders. Strategies may need refining, and keeping abreast of market and technological developments is essential. As an accompaniment, here is our useful article on the five steps needed to trade Forex.

2. Carefully research your broker

A myriad of online brokers exist. Choosing one can be time-consuming and confusing. Taking account of the following is essential:

What trading platform and software does the broker use?
Are you likely to use automated software to trade?
Will this software be compatible with broker trading platforms?

It is critical to choose the right trading partner as you engage in the FX market since price, execution, and the quality of customer service can all make a difference in your trading experience.

Remember, if you are a US resident, you will need to use a CFTC registered Forex broker such as Forex.com, TD Ameritrade, Interactive Brokers, Oanda or IG USA.

3. Select a consistent strategy and goals

Once you have a Forex education, find a trading strategy, and stick with it to discover your trading style. FX Strategies range from the very basic to the very complex and from the aggressive to the conservative. Every trading style has a differing risk profile and a different approach for the strategy to work.

Are you a position trader where you have the funds to take a long-term strategic trade?
Are you a day trader due to limited funds and need to trade daily to make a profit?
Will you be a disciple of technical or fundamental analysis or a bit of both?
If you trade short term, consider a scalping strategy that requires instant decisions in the space of one trading period.
Are momentum or reversal strategies a consideration?
Are you a chartist and will trade with a moving average or Fibonacci strategy?
What is your risk tolerance? How much leverage will you use?
Will you trade using automated software, or do you prefer to trade FX manually?
What currencies or currency pair(s) will you focus?
Will you margin trade or make use of CFDs?
What is the volatility of the currencies you want to trade as this will affect the strategy

Here is an excellent video detailing a simple profitable trading strategy

4. Use discipline and risk management

The management of your capital account is key to your success as a trader. Ensuring through appropriate stops that you trade with 1% to 2% of your capital at any time is essential if you want to last in the foreign exchange market. Every trade has an element of risk, and risk management will keep you trading for longer.

A lack of discipline can result in excessive trading losses, which can put you out of the game.

Panic and greed often blight the early stages of a Forex trading career. Controlling all emotions through risk management and recording it in a journal is excellent control overtaking a specific trading action.

Rules, discipline, and experience are critical in Forex trading. We have also written a dedicated article on how to further maintain focus and discipline when trading forex.

5. Create an intense work ethic

One of the most crucial forex trading tips is a strong work ethic which means that you prepare well for every trading day or week through solid research.

It means accepting that sometimes you may not feel like it but must take progressive action to improve continually. If you are trading through automation or mechanically, this may involve back testing your software or exploring new Forex trading strategies.

an FX scalp trader back testing his software

6. Accept losses

Look at the bigger picture and never obsess over having a high win percentage. Any loss should be easier to accept by limiting your trade exposure to no more than 1 or 2% of your capital. If you cannot take a loss, you will never be a profitable trader. Self-improvement and learning from previous mistakes build your character as a Forex trader.

7. Maintain a trading journal with weekend analysis

If you do not trade with discipline, you may be susceptible to revenge trading. A significant loss can trigger ill-disciplined traders to open up a new position with no strategic thought acting purely on emotion.

Operating a trading journal is essential, as successful currency traders are also accurate record keepers. It is vital to evaluate your trading performance continuously.

Note keeping should include:

Entry and exit conditions of all trades
Support and resistant levels
Target levels for each trade
Daily ranges

With meticulous note keeping, a journal helps to evaluate why you made losing trades and to monitor the ongoing performance of your trading strategy. It also flags up any inconsistencies with trades being out of line with your Forex trading strategy.

A journal can also be a printed record of an underlying chart if your strategy uses technical analysis. Entry and exit points and emotions at the time can record on the chart.

Our top trading trick

Evaluating your journal at the weekend is a useful tip. The Forex markets are closed, and it will not interfere with your weekday trading and may allow you to be more objective; remember during the weekend you are more likely to be calmer than in the cut and thrust of a trading day.

8. Positive feedback loops

Essential for building confidence, positive feedback loops are proven to work—trading according to your underlying strategy and executing well a pattern of positive feedback forms. Success builds confidence, and the more times you have winning trades in your chosen strategy, the more significant the positive feedback loop.

9. Carefully consider entry and exit points

Forex traders continually blight by conflicting information on charts of different time frames. A selling opportunity on a weekly chart may reflect as a buy signal on a daily chart. Make sure you synchronize a daily chart to time the entry against a weekly chart displaying trading direction. Only sell when you have a sell signal on both time frames.

10. Do not overtrade and take regular breaks

If you are over-trading the Forex markets, it is usually an indication of two underlying issues that may even be happening at the same time:

You are likely to be risking too much capital with every trade.
Your trading frequency is too high relative to the trading session.

Overtrading can harm your capital account. Trading Forex can be draining, and if trades are not going your way, a tendency is to spend long sessions in front of a computer looking at multiple screens that are central to a trading set-up.

To counter this, take regular breaks. It is vital to try and keep sessions uniform and take frequent breaks away from trading Forex and collect your thoughts. Only return to your trading station once you are feeling refocused.

a trader goes running during a break from trading

Bonus Tip

We have highlighted ten Forex trading tips and trading tricks that experienced traders use to profit from the Forex market successfully. However, the ability to trade FX profitably depends on having substantial knowledge and a rigorous Forex trading system in place. Emotion is the bane of traders, especially those new to the market. By eliminating it through discipline and rules is a solid base on which to perform.

Many top traders deal with emotion in different ways. Our final tip is to use meditation techniques before your trading day to start trading in a peak emotional condition.

If you are interested in further trading insights we have written an article on Forex trading tips and one on how you can make money Forex trading.

Written by Chris Gillie

Chris Gillie is the founder of Axcess FX, a Forex software review and research website. He is a former investment banker who worked in FX Sales on the UBS London trading floor. Chris has been using Forex trading software as part of his trading set-up since the late 2000s and the embryonic days of MetaTrader and the MQL coding language.

Seven Short Forex Trading Tips

There are so many fundamental Forex trading tips that you will be aware of and try and take on board when you begin Forex trading. If you start out doing the basics correctly you will have an improved chance of success.

In this short article, we have included seven short Forex trading tips for newcomers that cover off the basics and will provide you with value for your future trading endeavors. Remember, many new traders go on to make a good income from their FX trading activities and so why should you not be one of them!

1. Your trading style should reflect your personality

Your chosen Forex trading style should align with your personality, as trading involves making decisions under pressure and requires significant risk management to limit potential losses. By aligning your personality with your trading style will lead to improved performance, consistency and discipline

Factors to consider when you are trying to match a trading style with your personality include:

Lifestyle compatibility

Lifestyle is a factor that will impact on the style you trade. A short term trading style, like scalping or day trading is unsuitable if you are trading around a full time job. Instead, swing trading or position trading will be more appropriate.

Emotional control

Forex trading can be an emotional roller coaster and by trading according to your personality is more likely to see you keep control under pressure. For example, following a long-term trading strategy will better suit calm and patient traders rather than an impulsive trader, who is looking for greater trading activity.

Natural decision making

Some Forex traders are very analytical and are driven by data; whereas other traders rely more on intuition. Your style of trading should allow decision making in the way that feels the most natural to you.

2. Never over trade

You should only trade in amounts and frequency that you are comfortable with until you are completely confident with your ability to trade Forex. If you over trade it may have a negative impact in the following ways:

Mental exhaustion

By over-trading you can become susceptible to mental exhaustion, especially in short term trading strategies. It can result in decision fatigue where the quality of trading decisions will gradually decrease with the more decisions you have to make. Over the course of a trading day or trading week, the negative impact of over-trading could really start to impact on you.

The lack of a strategy

When you over-trade it is an indication that you lack a solid trading strategy or the discipline to adhere to one. The absence of a coherent strategy turns your trading efforts into gambling rather than calculated risk taking.

Revenge Trading

After suffering a significant trading loss, ill-disciplined traders may try and get their ‘revenge’ on the market by placing trades with minimal rationale behind them. Such a reaction can result in a vicious cycle of further losses and over-trading

3. Let a winning trade run

To trade Forex more profitably, once you have a winning trade, there are increased benefits from letting the trade and profits run:

Overcome the fear of missing out

The fear of missing out, also known as FOMO, can see traders jump into trades without proper analysis. Through letting winning trades run, traders can offset the negative mindset of missing out on other trading opportunities.

Efficiency of time and resources

The time and effort to manage a large winning position is no different to that of managing a small position. If you let winning trades run, it is a more productive use of both your time and resources.

Improving your risk reward ratio

Having a favorable risk reward ratio is fundamental to successful Forex trading. When you let a winning trade run, the potential reward increases while the initial risk remains the same; assuming you are moving your stop-loss up to break even.

4. Cut your losses quickly and accept them

By cutting losses quickly by letting a losing trade stop out and accepting it is fundamental to being a successful Forex trader. There are a number of reasons the practice is crucial:

Capital account preservation

In our article why FX trading requires strict money management, we identified how small losses of 2% of capital can be recovered quicker than larger losses. Remember that a 25% loss on your trading account requires a corresponding 50% gain to break even!

Avoid the “sunk cost fallacy”

The sunk cost fallacy in trading is the belief of continuing with a loss-making trade due to the time and money already invested, despite the risk of potential losses outweighing the benefits. By cutting losses quickly on a badly performing trade, Forex traders can avoid any fallacy and trade in the present and not the past.

Opportunity cost

By holding on to losing trades may tie up capital from your trading account that could be deployed to better trading opportunities. By cutting losses, traders ensure that their capital is free for fresh trades.

5. The trend is your friend

The old saying is “the trend is your friend,” anchors one of the central principles of technical analysis. The saying implies that Forex traders may improve their chances of success by trading in alignment with the current trend. When trading currencies, there are a few reasons why this principle has relevance:

Momentum

A trend is an indication that momentum lies behind a currency’s price movement. By placing trades that move with the trend, traders are seeking to capitalize on the momentum, which increases the chance of the trade making money.

Filtering out noise

The FX market is susceptible to random price movements or “noise” which can lead to false trading signals. By trading with the trend can help filter out noise and allow focus on more substantial price movements.

A higher probability of success

Forex trades placed in the trend direction usually have a higher probability to succeed as they go with the momentum of the market rather then against the flow.

Here is a very informative video giving further Forex trading tips for beginners

6. Always keep to the rules

An inexperienced trader will feel tested to the limit in times of high volatility. When the spot moves rapidly, losses can occur if a trader does not stick rigidly to the rules set out in their own trading system which includes:

Consistency

Adhering to a ruled based trading system creates consistency in your trading approach. By following a robust set of guidelines allows for accurate assessment of a strategy’s effectiveness and to make adjustments as necessary.

The 2% rule

It is best practice in Forex trading to place no more than 2% of your trading capital on a single trade. As the forex market is so volatile, keeping to the rule can help traders navigate through periods of high volatility by avoiding panic decisions through predetermined actions. Losing 2% of your capital is easier to recover than an ill-disciplined trade that loses 25% of your trading account.

Performance evaluation

If you are trading within a wider trading system it makes it easier to evaluate your trading performance. If trading results are lackluster, you can look back at your trading rules to pinpoint what is likely working and what isn’t.

7. Keep a trading journal

A trading journal is essential and the best traders are those that keep detailed records of trades so that they can review them at any time for different reasons:

Goal-setting and tracking

Trading journals are a good way to set trading goals and track any progress towards them. The process helps maintain motivation and keeps your trading aligned with original strategy objectives.

Accountability

A journal will hold you accountable to your underlying trading system and strategies. It makes you question the reasoning behind every trade, helping to prevent irrational trading.

Learning and improvement

Trading journals are learning tools. Through writing your thoughts behind every trade, and comparing the expected outcome with the final result provides insights into trading processes and decision making. With the information at hand for analysis, it will help lead to continuous trading improvements.

For further Forex tips please read this additional guide that we have written that will hopefully help you to trade profitably.

Written by Chris Gillie

Additional Resources

The Difficulty With Short-Term Forex Trading Strategies

The difficulty with short-term Forex trading strategies includes the unpredictable effects of volatility compared to longer-term trading strategies.

Macro-events like economic data, monetary policy announcements and geopolitical events, can instantly move the market and affect short-term trading strategies such as scalping, day trading and swing trading which have tight stop-loss orders. Position trading is less affected by singular events as traders are looking at long-term trends.

We will look at seven key difficulties faced by traders that use short-term Forex trading strategies, including the effects of volatility. We also touch upon the differences between short and long term trading strategies, so that you can make an accurate assessment of what will work best for you.

Market Volatility Caused By Macro-Events

The problem with short term Forex trading lies in an unexpected macro-event or other significant news that moves the market more than your hourly chart or technical analysis on a given day. For scalpers and day traders it can have a profound effect including:

Opportunity cost: Short-term FX traders may miss out on broader trends while they focus on the immediate market reaction
Whipsaw patterns: Macro-events cause prices to change directions quickly triggering confusing entry and exit signals
Liquidity fluctuations: Liquidity can dry up before macro events resulting in larger spreads and slippage, increasing trade entry/exit costs
Stop-loss hunting: Around macroeconomic-events, prices might spike briefly taking out the tight stop-loss levels of short-term Forex traders
Competition from algorithmic trading: Trading algorithms react to macro-events in milliseconds putting them ahead of human traders
Forecasting difficulties: Short-term traders who bet on outcomes of a macro-event may find themselves on the wrong side of a trade

Shorter Time Frames Provide Less Reliable Signals

Technical analysis patterns and indicators appear more frequently on shorter time frames but they have less reliability than longer time frames, where support and resistance levels become more established and take on greater significance.

Furthermore, as you drill down in time frames, the charts become more polluted by false moves and market noise. Market noise refers to random price movements due to minor market fluctuations and can lead to false signals and misleading trends. Day traders are more affected as they might trade off hourly charts or even shorter time frames. Ideally, Forex traders should use a longer time frame to define the primary trend of whatever they are trading.

Impact Of Bid-Offer Spreads

The very nature of short-term Forex trading is the execution of multiple trades over short periods, typically less than a day. Unlike other markets, in the Forex market the cost to trade is typically built into the spread, and the wider the spread the more it eats into profits on entry and exit into trades where a successful trade may only be a 10 pip profit.

As scalpers and day traders rely on small price movements to enter and exit trades, the profit per trade is highly impacted by spreads. In volatile markets, slippage, where take-profit and stop-loss orders are filled at a worst than expected price, can also further reduce potential profits.

Leverage Risk

Scalpers and day traders typically use higher leverage to boost profits from small price movements. While leverage can increase profits it also magnifies potential losses. For example, a trader leveraging 50x to open up a $250,000 USD/JPY trade is now fully exposed to this large position, likely dwarfing the trader’s actual capital account balance. Nothing short of a very tight stop-loss is acceptable when using leverage.

Understanding leverage and managing the associated risks has complexity and for some traders this is is difficult to grasp. Without a tight stop-loss and disciplined money management to only trade 1% to 2% of your trading capital account, then short term strategies can cause significant losses. A tight stop-loss may be as little as ten pips from the current spot price.

Over-Trading Risk

Short-term FX traders are at risk of over trading due to the inherent nature of trading in a system that requires multiple small trades every day to be profitable.

The high frequency of trading opportunities when trying to capitalize on small price movements within a short time frame is a particular problem as it can tempt traders to execute more trades than necessary.

The pressure to meet daily or weekly profit targets is an over-trading risk factor, especially if a trader is behind on their targets. The pressure to make budget can lead to poor decision making and taking on trades with a lower chance of success.

A Reliance On Sophisticated Tools And Techniques

To be successful as a short term trader requires access to advanced trading tools and up to date technology which can be expensive with both start up and ongoing costs. It includes:

High-speed internet connectivity
A high-specification computer with upgraded graphics card and memory to reduce lag
Advanced charting and analysis software
Direct market access via a Forex broker

The need to develop or understand complex trading strategies is also essential for a successful short-term trader. These can be difficult to master especially those based on advanced technical analysis, algorithmic trading or high-frequency trading tactics.

Psychological Stress And Emotional Discipline

Short-term Forex trading requires constant monitoring of the markets and quick decision making. It can be tiring mentally as traders must stay focused for long periods. The need to perform well on a daily basis can lead to burnout or trading decisions driven by emotions like greed and fear which can override rational analysis and decision making.

Furthermore, pressure to rapidly recover from losses can also lead to revenge trading, where traders take poorly calculated risks to recoup the fall in capital on their trading account.

If You Can, Trade for The Long Term

Many Forex traders cannot trade for the long term to become position traders. The reason is day traders need to make money every day to earn a living by scalping the market. A couple of pips here and there only creates a decent trading profit through frequent trading many times a day.

Taking a longer-term strategic position will require a deeper stop loss and trading with a higher percentage of your capital account. A larger transaction size justifies inactivity in the market by holding out for more significant currency moves.

A long-term trading strategy means that you are not affected by what happens on any one given day. You can forget about having to predict short term trends and you will have more chance making money Forex trading.

A table showing the differences between short-term and long-term trading

Factor	Short-Term Trading	Long-Term Trading
Goal	Benefit from small price movements	Gain from big market trends
Time Frame	Minutes, hours and days	Weeks, months and years
Trading Frequency	High, with multiple daily trades	Low, with few trades
Profit and Loss Realization	Quick, usually on the same day	Slow, realized over a long time
Capital Requirements	Low per trade	High per trade
Risk management	Tight stop-losses	Wider stop-losses
Analysis type	Technical analysis	Fundamental & Technical Analysis
Trading stress level	High, due to constant monitoring	Lower, due to reduced monitoring

A video explaining the benefits of long-term over short-term Forex trading

A Parting Thought

The Forex markets are a market of probabilities and not certainties. Trading long term Forex trends makes big profits. If you have the capital forget about trading the short term where unpredictable or unforeseen events will always mean that the odds are on a knife edge.

Additional Resources

Seven fundamental Forex trading tips

Written by Chris Gillie

The 15 Best Resources to Learn Forex Trading Online

When starting out in online Forex trading, you must understand the mechanics of the Forex market. If you want to preserve the cash balance on your brokerage account, at the very minimum, you must have some concept of economic fundamentals and technical analysis.

The primary influences of the Forex market are global macro-events and news, providing the potential to make significant trading profits from the volatility.

If the FOMC cuts US interest rates unexpectedly, currencies are likely to move wildly. Inexperienced traders may be unsure how to trade in volatile markets and make irrational trades in panic. Experienced traders with a system, trade without emotion and will always benefit when the inexperienced do not.

Without having a robust strategy or trading plan in place, trades are mostly thoughts only, and thoughts are emotions. It is a weak base from which trade. Getting a Forex education and developing a trading plan is vital if you want to thrive as a forex trader. How can you do this?

There are different ways to study Foreign Exchange basics before you dive into the volatile world of live Forex trading. There is also no reason why it should cost you any outlay with an extensive number of free Forex learning resources available on the internet.

An FX trader analyzing a trading strategy

The Best Free Forex Resources Online

Until you understand basics like the Forex currency pair quotation system, trading terms, and market participants, you will not be able to move on and develop a robust strategy for forex trading. Free resources are available online to help you get the basic Forex education necessary to move forward and trade. The top trading resources for mastering Forex basics are:

1. FX Street

The A to Z of everything Forex from the basics to advanced strategies, FX Street is an accessible resource in the online trading community. It has a significant education section providing hundreds of articles and videos and which you can access directly here.

2. Forex.com

An extensive library of educational content is available at Forex.com. This well-regarded CFTC registered online broker caters for all levels of trader from the newbie to the experienced pro and it is free to open an account to access the full suite of educational trading resources. They include, an academy, tutorials, beginner webinars and popular guides. Here is a link directly to the webinar section.

forex.com image of website education section

3. Investopedia

Interactive learning from basic up to mid-level education, Investopedia is an all encompassing bible of financial information which is easy to navigate with a simple to understand layout.

4. Babypips

Great for beginners to understand the basics of Forex by presenting complex information in a simple way. They have their School of Pipsology, an excellent free online course to help newbies learn how to trade FX. Baby pips also have a busy forum where you can ask any Forex related question and expect to receive an answer from a member of this thriving community.

5. Investing.com

A forex trading website that can help beginner traders by providing free to use information and resources, including educational material via their education hub as well as analysis and real-time data.

6. Bloomberg TV

Expert panelists and reporters will provide you with copious amounts of Forex market information to digest. Immersing yourself in Bloomberg TV every day is a necessity to get an understanding of the FX market.

7. Youtube

Learn from Youtube channels dedicated to Forex from researching tools and platforms to videos explaining trading concepts. Here is an example of a high quality beginner Forex tutorial made available on Youtube by Trading 212 which has more than 1.2 million subscribers.

8. DailyFX

A free-to-use site, DailyFX provides real-time news, live market data, and in-depth technical analysis for those looking to build their Forex education. A dedicated education section includes free trading courses, guides and research.

9. TradingView

Excellent for charting, TradingView, through cloud-based software, allows all traders to track and research the Forex market with customizable charts. Importantly, TradingView has sections dedicated to education and research.

10. Forex Factory

Forex factory has a trades section where beginners can watch live trades placed by a more experienced market participant. An excellent forum section hosts a broad range of active Forex related discussions.

The Best Free Online Forex Courses

Online courses train you to read charts, understand price dynamics, open and close positions, and see developing patterns, a further move towards developing your trading strategy. We see courses as an integral step to learn how to trade forex.

There is a number of free online forex trading courses to choose from. We have selected our best five

11. Udemy

Udemy, the well respected learning resource offers free Forex trading courses which you can browse here.

12. Ava Academy

Ava Academy is provided by the online exchange, Avatrade and has free Forex courses ranging from topics such as an introduction to technical analysis and how to start trading-the quick and dirty way.

Here is the link to the online courses at Ava Academy.

13. Class Central

Class Central is an aggregation service that finds free courses including Forex trading from all over the top learning platforms on the internet. Below is the direct link to free online Forex trading courses.

https://www.classcentral.com/subject/forex

14. FX Academy

FX Academy is a highly rated, educational website with a significant number of Forex courses ranging from an Introduction to Forex Trading to Trading With Double Bollinger Bands.

15. Tutorialspoint

Tutorialspoint offer a very comprehensive free multi-chapter Forex trading course covering everything from types of market analysis to fundamental market forces and position sizing and money management. The course can be accessed here.

Finishing Your Online Forex Education

Once you think you have covered the basics through free online resources and furthered your Forex education with online tutorials, it is the time to develop a strategy.

Unless you have done so already, you will need to open an account with an online broker, and the final stage before you start trading with real money will be to hone your strategy on a demo account. A reputable CFTC regulated broker like forex.com will allow you to open an account and practice in their demo environment.

Forex resources, ourselves included, advocate getting hands-on experience by using a demo account. Learning not only to develop or fine-tune a strategy but also to familiarize yourself with your broker’s online platform to avoid making order placement errors when you commence trading live.

We wish you happy trading – From everyone at Axcess FX

Written by Chris Gillie

Chris Gillie is the founder of Axcess FX, a forex software review and research website. He is a former investment banker who worked in FX Sales on the UBS London trading floor. Chris has been using forex trading software as part of his trading set-up since the late 2000s and the embryonic days of MetaTrader and the MQL coding language.

An Insight Into The Global Forex Market

Forex, is an abbreviation for Foreign Exchange and refers to the global market where currencies are traded. As the world’s the largest financial market, it is central to global trade, economic growth and investment.

Market participants from governments to individual investors look to profit from currency moves or hedge against them. Forex is also an an important financial barometer as it influences economic policy and global economic stability.

The Size And Scope Of The Global Forex Market

The global Forex market is the world’s most liquid and most significant market. In 2022 the daily trading volume in Foreign Exchange hit a record 7.5 trillion US dollars according to the Bank for International Settlements (BIS) in it’s triennial survey. The next survey will come out in 2025 but just to put the growth in Forex in perspective, in 1998, the daily volume was 1.5 trillion US Dollars illustrated in the chart below.

chart of turnover growth in the forex market from 1998 to 2022

To put this huge figure in context against other markets, as of April 2024, the average daily trading volume of all the U.S. stock markets combined is 478 billion US dollars and the cryptocurrency market, 558 billion US dollars.

With the Forex market representing such massive daily turnover from continuous trading across multiple time zones and borders, it influences economies much more than other financial markets.

Key Forex Market Participants

There are several major players in the currency markets that all play an important role in the market. They are government central banks, major banks, financial institutions like investment funds and large corporations, brokers, sophisticated investors and retail investors.

Government central banks: The U.S. Federal Reserve and other central banks play a central role by setting interest rates and applying monetary policy which directly influences FX rates.

Major banks and financial institutions: These market participants engage in high-volume Forex trading that impacts exchange rates through their speculative trades or hedging activities.

Brokers and retail investors: The advent of online brokers and electronic trading platforms has seen retail investors enter the market, as brokers now provide the same market access, that was previously limited to the large players. It also contributes to the Forex market’s liquidity and dynamism. In 2022, retail foreign exchange was 5.5% of all daily global Forex turnover.

Currency Insights

Forex trading, is a 24-hour market operating across three trading sessions in Europe, the United States, and Asia. Although the trading sessions overlap, the major currency pairs of each market will have more volume during specific trading sessions. Major investment banks like UBS will trade the European session in London from 7 am until 5 pm, upon when the trading books are passed to the U.S. desk in New York. At the end of the U.S. session, the trading books are then passed to the Tokyo office and then passed back to London to complete the loop.

The Forex market can be traded 24 hours around the clock, but not quite 24/7, as Saturday is when no trading takes place in the major markets.

time zone clocks including London, New York and Tokyo

Currency prices can be very volatile, especially in emerging market currencies and cross currency pairs that tend to be less liquid. Factors affecting the movement of currencies include geopolitics, macroeconomic data, unexpected events such as catastrophes, market supply and demand and trade flows.

Currency pairs are crucial for Forex traders as they represent the value of one currency relative to another, offering profitable trading opportunities based on correctly predicting FX rate changes. Understanding the nuances of each currency pair is vital for effective trading.

The Most Traded Currencies And Pairs

Although there are more than 50 currencies traded globally, surprisingly, the market has relatively few major currencies that contribute to its significant daily trading volume.

Currencies that have a major impact on daily trading include Sterling, the Swiss Franc, the Euro, US Dollar, Japanese Yen, and the Australian dollar. These currencies are the base for around 18 currency pairs that dominate volume with the most traded currency pairs being EUR/USD, GBP/USD and USD/JPY.

a currency chart highlighting the volatility of a currency pair

Data from the most recent BIS triennial survey indicates that the US dollar was on one side of almost 90% of all Forex trades in 2022. Furthermore, almost 80% of all Forex trading occurs in major Forex trading hubs which are key financial centers and include London, New York, Tokyo, Singapore and Hong Kong.

The US dollars dominance is due to:

A large presence in offshore funding markets where institutions raise debt with almost half of debt issuance being denominated in USD.
The dollar is popular for global payments and international trade where around half is invoiced in USD.

Forex Trading Mechanisms

Foreign exchange sees currency pairs traded as one against the other. It means that when you buy one currency, you are selling the other currency in the pair. Currencies quote in pips, which are a percentage in points to four decimal places and represents 1/100 of one percent of a currency. The quotation system is entirely different from the securities markets where you either buy or sell a single stock, bond, or exchange-listed fund.

Compared to the thousands of individual stocks that we can buy or sell, the currency market also seems very slimmed down. All the major currencies are available in a variety of trading forms including spot and forward foreign exchange and derivatives, including futures and options.

Spot market: Spot Foreign exchange is where currencies trade at current market prices for settlement in 2 trading days and is the most liquid and popular instrument.

Forward foreign exchange: Forward FX is where currencies trade at current market prices but settle at a time in the future, like 3 or 6 months. The price is adjusted to take into account the time differential in interest rates between the two currencies in the pair.

Futures and options: Futures and options are derivative contracts (which means derived from the underlying currency pair) where margin or premium is agreed to buy or sell currency at a predetermined price at a future date.

Leverage also plays a key role in Forex trading as it allows traders to control large currency exposure with a small amount of capital, amplifying profits but also losses!

Strategic Approaches In Forex Trading

Success in trading Forex requires the ability to create strategies using techniques including fundamental, technical and sentiment analysis. Understanding and implementing these methods enhances a trader’s means to make informed trading decisions in a volatile market.

Fundamental analysis: This is the evaluation of economic indicators, geopolitical events and central bank policies all of which influence currency movements.

Technical analysis: The focus on using charts and mathematical indicators to predict future price movements based on previous trends in the market.

Sentiment analysis: Gauging the market’s mood and positioning through various indicators, assisting Forex trader’s in spotting potential market shifts.

If you are interested in learning more about Forex, below is an excellent video that covers all the basic knowledge to start you on your Forex trading journey.

Written by Chris Gillie

Nick Leeson and Barings Bank Collapse: My experience

Nick Leeson brought down Barings Bank in 1995 after racking up huge losses through unauthorized derivative trading in Singapore.

The immediate aftermath of the Barings Debacle raised the question of why a relatively small merchant bank had a trading operation in a far-flung place so far away from its London head office.

It is a fascinating story that had a huge impact.

The Consequences Barings Collapse Had On Bank Trading Floors

Concerned, other banks began looking at their trading operations all around the world. Why have twenty trading rooms, thus increasing the risk of a rogue trader or a financial loss when you could do the same with three trading floors, one in each of the time zones and make the other centers into sales rather than trading operations.

The repercussions for many banks were swift

At the time, I was working for a large European Bank, trading the DEM and CAD deposit books through FX Swaps, FRA’s and cash. The bank had trading rooms all over the place, including San Francisco, Wellington, and even Bahrain. Our trading room was in one of the bank’s offshore operations.

Within months, we were told to square all our open positions and explained all our lending limits would be transferred to the head office as the bank sought to streamline its trading operations. Our trading room was scaled down, and the traders, including me,had to find new jobs.

The Barings collapse was an instrumental factor in forcing banks to move towards operating a single global trading book that is passed around the world as the trading day moves through the major time zones of Tokyo, London, and New York.

Lessons Were Not Learned As History Repeats Itself

Following the Barings collapse and the impact it had on how banks trade, it was not until the 2008 financial crisis that banks would again come under pressure. Like Barings, respected names like Lehman Brothers would collapse. Banks had not learned their lesson.

Written by Chris Gillie

Our Fap Turbo 3 Review (updated 2024)

The FAP Turbo 3 is the most up to date version of the Forex Auto Pilot (FAP) series of forex robots. It follows on from the original FAP and FAP Turbo 2. The FAP Turbo 3 is another of our robot reviews (updated for 2024) where we will look at the strategy employed, evaluate performance and look at trader feedback.

Our review, together with the full facts at the official website will help you decide whether FAP Turbo Version 3.0 can help you trade profitably.

History

The FAP Turbo has been around for over ten years, with the original FAP launched in November 2008. It was developed by a team of professional forex traders and programmers and is one of the earliest forex robots made commercially available for purchase. FAP Turbo 2.0 followed, and we are now on the current version 3.0. FAP 3 which has over 85,000 worldwide users.

The FAP is a fully automated forex trading robot meaning that both identifying and placing trades are done automatically. It differs from semi-automatic trading software where the decision whether to place an identified winning trade remains with the human trader. FAP Turbo 3.0 runs on the MetaTrader trading platform.

What Trading Strategy Does The Fap Turbo 3 Use?

The FAP Turbo 3.0 provides users with two different forex trading strategies available in separate trading modes. The legacy scalper strategy from previous FAP models is still available and is known as Scalper Mode. Version 3 now includes the new Medium-Term Strategy (MTS mode) algorithm. The aim of FAP Turbo 3.0 is to move away from scalping to medium-term trading.

Scalper Mode

The Scalper trades more frequently than the MTS mode, and like many forex robots, the legacy scalper works best in rangebound conditions. The developers have built the Scalper algorithm to trade the night session in the cross over between the US and Asian trading sessions, which is known to be a quieter trading session.

The Scalper targets opening between 1 and 5 trades targeting small take profits on each trade. Algorithms uses a specific 15-minute chart timeframe, indicators, and filters to create trade signals. Signals include RSI, MA, and also volatility filters and opening time filters.

The Scalper is programmed to trade eight currency pairs in the same way, including EURUSD, GBPUSD, USDCHF, GBPCHF, EURCHF, and USDCAD.

MTS Mode

The MTS strategy opens trades during the day employing different trade timings for different currency pairs. The MTS does not tie to specific chart time frames like the Scalper. The MTS algorithm is continuously monitoring the markets and will open trades only when its internal indicators identify conditions that indicate a high probability of success. The aim is to trade profitably and not to open trades up in conditions that are not optimal. It employs more substantial take profits and stop-losses of between 20 and 100 pips.

The Expert Advisor works right out of the box with default parameters; however, these can be substantially altered to align closer to a trader’s required risk and leverage levels. More information about strategy and settings are available at the FAP Turbo site

How Good Is The Performance?

The developers of FAP Turbo 3.0 provide performance backtesting using the MetaTrader strategy tester. Below are the performance results from over six years employing the Medium-Term Strategy across the eight currency pairs the forex robot is programmed to trade. The performance does not take live account spreads, slippage, commissions, or live tick data. Furthermore the modelling quality is only at 90%. Best practice back-testing using a tool like Birt’s tick data suite can get modelling accuracy up to 99%. For scalping strategies, not testing at 99% can make a seemingly profitable strategy unprofitable. The below results appea impressive at 90% we would hope this is also the case at 99% where every tick is taken into account.

Performance Results

Find Out How The Fap Turbo 3 Works in 3 minutes

If you have found this video useful and need more information about FAP Turbo 3 you can visit the official website.

Setting Up FAP Turbo 3.0

Implementation

The FAP Turbo 3.0 can be set up with any MT4 Broker. Once purchased, the product comes as a .ex4 downloadable file, a script for MetaTrader, and can only run in MetaTrader 4 software. Therefore, MetaTrader must be already set up on your computer for the EA to operate smoothly at an optimal level.

Once the Robot successfully activates, it needs attaching to the relevant chart from where it will analyze the Foreign Exchange market and trade automatically on your behalf 24/5 as long as your computer is always on; otherwise, you can still use a VPS for continuous robot trading.

Trade settings

FAP Turbo 3 allows you to choose to either run with the default recommended Scalper or MTS settings or tweak the parameters to align closer to your forex trading strategy. A large number of parameters exist; including manually setting lot size which increases the leverage on the trade (making it higher risk), selecting specific days to trade and adjusting take profit and stop-loss levels.

Key Features

Once a customer takes out a subscription, FAP Turbo 3 comes as part of a comprehensive package:

FAP Turbo 3.0 Robot
Free Forex Brokers trading account registration with MyFXChoice and Tallinex
Comprehensive 100-page user guide
Video Tutorials
Optional Virtual Private Server (VPS)

Buying FAP Turbo 3.0

Unlike many forex robots which offer a one-off purchase price, FAP Turbo 3.0 has a different pricing model.

It is available on a monthly subscription of only $39.95 a month including 7-day trial for just $1 to see if the robot works for you & 60 day 100% money back guarantee.

The Robot is available as a direct download from a third party marketplace who will process your payment for purchase.

Forex Trader Feedback

Online trader feedback for FAP Turbo 3 is mixed. Some traders report the EA trading profitably on the default lot size of 0.1 and point to lower leverage levels producing excellent performance. Other traders say performance is erratic across different currency pairs.

Summary and Rating

The refund rate is low; the subscription package is very comprehensive and includes a 100-page guide. There is also a 60-day money-back guarantee offered on the software. Performance appears solid over the six years of backtesting provided by the developer; however, it is not based on real-time quotes and does not take slippage and commissions. Backtesting quality is also only at 90% and not our preferred 99% which is crucial for any strategies where scalping is involved.

We have mixed views on the monthly subscription pricing model employed by FAP Turbo. On the one hand it might be considered more expensive than buying a robot outright; however with constant monthly income streams from subscribers, it allows the robot developers to continually reinvest in software development, keeping FAP Turbo always up to date.

Trader feedback is also mixed. We could not find consistency in the reviews. Instead, a multitude of different areas received feedback, some good and others bad.

Based on our review, with everything considered, we rate FAP Turbo 3.0 with a 3 1/2 out of 5-star rating.

Area Reviewed	Star Rating
Customer Support	3
Price	3
Performance	3
Usability	4
Axcess FX Rating	3.25

Written by Chris Gillie

Considerations When Buying Forex Trading Software

Purchasing the right forex trading software at the outset is crucial if trading software is part of a broader FX strategy that you want to pursue. Opting for the wrong software and your forex trading career could go from very good to very poor in a short time.

The concept of using forex software, which provides you with charts and graphs and sends signals, may seem desirable. However, to justify the implementation of software, your sole concern when undertaking research should be functionality alone.

Search online and find out as much as you can. Do your homework and make sure you understand what you need to know. Unless you know how all the features in forex trading software works, you will not be in an excellent position to analyze the software by backtesting and paper trading as part of a broader strategy.

Forums as soundboards

If you feel you may have identified the right forex software package, hold off instead of purchasing it immediately. Authoritative reviews and forum feedback on the software are essential reading. You need to invest in the software only when your exhaustive research has identified that it is the best option for any more comprehensive trading strategy.

We have a detailed guide that covers the merits of thoroughly using online reviews to identify the best software.

The best forums for foreign exchange where you can interact with the Forex Community, including for trading software include but are not limited to the following:

EarnForex

A forum with a large community ensuring quick answers to your questions

MT5 Forum

A valuable forum dedicated to software around the MetaTrader trading platform

Forex Abode Forum

A forum with a large community with a heavy emphasis on the subject of analysis

Babypips Forum

A forum focusing on the needs of beginners which is the overall aim of the Babypips site

Forex automated trading systems and software explained

No product becomes popular without possessing something attractive and beneficial for the targeted user. The industry of trading has become quite popular and there are number of reasons for this popularity. Some of the benefits include the fact the foreign exchange market is open day and night all over the world and is extremely liquid. Currently, it has been reported that every day 2$ billions changes hands.

Automated trading systems play an important role in this industry. Through the program you can trade currencies online on autopilot, without needing any human supervision. The aim of the program is to maximize your profits to its full potential. It achieves its purpose by identifying and capitalizing on signals when to initial or exit trades as per the parameters initially defined.

They are scripted and encoded in a way that the mathematical algorithms are able to produce money-spinning results. It is worthwhile to mention that functioning of these systems is dependent very much on the extent of how well the system has been executed and programmed.

Although the systems work on autopilot, your trading skill and the experience you have as a trader is also important as it increases your chances of finding and exploiting more trading opportunities. Trading programs can be aiding tools in the process of your earning money, but your trading skills remain your most important assets.

They can only help but not lead the way to success. Also, you have to understand that there are no immediate returns, systems can be beneficial in long term and you must understand how they function.

It is generally claimed that most programs can generate a regular income for $100 or so to say the least. But that is not always true. The back tests that they offer as a proof are not actually a proof. The reason being those tests are conducted in only favorable conditions without projecting the element of unpredictability of the market. Often it is assumed that the simulation profits of the software will actually repeat itself in real life. However, it is not history. Simulation track record never repeats itself.

It is a very difficult choice as in which autopilot system is suitable for you. There are numerous trading systems available. Not all of these trading systems are useful. Some of them are just worthless pieces of software. But is it not like going to the moon and back to find an affordable system which actually performs well. I would suggest that you choose systems, which has good price and all the functions are as per your business needs.

Avoiding Mistakes – Forex Tips for beginners

Depleting your capital account with your online broker is undesirable.

As an inexperienced trader, what are the ways that you can cut out mistakes and limit trading losses?

We highlight what essential controls need to be maintained to at least give yourself a chance to make profits as a forex trader.

Essential controls to avoid trading mistakes

1 Master one strategy at a time

If you are new to forex trading, trying to learn too many strategies could slow up your learning process and cause losses on your trading account.

As you become more experienced, it is reasonable to use different trading strategies, but at the beginning, master one strategy at a time.

2 Simplify your trading

Novice traders tend to overcomplicate trading creating technical indicators and trying different expert advisors. If you use chart software, your chart may obscure by all the technical indicators flashing up on the screen.

It is best to focus on the raw price action that presents itself on every chart. Learn what the price is telling you, and the simplicity of trading will become apparent to you.

3 Avoid trading in different markets

Novice traders tend to trade on multiple markets with little understanding of the market. Known as noise trading, traders enter trades without the proper technical or fundamental research to justify the trade. If you want to trade on different markets, it is essential first to trade them on a demo account.

4 Over leveraging positions

Inexperienced traders are often susceptible to using too much leverage in their trades. Online brokers offer levels of leverage that put the capital account of a new trader at risk. Leverage of more than 100:1 is not uncommon. As the amount of leverage magnifies the profit and loss on a trade, it needs monitoring.

5 Lack of research

Proper research of a currency pair or currency market is essential to trade successfully. In-depth analysis should shed light on entry and exit timings and market trends. There may be slight differences between currency pairs and how they work. Detailed research is essential to put a proper strategy in place.