The global forex market is the world’s most liquid and most significant market. In 2022 the daily turnover in FX according to the Bank for International Settlements (BIS) in it’s triennial survey has hit a record 7.5 trillion US dollars. To put this in perspective, the New York Stock Exchange has a daily turnover of 75 billion US dollars
Currency trading, also known as 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. The markets are 24 hours, but not quite 24/7 as Saturday is when no trading takes place in the major markets.
Currency prices can be very volatile. Factors affecting the movement of currencies include Geo-politics, Macroeconomic data, unexpected events such as catastrophes, and market supply and demand and trade flows.
An excellent Forex Basics video
Retail foreign exchange has grown substantially
The major players in the currency markets have traditionally been banks, investment funds, large corporations, and sophisticated private investors.
The advent of online brokers and electronic trading platforms means retail investors have the same market access as the large players. In 2022, retail foreign exchange was 5.5% of all daily global FX turnover.
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.
The forex market has 8 currencies that largely contribute to daily turnover
Despite such a huge daily turnover, the forex market has relatively few major currency pairs contributing to this significant turnover.
Around 18 currency pairs dominate turnover, and the most traded currencies are Sterling, the Swiss Franc, the Euro, US Dollar, Japanese Yen, and the Australian dollar.
Compared to the thousands of individual stocks that we can buy or sell, the currency market seems very slimmed down. All the major currencies are available in a variety of trading forms. It includes spot and forward foreign exchange and derivatives, including futures and options.
As with all forms of trading, making money in FX is about having a trading plan that you have the discipline to follow. You must know your entry and exit points. Risk and reward must weigh up before you enter a trade.
Here at Axcess FX are our 10 top forex tricks and tips to put you on the right path to trade profitably.
1. Get a forex education
Forex trading carries the risk of losing your capital. To manage risk, put in place a working strategy, and avoiding significant losses requires solid FX knowledge. If you are committed to starting forex trading, tip number one is to get a good forex education.
From a basic understanding of how currency pairs work, you will want to learn how to analyze the market using fundamental and technical analysis and understand trading signals, trading tools, instruments, and study price action.
Beyond immersing yourself, online courses hosted or written by respected industry figures are essential. It is vital to learn the right way. They are also convenient for those that are in employment. UBS, the world class investment bank offer a one-day Forex course either as a classroom or virtual program which you can find out more about at their research academy.
Continuous education is also a necessity for experienced traders. Strategies may need refining, and keeping abreast of market and technological developments is essential. As an accompaniment, here is our useful article on the five steps needed to trade forex.
2. Carefully research your broker
A myriad of online brokers exist. Choosing one can be time-consuming and confusing. Taking account of the following is essential:
What trading platform and software does the broker use?
Are you likely to use automated software to trade?
Will this software be compatible with broker trading platforms?
It is critical to choose the right trading partner as you engage in the forex market since price, execution, and the quality of customer service can all make a difference in your trading experience.
Remember, if you are a US resident, you will need to use a CFTC registered forex broker such as Forex.com, TD Ameritrade, Interactive Brokers, Oanda or IG USA.
3. Select a consistent strategy and goals
Once you have a forex education, find a trading strategy, and stick with it to discover your trading style. FX Strategies range from the very basic to the very complex and from the aggressive to the conservative. Every trading style has a differing risk profile and a different approach for the strategy to work.
Are you a position trader where you have the funds to take a long-term strategic trade?
Are you a day trader due to limited funds and need to trade daily to make a profit?
Will you be a disciple of technical or fundamental analysis or a bit of both?
If you trade short term, consider a scalping strategy that requires instant decisions in the space of one trading period.
Are momentum or reversal strategies a consideration?
Are you a chartist and will trade with a moving average or Fibonacci strategy?
What is your risk tolerance? How much leverage will you use?
Will you trade using automated software, or do you prefer to trade FX manually?
What currencies or currency pair(s) will you focus?
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.
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 backtesting your software or exploring new forex trading strategies.
6. Accept losses
Look at the bigger picture and never obsess over having a high win percentage. Any loss should be easier to accept by limiting your trade exposure to no more than 1 or 2% of your capital. If you cannot take a loss, you will never be a profitable trader. Self-improvement and learning from previous mistakes build your character as a forex trader.
7. Maintain a trading journal with weekend analysis
If you do not trade with discipline, you may be susceptible to revenge trading. A significant loss can trigger ill-disciplined traders to open up a new position with no strategic thought acting purely on emotion.
Operating a trading journal is essential, as successful currency traders are also accurate record keepers. It is vital to evaluate your trading performance continuously.
Note keeping should include:
Entry and exit conditions of all trades
Support and resistant levels
Target levels for each trade
Daily ranges
With meticulous note keeping, a journal helps to evaluate why you made losing trades and to monitor the ongoing performance of your trading strategy. It also flags up any inconsistencies with trades being out of line with your forex trading strategy.
A journal can also be a printed record of an underlying chart if your strategy uses technical analysis. Entry and exit points and emotions at the time can record on the chart.
Our top trading trick
Evaluating your journal at the weekend is a useful tip. The forex markets are closed, and it will not interfere with your weekday trading and may allow you to be more objective; remember during the weekend you are more likely to be calmer than in the cut and thrust of a trading day.
8. Positive feedback loops
Essential for building confidence, positive feedback loops are proven to work—trading according to your underlying strategy and executing well a pattern of positive feedback forms. Success builds confidence, and the more times you have winning trades in your chosen strategy, the more significant the positive feedback loop.
9. Carefully consider entry and exit points
Forex traders continually blight by conflicting information on charts of different time frames. A selling opportunity on a weekly chart may reflect as a buy signal on a daily chart. Make sure you synchronize a daily chart to time the entry against a weekly chart displaying trading direction. Only sell when you have a sell signal on both time frames.
10. Do not overtrade and take regular breaks
If you are over-trading the forex markets, it is usually an indication of two underlying issues that may even be happening at the same time:
You are likely to be risking too much capital with every trade.
Your trading frequency is too high relative to the trading session.
Overtrading can harm your capital account. Trading forex can be draining, and if trades are not going your way, a tendency is to spend long sessions in front of a computer looking at multiple screens that are central to a trading set-up.
To counter this, take regular breaks. It is vital to try and keep sessions uniform and take frequent breaks away from trading forex and collect your thoughts. Only return to your trading station once you are feeling refocused.
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.
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.
There are so many fundamental forex trading tips that you will be aware of and try and take on board when you begin forex trading. If you start out doing the basics correctly you will have an improved chance of success.
In this short article, we have included seven short forex trading tips for newcomers that cover off the basics and will provide you with value for your future trading endeavors. Remember, many new traders go on to make a good income from their forex trading activities and so why should you not be one of them!
1. Your trading style should reflect your personality
Your chosen forex trading style should align with your personality, as trading involves making decisions under pressure and requires significant risk management to limit potential losses. By aligning your personality with your trading style will lead to improved performance, consistency and discipline
Factors to consider when you are trying to match a trading style with your personality include:
Lifestyle compatibility
Lifestyle is a factor that will impact on the style you trade. A short term trading style, like scalping or day trading is unsuitable if you are trading around a full time job. Instead, swing trading or position trading will be more appropriate.
Emotional control
Forex trading can be an emotional roller coaster and by trading according to your personality is more likely to see you keep control under pressure. For example, following a long-term trading strategy will better suit calm and patient traders rather than an impulsive trader, who is looking for greater trading activity.
Natural decision making
Some forex traders are very analytilcal and are driven by data; whereas other traders rely more on intuition. Your style of trading should allow decision making in the way that feels the most natural to you.
2. Never over trade
You should only trade in amounts and frequency that you are comfortable with until you are completely confident with your ability to trade Forex. If you over trade it may have a negative impact in the following ways:
Mental exhaustion
By over-trading you can become susceptible to mental exhaustion, especially in short term trading strategies. It can result in decision fatigue where the quality of trading decisions will gradually decrease with the more decisions you have to make. Over the course of a trading day or trading week, the negative impact of over-trading could really start to impact on you.
The lack of a strategy
When you over-trade it is an indication that you lack a solid trading strategy or the discipline to adhere to one. The absence of a coherent strategy turns your trading efforts into gambling rather than calculated risk taking.
Revenge Trading
After suffering a significant trading loss, ill-disciplined traders may try and get their ‘revenge’ on the market by placing trades with minimal rationale behind them. Such a reaction can result in a vicious cycle of further losses and over-trading
3. Let a winning trade run
To trade forex more profitably, once you have a winning trade, there are increased benefits from letting the trade and profits run:
Overcome the fear of missing out
The fear of missing out (FOMO) can see traders jump into trades without proper analysis. Through letting winning trades run, traders can offset the negative mindset of missing out on other trading opportunities.
Efficiency of time and resources
The time and effort to manage a large winning position is no different to that of managing a small position. If you let winning trades run, it is a more productive use of both your time and resources.
Improving your risk reward ratio
Having a favorable risk reward ratio is fundamental to successful forex trading. When you let a winning trade run, the potential reward increases while the initial risk remains the same; assuming you are moving your stop-loss up to break even.
4. Cut your losses quickly and accept them
By cutting losses quickly by letting a losing trade stop out and accepting it is fundamental to being a successful forex trader. There are a number of reasons the practice is crucial:
Capital account preservation
In our article why forex trading requires strict money management, we identified how small losses of 2% of capital can be recovered quicker than larger losses. Remember that a 25% loss on your trading account requires a corresponding 50% gain to break even!
Avoid the “sunk cost fallacy”
The sunk cost fallacy in trading is the belief of continuing with a loss-making trade due to the time and money already invested, despite the risk of potential losses outweighing the benefits. By cutting losses quickly on a badly performing trade, forex traders can avoid any fallacy and trade in the present and not the past.
Opportunity cost
By holding on to losing trades may tie up capital from your trading account that could be deployed to better trading opportunities. By cutting losses, traders ensure that their capital is free for fresh trades.
5. The trend is your friend
The old saying is “the trend is your friend,” anchors one of the central principles of technical analysis. The saying implies that forex traders may improve their chances of success by trading in alignment with the current trend. When trading currencies, there are a few reasons why this principle has relevance:
Momentum
A trend is an indication that momentum lies behind a currency’s price movement. By placing trades that move with the trend, traders are seeking to capitalize on the momentum, which increases the chance of the trade making money.
Filtering out noise
The forex market is susceptible to random price movements or “noise” which can lead to false trading signals. By trading with the trend can help filter out noise and allow focus on more substantial price movements.
A higher probability of success
Forex trades placed in the trend direction usually have a higher probability to succeed as they go with the momentum of the market rather then against the flow.
6. Always keep to the rules
An inexperienced trader will feel tested to the limit in times of high volatility. When the spot moves rapidly, losses can occur if a trader does not stick rigidly to the rules set out in their own trading system which includes:
Consistency
Adhering to a ruled based trading system creates consistency in your trading approach. By following a robust set of guidelines allows for accurate assessment of a strategy’s effectiveness and to make adjustments as necessary.
The 2% rule
It is best practice in forex trading to place no more than 2% of your trading capital on a single trade. As the forex market is so volatile, keeping to the rule can help traders navigate through periods of high volatility by avoiding panic decisions through pre-determined actions. Losing 2% of your capital is easier to recover than an ill-disciplined trade that loses 25% of your trading account.
Performance evaluation
If you are trading within a wider trading system it makes it easier to evaluate your trading performance. If trading results are lackluster, you can look back at your trading rules to pinpoint what is likely working and what isn’t.
7. Keep a trading journal
A trading journal is essential and the best traders are those that keep detailed records of trades so that they can review them at any time for different reasons:
Goal-setting and tracking
Trading journals are a good way to set trading goals and track any progress towards them. The process helps maintain motivation and keeps your trading aligned with original strategy objectives.
Accountability
A journal will hold you accountable to your underlying trading system and strategies. It makes you question the reasoning behind every trade, helping to prevent irrational trading.
Learning and improvement
Trading journals are learning tools. Through writing your thoughts behind every trade, and comparing the expected outcome with the final result provides insights into trading processes and decision making. With the information at hand for analysis, it will help lead to continuous trading improvements.
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.
Nick Leeson brought down Barings Bank in 1995 after racking up huge losses through unauthorized derivative trading in Singapore.
The immediate aftermath of the Barings Debacle raised the question of why a relatively small merchant bank had a trading operation in a far-flung place so far away from its London head office.
It is a fascinating story that had a huge impact.
The Consequences Barings Collapse Had On Bank Trading Floors
Concerned, other banks began looking at their trading operations all around the world. Why have twenty trading rooms, thus increasing the risk of a rogue trader or a financial loss when you could do the same with three trading floors, one in each of the time zones and make the other centers into sales rather than trading operations.
The repercussions for many banks were swift
At the time, I was working for a large European Bank, trading the DEM and CAD deposit books through FX Swaps, FRA’s and cash. The bank had trading rooms all over the place, including San Francisco, Wellington, and even Bahrain. Our trading room was in one of the bank’s offshore operations.
Within months, we were told to square all our open positions and explained all our lending limits would be transferred to the head office as the bank sought to streamline its trading operations. Our trading room was scaled down, and the traders, including me,had to find new jobs.
The Barings collapse was an instrumental factor in forcing banks to move towards operating a single global trading book that is passed around the world as the trading day moves through the major time zones of Tokyo, London, and New York.
Lessons Were Not Learned As History Repeats Itself
Following the Barings collapse and the impact it had on how banks trade, it was not until the 2008 financial crisis that banks would again come under pressure. Like Barings, respected names like Lehman Brothers would collapse. Banks had not learned their lesson.
Written by Chris Gillie
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.
The FAP Turbo 3 is the most up to date version of the Forex Auto Pilot (FAP) series of forex robots. It follows on from the original FAP and FAP Turbo 2. The FAP Turbo 3 is another of our robot reviews (updated for 2024) where we will look at the strategy employed, evaluate performance and look at trader feedback.
The FAP Turbo has been around for over ten years, with the original FAP launched in November 2008. It was developed by a team of professional forex traders and programmers and is one of the earliest forex robots made commercially available for purchase. FAP Turbo 2.0 followed, and we are now on the current version 3.0. FAP 3 which has over 85,000 worldwide users.
The FAP is a fully automated forex trading robot meaning that both identifying and placing trades are done automatically. It differs from semi-automatic trading software where the decision whether to place an identified winning trade remains with the human trader. FAP Turbo 3.0 runs on the MetaTrader trading platform.
What Trading Strategy Does The Fap Turbo 3 Use?
The FAP Turbo 3.0 provides users with two different forex trading strategies available in separate trading modes. The legacy scalper strategy from previous FAP models is still available and is known as Scalper Mode. Version 3 now includes the new Medium-Term Strategy (MTS mode) algorithm. The aim of FAP Turbo 3.0 is to move away from scalping to medium-term trading.
Scalper Mode
The Scalper trades more frequently than the MTS mode, and like many forex robots, the legacy scalper works best in rangebound conditions. The developers have built the Scalper algorithm to trade the night session in the cross over between the US and Asian trading sessions, which is known to be a quieter trading session.
The Scalper targets opening between 1 and 5 trades targeting small take profits on each trade. Algorithms uses a specific 15-minute chart timeframe, indicators, and filters to create trade signals. Signals include RSI, MA, and also volatility filters and opening time filters.
The Scalper is programmed to trade eight currency pairs in the same way, including EURUSD, GBPUSD, USDCHF, GBPCHF, EURCHF, and USDCAD.
MTS Mode
The MTS strategy opens trades during the day employing different trade timings for different currency pairs. The MTS does not tie to specific chart time frames like the Scalper. The MTS algorithm is continuously monitoring the markets and will open trades only when its internal indicators identify conditions that indicate a high probability of success. The aim is to trade profitably and not to open trades up in conditions that are not optimal. It employs more substantial take profits and stop-losses of between 20 and 100 pips.
The Expert Advisor works right out of the box with default parameters; however, these can be substantially altered to align closer to a trader’s required risk and leverage levels. More information about strategy and settings are available at the FAP Turbo site
How Good Is The Performance?
The developers of FAP Turbo 3.0 provide performance backtesting using the MetaTrader strategy tester. Below are the performance results from over six years employing the Medium-Term Strategy across the eight currency pairs the forex robot is programmed to trade. The performance does not take live account spreads, slippage, commissions, or live tick data. Furthermore the modelling quality is only at 90%. Best practice back-testing using a tool like Birt’s tick data suite can get modelling accuracy up to 99%. For scalping strategies, not testing at 99% can make a seemingly profitable strategy unprofitable. The below results appea impressive at 90% we would hope this is also the case at 99% where every tick is taken into account.
Performance Results
All the performance results shown above base on a 1.0 standard lot or equivalent
Find Out How The Fap Turbo 3 Works in 3 minutes
If you have found this video useful and need more information about FAP Turbo 3 you can visit the official website.
Setting Up FAP Turbo 3.0
Implementation
The FAP Turbo 3.0 can be set up with any MT4 Broker. Once purchased, the product comes as a .ex4 downloadable file, a script for MetaTrader, and can only run in MetaTrader 4 software. Therefore, MetaTrader must be already set up on your computer for the EA to operate smoothly at an optimal level.
Once the Robot successfully activates, it needs attaching to the relevant chart from where it will analyze the Foreign Exchange market and trade automatically on your behalf 24/5 as long as your computer is always on; otherwise, you can still use a VPS for continuous robot trading.
Trade settings
FAP Turbo 3 allows you to choose to either run with the default recommended Scalper or MTS settings or tweak the parameters to align closer to your forex trading strategy. A large number of parameters exist; including manually setting lot size which increases the leverage on the trade (making it higher risk), selecting specific days to trade and adjusting take profit and stop-loss levels.
Key Features
Once a customer takes out a subscription, FAP Turbo 3 comes as part of a comprehensive package:
FAP Turbo 3.0 Robot
Free Forex Brokers trading account registration with MyFXChoice and Tallinex
Unlike many forex robots which offer a one-off purchase price, FAP Turbo 3.0 has a different pricing model.
It is available on a monthly subscription of only $39.95 a month including 7-day trial for just $1 to see if the robot works for you & 60 day 100% money back guarantee.
The Robot is available as a direct download from a third party marketplace who will process your payment for purchase.
Forex Trader Feedback
Online trader feedback for FAP Turbo 3 is mixed. Some traders report the EA trading profitably on the default lot size of 0.1 and point to lower leverage levels producing excellent performance. Other traders say performance is erratic across different currency pairs.
Summary and Rating
The refund rate is low; the subscription package is very comprehensive and includes a 100-page guide. There is also a 60-day money-back guarantee offered on the software. Performance appears solid over the six years of backtesting provided by the developer; however, it is not based on real-time quotes and does not take slippage and commissions. Backtesting quality is also only at 90% and not our preferred 99% which is crucial for any strategies where scalping is involved.
We have mixed views on the monthly subscription pricing model employed by FAP Turbo. On the one hand it might be considered more expensive than buying a robot outright; however with constant monthly income streams from subscribers, it allows the robot developers to continually reinvest in software development, keeping FAP Turbo always up to date.
Trader feedback is also mixed. We could not find consistency in the reviews. Instead, a multitude of different areas received feedback, some good and others bad.
Based on our review, with everything considered, we rate FAP Turbo 3.0 with a 3 1/2 out of 5-star rating.
Area Reviewed
Star Rating
Customer Support
3
Price
3
Performance
3
Usability
4
Axcess FX Rating
3.25
Written by Chris Gillie
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.
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 2023 as we are updating this review is over 15,408%. 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.
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 gage opinion of traders using the software. MyFXBook, the industry reknowned 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
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.
The difficulty with short-term forex trading strategies includes the unpredictable effects of volatility compared to longer-term trading strategies.
Macro-events like economic data, monetary policy announcements and geopolitical events, can instantly move the market and affect short-term trading strategies such as scalping, day trading and swing trading which have tight stop-loss orders. Position trading is less affected by singular events as traders are looking at long-term trends.
We will look at seven key difficulties faced by traders that use short-term forex trading strategies, including the effects of volatility. We also touch upon the differences between short and long term trading strategies, so that you can make an accurate assessment of what will work best for you.
Market Volatility Caused By Macro-Events
The problem with short term trading lies in an unexpected macro-event or other significant news that moves the market more than your hourly chart or technical analysis on a given day. For scalpers and day traders it can have a profound effect including:
Opportunity cost: Short-term traders may miss out on broader trends while they focus on the immediate market reaction
Whipsaw patterns: Macro-events cause prices to change directions quickly triggering confusing entry and exit signals
Liquidity fluctuations: Liquidity can dry up before macro events resulting in larger spreads and slippage, increasing trade entry/exit costs
Stop-loss hunting: Around macroeconomic-events, prices might spike briefly taking out the tight stop-loss levels of short-term traders
Competition from algorithmic trading: Trading algorithms react to macro-events in milliseconds putting them ahead of human traders
Forecasting difficulties: Short-term traders who bet on outcomes of a macro-event may find themselves on the wrong side of a trade
Shorter Time Frames Provide Less Reliable Signals
Technical analysis patterns and indicators appear more frequently on shorter time frames but they have less reliability than longer time frames, where support and resistance levels become more established and take on greater significance.
Furthermore, as you drill down in time frames, the charts become more polluted by false moves and market noise. Market noise refers to random price movements due to minor market fluctuations and can lead to false signals and misleading trends. Day traders are more affected as they might trade off hourly charts or even shorter time frames. Ideally, traders should use a longer time frame to define the primary trend of whatever they are trading.
Impact Of Bid-Offer Spreads
The very nature of short-term forex trading is the execution of multiple trades over short periods, typically less than a day. Unlike other markets, in forex market the cost to trade is typically built into the spread, and the wider the spread the more it eats into profits on entry and exit into trades where a successful trade may only be a 10 pip profit.
As scalpers and day traders rely on small price movements to enter and exit trades, the profit per trade is highly impacted by spreads. In volatile markets, slippage, where take-profit and stop-loss orders are filled at a worst than expected price, can also further reduce potential profits.
Leverage Risk
Scalpers and day traders typically use higher leverage to boost profits from small price movements. While leverage can increase profits it also magnifies potential losses. For example, a trader leveraging 50x to trade a $250,000 USD/JPY position is exposed to a large position, likely dwarfing the trader’s actual capital account balance. Nothing short of a very tight stop-loss is acceptable when using leverage.
Understanding leverage and managing the associated risks has complexity and for some traders this is is difficult to grasp. Without a tight stop-loss and disciplined money management trading 1% to 2% of your trading capital account, then short term strategies can cause significant losses. A tight stop-loss may be as little as ten pips from the current spot price.
Over-Trading Risk
Short-term forex traders are at risk of over trading due to the inherent nature of trading in a system that requires multiple small trades every day to be profitable.
The high frequency of trading opportunities when trying to capitalize on small price movements within a short time frame is a particular problem as it can tempt traders to execute more trades than necessary.
The pressure to meet daily or weekly profit targets is an over-trading risk factor, especially if a trader is behind on their targets. The pressure to make budget can lead to poor decision making and taking on trades with a lower chance of success.
A Reliance On Sophisticated Tools And Techniques
To be successful as a short term trader requires access to advanced trading tools and up to date technology which can be expensive with both start up and ongoing costs. It includes:
High-speed internet connectivity
A high-specification computer with upgraded graphics card and memory to reduce lag
Advanced charting and analysis software
Direct market access via a forex broker
The need to develop or understand complex trading strategies is also essential for a successful short-term trader. These can be difficult to master especially those based on advanced technical analysis, algorithmic trading or high-frequency trading tactics.
Psychological Stress And Emotional Discipline
Short-term trading requires constant monitoring of the markets and quick decision making. It can be tiring mentally as traders must stay focused for long periods. The need to perform well on a daily basis can lead to burnout or trading decisions driven by emotions like greed and fear which can override rational analysis and decision making.
Furthermore, pressure to rapidly recover from losses can also lead to revenge trading, where traders take uncalculated risks to recoup the fall in capital on their trading account.
If You Can, Trade for The Long Term
Many forex traders cannot trade for the long term to become position traders. The reason is day traders need to make money every day to earn a living by scalping the market. A couple of pips here and there only creates a decent trading profit through frequent trading many times a day.
Taking a longer-term strategic position will require a deeper stop loss and trading with a higher percentage of your capital account. A larger transaction size justifies inactivity in the market by holding out for more significant currency moves.
A long-term trading strategy means that you are not affected by what happens on any one given day. You can forget about having to predict short term trends and you will have more chance making money forex trading.
A table showing the differences between short-term and long-term trading
Factor
Short-Term Trading
Long-Term Trading
Goal
Benefit from small price movements
Gain from big market trends
Time Frame
Minutes, hours and days
Weeks, months and years
Trading Frequency
High, with multiple daily trades
Low, with few trades
Profit and Loss Realization
Quick, usually on the same day
Slow, realized over a long time
Capital Requirements
Low per trade
High per trade
Risk management
Tight stop-losses
Wider stop-losses
Analysis type
Technical analysis
Fundamental & Technical Analysis
Trading stress level
High, due to constant monitoring
Lower, due to reduced monitoring
Skills required
A video explaining the benefits of long-term over short-term forex trading
A Parting Thought
The forex markets are a market of probabilities and not certainties. Trading long term forex trends make big profits. If you have the capital forget about trading the short term where unpredictable or unforeseen events will always mean that the odds are on a knife edge.
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.
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 to trade, 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.
Which Strategy Should I Consider?
Before you start trading, 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, while fundamental analysis involves analyzing economic indicators and news events,
Trading style
Do you want to trade be a day trader, swing trader, or take 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 as the aim is to make a daily profit with small profits on every trade.
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.
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 tersting
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
Practice With A Demo Account
As a beginner, ahead of trading live, you should test prospective strategies in a simulated trading environment. Most online broker companies 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.
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.
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 and ultimately on low latency direct broker trade execution straight from your chart.
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.
The benefits of forex trading tutorials range from getting beginners quickly up and running with trading basics, to advanced training for seasoned traders, looking to improve in a specific type of technical analysis.
Tutorials are sufficiently insightful as the people behind them usually come from a trading background and with the varying methods of delivery, tutorials can make the learning process exciting and motivational.
In this article, we will look at the main benefits of forex trading tutorials, but also, the different ways you can take a tutorial and where to find the best forex trading tutorials online. Read on and start your trading journey on the correct path to success.
How Are Forex Tutorials Delivered And Who Would Each Method Suit?
Forex trading tutorials can be delivered in differing formats, catering for varying learning styles and preferences. Each delivery method offers unique benefits and suits the different needs of traders, from newcomers to experienced traders, looking to refine their technique and strategy. In our easy to read table we list each tutorial method to give an instant overview of what might work best for you.
Tutorial Method
Description
Who Would It Suit
Online courses
Online platforms provide structured courses for all levels of trader. The courses can include a blend of written material, video lectures, quizzes and interactive components
Great for self-paced learning
Webinars and live workshops
Live webinars and workshops are conducted by educational platforms and trading experts. They offer real-time interaction with instructors, allowing for immediate Q & As
Those looking for specific topics or strategies
Video tutorials
Platforms like YouTube offer video tutorials, ranging from comprehensive guides to shorts, focusing on specific aspects of trading
Particularly helpful for visual learners
E-books and digital guides
E-books and digital guides offer easily accessible information in written form, serve as handy reference materials and range from basic guides to advanced trading concepts
For those who prefer reading to other learning formats
Interactive trading apps and games
Apps and games are designed to teach forex trading in an interactive and engaging way by gamifying the learning process to make it accessible and fun
For learners who find standard methods overwhelming
Demo trading accounts
Most online brokers provide free demo accounts where traders can practice with virtual money. These platforms are providing the chance to apply knowledge in a risk-free environment
For newbies wanting hands-on experience and knowledge
Mentorship programs
Some traders chose personalized mentorship programs where a seasoned trader gives one-on-one guidance, bespoke advice and direct feedback
For those seeking in-depth, customized learning
Trading forums and online communities
The participation in online communities and forums is a form of tutorial as members share advice, strategies and experience that gives valuable insights and peer support
For those that like to learn through community participation
Seminars and conferences
Attending conferences and seminars affords opportunities to hear from multiple experts, network with other traders
Traders wanting to stay updated on the latest trends and strategies
Workbooks and exercise sheets
Exercise sheets and workbooks provide a hands-on approach to learning, including trading scenarios, strategy planning exercises and calculations
For those who learn best through practice
Table 1
What Are The Benefits Of Forex Trading Tutorials
Here at Axcess FX, we strongly believe in the merits of forex trading tutorials and have identified several key benefits that traders of all levels can enjoy from participating in tutorials.
Constructing a trading mindset
Having the right mindset is just as important as knowledge and strategy to become a successful trader. Forex tutorials typically emphasize the significance of patience, discipline, emotional control and ongoing learning. Tutorials instruct traders to deal with wins and losses objectively and to adhere to a focused approach to trading.
Access to expert knowledge
Many tutorials are produced by industry professionals and expert traders, providing access to real-world experiences and expert insights. Such varied perspectives and advanced trading techniques are not always available in standard texts.
Staying updated
Forex trading tutorials often provide insights into current market trends and how to adjust strategies and trading systems to respond to any changes. As the forex market is so dynamic, it help traders stay relevant and responsive.
Personalized learning
Forex trading tutorials, as we have evidenced in Table 1, come in various formats, from online courses to interactive webinars and video tutorials. The variation really allows traders to select learning resources that best fit their learning preferences and pace to learn, enabling different learning styles and time schedules.
Avoiding common pitfalls
Particularly, for newcomers, it is easy to fall into common forex trading traps. Tutorials, presented by seasoned professionals are well placed to educate about these mistakes. Learning upfront about pitfalls like overtrading and having a trading plan in place can save traders from making costly oversights.
Understanding the basics
Forex tutorials are a great resource for grasping the fundamentals of forex trading. Key topics like how the global currency market works and essential trading terms is crucial foundational knowledge for new traders to successfully navigate the forex market.
Developing trading strategies
Tutorials will explore a variety of trading strategies from both a short-term and a long-term approach. It will include strategies such as day trading, swing trading and position trading. It allows traders to try out different strategies and find one that ties to their goals, risk tolerance and investment time-line.
Risk management
A vital area covered in trading tutorials is managing risk and includes:
Learning about leverage, its risks and how to use it wisely
Understanding how to use stop-loss orders to limit any sudden loss to capital on your trading account
How to trade with just a small percentage of your capital
Finding The Best Online Trading Tutorials
We have outlined the significant number of tutorial methods that exist, ranging from online courses, to webinars and E-books. With such a wide ranging choice, how do you find suitable trading tutorials for your needs?
Don’t worry, if you struggle to find suitable tutorials, we have also done some heavy lifting for you and have drawn up a short list of options for different tutorial methods.
Online course options
Babypips.com offer an excellent free online course for new forex traders at their School of Pipsology
Udemy is a great resource for high quality well-priced forex courses
Webinars
Forex.com offer a range of forex webinars for both beginners and experienced traders and you can find the webinars at this link at their trading academy.
Video tutorials
YouTube is an excellent source for forex video tutorials and an excellent one for beginners, is the Ultimate Forex Trading Course by Raynor, who has almost 2 million subscribers. The course is 2 hours long and the video is below for your convenience.
Demo trading accounts
Reputable online forex brokers offer free demo accounts for beginners to trade with virtual money in a simulated environment. Interactive Brokers, Oanda and Forex.com all offer free accounts for simulated trading.
Mentorship programs
Forexsignals.com offer one of the most comprehensive mentorship programs with access to mentors, a live trading room and proprietary trading tools. We have written a review of Forexsignals.com which you can read about.
Other options include Traders Academy Club and Asia Forex Mentor.
Trading forums
Well known forex trading forums and online communities that are worth checking out include Forex Peace Army, Reddit, Forex Factory and Babypips.
Final Thoughts
Trading tutorials are essential, as without learning the basics of forex, you may incur losses on your forex broker capital account. Armed with knowledge and employing a coherent trading strategy, including risk management, all of which you can learn through tutorials, means you will be well placed to trade proficiently.
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.
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.
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 in Table 1 below:
AdvantagesOfSimulated 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
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.
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 maximise 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.
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 in the U.S., including Forex.com and IG, 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.
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 involvementin 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.
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.
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.
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.
