Unfortunately, lately, we have noticed that many forex traders want to receive a full run-down of the usage of trading software, indicators, and other tools that ease trading from a-z. Our company has been active since 2002, and we are noticing an increase in traders who want to purchase a program, install it and forget about it. There are many articles about programs that run in auto-pilot, without the need of the trader to interact with the program or with minimum effort. These articles and advertisements are created by dishonest companies to sell their product, which is marketed as a get-rich-while-doing-nothing scheme.
In reality, Forex cannot be fully automatic. Someone who wants to be a trader needs to put in the effort, just like any other job. It is essential to dedicate some time every day, and we have many clients for whom trading is a full-time job. However, we also have clients who use trading as an extra source of income and do not spend that much time learning the intricacies of the program usage. Regardless, effort and time are needed to be a successful trader. Installing and forgetting about a program is impossible in this competitive business. In our experience, such approaches lead to very sad results. We tried to create such a program that will allow the trader to start trading easily, not software that tells the trader to do this and do that to make a profit, but something that is easily accessible to traders who are looking to automate their trading further.
I will begin by dismantling some false stereotypes that I have observed over the years. I have heard that trading on the foreign exchange market can yield you 1000% profit in just days.
This is blatantly an untrue statement. A realistic figure is closer to 30-50% monthly profit, and as your capital increases, your percentage gains will decrease. If you come in with a deposit of 100 dollars, it is possible to make 50% a month, but with 100,000 dollars, you should expect 10-15% profit and so on. The higher the capital, the harder it is to make money. When you have achieved great successes in trading, and your capital increases to a very large amount, however, you will be dealing with different levels of brokers, different levels of instruments, and so on. This will cause your profit to be very stable, for example, 5% or 7% a month. These are figures which you should expect. This is a common stereotype which causes frustration amongst brokers, and although there are cases of 1000% profits, these end up with a blocked account and a long talk with the broker who will find a way to block you from withdrawing these profits. Our management is for those who want to make money steadily and in the long term.
The second opinion which we disagree with is the expectation of having completely stable profits. Stability in the long-term is possible, but for months where you generate a 50% profit, you will have months with a 5% profit. That is just how the business is. When we talk about steady gains and profits of 30%, we mean a strategy with a realistic profit margin achieved in some months of trading. If stability and a certain threshold of profit are required by you, then an office job fits the description much better than the volatile foreign exchange market. Unlike an office job, a steady salary is not guaranteed, as in any business.
The third mistake that traders make is trusting their brokers. Traders with existing forex brokers make the mistake of listening to their broker’s advice or taking their word as fact. If you arent ready to switch your broker from time to time and search for brokers, forex trading is not for you. Many brokerages start as clean companies and earn profit the way they were intended to. After a while, they change directions and go into b-book, start using all different types of methods which disallow the trader to make profits. IN this case, you need to drop this broker with no remorse. You always need to act in your best interest, as the broker will do this in a heartbeat. The reason why this is being outlined is that you need to understand this before you start. Knowing that the broker does not have your interests in mind in 99.9% of cases will save you a rude awakening as you get into trading.
There are also many forums and groups, which form based on advising traders. Firstly, many forums and groups have representatives from brokerage companies posing as traders to give flawed advice. There are also very inexperienced traders who believe their strategy is the end-all of trading. Although there may be some good advice on forums, it is very difficult to discern this from flawed strategical advice. Things that sound good in theory often do not work in practice, and following a strategy found on a forum may lead to quick gains, with a very large loss soon after. We believe trusting your knowledge and judgment and following a well-structured strategy is the best way to make money.
The choice of a broker will be outlined twice in our article. The first will be the initial choice of broker to learn about the FOREX market. If you are a beginner it’s important to choose a broker based on recommendations, for you to start trading seamlessly to understand the market. After this, we will tell you how to change your broker and why this is required. You need to consider some things before the choice of a broker, how the broker is regulated, where they are located, what reviews they have, which platforms the broker offers. The last criteria are important as we do not recommend starting to trade, for example of Fix API, as this is a more advanced platform. We believe starting on the MT4 platform is the most optimal as it is not an ideal platform and is created for brokers and not for traders, however has all instruments which will demonstrate the forex market. For this reason, you should look for a broker which offers either the MT4 or the MT5 platform, prioritizing MT4 as it is more simple to understand.
ECN Forex Brokers
- Saxo Bank
- CMC Markets
- Interactive Brokers
- TD Ameritrade FX
Next, you need to select a strategy. There are a PLETHORA of strategies, you can find descriptions of them online, but the strategy which works without a doubt will not be revealed to others and will not be outlined in detail online. Strategies can be divided into certain categories. It is important to understand if you will be manually trading at all or using a fully automatic strategy. The advantage of an automatic strategy is that you can test this strategy using historical data. This will not be 100% accurate as in the testing, many factors are left unaccounted for, and often testing is done using historical data which are tailored and more perfect than is seen in forex trading. However, after testing, you will be able to form an opinion on the strategy which you are using, rather than using this strategy manually, as this will cause you to learn from losing money. Even if you use the demo, this will cause a loss of time as it requires about a year for the market to go through all phases, as this will give you an idea of how the strategy operates. If you found an indicator that shows points of entry or exit, your job is not done, the indicator is just a small part of the strategy, it can help the trader create his strategy, but a strategy does not only contain entry points, but exit points, how stop loss is set, how to take profit is set, which money management is used, and so on. So I recommend starting with an automatic strategy or automating your strategy. It is better to automate it for the MT5 platform as this platform has better testing tools and optimization. The MT4 platform does not allow you to test using ticks, and many articles outline how to import ticks into the MT4 platform, but this is incorrect. This is because MetaTrader stores only open/close, high/low information, and loading ticks into the MT4 is just a myth. So if you want to utilize testing on ticks, you should automate this strategy for the MT5 platform and optimize it by testing it there. We can helo you program this as our talented developers have immense experience in coding strategies for any platform. After your strategy has been tested and works on the MT5 platform, you can code this strategy for other platforms that you are interested in. From the MT5 platform, it is best to switch to the Fix API platform, a financial protocol that allows you to work with brokers on a higher level, such as liquidity providers, and will enable you to use all real instruments. You can use FOK IOC and limit orders which help control slippage, and you can read about the FIX API platform and its benefit son our blog.
Platforms for Forex Trading
- MetaTrader 4 (MT4)
- MetaTrader 5 (MT5)
- jForex (DukasCopy)
We start on the MT4 and MT5 platforms, and when we gain experience, we should switch to FIX API. FIX API brokers have some limitations. The first one being, that these brokers allow trading only on large deposits, usually over $10,000. IF your capital isn’t large enough yet, you should stay on the MT4 and MT5 platforms so you are not limited by just two to three brokers. If your capital is larger, you should move to FIX API brokers and use your strategy there or purchase a strategy that works with FIX API. As soon as you have chosen a strategy, which will be outlined later, you will need to change your original broker. Why is this? For example, you want to trade gold during moments of high volatility, and the liquidity may be low on your original broker. If your original broker is smaller, there will be less liquidity during highly volatile times, you will face slippage, and your orders will be rejected. In cases such as these, you will need to switch your broker. The second instance of when you will need to switch brokers may arise when the broker starts rejecting orders which are done during highly volatile times. So for each strategy, you will need to switch brokers. When you have optimized your strategy and tried it on the demo account, when you move to a real account you will need to switch your broker.
You should also select a VPS. A VPS is always needed, and you need to choose the VPS in the location of your broker. If your broker is in New York, you should select a VPS in the same data center. If you do this, there will be less lagging of time, as slippage on every order will cause you more losses than if you buy a VPS. You should never take a VPS from your broker, as in this case, the broker will be able to go on the VPS and see which strategy you are using. The VPS should be selected from a highly regarded VPS provider and never from the broker.
- UltraFXVPS (locations: NY, LD)
- BeeksFX (Locations: NY, LD, TY)
- FXVM (Locations: NY, LD, TY)
What kinds of strategies are there. There are thousands of strategies used in the Forex market, each one is different, and the optimal choice of strategy depends on how you envision trading. There are highly profitable scalping strategies, but scalpers often have a large distance set in their stop loss, so one loss will be colossal, and you will lose more than you made on 3-4 successful trades. These strategies are very sensitive to the broker that you use, and the broker can easily destroy this strategy using a plug-in; however, this is a highly profitable strategy. Arbitrage strategies encompass trading based on the fast feed, and there are many varieties of arbitrage. Latency arbitrage, hedge arbitrage, statistical arbitrage, and triangular arbitrage are all different and highly profitable with a very short stop loss. Learn more about arbitrage trading- click to read An Ultimate Guide to Arbitrage Trading. This minimizes your risk. In my opinion, arbitrage is the best strategy to use when trading on the forex market. The catch is that you will need to change brokers ofter, but one profitable month will be profitable enough that it will cover the money you lose while in search of a new broker and small losses due to testing. Our company offers many programs, the most current being DAAS, which includes many arbitrage strategies within itself. I can say proudly that this is the best product on the market, with no competitors on the market. The next way of trading is trading based on news. This is a more expensive way to trade than arbitrage as the trader needs to invest in a news feed, which is expensive, and companies that provide it want a large amount of money, 3 to 4 thousand dollars. We offer live feed to our traders and offer a program for news trading, but it will require extra funding. There are benefits to this type of trading, just one or two successful order entries can make profits for the trader, but you need to have lots of experience with news trading. You need to understand which news items you should trade, which you shouldn’t, and so on. You need to be able to understand very well things such as the importance of oil vs. COVID-19 or unemployment and what this corresponds to.
Video about DAAS
There are many on the market which are using grid strategies. Companies now sell grid signals or control accounts using gridders, and I recommend not get involved in such fads, as grids much like martingale, are very, very high-risk strategies. When you open a trade on a currency pair while using a grid, as soon as the grid goes against the direction of your order, there will be money pouring which under a strong trend will result in your account being completely nullified to 0. This is why we recommend avoiding any strategies based on a grid or martingale system. To be successful, this needs to be a grid with fixation; if you lose twice in a row, this strategy needs to be fixated to avoid more losses, which is often not done.
As I already pointed out in the beginning, money management needs to be more strict if you have a smaller deposit and softer if you have a larger deposit. If you are starting with 100 dollars, you want to make money; you can use more aggressive money management and enlarge your lots with capital growth. If your capital is large, I would recommend trading with a fixed lot and set goals that aren’t as ambitious as when you have a smaller capital. You will conserve your capital in this way and be able to work with one broker for a longer amount of time as the broker will make money on commission, and he will see that your profit is non-dependant on liquidity providers.
The purchase of a signal is very important as well. I would recommend the purchase of a signal in the case when you want to mask your arbitrage strategies or news trading. To mix arbitrage and news with other strategies, just simply buying signals isn’t the right course of action as usually all of these signals are not very high-quality, and you will start losing eventually. But when you have working signals and arbitrage trading ad the same time, the arbitrage will cover the losses of your signals with profit. If you are purchasing signals, you can use a copier that will copy these signals to your accounts on which you are using arbitrage trading. This is why the trade copier is a very important trading instrument as it allows you to copy signals from other traders and other sources. It also allows you to control multiple accounts at once. You can trade on some accounts and copy these orders on a larger amount of accounts.
Signals service providers
Hopefully, this article could outline some doubts that you may have had about trading, strategies, and our company. If you have any questions, please do not hesitate to write to us, as we will do our best to assist you. Happy trading!