forex discussion

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

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

The Size And Scope Of The Global Forex Market

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

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

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

Key Forex Market Participants

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

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

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

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

Currency Insights

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

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

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

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

The Most Traded Currencies And Pairs

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

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

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

The US dollars dominance is due to:

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

Forex Trading Mechanisms

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

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

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

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

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

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

Strategic Approaches In Forex Trading

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

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

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

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

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.

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?
• Will you margin trade or make use of CFDs?
• What is the volatility of the currencies you want to trade as this will affect the strategy

Here is an excellent video detailing a simple profitable trading strategy

4. Use discipline and risk management

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

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

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

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

5. Create an intense work ethic

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

It means accepting that sometimes you may not feel like it but must take progressive action to improve continually. If you are trading through automation or mechanically, this may involve 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.

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:

1. You are likely to be risking too much capital with every trade.
2. 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.

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.

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.

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

Written by Chris Gillie

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.

Additional Resources

• What are the benefits of forex trading tutorials
• Security measures to take when using forex robots

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.

Additional Resources

Seven fundamental forex trading tips

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 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.

Related Resources

• The benefits of forex trading tutorials
• 15 resources to learn forex online

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 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.

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

Additional Resources

• 7 fundamental trading tips
• Take the easy path to forex trading

Written by Chris Gillie

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

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.

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 involvement in a simulated environment can be a drawback and may:

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

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

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

There are limitations in simulating real market conditions and include:

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

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

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.

1. 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.
2. Continue to analyze and learn from a live trading experience instead of reducing focus on this important part of a robust trading system.
3. 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.
4. 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.

Related Resources

• How to troubleshoot a forex robot that is performing badly

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 robots and Expert Advisors are scripts that are coded with automated forex trading strategies.

The primary way to use automated software is to import these scripts into a forex platform such as the well-respected MetaTrader platform. Many robots and EAs develop using the Metaquote MQL language and deploy on both MetaTrader 4 (MT4) and MetaTrader 5 (MT5).

The automated forex trading software can perform trading operations once imported into the trading platform, some with minimum trader intervention according to the algorithm’s pre-set conditions.

Are Forex Robots and Expert Advisors the same?

Forex robots and Expert Advisors are both very similar types of automated forex trading software. Both are involved in the analytical part of a trade. Both undertake market analysis including charts using their internal algorithms and technical indicators to find high probability trades’ entry points. 

There is one crucial difference. A forex robot will perform trades without the need for manual sign off. An Expert Advisor is just responsible for generating trading signals, advising you if they think you should trade but not placing a trade for you. Forex robots automate the full process from trade signal to trade placement with no trader intervention.

The Main Features of Expert Advisors and Forex Robots

The algorithmic trading programs coded into EAs and forex robots are often capable of performing varying functions.

Except for automatic order placement, which is limited to forex robots, they share the following functionality:

• Alerting the trader about market events
• Risk control via pre-settled money management policies
• Monitoring the compliance of a strategy concerning market conditions
• Place orders to trade according to specific conditions
• Opening, closing, or partial close of market orders according to the algorithm

The Advantages of Automated Forex Trading Software

There are many pros of forex trading by robot and the most important are the following:

• 24/5 trading: A robot for trading forex will automatically enter and exit forex trades during a specified period if that is part of its programming. It means a trader does not have to be present to manage the trade placements. It could allow 24-hour trading at high volume, which is not possible for a human being. It reduces the chance of missed trading opportunities that a human trader may encounter due to physically being unable to trade. Many traders chose to use forex trading bots as their sole trading method, while others will use it as part of a broader overall strategy.

• Forex Robots remove human emotion: Even disciplined traders working within a robust forex trading system can be susceptible to placing trades that may not align with strategy rules. Times of high volatility or chasing a loss can see traders who place manual trades that do not follow the logic, incur large trading losses. Automation removes psychology from trading with a focus just on following a strategy.

• Backtesting automated forex trading software: To get an insight into how profitable automated trading systems are depends on the strategy. It is critical to undertake a backtest of the automatic trader software and have a robust money management system in place from the onset. Backtesting is essential for getting a better idea of the robot’s performance, including risk versus reward and other variables and indicators. However, good your strategy, without backtesting and money management in place, you will fail. Get it right from the beginning. Below is an example of a robot strategy backtest:

The Disadvantages of Forex Robots

Using a robot for forex trading does have its disadvantages; however, these are starting to be addressed as more advanced EAs come onto the market and lower cost and faster access to FX trading.

• Narrow trading conditions: Forex Robots work best with a single currency pair and in markets trading in a limited range. Volatile forex markets with large trading ranges see more mixed results. A small number of sophisticated EAs are incorporating increasingly complex algorithms with dynamic features, including recognizing when forex market conditions are becoming more volatile and adjusting for it. Forex Robotron is a sophisticated robot. For example, it has a dynamic stop loss and close profit feature. When this is activated, as soon as an open trade starts to lose money, the position is closed, which overrides the default stop loss position.

• The requirement for a VPS server: The only downside to using robots is the need to leave your computer on if you want a robot forex trading continuously, and this requires a reliable server, which costs more. Using a VPS or Virtual Private Server instead of lower-cost shared hosting is essential to trade forex reliably lowering the risk of glitches or slow connections, which can affect trade placements.

Who Needs Automated Forex Trading Software?

A forex robot can be employed by all forex trader levels, from the beginner to the professional trader.

A beginner may rely on a robot to generate regular profit as they learn how to trade. In contrast, using a defined trading strategy, a professional trader will employ a robot as an accompaniment to their trading system. Professionals often tend to use automated software to generate trade signals but will decide whether they will place the trade.

Do Forex Robots Work?

A Forex robot can work well if it is employed correctly. A Forex robot should be considered as a tool that identifies market trends and generates forex trading signals that you, as a trader, can choose to act upon. It is the true definition of an EA, where you have the final say if you want to place that identified trade.

Where you choose when to trade means the EA is an extension of your trading system where settings and parameters are aligned as closely as possible to your strategy and currency pairs traded.

To employ a robot correctly does require an underlying knowledge of forex trading. Beginners who use fully automated robots to execute trades are less likely to see the full benefits of employing a robot unless they get trading experience through backtesting and practicing using a demo account.

How Much is A Forex Trading Robot?

Forex robots are traditionally available for purchase for a one-off fee, which offers lifetime updates. Prices vary from below $250 for long-established robots like WallStreet Forex Robot 3.0 to over $500 for Forex Flex EA. One of the few forex robots that retails on a subscription basis is Forex Real Profit EA. The complexity of the algorithms often dictates the price. Robots that include dynamic features that can adjust to changing market conditions tend to be at the upper price level. Most reputable developers will offer a 30 or 60 day money-back guarantee.

Some developers are now starting to offer automated software on a subscription basis. The merits of this from both the programmer and the user perspective is it allows ongoing development of the robot, making sure it continues to trade profitably by continuous review of built-in algorithms. Forex Real Profit EA is available on a subscription at a cost of $199 a year.

What is the Best Forex Trading Robot?

There is a multitude of forex trading robots available on the market, particularly compatible with the MetaTrader trading platform. Reputable resources that verify robot performance include MyFXbook. We have also researched and created a list of the top Expert Advisors according to a strict set of criteria to help you undertake due diligence and make an informed decision to finding the best forex robots to fit with your trading system.

At Axcess FX, we consider a low drawdown the most vital metric to gauge a robot. Drawdowns are the fall in the capital on your forex broker trading account following losing trades in real-time trading. It is the calculation of the difference between the relative peak in trading capital and the relative trough in the capital and is represented as a percentage.

Related Resources

• Forex robots compared to copy trading and forex signals

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.