Trading The FX Markets With Software

forex geometry

The Foreign Exchange market is dynamic and fast-moving. Forex trading software helps traders monitor an ever-changing market to make informed trading decisions.

Currency trading involves taking strategic short term or long term positions of currency pairs to make a profit from their changing values.

forex trader at a desk

Economies go through periods of both growth and decline, and these changes reflect the relative values of the currencies associated with each marketplace.

Having the proper positioning using an underlying trading strategy with software and knowing when to exit the market can lead to substantial profits over short and long term time frames.

Getting started with forex software

The software and online tools available for retail investors allow the monitoring of markets and the sending of notices and alerts to users through various desktop and mobile devices.

Trading the forex market with a good strategy and software can produce profits of anywhere from five to thirty percent in a matter of moments. Still, without the proper management, it is capable of producing the same type of losses.

Is It Possible To Make Money Forex Trading?

Statistics place those that make money trading forex at between 10% and 30% of all market participants. Whether trading personally or professionally forex trading is not guaranteed to make you money.

So how do you make money in forex? How can you increase your chances of success in one of the fastest moving financial markets?

Read on, and we will explain how.

How Can you Make Money in Forex Trading?

Currencies

If you are a retail investor, Bloomberg report that research undertaken by forex broker FXCM of its retail clients highlights that 68% of accounts had a net trading loss in the previous year.

It indicates that one in three retail forex traders did not have a loss on their account, but it does not give a glowing confirmation that everyone becomes rich from trading in forex.

If you are well researched and disciplined, you can be one of the 32 % of traders who do not lose money trading forex even going on to make a good income from the markets. Financial rewards can be substantial if you can differentiate yourself and become a skilled forex trader.

How Much Can you Make Trading Forex?

A robust forex trading system should win 50% of the time if you have the right trading conditions to undertake a sufficient number of trades. If you are day trading EUR USD, it may prove challenging to find up to 5 suitable transactions a day if the market is trading in a narrow range.

Assume your strategy limits a losing trade to 6 pips and attempts to make nine pips on winning deals, and you have $10,000 capital in your trading account. 10:1 leverage with a maximum risk of $100 per trade (1% of $10,000), your leveraged trading position is $100,000. The maximum risk is $60 per trade (6 pips of $100,000).

Assume you trade EUR USD five times a day on 20 trading days a month which is 100 trades a month

A 9 pip win = $90 per trade x 50 transactions per month = $4500

A 6 pip loss = $60 per trade x 50 transactions per month = $3,000

Your net profit is 1245 US dollars per month

6 Basics To Follow To Make Money From Forex

We have listed the following essential points that you need to adhere to make money when you trade in forex and keep your your capital account stable.

Trade forex less to gain more

Try and focus on the trades that will make the most significant gains rather than trading for its own sake. To do this, you must always be informed and alert.

Do not diversify

Stick to trading one currency or specific currency pairs and become an expert on it. If you are having success trading GBP/USD why would you start trading EUR/JPY

Understand compounding growth

Small gains compounded over time can produce some astonishing results. Consider the following. If you target a 50% annual profit, you can grow a $10,000 account into over $250,000 in under ten years

Make your stop loss into a stop profit

Always maintain your stop loss at its original level. Only move it up when the position is well in profit, but don’t trail your stops too close. Give that open position a chance to run.

Give your positions breathing space

Trading can be volatile. If you are after a significant gain give your trade breathing space with a stop-loss that takes account any market volatility

Limit risks but maximize your chance of success

Many traders lose money not by market direction but through unstable financial markets that take out tight stop losses. Consider buying in or at the money options to avoid getting stopped out rather than trading the underlying spot.

12 Ways to Avoid Losing Money in Forex Trading

It is essential to have a rigorous system in place to minimize losing money. Below we list the most critical areas of consideration to help reduce the risk of losing money.

Do your research

Do not dive in and trade if you have no underlying knowledge of the forex markets. Here are the key areas to consider

  • Understand how foreign exchange works, including quotes and what factors affect it.
  • Will you use technical analysis or fundamental analysis?
  • Will you use manual or automated software?
  • Which domestic and foreign currencies or currency pairs will you trade?
  • What hours and which session (European, Asian, US) will you operate?

Use a reliable broker

technical anlysis chart

Only open an account with a broker that is registered with both the CFTC and the NFA. A central issue here is making sure your deposit and funds in an account will be safe.

Make use of a demo account.

Good brokers will have a demo account for you to use before going live. Make full use of this to practice getting familiarity with the broker platform, so order errors do not occur when you go live.

Begin with small trades and pre-plan

If you have had success with a practice account, it is a great start. When going live, critical risk is emotion. Real money is at stake. Trading in a small size will allow you to practice minimizing emotion, which is an unwanted part of trading. Emotional trading occurs when you do not pre-plan your trades.

Protect the downside

Always put a stop loss in place to protect your trading account. Foreign exchange is a fast-moving financial instrument. Unexpected news can move the forex market. If you have a leveraged position without a stop loss, this could wipe out your cash.

Exit trades properly

If you are in a winning position, do not come out too early. If you are in a losing position, do not compound the damage. Try and minimize stress and emotion in your decisions

Be aware of leverage

Leverage should be used with care when you are starting in forex. Brokers can offer up to 50 times of leverage. If you have $5,000 in your account, a $250,000 position results from using 50:1 of leverage.

currency trader at his desk

Do not trade for the wrong reasons

If a currency pair is not moving, do not enter a trade just because you are bored. Have a trading strategy in place for your trade

Do not give up too easily

Getting trades wrong is normal. Even if you are having a bad trading day, try and keep to your daily trading limits and not quit because you are losing.

Maintain accurate account book-keeping

Keep an accurate record of every trade. Having instruments traded, why you entered into a position, and the profit and loss to hand can help you identify mistakes and avoid doing them in the future.

The impact of tax

What is the impact of tax on your FX trading?  Ensure you do not have any unexpected tax bills to pay from your FX trading. A tax specialist can also advise if your trading can be tax efficient.

Trading is a business

You do not become a successful FX trader overnight. Stay organized, set realistic goals, and treat every day as just another day at the office, whether you have winning or losing trades.

Key Takeaway

Can you make money trading forex? The answer is there are no guarantees you will successfully trade Foreign Exchange. However, being organized, disciplined, and having a trading strategy in place will give you the best chance of being one of the 32% of retail traders that do not lose money in the forex market.

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 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.

currency chart analysis

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.

Continuous education is also a necessity for experienced traders. Strategies may need refining, and keeping abreast of market and technological developments is essential.

2. Carefully research your broker

A myriad of online brokers exist. Choosing one can be time-consuming and confusing. Take 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 forex market since price, execution, and the quality of customer service can all make a difference in your trading experience.

3. Select a consistent strategy and goals

Once you have a forex education, find a strategy, and stick with it and 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?

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.

currency pairs on a screen

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.

5. Create an intense work ethic

One of the most crucial forex trading tips is a strong work ethic 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 backtesting your software or exploring new strategies.

fx scalp trader

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.

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.

7. Maintain a trading journal with weekend analysis

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 as you are 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.

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.

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 forex 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.

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.

nick leeson barings

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 rooms, 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, were given their P45s.

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.

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 fx software

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.

forex samurai

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.

master scalper software

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.

Forex Killer Signal Software Review

forex killer software

A signal generator or a program that does all the analytical work in finding trading signals for a chosen currency pair has plenty of merits as part of a trader’s broader trading system. A problem facing traders is when to correctly enter a trade if there is doubt over the strength of a signal.

Automatic and unbiased trading signals from the signal generating software helps eliminate the uncertainty of whether to enter into a trade.

By taking out the analytical work involved in technical analysis, traders can focus on other research areas, including price action and fundamental analysis. One of the best forex pickers is the forex killer.

Forex Killer Is A Signal Generator

As a signal generator, Forex Killer should not be confused with automated trade programs like Odin or Vader, which carry out the actual trading work.

Forex Killer requires a little more from you in this respect and is ideal for traders who want more control over their trades than an automated program that finds trading opportunities, acts on them, and then pulls out when that trade goes south.

To use Forex Killer, you need to have a basic knowledge of the forex market that extends to technical analysis.

Forex Killer works well to spot trends and signals

Dramatic names aside, Forex Killer is a very competent and powerful forex signal software tool designed by a successful forex trader called Andreas Kirsch Berger. Its algorithms, which it uses to trade, are based on several winning trading techniques, all bundled into one trend scouring forex picker.

Forex Killer also makes use of behavioral overlaps finding strong trends from the past and looking for similarities in the current market for a currency pair. Professional traders have always used historical data for trading directions regularly.

Forex Killer Key Features

  • Free lifetime software updates
  • An easy to understand software tool
  • Independent software that is compatible with many trading platforms
  • Works with wide ranging currency pairs
  • Suitable for both new and experienced FX traders

Results

Traders report profitable outcomes using Forex Killer on signals generating a 75% probability and upwards.

An Insight Into Forex Trading Software

An FX trading robot uses a computer program to monitor currencies and does calculations using a pre-programmed algorithm to work out the best time to buy and sell.

computer screen with chart

It takes the guesswork out of trading by instilling statistical expectancy in a system when buying and selling. It helps a trader to identify currencies that meet specific criteria, or when certain currencies perform in a particular way.

There is lots of research available online about forex trading software. Like any other tool, it needs proper research. Trustworthy reviews from authoritative sites and feedback from forex community forums are essential before buying software. To successfully use trading software, you need to fully understand how it works and how best to apply it as part of a strategy.

Risk managing automated software

Most selling points for forex robots revolve around setting them and watching the profits accumulate. In some cases, this may work, but mostly you have to carefully monitor the program to ensure it is adjusting to trends in the market. Expert Advisors offer more control for a trader than the complete automation including trade placement available with forex robots

While it can be very profitable, automated trading software does require a certain amount of intervention to be run effectively.

Backtesting is vital

Backtesting is essential before trading live using automation as part of your trading strategy. Testing for weeks or months is not unusual to accurately test a system offline using both historical data and demo trading for system validation. Used properly, and with the patience to research the best software for your specific forex strategy thoroughly, it can become a powerful tool.

Key thought

Forex trading software can be a crucial addition to a broader trading system. If you read about the psychology of trading, automated software helps take the emotion out of trading. For success, the software must backtest appropriately, and only then should it be considered for live trading.

What is Forex Charting Software?

charting software

Forex charting software is a computer program which helps traders compare the price of a currency pair using different trading indicators. The most popular technical indicators includes moving averages, bollinger bands, fibonacci retracement and relative strength index.

The practice of studying charts and patterns is known as technical analysis. It is used by traders to analyze the market and find indications about the future performance of a currency pair.

Identifying trade signals and price patterns may seem confusing at the beginning. There are excellent online courses, tutorials, and books on technical analysis essential for those learning charting as part of their trading education.

Charting software as part of a trading strategy

Charting software helps traders undertake their technical analysis and is a vital tool in implementing a successful forex trading strategy.

Focusing on one specific trading approach using charts and implementing it into a disciplined strategy is recommended.

Simulated paper trading can be employed to help traders understand how technical trading indicators identified as part of their strategy behave in live markets. From charts, beginner traders may choose to paper trade a simple crossover strategy tracking two moving averages on a currency pair.

Should you invest in charting software?

Most online forex brokers offer free charting software to support your trading activities when you open an account on their forex trading platform. The MetaTrader platform, which is popular with online brokers, offers excellent charting software.

Other platforms may not have competitive charting software. Many traders prefer to use their charting software purchased independently. The following software development companies offer good FX charting software:

  • NinjaTrader
  • eSignal
  • MetaStock
  • ProfitSource

What constitutes good charting software?

Proper technical analysis focused software should have interactive charting features allowing you to work to implement a charting strategy as part of your broader trading system.

Features must include technical indicators, including moving averages and oscillators and also patterns such as shapes and trendlines. Charts will include bar and candlestick charts and opening and closing prices. Time frames vary from a minute up to multi-year intervals. Traders usually employ candlestick charting as it displays the broadest amount of data.

Takeaway thoughts

Before you consider purchasing charting software, make sure it has useful support features, including advice and support for trading on the Forex market, a possibility to ask questions about using the software’s features, and technical support.

What Are Forex Robots & How Do They Work?

Forex Trading Using Automation

There is a myriad of forex exchange trading strategies and styles. Traders of differing levels of experience will have different ways of working. There is a divide between those who want to trade manually and others who wish to trade using automation.

Traders who go down the root of automation will need to undertake plenty of research to find automated software that matches their trading style and correctly carries out trades according to the strategy.

What is A Forex Robot?

To undertake automated trading, a trader will need to purchase or develop a trading robot. A forex robot is computer software that uses technical signals to establish if a currency pair should be bought or sold at a point in time.

As part of an overall FX strategy, a robot helps take away the emotion out of trading. Emotion can sometimes result in traders opening trades that are not based on logical decisions and out of line with an overall strategy. Psychology can amplify in fast or volatile markets or the temptation to trade quickly after a losing trade.

How Do Forex Robots Work?

A significant number of forex trading robots build using the Metaquotes, MQL scripting language used exclusively with Metatrader Software. Metatrader is a leading forex trading platform used by many online brokers through which their clients trade. The ability to integrate a robot with MetaTrader allows the automatic generating of trading signals and placing orders according to the trade indicators.

Some robots are programmed to scan and interpret charts. Additionally, they can program with specific parameters needed to make a trading decision; using trading signals, they decide when it is appropriate to trade or to hold back.

Forex robots work best when employed with a specific currency pair and use a defined range or time frame as part of an overall strategy. They typically design to make a certain number of pips within a trading range. They can identify profitable trades even in unstable markets, which for a human has an unclear trading direction. They can also follow a clear trend to maximize profits.

Forex Robots: Research is Essential

It is essential when researching robot software to look for authoritative online testimonials and reviews. There are proficient forex robots available on the market, but extensive research needs undertaking to ensure implementing the software as part of your trading style or strategy will be successful. Once purchased, testing robot software on a demo account is vital to establishing a trading system’s statistical expectancy.

Forex robots have, at times, received bad publicity due to their association with promises of guaranteed profits which have not materialized when used to trade in live markets. There have also been problems with robot software providers selling automated software with a money-back guarantee and disappearing just a few months later.

Robot Effectiveness

Traders using robots should never entirely depend on them to undertake the full range of trading activity. Forex robots can carry out sophisticated tasks, but their functionality can be limited to how they were initially programmed. Forex trading still requires extensive human observations and research and digesting current news and economic developments that robots cannot do.

A criticism of forex robots is they generate profits over the short term, but their performance over the long term is more mixed. It is primarily because they are automated to move within a specific range and follow trends. As a result, sudden price movements can take out profits made over the short term.

Develop Your Own Forex Robot

Technically capable traders may consider building out their forex robot. The advantage of this is developing an automated system based on their own technical trading rules. Demo accounts that use Metatrader allow experimentation with MQL scripts, and after backtesting, it may be possible to develop a capable robot. A simple example of a robot could be one designed for GBP USD, where a trader has a strategy for take-profits and stop-losses following a technical break-out. A robot could be programmed with rules to place trades automatically rather than the trader having to place orders manually.

Final Takeaway

It is essential to remember that forex trading robots work at their best identifying a narrow set of parameters to which they program. They are a useful addition to a defined trading strategy but should not be used on their own as a stand-alone trading system.

In Forex Trading You Need To Make Money Fast

Foreign Exchange is the world’s fastest-moving financial instrument. It is more volatile than equities, bonds, or commodities.

trader on a forex floor

The underlying Foreign Exchange spot market moves first when any news or economic data comes out. It has a knock-on effect as the derivatives market (derived from the underlying spot) starts to react to the underlying spot rate.

If you are a market participant in Foreign Exchange, whether your a Spot Trader, a Derivatives Trader, or a Sales Person, the brutal volatility of Forex burns your metabolism, it is punishing working from seven until five (the London Trading Day) every day.
Forex a short window of opportunity.

Forex Burns Your Metabolism Fast!

Due to the enormous pressure, a career in Forex is a short one, and you only have a short window of opportunity to make your money. It is not often you see forty-five or fifty-year-old Forex Traders still active on the trading floors of large Investment Banks. They may have moved off the floor into higher managerial positions or moved into slower-paced areas within Banking. It is also highly likely having made their fortune they are doing something else.

Forex: Get Ready For A Roller Coaster Ride

If you want to make money quickly, a career in Forex may be for you, but be prepared to take the rough with the smooth and be in for a roller coaster ride. Be ready to work hard, and if financial rewards do not come your way quickly, do not hang around, move into an area where you can enjoy a longer career.