Do Forex Robots Improve Your Winning Odds?

forex diamond software

If you trade forex, you will know that timing is critical. A forex robot can take the guesswork out of flaws in human timing, including emotion, by not only identifying trades but if you choose to do so the robot also automatically enters and exit trades with no manual intervention.

Trading forex can be very exciting and profitable, but remember, it is a zero-sum game. For every FX winner, there is a loser on the other side of the trade. To be a winner, you only need to be right a little more than half the time.

As part of your broader trading system, can you expect to be a winner more than half the time with a forex robot?

To help answer this question, it is crucial to undertake rigorous research before adding a forex robot, also known as an Expert Advisor (EA) to be part of your trading system.

Once you have identified an EA to match your strategy, it is then vital to both backtest and undertake at least 50 trades with it in a demo environment before progressing the robot to real account trading.

Research is Key

As part of your forex robot research, it is essential to consider the following points when considering adding a robot to your existing trading strategy.

Compatibility

Does the Expert Advisor’s underlying trading strategy align with your trading strategy?

For example:

forex megadroid software
  • Does it trade the currency pair or pairs that you already trade?
  • Are you a day trader using a scalping strategy? If so, a scalper robot like Forex Megadroid is probably the most relevant robot to your trading system.
  • Do you trade a particular session? If so, does a robot also generate trade signals during that session?

The Key Metrics for Evaluating Robots

To verify robot performance as part of your research, the robot developer must have verified performance data on a real trading account for you to analyze. Two essential resources provide this data, MyFXbook and FX Blue. Consider the following statistics as part of your research:

Profit factor

The profit factor can reveal whether a robot makes money, and so is a crucial metric. The profit factor or PF displays the relationship between profit and risk, calculated by dividing gross profit by the gross loss on all trades. An EA with a PF of less than 1.0 should not be considered for selection as it will lose you money.

Risk-reward ratio

The risk-reward ratio is an indication of a robot’s level of risk. A high risk-reward ratio indicates that a robot has a riskier strategy coded into its algorithm and should be openly questioned.

The golden risk-reward level of 3:1 is considered the benchmark to apply to a trading system where every $1 risked expects to see $3. It means that you could trade profitably with a robot that is only correct 50% of the time. Consider the below table that illustrates this point where if you only had winning trades 50% of the time you would still make an overall profit over 5 trades of $20,000 using a 3:1 risk-reward ratio.

TradeLossWin
1$2,000$6,000
2$2,000$6,000
3$2,000$6,000
4$2,000$6,000
5$2,000$6,000
Total$10,000$30,000

Drawdown

Drawdown is an essential metric and represents the maximum loss percentage since the last high point on your capital trading account. It can be analyzed by studying an equity curve chart. If a chart has large peaks and troughs, it is an indication of volatility. A robot with a high drawdown is not only volatile but also poses a higher risk. Consider robots with a low drawdown like Forex Diamond represented by a steadily rising chart.

a forex robot looking at a currency chart

Maximum drawdown

This metric represents the robot’s maximum loss after the last high point in capital on your trading account. For example, a 60% drawdown indicates that an EA lost 60% of the trading capital value at one point. If it were to occur right after trading started, it would mean an instant fall of 50% in your capital account!

Average drawdown

Average drawdown is the comparison of several different drawdown amounts. If a robot has five drawdowns, adding them up and dividing by five gives the average drawdown. It will offer you an idea of the average loss size during a period of drawdown.

Backtesting is Vital to Verify a Forex Robot’s Results

Some forex robots are programmed to be quite active and will put on trades several times a day. Others will trade less frequently, only when conditions are optimal. Some automated programs, such as the forex Megadroid have a lengthy history of positive reviews and long-term backtesting to confirm their validity. You can also look at the results obtained from recent live trades for confirmation. 

Best of all, you can link them to the MetaTrader demo account without risking real money. It should provide the necessary validation. If you are a new or a seasoned trader, a robot can help you become more profitable as part of a robust forex strategy.

Statistical expectancy

forex chart on a computer screen

It is essential to completely disconnect from whether your next trade placement makes a profit or a loss. If your underlying strategy has an edge, you do not have to be right even half the time to trade profitably. Statistical expectancy allows you to evaluate your trading system’s performance objectively by testing robot performance from fifty trades.

Forex robots allow 24/5 trading

There is a vast choice of automated trading software that allows robots to direct your trading through algorithms. Most are simple to install and get running, linking right into your online broker’s platform.

If your broker uses the MetaTrader platform, then automated software integration should be straightforward as most robot developers use the MTQ language code of MetaTrader for scripting forex robots. 

Conclusion

Forex trading can be profitable and exciting. By undertaking extensive research and testing to get the right forex robot trading for you, reinforcing trade signals aligned to your strategy means guesswork is further reduced. The risk of trading outside the confines of your strategy through psychology also reduces.

For every side that there is a winner, there is also a loser. Which side would you prefer to be?

What Are Forex Robots & How Do They Work?

Forex Trading Using Automation

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.

an automated 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 or the temptation to trade quickly.

The Mechanics: How Do Forex Robots Work?

metatrader 4 platform

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. The ability to integrate a robot with MetaTrader allows the automatic generating of trading signals and placing orders according to the trade indicators.

Some robots are programmed to scan and interpret charts. Additionally, they can program with specific parameters needed to make a trading decision; using 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. They 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 EAs cannot do.

expert advisor software

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 that can see forex market conditions with sudden 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 has a minimum deposit requirement of $100 to open a forex trading account but a minimum trade size of just $1.

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 robot forex trader 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 employing it in a real-money environment. Most reputable robot developers 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.

forex robot software

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 it trades profitably. Dedicated review sites include 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 develop 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 an EA will perform well as part of your strategy. If you trade USDJPY 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:

What is the Best Forex Trading Robot?

Our research 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 consistant monthly performance.

Forex Diamond is the robot with the lowest 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 GPS Forex Robot 3. It is one of the top 20 robots we have identified according to our ranking criteria. Its drawdown is within the parameters of 20% to 40% that is considered safe for an EA, but it is the sheer length of time of 8 years that it has been trading profitably on a verified real trading account that is so impressive.

Unusually for a Forex EA, it has been used by a Wall Street investment firm to trade profitably, and the results are available to view at the GPS official site. It is unusual because most large investment firms have their in-house quants and programmers and rarely use external auto trading software, preferring to develop in-house. Read our detailed review of GPS Forex Robot 3

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 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 GBPUSD, 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 has to make 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 program. They are a useful addition to a defined trading strategy but should not be used on their own as a stand-alone trading system.

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.

Our Fap Turbo 3 Review For 2020

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 where we will look at the strategy employed, evaluate performance and look at trader feedback which you can use to see how Version 3.0 can help you trade profitably.

History

The FAP Turbo has been around for over ten years, with the original FAP launched in November 2008. It was developed by a team of professional forex traders and programmers and is one of the earliest forex robots made commercially available for purchase. FAP Turbo 2.0 followed, and we are now on the current version 3.0. FAP 3 which has over 100,000 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.

FAP forex robot

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; nevertheless, it is valuable to see the results which appear impressive.

Performance Results

FAP Turbo 3.0 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
  • Comprehensive 100-page user guide
  • Video Tutorials
  • Optional Virtual Private Server (VPS)

Buying FAP Turbo 3.0

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

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

The Robot is available as a direct download. The purchase of FAP is managed by Clickbetter, the respected marketplace and payment processor used by many forex software providers.

Clickbetter provides a 60-day moneyback guarantee, which is standard amongst other processors such as ClickBank and Avantrade.

The refund rate of FAP Turbo 3 on Clickbetter is low at 0.50%.

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.

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 ReviewedStar Rating
Customer Support3
Price3
Performance4
Usability4
Axcess FX Rating3.5

The Benefits of Forex Trading Tutorials

Excellent forex trading tutorials are available online. For beginners, a tutorial provides a complete overview of trading forex, including guidelines, terminology, strategies, tips, and technical analysis.

trader at desk

A tutorial can often be downloaded from the provider’s website as a PDF for a leisurely read or browsed right at your computer desk.

A forex trading tutorial is sufficiently insightful to give you a decent overview as the people behind them usually come from a trading background.

Many of the ideas and strategies available do not always have a mention in books. The forex trading tutorial method, through both audio and video, makes the learning process exciting and motivational and learning can be a realistic simulation of a live trading situation.

Finding The Best Online Trading Tutorials

Many membership-based websites also exist where forex traders can interact. These websites often provide a forex trading tutorial for a fee and sometimes even free. Here are five of the best online tutorial websites to consider:

1. The Forex Trading Coach

A highly recommended online tutorial called ‘The Successful Trader System’ which includes live trading room webinars

2. Forex4Noobs

It targets helping novice forex traders in understanding how price action works through analysis and tips.

3. Trade with Precision

A selection of training courses and tutorials that shows you how to develop strategies, risk management techniques and having a trader mindset

4. Learn to Trade

A forex education site with free resources and tutorials that cover the needs of anyone new to forex trading

5. Market Traders Institute

If you are looking to take your forex education to the next level and learn about software and strategies

Moving Forward to Live Trading

forex quote system

It is essential to open a trading account with an online forex broker once you develop proficient forex knowledge through tutorials.

Most brokers provide you with a demo account to test their software before you commit to opening an account and trading with your capital.

It will allow you to test your trading knowledge and start developing strategies and techniques through testing leading to your successful trading system.

Final Thoughts

Trading tutorials are essential. Without learning the basics of forex, you cannot trade without incurring losses on your brokerage capital account. Although knowledge is vital, you cannot trade without a trading strategy. A trading system will allow you to trade with discipline and without emotion.

Trading is a two-step process. Build knowledge and then build a trading strategy.

Forex automated trading systems and software explained

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

automated fx software

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

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

forex samurai

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

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

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

master scalper software

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

Avoiding Mistakes – Forex Tips for beginners

currency graph

Depleting your capital account with your online broker is undesirable.

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

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

Essential controls to avoid trading mistakes

1 Master one strategy at a time

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

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

2 Simplify your trading

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

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

3 Avoid trading in different markets

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

4 Over leveraging positions

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

5 Lack of research

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

Simulated Forex Trading: Vital Research for Traders

Simulated trading uses a theoretical trading balance to practice on instead of using your capital held in your brokerage account. There are two types of simulated trading which we will now cover for you.

A Look at Back Testing

With backtesting, you use trading software along with historical data to place theoretical or dummy trades to simulate as if you were trading during the period under analysis.

back testing historical data

It does not matter if your dummy trades are manual or employ automated trading software. It is an excellent way to test new trading software, which you may be considering using to form part of your broader trading strategy and is essential work.

Looking back through historical data allows you to fully understand how a currency pair moves and how it reacts to specific macro events, particularly economic data. Backtesting is crucial as it is entirely relevant to the market conditions at the time.

For a novice trader backtesting is crucial. It builds confidence that a trading strategy you want to implement will work. Undertaking specific trades or a strategy when your capital is on the line with a low degree of certainty is undesirable.

You will understand the statistical expectancy if you can undertake fifty dummy trades or more using historical data as a trading basis. It is the likelihood of knowing if your strategy has a good chance of making a profit over the long term.

Employing Demo Trading

The second type of simulated forex trading is using a demo trading account or demo trading. Most online forex brokers give the option of practicing with a demo account, which is just like a live trading account except you trade with a theoretical balance.

The trading platform and the price action are similar to the experience of using your capital in live market conditions.

Simulated forex trading is an excellent way to build experience because you can take the fundamentals you get from backtesting and apply them using your funds and find out if the system you developed will work.

Our Final Thoughts on Simulated Trading

Simulated trading is essential. For the new trader, it allows for the exploration of a strategy that will work based on positive expectancy. A robust trading system will lead to trading with discipline, not on emotion, the forex trader’s bane. It is a great start to moving forward and trading on your brokerage account profitably.

The Importance of Demo Trading in Forex

A vital forex tip is to use a demo account when you first start trading online.

forex charts on a screen

Undertake demo trading for the first three months before you start trading with real money. All good online brokers will offer a demo account.

It is a crucial tip to cut your teeth on the forex trading demo account. Familiarize yourself with the software and the platform. It is essential only to study one or two of the major currency pairs; the major currency pairs are the best to follow as they are the most liquid.

Demo trading allows you to develop a feel for the market

A demo account allows you to get a feel for your chosen currency pairs’ movements. Demo trading also allows you to hone your wider forex strategy through backtesting and paper trading until you are ready to progress to real money. F

or example, Cable or the GBP/USD can be very busy in the morning European session but is quieter once the American market gets into full swing. Learn and get a feel for these and other such trends before you start trading with real money.

The best way to trade forex is to confirm a trend. A trend is confirmed by looking at a chart, a process known as technical analysis. Many traders make it their business to predict where the market is going before it happens and trade accordingly. It is a crucial and essential for forex trading.

Bonus tip

Depending on what time frame you want to take a strategic position will make a big difference for your overall strategies. A bonus tip is if you are taking a position over the short term, perhaps one week to one month, then you do not want to be looking at a long term chart. When you are starting, have a plan, and keep everything simple.

Considerations When Buying Forex Trading Software

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

FX software

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

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

Forums as soundboards

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

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

EarnForex

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

MT5 Forum

A valuable forum dedicated to software around the MetaTrader trading platform

Forex Abode Forum

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

Babypips Forum

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

Historical charts, patterns and signals

chart software on a screen

Professional forex traders use charts to check the markets daily, and view historical data to make informed decisions as part of their overall trading strategy.

Basing decisions on historical forex charts, records and patterns in order to make sound and rational decisions is common sense. For example, cable has sat below 2.40 since 1980 and has never been back to the same spot ever since. Such data, must be valuable to a position trader.

Charts can give you a long term report of the position and strength of certain pairs. Inevitably there will be pairs that remain strong throughout.

charts on a screen

Charts are crucial for making rational decisions based on signals and patterns

As well as trading software, credible historical forex charts are made available by economic institutions that have been involved in the long term analysis of fundamental and technical trends.

It is important that you derive your historical charts from a reputable institution as the value of the chart is diminished based on the lack of accuracy.