The Future of Online Forex Trading

Online Forex Trading and How it is Likely to Evolve

Online forex trading is likely to evolve in the coming years. So as to offer traders smarter ways to trade and more advanced contingent orders for risk control.

Online Forex Trading Needs to Keep on Evolving

Online forex trading needs to keep on evolving as markets become more risky in some aspects. And more profitable in other aspects. Volatility patterns change, and market volatility itself may change significantly for long periods of time. Trading forex is difficult, always, and it will always remain so. As most trading educators and gurus always seem to be one step behind real market action. And the trading tools available today, though not bad. Cannot be used in the ways that these old fashioned educators will tell you. Every forex trader who has been through such education has found out the hard way. Small risk reward ratios fail miserably, and actually make one’s forex trading much more risky. Nothing that works well on the white board ever works well in live trading. That’s just the way it is. The markets will always be risky and intimidating. But to some good traders they will always be profitable as well. Online forex trading will keep on intimidating traders, especially new traders. And forex brokers will keep on improving, so as to provide the best error-free trading experience.

How Will Online Forex Trading Evolve?

We are likely to see online forex trading evolve in some ways, so that more flexibility is available for risk control. Such as contingent orders which are based on multiple data inputs, than just market price. For example, they may make it possible to have a trade closed or reversed, based on market price and volatility. Or based on price progress and the elapse of time. Such contingent orders could really allow already good traders, make their trading go even further. And hence increase profitability. Traders that lose, will continue to lose until they improve their methods. There’s no magic remedy for losing traders, to offer overnight success. Brokers cannot really help on that one. But for those who are on the way to success, brokers can enhance the trading experience by huge margins. Forex brokers of the future will make it so that the wise forex trader will trade much better than they ever could with today’s platforms. And the same is true when comparing different times in the brokerage industry, set 10 or 15 years apart. The newer service was always improved and better in many ways, over the old.

Wise Traders Know Not to Be Fooled By Evolution

Wise traders know that smart phones and automation are all good, but are not by any means the answer to trading. As they are not substitute for real, hard-earned trading experience. And while they want to see enhancements made in the brokerage industry. They know that winning in the forex market will only be possible through the use of the right strategy. As well as through real dedication to the task.

How Will Brexit Affect Online Currency Trading?

Online Currency Trading- The Effects of Brexit

Online Currency Trading after Brexit

Brexit will impact some economies in bad ways and good. These all long term effects, with the British pound itself likely to rise due to the forthcoming events.

Online Currency Trading and Investing after the Brexit

Online currency trading and investing is likely to see the effects of Brexit on many countries. First and foremost is Britain itself, which will almost certainly be economically worse off outside the EU. More specifically it is expected that unemployment will go up, as many specialized jobs will be diverted in other EU countries. The general feeling is that Britain will become poorer for several years at least, inflation will definitely rise. And interest rates will also rise significantly. And this is the only reason why Carry forex players will see an opportunity investing in the British pound, hence the currency will appreciate. This scenario is not an exact one, but it very likely to happen. Carry forex trading on the other hand is very important. Because it helps even short term forex traders better assess technical support and resistance levels. So a trader trading let’s say EURGBP, will take these Carry trade facts very seriously. And they will look at interest rate differentials between the two different economies and their currencies. It won’t take an economist to figure out which country will have more inflation, and the need to fight more inflation. Or which country will do better on imports and exports. So the trader in our example will look to confirm short trades in EURGBP, expecting the British pound to recover from drops. And not to break below critical lows. Therefore EURGBP should provide some nice trades on the short side. With counter moves seen as mere corrections. Online currency trading can be implemented very nicely through CFD trading accounts. Provided that the trader knows how to handle volatility and risk control.

Online Currency Trading Makes Sense

It may seem that online currency trading doesn’t really make much logic sense. And that economists and technicians never agree on anything. But this disagreement among these people is natural, and expected. Wise traders take the logic approach, and when data is in conflict, they look at different time frames. Logic of longer time frames always prevails over the conflicting logic of shorter time frames. In the case of Carry forex trades, inflation and interest rates are logic data. And this data prevails over any short term indicator. In fact, short term indicators fail to predict price extremes, and where a currency pair may go. Global investor money will always go to the currency paying the highest interest rate, period! The domestic economy may act in a negative way, so as to lessen the buying power of the currency of the country in question. But even poor countries can see their currencies appreciate on high interest rates alone, as long as the country has a good reputation. and Britain in our example does have a good reputation.

CFDs for Forex Trading

CFD guide books and resources are available for traders to read. But in a nutshell, CFDs are better because of their superior linear pricing and far superior liquidity. And not because of their leverage. Many other trading instruments come with convenient leverage, but lack the linear pricing and ultra high liquidity of CFDs! That’s where the secret of success is, in many CFD trading stories! The entire spectrum of short term and long term forex trading can be implemented through CFDs, in very profitable ways. Where risk itself is controlled in the best ways possible by retail traders. The actions of large Carry traders and the relevant information can help set currency analysis right. And to eliminate key trading mistakes over the course of the trading year. That’s how online currency trading and investing can be greatly improved.

Online CFD Trading – Not For Publication

Online Contracts for Difference or CFD trading allows you to make profits due to changes in the prices of underlying financial instruments without actually owning them. This relatively new type of trading is gaining popularity because of the many advantages it provides.

The most profound advantage of online CFD Trading is that because you are only trading the difference between the purchase and sale (or sale and purchase) prices of an asset, you incur none of the brokerage fees associated with such a transaction – no “round-trip” commissions; only the margin spreads. The market trader enters into a contract with a CFD at a specific price, and the difference between that price and the price that it is closed at is settled in cash. (Note: A small fee is associated with holding positions over 24 hours, so CFDs are not appropriate for all longer-term investment strategies)

Discovering What Is online CFD Trading

Below we list some of the significant advantages of CFD trading.

1. Leverage plus margin

Leverage is the mechanism whereby your CFD margin deposit controls an asset of many times greater value, offering a magnified trading impact and accelerated return. The most significant advantage of online CFD trading is the unrivalled margin available in today’s platforms, with leverage of up to 400 to 1 (in forex).

Thus, a very small principal can control a significant trading amount, magnifying gains (and losses!). The implications of your decisions take on exponential importance. With this magnification ability comes a responsibility for better preparation and more professional execution. With this leverage ability across the entire range of asset classes, you can benefit from trading the entire set of asset classes with minimum committed capital.

2. Liquidity

CFD trading is a truly global enterprise. Trade initiation is possible if an official exchange is open for business somewhere on the globe. With forex, major commodities, and stock indices trading nearly 22–24/5, so are CFDs. And for commodities and shares listed only on US or European markets, trading hours are no less than in the underlying exchange. Fixed margins and best execution policies minimize unexpected “spikes”, even in fast moving markets. With CFDs, what-you-see is almost always what-you-get.

3. Tax and cost efficiency

Again, because CFDs are only agreements to compensate for price movements and not transactions involving asset ownership, their cost efficiency and style of taxation are also more advantageous. Levies associated with specific asset classes, like stamp taxes on shares are not imposed. The general exemption because no physical asset changes ownership can beneficially affect the relative tax and regulatory burdens as well.

As discussed above, the absence of a commission means that transaction costs are minimized. Furthermore, fixed costs are largely eliminated.

Similarly, the expensive costs and delays of a physical delivery of the shares, the registration, and any holding/safe custody charges that come with having a broker are eliminated, which saves you time and money.

4. Facility of automated orders and alerts

Today’s advanced CFD trading platforms offer a uniform interface for trading in all underlying assets. Additionally sophisticated alarms and trade prompts and executions ease your formulation and execution of standing orders to minimize losses and maximize profits.

5. Convenience of placing orders

A very important benefit of online CFD trading is that you can place your orders on multiple platforms and environments with one interface. Industry-leading companies offer 24/5 assistance and advance mobile-friendly environments. Seamlessly monitor your portfolio on smartphones, tablets and desktop PCs, depending on where you are. Trade anytime, anywhere.

6. Breadth of Offerings

In addition to the seamlessness of the interface and the general absence of commissions, the ability to trade a thousand or more financial instruments enhances the functionality of online CFD trading to the extent that they represent an optimal platform for a variety of hedging and risk management positions. For both traders with positions in any number of marketplaces and businessmen with exposure to underlying asset price fluctuation, having a single user-friendly multi-platform interface with position details reduces risk and overhead.

Now you can see the benefits of online CFD trading and why this type of trading is enjoying increasing popularity, particularly among those with modest funds available for trading.

CFD Online Trading Platform Specifics

While CFDs were initially publicly traded negotiable instruments on stock exchanges, their business model rapidly evolved and migrated into proprietary platforms wherein and whereby volume grew exponentially. Integral to this evolution was the explosion in computing power and the internet such that each current CFD marketplace is a closed platform backed by private capital. While national and supra-national financial regulators impose a veneer of respectability and oversight to the various operations, the business license threshold is minimal. Traders are thus required to perform their own due diligence in platform evaluation.

Evaluatory criteria include those both specific to CFDs and those more general related to trading environments. Apart from registration and any infraction information available from the regulatory authorities, enquire as to

Bid / Ask spread size and variability —The greater your trading velocity, the more important this variable will be to your performance. Often in online CFD trading, this variable is negotiable or a function of volume. Particularly here, clarify with brokers or sales representatives as to what special treatments are available and the criteria required to obtain them.
Simulation account — Practice, practice, practice. Your online CFD trading platform should offer an unlimited environment in which you can try out your trading ideas and regimes and you should avail yourself of it. Contemporary psychology posits that 10,000 repetitions are required to master an autonomous action and while it can be readily agreed that playing piano and profitably “playing” markets are dissimilar skill sets, both require a degree of mental discipline and competence and the ability to learn from mistakes. Do not underestimate the demands of this element of preparation
Customer Service and Responsiveness — After a thorough vetting of the prospective online CFD trading vendor and initial trading initiatives, both simulated and real, initiate and evaluate the firm’s customer service, across the entire range. Only after you have satisfied your expectations
- Ensure that order execution suffers minimal distortion. While total liquidity and instant position realization is not a reasonable expectation for a beginning retail trader, lags and price variance should be reasonable.
- Attempt to withdraw funds. Regulatory anti-money-laundering laws have rendered the withdrawal process into a more stringent and drawn out process, but once you have submitted the correct documents, your second and subsequent requests should be routine prompt affairs.
- Ask difficult questions and make demands. Confirm that “24/5” availability is truly the case. Ensure that promised responsiveness extends to all communication channels: for example, phone, email, website, instant messaging
Quality of Ancillary Assistance — With the information technology explosion and internet revolution has come the ability to calculate and present endless analyses of data, from streaming news feeds to market commentary, charting packages, and alerts of varying kinds. Your platform should offer a wealth of such tools and the ability to package, deliver and format them as per any individual preference.
Instrument leverage — The multiple of your margin capital. This magnification factor is actually less important than other platform characteristics because new traders in particular over-leverage their capital. Just as in the larger business world, most business fail, with the single largest contributing factor under-capitalization; Most new traders fail, with the single largest cause being over-leveraged positions. As a beginning trader, no single trade should represent more than 2% of your “risk capital” (defined as monies which can be lost in their entirety) and ultimately this percentage can be increased to five percent.

The Forex Trading Platform Online Traders Prefer

The Forex Trading Platform Online You Should Use

The typical forex trading platform online traders prefer, is always one which offers sophisticated trading tools. All for the purpose of catching more trades.

The Forex Trading Platform Online Traders Prefer is the Perfect Trading Terminal

Traders usually have more than one strategy, and trade more than one market. Though they all develop special skills around one set of markets, or trading hours. Online trading is a must in today’s fast moving financial markets. The forex trading platform online traders choose to use, is one which facilitates all their specialized trading needs. Typically these needs include the ability for placing contingent orders with detailed triggering criteria, and catching opportunities while they are away from their computers. This kind of automation is essential for implementing many forex trading strategies today. The forex trading platform online traders use, has to also provide embedded calculator tools, for performing fast and accurate calculations. This functionality is critical even to swing traders and CFD stock traders, because they can play around with various numerical inputs, and work out insightful and accurate results. The old school handheld calculator cannot match the accuracy and speed of spreadsheet-like embedded calculators, because data is entered in a sequence, and any mistakes are carried through. The good CFD trading platforms especially, offer all this and even more. The wise traders of today’s markets are more like number and chart analysts, rather than simple, passive financial news receivers. Even if one trades on the daily news, without numerical analysis and price targets, they will have no clue where and how the probabilities will dictate the trend on that day.

One Kind of Forex Trading Platform Online Traders Don’t Like

There is one type of forex trading platform online traders don’t like much, and that’s the kind of bad innovation. Any platforms that evolve too fast, without being compatible with previous versions, in terms of user interface, fail to win traders. It is the kind of failed innovation we saw with Windows 8, which is hard for previous version users to become accustom to, if not annoying to use. Such extreme changes in a trading platform are not welcome, as traders are used to a certain layout on their trading platform. And even new traders, who just started to learn forex trading, are not keen on dramatic changes on the trading platforms and in their software. Traders develop trading skills, and in the process of doing so, they become accustomed to pressing certain buttons and seeing certain things, in fixed places on the trading terminal screen. If the trading platform in question appears to be too radical, and too space-age like, it does create user compatibility problems. But in reality, not many such platforms exist, all good brokers avoid extreme changes and pay attention to customer comfort. One area of moderate evolution is on forex, and the ability for the trader to see exactly how much money they trade per pip. Instead of using the old format of Lots, which to many new traders may be confusing. This change is good for new traders who don’t understand the pricing of the Pip and Lot size, not a mad step forward, but somewhat unnecessary for most forex traders.

How Do Global Events Affect Online CFD Trading

Online CFD trading in Today’s Global Financial Markets

Globalization has improved economies and living standards around the world. While small investors look at online CFD trading as the perfect opportunity tool.

Online CFD Trading Wins over Classic Investing

Classic investment methods are proving to be more and more inefficient and hard to afford in today’s markets. This is because the average retail trader has to take into account a market’s volatility and overall risks. Online CFD trading offers all the good things and earning potential of classic trading and investing. But without many of the bad aspects that classic investing has. Many old fashioned investors and traders still may wonder, how does CFD trading work? But even them are quick to learn and adapt. Global events create risks and opportunities on a weekly basis, in all markets. And even though the trading industry and many CFD trading courses push for day trading. The real opportunity seems to lie somewhere between week to week trading and day partial day trading. This is because the week is a time period which allows for good time flexibility against unforeseen events. While also allowing traders to make a profit without having to wait too long.

Online CFD Trading Gets the Attention of Stock Traders

Online CFD trading is constantly winning more and more fans among classic stock traders. This is because of the benefits of CFDs, which are quite unique and often overlooked. Stock traders and investors, all need ways to limit their downside risk in the near term. And hedging a stock trade is not affordable or as straightforward through instruments other than CFDs. Even day traders, trading stocks using advanced methods and level II quotes. Have found that CFDs help get the job done both fast, and at very low dealing cost. Online CFD trading has the potential to boost profitability in many different trading systems. There is no need for extensive online CFD training on how to use CFDs. But ti helps to know the real benefits.

The Global Stock Trader

Globalization offers good opportunities every week, especially in commodity related stocks. And also in stocks where level II information can be cross-confirmed against local, stock-specific factors. So that the trader is able to figure out why the stock in question may rise $5 this month, without really being bullish. And why it may also rise $5 at another time, where the circumstances impacting the underlying company are actually very positive. And in which case the stock will continue to rally. So it’s important to know the story behind the numbers and who is really buying or selling a stock. Even geopolitics is important in this kind of analysis.

Tips For Trading Success on Forex Trading Platforms

What is Missing in Most Forex Trading Platforms

Forex trading platforms used today are all good, for most tasks a trader may have to do. There are however trades where a simple price chart will not suffice.

Forex Trading Platforms and Competitive Trading

Forex trading platforms and even premium market charting packages are designed around clients’ demands. And even though they cover a wide spectrum of indicators and tools. The wise forex trader may need to resort to yet different types of charts from time to time. Sometimes patterns such as price gaps are visible on some charts, but not on others. And sometimes candlestick analysis may yield different results because different charts show slightly different candle bars. And in extreme cases the trader has to resort to point and figure charts or totally different charts. So as to be able to see beyond market noise and confusion. Forex brokers do their best to meet the demands of their clients on charting tools. And they facilitate online forex trading extremely well. Nonetheless, no amount of prepackaged tools and indicators is ever enough when the markets become really confusing and intimidating. And the wise forex trader has to look even further out for clues on market direction. Forex trading platforms help get the job done, but cannot provide all the tools a trader may possibly need. Even premium charting software fails to go this far.

Forex Trading Platforms and Hedging

The wise forex trader often needs to hedge an open losing trade. This is usually a trade which the trader believes will turn around. And the trading platform provides all the tools necessary, such as contingent orders, to manage trade risk quite well. Forex trading strategies focused on extensive risk control through hedging are clever strategies. The main objective is to expect losing trades, always. And to invoke plan B, specifically for that scenario. The wise forex trader identifies strengths and weaknesses on the charts, and prepares to handle both market directions. Market volatility can be thought of as a third direction. Where no lasting trend will ever develop. And volatility itself is more complex than it appears. Traders who understand volatility and know the underlying daily trends of the markets, make the most money. The forex industry is focused too much on day trading. And yet it is a mistake to be a exclusively a day trader. The forex market has all kinds of participants, and the most influential ones are not exclusive day traders. So it’s a good idea to use forex trading platforms for more than just day trading, the tools are available in them anyway.

Pay Attention to the Principle of Probability

The basic idea of probability in forex trading is all about imposing time limits on trades. Trading platforms have not yet evolved to this level, but may do so in the future. The idea is that if a trade fails to show profit of at least an amount X or more, at Y number of hours after it has been opened, then the trade will be closed. This timing has to be adjusted around the probability that a trade which takes too long to become profitable. It naturally starts to become very likely that it will turn into a loser. And it is a concept that many floor traders and veteran forex traders have used over the years. And it does work, because it helps traders avoid large losers while still being at the break-even point.