All about Forex

[mckoy_slipstream]

---

I decided to start this thread to clear some confusions about the forex market. most often, people are afraid of what they don't know, so they choose to stay away and not investigate further.

who am i: im a full time trader (forex and futures), i also trade stocks, but not that often, though i still have live account with fmsbc, and has long term investment with a telecom company... very long term

**THERE WILL BE NO SELLING ON THIS THREAD. i am not affiliated with any forex brokers, and not selling anything, either for commission or personal gains.

purpose: there are numerous threads on istorya.net about forex, but these are bloated with information that newbies may not be able to grasp. although well cover the basics, the readers are required to read further, especially those supplemental links provided.

this thread is not for the lazy people. if you want to learn forex, do it yourself. im here to tell you that you can learn it, even without guidance from experts. if you have the determination, nothing is impossible.

and last, but not the least: all posts here are for educational purposes only. forex trading is risky and due diligence is required before proceeding to trade with real money. i won't be liable for any losses incurred from using strategies posted here.

all links given should be sufficient enough as i've used them personally while i was learning to trade, and still find them useful as i progress.

[mckoy_slipstream]

PRE-REQUISITE:

this thread is not designed for babies, i don't intend to spoon fed anyone.

you should have at least finished kindergarten level on this site: School of Pipsology | Learn Forex Trading

the most important concepts you should understand:
- how to profit in forex
- what is a pip, concept of currency pairing
- margin and leverage
- types of forex orders

[mojojojo2010]

thanks sa info,, bro. basa sako before asking question.

[mckoy_slipstream]

after finishing kindergarten, i would assume that you now have ideas of the following:

- concepts of currency pairing
- how to profit in forex
- margin and leverage
- types of forex orders

for further reading, visit

FOREX Pip Calculation | Profit and Loss - P/L Calculation

Calculating Leverage in Forex

tools you have to be familiar with:

Forex Leverage | FX Margin | Currency Margin Calculator | OANDA fxTrade

Trading Calculator | Forex Profit / Loss Calculator | OANDA fxTrade

[mckoy_slipstream]

your next assignment, to those really wanting to learn more, is to read this:

How to Choose a Forex Broker

pay attention to each of the segments on the article as it outlines the most important factors to consider when choosing a forex broker.

forex is a psychological beast and the last thing you need is distraction by always thinking that your broker may steal your money. you want peace of mind when trading, make sure you trade with a fully regulated broker.

My broker is Pepperstone. soon, we will discuss other things you may want to add to the criteria.

[mckoy_slipstream]

Choosing a Forex Broker (continued...)

After you've finished reading the material posted here: How to Choose a Forex Broker

you should have a pretty good idea of what a good forex broker is. but the search won't end there. your next consideration will be the following:
- platform
- funding and withdrawal process
- retail or ecn broker

Platform
I would suggest you select a broker that uses metatrader charting software. most brokers have MT4, others are now offering MT5. don't bother yourself with the differences as they are too technical to discuss here. MT4 is a good forex software with fast execution and large number of traders used it. that means that MT4 has great support from forex trading community, especially when it comes to custom indicators, and MT4 is user friendly. as much as possible, avoid java based platform and even flashed based platforms. java based can be often slow and gets cut off, and you need to make sure that your java software is updated to maintain smooth operation. same with flash. that can be a hassle when the market is moving and you need to update your java before you can even trade.

Funding and Withdrawal
Forex account is handled offshore. I would suggest you open a separate account and don't exposed your savings account. even if your broker is a trusted one. this has something to do with you tracking your progress as well. that account should just be dedicated to funding and withdrawing forex profits.

Some traders used credit cards, but im not that comfortable with that. i mainly use debit card. some brokers accept pay processors like paypal, moneybookers, and liberty reserve. however, i would not prefer such process for funding and withdrawal. i'd like to have it done directly from my debit account. FXCM and Pepperstone accepts debit cards. Oanda on the other hand accepts them, but does not guarantee that funds will go thru. If you have a paypal, you can use that with Oanda.

[mckoy_slipstream]

Retail and ECN forex broker

I decided to separate this post since i feel that this is one of the most important factor when selecting a broker.

What is a retail broker?
A retail forex company is also a market maker for all your trades. Market Maker Definition | Investopedia

to make it simple: you have a dollar($) and you went to SM to have it exchanged. SM is the market maker as they have the inventory to accept your sell order in exchange for another currency. they too dictates the price. now, in forex practice, imagine yourself playing in a sandbox. you have the entire sandbox only to play, anything outside the sandbox is not permitted. it means that market makers create the trading environment, the quote, spread, and they trade against you.

how to spot retail or market makers?
- you can start with $1 and have it leverage to 2,000
- they give you trading bonus when you deposit money
- they have all sorts of advertising gimmicks, i think you've seen some.

What is an ECN?
ECN or electronic communications network is like an interbank that consolidates bank quotes and give you the best price. these broker have solid liquidity providers that makes the spread as thin as ice, since the broker won't care if you profit or not, the most important thing is you trade, since you'll be paying a commission fee for each trade. when you execute a trade, it's sent to the interbank, and the other side is usually a real trader.

let's go back to the example above. you went to SM to exchange your $, but then, the lady would tell you to wait since she needs to update her computer and get the best quotes among the member banks they have, let's say they get quotes from Metrobank, BDO, UBP, RCBC, what they do is they consolidate the quotes and give you the best price. what about that?

remember the sandbox? with ECN, there is no sandbox. you could be trading right now with someone in timbuktu, there is no boundaries as your trades is being passed on an electronic channel to find the match for your bid.

im not saying that retail traders are bad. but i would strongly suggest you avoid short term trading with them. with ECN, you can trade between the spread, so scalping is not an issue.

**got something you don't understand? try reading this further: School of Pipsology How Do You Trade Forex?

some new terms used here are spread, scalping, and bid. you should have an understanding as to what these terms are when you've read the link. if such term in not present, a google search won't hurt.