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Take the Easy Path to Forex Trading

The key to successful trading, if you are new to Forex, is having the basics correctly in place before trading with real money in live market conditions.

You must be well prepared to trade Forex as it is a volatile financial instrument for trading, affected by economic data, geopolitical events and major news announcements. Adding factors like leverage to the volatility, means an inexperienced trader without a trading plan has a reduced chance of success.

In this short article, we identify five steps that you can take, as a newcomer, allowing you to improve your chances of success from the outset.

Read on to find out how you can take the easy path to Forex trading!

1. Which Strategy Should I Consider?

Before you start trading Forex, it is essential to decide upon a strategy and not just enter the market blindly. Considerations should include:

Market analysis

Will you be more comfortable with technical analysis, fundamental analysis, or a combination of both?

Technical analysis is the study of charts and patterns
Fundamental analysis involves analyzing economic indicators and news events,

currency chart showing volatile charts and patterns

Trading style

Do you want to trade like a day trader, swing trader, or a position trader who takes long term positions? Day trading involves executing multiple trades every day; swing trading is holding trades for days or weeks and being a position trader means infrequent trade placement, instead focusing on trends over months and years.

Capital Availability

The funds you have available to invest will influence your strategy. Some strategies, like position trading require significant capital due to the need to hold a position long term with wide stop-losses. Other strategies like day-trading can be executed with a smaller budget, perhaps with low leverage as the aim is to make an overall daily profit with small profits on every trade.

2. What Currency Pair Are You Going To Trade?

Choosing which currency pair to trade is an important step on the easy path to Forex trading.

Some currency pairs like Cable (GBP/USD) are both volatile and liquid. They are well-suited for day traders looking for intraday profits as there is sufficient daily movement and there is good liquidity meaning tighter spreads and less slippage, which affects the paper thin profit margins of short-term traders.

Other currency pairs like USD/JPY are noted for being more stable. They have an inclination to follow long term trends which are suitable for position traders placing long-term strategies.

Whether it is GBP/USD, USD/JPY or another currency pair, it is important to follow them ahead of live trading until you have a good feel for price action and understand how they react in certain market conditions and to your selected technical indicators.

You will need to use charting software as part of your overall FX strategy, either a solution that is provided on your broker platform, or a stand-alone charting solution.

3. The Importance of Technical Analysis and Charting Software

Technical analysis is a vital skill to learn as a Forex trader. Presented visually, in the form of line, bars and candlesticks, charts supply price data on what is happening to a specific currency pair, and in most instances, the fundamentals reflect in the charts.

A widely held view is that a currency trader is only as good as the charting software they employ as part of a trading system. There are excellent stand-alone charting software tools on the market, and many can also plug straight into your brokers’ electronic trader platform, allowing trading placement straight from charts, with straight through broker trade execution.

Charting software is available to suit all trading styles and is an integral reason for the growth in popularity of online Forex trading. From manual charting software, to tools where you can code your own indicators and algorithms, the choice can appear overwhelming.

Good charting software includes:

Trendspider, an AI-powered technical analysis tool to efficiently navigate and trade on the market
TradingView, which is one of the best cloud-based charting software for access from anywhere
eSignal is a software tool that uses multiple data vendors to give some of the best historical data analysis for strategy testing

For more information on the best technical analysis software including TrendSpider and TradingView, we provide more insight in our detailed guide on the best Forex charting software for traders, researched according to strict criteria to provide the best options out there for all trading styles.

An overview video of technical analysis – Charting patterns for beginners

4. Practice With A Demo Account

As a beginner, ahead of trading live, you should test prospective strategies in a simulated trading environment. The top online Forex brokers will allow you to open a demo account, without committing to trade through a live brokerage capital account.

Trading in a simulated environment is called forward testing. It allows you to trade safely any strategy that you have backtested using the historical data available through the backtester tool of your chosen charting solution. By forward testing a strategy through multiple trades that have already back tested successfully with historical data provides confirmation of the statistical expectancy ahead of trading live with real money at risk.

5. Ensure A Smooth Transition To Live Trading

The final step on your easy path to Forex trading is a smooth transition to live trading. Having successfully backtested with charting software, and forward tested your strategy on a demo account, there is the temptation to dive head first into live trading.

Good practice, however is to start small. Begin trading with a smaller trading size than you intended from the outset. It will help reduce psychological pressure and get you used to trading with real money as there will be an emotional difference, where the fear of losing real money can affect your decision making.

Try and also replicated the demo conditions as closely as possible in your live account, particularly risk management around tight stop-losses and keeping to the correct trading frequency by not over-trading.

a dial from low risk to high risk around risk management

Our Takeaway

In our five steps on your easy path to Forex trading, we identify that analysis will always be an essential element of your Forex trading strategy. If technical analysis is your chosen route then integrate the best charting software you can find as:

The quality of data not only affects backtesting but has a knock on effect on forward testing.
A greater likelihood of low latency when using direct broker trade execution straight from your chart.

Related Resources

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.

Trading Forex in 5 Steps: The Dummies Guide

Forex is one of the fastest moving financial instruments meaning the Forex market is volatile and unpredictable and a daunting place if you do not know what you are doing.

As a beginner, you must accept that you will need to learn the basics. Here are the five steps required to start trading the Forex markets proficiently in our Axcess FX Forex trading for dummies guide.

1. Get a Basic Forex Education

Learn the basics. There are plenty of online guides, Forex tutorials, and courses available for those starting forex trading. Learn to trade resources are available online including Babypips.com, Investopedia and thebalance.com. Forex.com has excellent educational tools to help you trade, CMC Markets provides a highly recommended guide for beginners and Forex Mentor Pro offers a full suite of tools including live trading sessions to teach beginners how to become a profitable trader at an affordable price.

At the start, you need to understand the fundamentals of the Forex market, how Forex quotes work, and the major market participants.

Forex market fundamentals

Currencies like stocks can be freely traded. The key difference is currencies trade Over The Counter (OTC) between a buyer and seller and not on an exchange, like the NYSE as stocks do.

The Forex market trades around the clock, 24/5, throughout three major trading sessions: the European, U.S, and Asian session, centered around London, New York, and Tokyo. All three trading sessions overlap, providing 24/5 coverage from the Sunday evening Asian trading session until the U.S. trading session’s close on the following Friday evening. The London and New York trading session is the most liquid where spreads are the narrowest.

world time zone clocks for London, New York and Tokyo

How do Forex quotes work?

You cannot trade one currency in isolation; it needs pairing with another currency, creating a ‘currency pair.’ A currency quote reflects the first currency’s price in terms of the second currency in the pair. If GBP/USD (sterling versus us dollar, also known as Cable) is trading at 1.3500, it means that one GBP will purchase 1.3500 USD.

Currency pairs quote down to four decimal places. The final decimal represents the smallest increment that a currency can change in price and is known as one pip. Retaking our GBP/USD example, if the currency pair increases from 1.3500 to 1.3550, it means a rise of 50 pips, and a Forex trader will express the amount of profit (or loss) in terms of pips.

major currency pair quotes on an exchange

Who are the primary Forex market participants?

Before the advent of the internet, the foreign exchange market was dominated by predominantly institutional participants such as major banks, large international companies, central banks, and investment funds.

With the advance in technology, the retail investor has now joined the big players in the FX markets as online Forex brokers provide low-cost market access with tight spreads through their trading platforms. Retail foreign exchange is continuing to grow as small Forex traders take advantage of trading anywhere they have a device, whether PC, tablet, or mobile with internet connectivity.

forex trading online through a mobile device

2. Raise Your Knowledge to The Next Level

This second step should start to include learning about technical and fundamental analysis and an understanding of both manual and automated Forex software, including Expert Advisors and charting tools and packages.

This step also includes researching different types of strategies as the aim is to build your Forex education to a level where you can start to mold a trading style that plays to your strengths.

There are four broad types of Forex trading strategies, which are position trading, swing trading, day trading, and scalping. Position trading is taking a longer-term strategic currency position. Simultaneously, scalping is the shortest strategy with currency trades sometimes opened for just seconds to take advantage of only a few pips of profit.

Choosing a preferred strategy may come down to your character, with an analytical thinker choosing to use fundamentals as a basis for taking out a long-term view using position trading.

What type of trading style and psychology will you use

To gain all the essential knowledge to start trading, it is vital to watch tutorials, participate in online courses, and follow trading forums. Forums have developed useful ways of tutoring about the basics of currency trading for dummies and showing beginners instant trading results. Forex Mentor Pro has an excellent active member forum that you get access to when you sign up for an affordable membership and learn how to trade profitably. Forex Guy also has a good forum and Second Skies Forex offer a 12-chapter trading Forex for dummies course.

Particularly, when looking at forums, try and pay close attention to what successful Forex traders are doing and what you can take from their strategies and techniques relevant to you and from which you can mold a system around.

Below is an excellent video with a full online Forex trading course that lasts 2 and half hours. It is free to watch on YouTube and with over 5 million views over the last year, it is highly recommended.

3. Open An Account With An Online Broker

To trade Foreign Exchange, you will need an online trading account provided by a reputable brokerage. Any online broker selected should include the following considerations:

Consider an ECN broker

Ensure that the broker uses ECN (electronic communications networks) to give you direct access to other currency market participants. ECN brokers match trades between buyers and sellers and do not trade against their clients, instead passing orders to liquidity providers. ECN brokers provide the tightest spreads and only charge a fixed commission per Forex trade. Tight spreads are particularly relevant if you are adopting a scalping strategy.

Your chosen broker should use Metatrader

Chose an online broker that uses the MetaTrader 4 Forex trading platform (MT4). MT4 licenses to Forex brokerages who then provide the software to their retail traders. It is a flexible platform built on the MQL coding language employed by most Forex trading software that you may choose to use as part of your more overall trading strategy. It may include enhanced technical analysis tools or an Expert Advisor as part of an automated or semi-automated trading setup. MT4 Brokers include Forex.com, IG and Oanda, XM and Pepperstone.

Only use a regulated broker

Not only are tight spreads, fair commissions, excellent customer service, and MT4 capability important when choosing a broker, it is also very important to ensure the broker is fully regulated.

If you are a U.S. based Forex trader, you are required to use a broker that holds full registration with the CFTC (Commodities and Futures Trading Commission). This highly respected regulatory framework safeguards investors’ interests by ensuring a broker maintains complete records, reports, and disclosure. To become CFTC registered, a broker needs to keep a substantial holding deposit with the regulator, meaning not all brokers can offer their services to U.S. currency traders. Investopedia has an excellent resource for comparing Forex brokers including those considered the best for US Traders.

For non U.S. based investors, again it is vital to make sure that the broker is reputable. The best forex brokers have to be regulated and depending where you live will decide the relevant financial authority. For example, in the UK, this is the FCA, in Australia, the ASIC and in Dubai, the DFSA.

Finally, a good demo account is also desirable, as that is an integral part of becoming a proficient Forex trader, and we cover this next.

4. Start Using A Demo Account to Dial In Your Strategy

As a novice trader, the first thing you should do is trade Forex using a demo account provided by your online Forex broker.

A demo account works in the same way as trading real money on your brokerage capital account. It will allow you to trade a theoretical amount in a live environment without putting your capital at risk.

Most online brokers do offer a degree of training on their platforms, including charting tools for technical analysis which is well worth going through as it will give you an idea of what you should be looking for on charts to complement your system for trading in Forex.

Demo accounts additionally serve to familiarize yourself with a broker’s electronic trading platform. When you trade with real money, you must be proficient with the order entry system, so you do not incorrectly enter a Forex trade and lose money.

forex trader analyzing a new trading system using a demo account

5. Integrate Forex Trading Software to Complete Your Trading Style

Once you are operating with a demo account, it will be essential to have at the very least a charting package. Some of the more basic charting software tools are free, and there is an annual subscription for others. It is best, to begin with, the platform’s free version provided to get a feel for how they work. You can then choose more advanced charting software packages such as TradingView, TrendSpider or Esignal offered on a subscription basis.

Automated software can also be a great option as part of a broader trading system. Using automated trading takes the emotion out of trading. You can use a pre-programmed Expert Advisor (EA) to identify Forex trends by following a set of rules and which then recommends trades based on any signal identified.

Some EAs, also known as Forex robots, will also place any identified trade directly onto the currency market without the need for human intervention. Automated software allows you to place trades automatically, meaning you do not have to be at your desk for long hours. The robot does the heavy lifting. Many professional Forex traders do, however, prefer to maintain an element of control by only using EAs to identify trades and then choosing whether to act upon them or not.

Read more about Forex robots in our detailed guide on how to find a profitable Forex robot to accompany your trading strategy.

a forex robot pointing at a chart on a screen

Go Live

Now you are ready to go live and start trading with real money. At this stage start with small trades and adhere to two principles:

Risk management

Make sure your money management system is strict, and do not trade with more than 1% of your capital. Combine this and always use a stop loss to avoid any significant losses.

Statistical Expectancy

Think about your overall trading strategy and statistical expectancy and not about individual trades. The aim over the long term is to trade using probability, and if you know your trades have a good chance of making a profit over the long run, individual trades are irrelevant.

We have two further written resources that provide more related reading to this article:

How to navigate to the journey to an expert trader

10 useful tips on how to trade Forex profitably.

Written by Chris Gillie

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?

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.

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

image of a chart and money showing profit

Six 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.

1. 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.

2. 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

3. 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

4. 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.

5. 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

6. 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.

1. 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?

forex trader updating his trading journal with research notes

2. Use a reliable broker

Only open an account with a CFTC and NFA registered broker if you are US-based to ensure your deposit and funds in an account are safe. Interactive Investors, Oanda, TD Ameritrade, IG USA and Forex.com are CFTC and NFA regulated brokers.

For non-US investors, use reputable Forex Brokers like XM, Pepperstone or IC markets that are registered with your relevant financial authority, for example, the FCA in the UK, or ASIC in Australia.

3. 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.

4. Begin with small trades and pre-plan

If you have had success with a practice account, it is a great start. When going live, a critical risk is emotion as 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.

5. 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 and if you have a leveraged position without a stop loss, this could wipe out your cash.

6. 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.

7. 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.

8. 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.

9. 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.

a forex trader has his head in hands in despair

10. 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.

11. 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.

12. 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. For further relevant articles we have written further tips on how to trade forex profitably and how to maintain focus when trading.

Written by Chris Gillie

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.

10 top Forex trading tips and tricks illustration

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.

an instructor giving a Forex trading course to a group in a classroom

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 for US investors such as Forex.com, TD Ameritrade, Interactive Brokers, Oanda or IG USA.

If you are a non-US investor there are a number of excellent broker platforms including XM, Pepperstone and IC Markets.

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.

a disciplined trader looking at stop loss levels on a chart on a screen

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.

A Forex trader with head in hands realizes he will need to learn from a trading mistake

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.

an example trading journal with space to note down support and resistant levels and target levels for each trade.

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.

charting software on a screen showing entry and exit points on a Forex trade

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

Simulated Forex Trading: Why It Is Vital For Traders

Simulated Forex trading, also known as paper trading or demo trading, refers to a risk-free environment where Forex traders can test strategies, study market dynamics, and navigate trading platforms with no risk of incurring real financial losses.

Here at Axcess FX, we have written this article to underline why, if you trade, it is vital to simulate all aspects of your Forex system, from strategy to execution, before trading with real money. A simulated environment acts as such a safeguard.

Read on to learn about the merits of simulated Forex trading and why it is crucial for traders of all levels.

Understanding Simulated Forex Trading

A simulated trading environment acts as a bridge, enabling traders to transition from theoretical knowledge to practical application. Seven key advantages of simulated trading compared to a live trading environment are highlighted here in Table 1:

Advantages Of Simulated Trading Over Live Trading	Simulated Trading	Live Trading
1. Fosters a deep understanding of market dynamics with no risk	✔	✖
2. Engagement with real market data without financial exposure	✔	✖
3. Allows for error and learning without financial repercussions	✔	✖
4. Builds confidence in a trading system including trade execution & decision-making	✔	✖
5. Develop, test and refine trading strategies in a secure and risk-averse setting	✔	✖
6. Analyze and learn from trading results without actual financial implications	✔	✖
7. Learn the functionalities of a trading platform before using real money	✔	✖

Table 1.

Most reputable online brokers offer simulated Forex trading, each with a varying degree of features and user interfaces. We will cover this in the section about which platforms provide the best simulated Forex trading.

The Benefits Of Simulated Trading For Traders: In-Depth

In this section we will cover in detail, each of the seven benefits of demo trading identified in table 1.

Build a deeper understanding of market dynamics without financial risk

Simulated trading platforms allow traders to encounter market dynamics where currency movements, affected by geopolitical events and macroeconomic indicators, can be observed. Without the threat of real financial losses, traders can focus purely on market education including:

Developing a real sense of market trends and patterns
Navigation of varying market conditions and scenarios
Understanding volatility and how to manage it effectively

Engage with real market data without exposure to your capital

Although actual capital is not at risk, simulated Forex trading is not just a hypothetical scenario; it is based on real-time market data.

Forex traders are still engaging with live market conditions and, witnessing first-hand how various currency pairs move in response to actual economic data and news events. Being an FX market participant without the risk of capital exposure still provides a genuine feel of the market’s nuances.

Allows for errors and learning due to the risk-free environment

Mistakes are an inevitable aspect of any learning journey. Unfortunately, mistakes in financial trading have consequences, namely a fall in capital on your trading account.

Within the safety of a simulated environment, currency traders can make errors without catastrophic consequences; instead, the mistake turns into a lesson that can be learned from. It nurtures growth, resilience, and a deeper understanding of trading.

Builds confidence in your trading system, including trade execution and decision-making

Continual practice in a simulated setting will solidify a trader’s conviction in their trading system. As they continually apply, test, and adjust their approach in a demo environment, confidence in executing trades and making timely decisions will grow.

Trader confidence, honed risk-free, is a significant advantage when transitioning from simulated to live trading. Compare this to a newbie trader throwing themselves straight into the pressure of a real money-at-stake environment with no practice. Indeed, the confidence derived from successful simulated trading:

Reduces the likelihood of impulsive and emotionally driven decisions in the real market
Prepares traders mentally and strategically for live market scenarios

illustration showing paper trading can be used by both beginner and experienced traders

Enables the development, testing and refining of trade strategies in a risk-averse setting

A simulated trading platform acts as a sandbox for Forex traders. Within its confines, you can:

Develop new trading strategies
Test and validate the effectiveness of strategies
Make necessary adjustments and refinements based on outcomes
Ensure that the strategy is robust and applicable to real market conditions

By optimizing their approach without financial setbacks, FX traders can ensure when trading with real money, strategies are well-calibrated.

Analyze and learn from trading results without financial implications

Post-trade analysis is a cornerstone of effective trading. In a simulated trading environment, a trader can dissect their performance, understanding both trade successes and failures. Without the emotional strain of real money at risk, this introspection is more objective and constructive, setting the stage for continual improvement.

a forex trader analyzing trading results

Permits familiarization with trading platforms and tools

Every trading platform has its unique layout, tools, and features. Etoro has its own proprietary trading platform which is different to Interactive Brokers, which in turn is different to Forex.com. It is vital to master your chosen platform to maximize trading efficiency. Forex demo-trading accounts serve as a testing ground, giving Forex traders the time and opportunity to familiarize, practice, and master platform-specific functionalities; ensuring they are platform experts ahead of trading a live FX market.

an online broker platform in simulated trading mode

What platforms offer the best simulated Forex trading?

Most reputable online trading platforms cater to the needs of traders looking for simulated trading functionality. Some of the notable ones include:

Etoro: A broker with its own propriety Forex trading platform that provides demo trading accounts
MetaTrader 4: A platform used by many online brokers inside and outside the U.S. and renowned for its user-friendly interface and comprehensive analytical tools
Interactive Brokers has a proprietary platform called TraderWorkStation (TWS) with a simulated trading environment.
TradingView: Known for its wide variety of technical analysis tools and social networking capabilities

Each platform comes with its unique features and capabilities, catering to different needs. For more details on Forex trading software including platforms, we have a written a guide here. Below is a useful video on how to paper trade on TradingView to provide further insight.

Drawbacks and Criticisms

Despite the obvious benefits we have identified, simulated Forex trading, it is not without its criticisms and drawbacks.

The lack of emotional involvement in a simulated environment can be a drawback and may:

Lead to a lack of accountability for trading decisions
Result in a skewed perception of trading risk and reward

Successful trading in the confines of a demo trading environment may result in overconfidence in live trading due to:

Success in a risk-free environment not necessarily translating to live trading success
Possible neglect of risk management strategies due to simulated success

There are limitations in simulating real market conditions and include:

An inability to replicate the psychological and emotional pressures of live currency trading
Potential discrepancies in data and market conditions between the simulated and live environments

A very good resource is available at Investopedia that further highlights not just the pros but also the cons of paper trading.

The Difference Between Backtesting and Simulated Forex Trading

Another type of strategy affirmation is backtesting, and like simulated trading is an important verification process used by traders before deploying a new Forex strategy in live trading.

Whereas simulated trading, is trading a non-live version of the current Forex market, backtesting is the use of historical price data to test a strategy and see how it would have worked in past market conditions. The two however, do work hand-in-hand.

The MT4 and MT5 (Meta Trader) based platform used by many online brokers has their own strategy tester that can be used for backtesting with historical data. It has a 90% modeling accuracy and although useful is not as reliable as the 99% accuracy available through external backtesting software that interprets data, such as Birt’s Tick Data suite.

Many traders will use both testing methods. They will put a prospective Forex strategy through a rigorous backtesting trial to see if it is profitable. They can then undertake further diagnostics by putting the strategy through it’s paces in a simulated market environment using live current market prices. The trader can then adjust and improve the performance of the strategy, all in a safe no risk environment.

A notable concern with backtesting is overfitting. Overfitting happens when a strategy is fine-tuned to perfection on historical data but fails to replicate those outcomes in real-world markets.

We have an in-depth written resource here at Axcess FX about backtesting as part of creating a profitable and reliable automated trading strategy.

How To Transition From Simulated Trading To Live Trading Effectively

We have identified four areas you should focus on to ensure a smooth transition from simulated to live trading. If you can adhere to them, you have given yourself every chance of making real money.

Gradually introduce real capital into the mix by starting with a smaller than normal trade size. It will allow you to open the door to live trading while maintaining an even more conservative risk management strategy than you are used to.
Continue to analyze and learn from a live trading experience instead of reducing focus on this important part of a robust trading system.
Be mindful of the psychological and emotional differences between simulated and live trading. It may not be evident at first, but if you start entering and exiting trades without adhering to the rules of your tested strategy and risk management process then take a step back.
Ensure all Forex trading strategies tested in a simulated environment are adaptable, with room for adjustment and not overfitted before you start trading live.

trading risk illustration with a dial at low risk

Conclusion

We hope that this article has convinced you of the merits of simulated Forex trading before moving into a live trading environment.

It is all too easy, especially for newcomers, in a desire to start making money quickly, not to build a reliable Forex trading system. Simulated trading is your safeguard to jumping the gun. If you combine it with backtesting you will be well placed for a chance at success.

Related Resources

Written by Chris Gillie

What Are Forex Robots & How Do They Work?

There is a myriad of Forex trading strategies and styles. Traders of differing levels, from beginners to professionals, 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 path 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 their strategy.

In this short article, we will explain what Forex robots are, how they work and how to identify the best Forex robot.

What is A Forex Robot?

To undertake fully automated trading, a trader will need to purchase or develop an automated Forex trading robot. A Forex trading bot, also known as an Expert Advisor or Forex EA, 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 FX trading. Emotions can sometimes result in currency traders opening trades that are not based on logical decisions or market analysis and out of line with an overall trading system. Psychology can amplify in fast or volatile Forex markets with the temptation to trade quickly.

The Mechanics: How Do Forex Robots Work?

Many Forex trading robots are built 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, including Forex.com and Oanda, that are approved brokers for U.S. residents and XM Group and Pepperstone, brokers for non-U.S. residents.

The ability to integrate a robot with MetaTrader allows for the automatic generation of trading signals and order placement according to the trade indicators.

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

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

In Practice: Do Forex Robots Work?

Forex trading bots can be a useful tool to accompany your trading strategy, but it is essential to employ an EA correctly for full effectiveness.

Traders using robots should never entirely depend on them to undertake their full range of trading activity. Expert Advisors 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 Forex robots cannot do.

a forex trader researching trading charts and economic developments

Are Forex robots profitable?

Expert Advisors can generate strong profits by following short term trends within specific ranges and then identify the clearest signals on which to trade.

Long term trends, though, that can see Forex market conditions suddenly affected by adverse price movements are harder for robots to follow with the same degree of success; although more sophisticated robots with dynamic features are beginning to address this issue.

With how much can I start Forex trading by robot?

Forex EAs typically work with brokers that employ the MetaTrader platform. It is the minimum trade size specified by a Forex broker that drives the minimum size that can be placed for order execution using a Forex trade robot.

For example, Forex.com requires just $100 to open a Forex trading account and then has a minimum trade size of just 1000 units per currency according to the Forex.com website.

A Key Consideration Before Buying A Robot for Trading Forex

Ahead of buying a robot for Forex trading, perhaps the most crucial consideration is whether the Forex robot can trade profitably as part of your broader trading strategy.

The only way of really knowing is by researching for the right EA and then backtesting specific settings and demo trading before deploying it in a real-money environment. Most reputable robot developers like Forex Diamond, will offer a 30 day or 60-day money-back guarantee giving you time to test thoroughly.

An excellent video about automated & manual trading and how you can use a hybrid of both in a trading system

Identifying The Best Robots: Research is Essential

We have undertaken extensive research on the most important considerations to identify solid Forex robots. Through our detailed analysis we have created a guide of the best Forex robots on the market.

The guide provides full details, but as a concise summary:

First and foremost, you should always look for verified performance through real trading accounts. A reputable Forex robot developer will make this available on either Myfxbook or FX Blue.

It is essential when researching EA software to look for authoritative online testimonials and user reviews. Online trader reviews are also essential to determine the general sentiment for a particular robot and if the Forex robot trades profitably to improve winning odds. Dedicated review sites include Forex Peace Army (FPA).

Forex trading forums can also be a good source of feedback. MT5 Forum has a high degree of relevance for automated forex software. MT5 is the Metatrader platform forum, and as the majority of Expert Advisors are developed using the MQL coding language, you will find many references to robots.

Not only does extensive research need to be undertaken before deciding which automated software to use as part of your trading style or strategy. Once purchased, testing the software is vital to establishing statistical expectancy as part of your overall trading system. Testing can be undertaken both through theoretical trading using a demo account and backtesting.

Backtesting

Although backtests are available from a robot’s developer, there are reasons why you should do your own backtests ahead of any live trading.

Not many developers use modeling with enough accuracy to tell whether a Forex robot will perform well as part of your strategy. If you trade USD/JPY and are looking to make a nine pip profit with a six pip stop loss on every trade, if developer backtests do not include individual tick data, real-time spreads, commissions, or slippage, then automated software could actually lose money for you.

Many software developers use the Metatrader Strategy Tester, and as it only uses random bar graph data from the trading day, it is only considered 90% accurate. Developers that provide backtesting with 99.9% accuracy are using historical data with tools like Birt’s Tick Data Suite and offer much more credibility; however, if you are using a robot according to your strategy, you must still backtest according to strict adjustable parameters within the robot algorithms, to align any automated Forex to your trading system.

Here is a screenshot of a backtest employing 99.9% modeling accuracy:

strategy tester report with modelling quality at 99.90% accuracy

What is the Best Forex Trading Robot?

Our detailed research on understanding the role of Forex robots values low drawdowns as the most important criteria for choosing a Forex EA. A robot algorithm generally employing a lower drawdown has a less volatile strategy and should give more consistent monthly performance.

Forex Diamond is a robot with one of the consistently low drawdown that we have researched. We have undertaken a full review of Forex Diamond to complement backtesting and full performance results at the Forex Diamond official site.

The other EA we rate very highly at Axcess FX is FX Stabilizer. It is one of the top 20 robots we have identified according to our ranking criteria. Its drawdown is within the parameters of 10% to 40% that is considered safe for an EA, but it is the sheer length of time of 3549 days that it has been trading profitably on a verified real trading account that is so impressive. You can see all the performance date for FX Stabilizer in our detailed top 20 Forex Robots study.

Fx Stabilizer one of the best performing FX Software products

Develop Your Own Forex Robot

Technically capable traders may consider building out their own Forex robot. The advantage of this is developing an automated system based on their own technical trading rules. Demo accounts that use MetaTrader allow for 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 making a manual order placement.

Final Takeaway

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

Forex robots have, at times, received bad publicity due to their association with promises of guaranteed profits that have not materialized when used to trade in live markets. If, however, you do your research and undertake your backtesting, there are enough proficient robots out there to make a difference to your trading.

Written by Chris Gillie

Our Review of Forex Megadroid (Updated for 2026)

Forex Megadroid is a fully automated Forex trading robot utilizing AI technology.

The robot developer claims the Forex robot will forecast with 95% accuracy by optimizing the correct time to enter the Forex market.

Please read this comprehensive review to understand how the robot works, the strategy employed, performance and trader feedback. In addition to this review, additional information is also available at the robot’s official site where you can further learn how Forex Megadroid can help with your trading.

How does Forex Megadroid work?

The software uses artificial intelligence and an advanced set of algorithms called Reverse Correlated Time and Price Analysis or RCTPA technology, which helps determine the market trend.

Specifically, the algorithm looks at trends that are the most likely to result in a profit by looking at specific timeframes that will take place over the next 2-4 hours. Whereas most robots look at past data to place trades, the Megadroid looks at future data to place trades.

What strategy does it employ?

The Megadroid is a scalping robot that trades EURUSD targeting small profits on each trade to provide its user with a 20% profit every month. To maximize profits, it requires low bid/offer spreads, small commissions, and rapid execution.

Using an ECN broker to achieve these low cost and fast execution times is essential to get the best out of Forex Megadroid as it is with other scalping automated trading systems.

Forex Megadroid only trades EURUSD as it is a very liquid and a relatively stable currency pair. More volatile currency pairs would be less effective with the robot’s strategy of employing fixed stops rather than trailing stop losses.

Even with EURUSD, spikes in volatility may require risk setting adjustments to avoid potentially winning trades getting stopped out.

Most Forex robots tend to have their best results over short time frames in optimal Forex markets. The developers of Forex Megadroid claim it works profitably for EURUSD under any market environments and conditions, so this means in both a trending and ranging foreign exchange market.

They advise that it can configure short and long-term strategies and settings can be adjusted based on your Forex trading system. To find out more or purchase the Megadroid, visit the official website here

How good is the performance?

The Expert Advisor was first developed in July 2007 as an algorithmic Forex trading software program by its developers, two Forex traders, John Grace and Albert Perrie. It was publicly launched as a product for other traders in February 2010, since when there has been continuous performance data.

Cumulative performance from 2009 to the end of 2025 as we are updating this review is over 15,000% from over 6000 trading days. The performance is impressive, but do note that these performance results listed on the official website are from backtesting and do not include real live account bid-offer spreads, commission, or tick data. As Megadroid is a scalper, any deviance from low commissions and spreads can dramatically alter performance.

If you would like to find out more after watching this video please visit the Forex Megadroid official website

A review of the pros and cons of using Forex Megadroid

Advantages that can be of benefit to a trader using Megadroid include:

The software provides the trader with settings that can adjust risk tolerance from perceived lower risk to high-risk levels, including stop-loss settings and automatic money management.
The Forex Megadroid is straightforward to install, and installation takes less than 10 minutes with the provided set up instruction and pre-set files.
Unlike much Forex trading software, Forex Megadroid does not need any other external software installations to aid in its work as its package already has everything required.
The software has shown to be reliable over time with the Megadroid over 11 years old.

There are two disadvantages of the Forex Megadroid:

The software can get a touch slow during automated Forex trading.
The Forex Megadroid is designed as a plug and play robot to cater to both beginner and experienced traders. The reality is, as with most Forex robots, it is better to use the EA as part of a broader trading strategy, typically associated with more seasoned traders.

Key features and cost

Forex Megadroid has a host of features and a low starting cost without the hidden monthly fees of some Forex software products. Here are the main features:

One-off purchase of $67
60-day moneyback guarantee by Clickbank
Free lifetime updates
Fully automated software
Compatible with MetaTrader 4
One license included
Full customer support
Stealth mode

Purchasing the Megadroid

The Megadroid is available to purchase using the services of Clickbank, the well-known platform that provides a product marketplace and secure payment processing.

For buyers, Clickbank delivers comfort in the form of a moneyback guarantee which is for a full 60 days.

Such a money-back guarantee would be less forthcoming if the robot was purchased directly from the EAs developers.

Clickbank further provides the percentage of refunds requested by customers for a product, providing buyers with useful verification if a forex robot is working well with a low refund rate preferable.

Payment for the Megadroid can be with either a credit card or via Paypal at the developer’s website with checkout and processing provided by Clickbank.

Setting up the Forex Megadroid

Forex Megadroid is straightforward to install with the provided set up instruction, and pre-set files and installation takes less than 10 minutes. It works with online Forex brokers that offer the MetaTrader 4 trading platform to traders.

As the robot only trades EUR USD, the settings are less complicated than for other FX robots, but you should be aware of different parameters:

The default parameters on the Megadroid are a risk level of 10% and a medium aggressiveness setting.

The risk level setting controls where your stop losses are positioned. The aggressiveness setting relates to how many trades you want the robot to place on the Forex market. The default settings adhere to the golden Forex trader ration of 3:1 risk-reward.

Users of the robot users tend to crank up the aggressiveness setting. The default may see the Megadroid place as few one or two trades per week as it is a very conservative robot employing strict criteria to trade placement to increase the chance of profitability.

Lot size settings allow for the adjustment of the size and leverage of the trade placement. Traders can combine the trade size with aggressiveness and risk levels to their specific requirements.

Trader Feedback

A number of online reviews are available from which to judge the opinion of traders using the software. MyFXBook, the industry renowned Forex performance verification site, provides a good barometer of sentiment and there are also positive reviews on well-respected review site, Forex Peace Army. If you want to further understand the merits of reading reviews before you purchase Forex software we go indepth in our article on the benefits of online Forex software reviews.

Positive review feedback revolves around getting decent performance, depending on using online brokerages using low spreads and trading platforms with ECN capability.

Some traders do not use it live; instead, they use it as a semi-automated Forex Expert Advisor in a demo account, where they have the final decision on market analysis and whether to place a trade.

Negative review feedback of the Megadroid continually references the software being slow and stop-loss levels being too high when trading Forex. Additionally, the software does not generate enough trades on default settings to create enough Forex trading account profit.

Summary and review rating

The robot developed by two Forex developers with over forty years of trading experience reflects in the performance and durability of Megadroid. Robots developed by those that understand Forex tend to do slightly better than coders with a limited Forex knowledge.

Forex Megadroid has gained the trust and confidence of many traders and is one of the currency market’s best robots. Along with robust backtested performance, excellent customer support, and lifetime updates, it is one of the more reliable robots on the market in terms of trading performance and overall customer support. For this automated trading software review, we rate it at four stars out of five.

Area Reviewed	Star Rating
Customer support	4.0
Price	4.0
Performance	4.0
Usability	4.0
Full review rating score	4.0

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. Initially seen as a star trader, the Kobe earthquake saw the Nikkei 225 plummet and Leeson’s unauthorized trades rack up large losses which were concealed in the now infamous 88888 error account. Unfortunately these unhedged positions became so large (over 1 Billion USD) that Barings Bank collapsed.

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 for not just me, Chris Gillie, but thousands of traders worldwide, in particular those working in smaller financial centers.

The Consequences Barings Collapse Had On Bank Trading Floors

Shocked by Barings Bank collapse, 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. Subprime mortgage loans were offered to borrowers who in reality would struggle to make the mortgage repayments and that was before U.S. interest rates rose causing property owners to default on their mortgages. It was further compounded as these subprime loans were packaged with lower risk debt into Mortgage-Backed Securities (MBS) by banks; instruments that contained much higher risk than was broadly understood.

Like Barings, respected names like Lehman Brothers, Bear Sterns and Merrill Lynch would collapse. Banks had not learned their lesson.

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.

What is Forex Charting Software?

Forex charting software is a computer program which helps Forex traders compare the price of currency pairs using different trading indicators. The most popular technical indicators include moving averages, Bollinger bands, Fibonacci retracement and relative strength index (RSI).

The practice of studying charts and patterns is known as technical analysis and has long been used by traders to analyze the currency markets 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. To help you quickly identify the best Forex online learning resources including charting, you can read our Axcess FX article, the 15 best resources to learn Forex online.

Charting Software As Part Of A Trading Strategy

Charting software helps traders undertake 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.

Seven Key Advantages Of Using Forex Charting Software

We have identified seven of the advantages for using Forex charting software. They are not in order of importance, but looking through them will make you aware of the benefits.

1. A visual representation of market data: It can be challenging analyzing market data to identify potential trades. Charting software though, offers a clear visual representation of trends, patterns and price movements.

2. Real-time data and analysis: Forex trading software can provide live price feeds to charts, analytics and market data which is crucial for permitting traders to make accurate decisions from up-to-date market conditions and trends.

3. Historical data analytics: As well as live data, charting software enables Forex traders to access historical data that:

Allows predictions based on historical price movements
Identifies recurring patterns
Reviews previous market behavior

Historical data is also used by Forex traders for backtesting and strategy testing.

4. Customizable technical indicators: Using Forex charting software means popular technical indicators like RSI and Bollinger Bands can be added on to charts and customized to align with specific trading strategies, facilitating decision making.

5. Advanced drawing tools: Advanced drawing tools available through charting software allow Forex traders to mark price points, create visual analysis and forecast possible reversals. Chart drawing tools include:

Trendlines
Fibonacci retracements
Channels

6. Alerts and Notifications: Specific price levels can be set up with an alert by FX traders using charting software. Once an alert is activated, traders are notified when set criteria are met, for example a moving average cross over or divergence (MACD). A trader can then take any necessary action without constantly monitoring the market.

a trading alert comes up on the trader's phone

7. Multiple time frame analysis: The seventh advantage of using charting software for Forex trading is the ability to analyze charts on multiple time frames. Time frames range from minutes and hours to daily and weekly.

Analyzing different time frames allows traders to get a broad perspective of current trends and hone trading strategies to preferred short term or long term goals.

If you are at the beginning of your charting journey, you may find the below video on how to read charts fast, useful to get you on the right path:

Should You Invest In Paid For 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 free charting software.

There can be limitations to using free chart software however, like a limit on live data feeds or reduced access to strategy testing. Many traders, therefore prefer to use their own charting software purchased independently rather than that offered by their online broker.

If you are thinking of investing in independent Forex charting software, it is vital to first read online reviews to get informed independent feedback before committing. We have a detailed guide where you can read further about the benefits of reviews and how they will help you decide on the appropriate charting and technical analysis software.

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.

The following software development companies offer good FX charting software:

MultiCharts
eSignal
Trend Spider
Trading View
MetaTrader Charts

We have an informative resource that looks at the best charting software that will help you further make an informed decision on the best option for you.

Takeaway thoughts

In this article, we have provided a high level overview of what is Forex charting software, including its advantages compared to not using it, what constitutes good charting software and whether you should invest in a paid rather than free solution.

If you are considering purchasing charting software, make sure it has useful support features, including guidance and support for trading on the Forex market, and the possibility to ask questions about using the software’s features and technical support, through either chat, email or voice.

Written by Chris Gillie

Chris Gillie is the founder of Axcess FX, a Forex software research and review 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, where there is a reporting deadline of 31st August, 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 like the Bank of England (BOE) and Bank of Japan (BOJ) play a central role by setting interest rates and applying monetary policy which directly influences FX rates.

Major global banks and financial institutions: These market participants engage in high-volume Forex trading that impacts exchange rates through their speculative trades or hedging activities. Global Foreign Exchange banks with the largest volume include Deutsche Bank, Citigroup and UBS.

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 and has continued its upward trend, now reported as over 6% in 2025. The largest online brokers include IG Markets, Forex.com and Etoro.

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.

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Written by Chris Gillie