There are approximately 100 forex brokers worldwide -40 of which reach to international audiences and the rest concentrates on domestic markets. This forex broker mix is now enhanced by major banks that are partnering with established forex brokers.

Clearly, as the number of participants grow the forex broker choice gets tougher.

The competitive forex broker landscape showcases firms highlighting their perceived strengths and what (broker firms perceive) traders wish to hear: broker financial strength, technology prowess, great customer service, and the list goes on. But what are the hot buttons of forex traders nowadays and is technology one of them?

To answer those questions, e-Forex magazine and ForexDatasource.com partnered to conduct a special study. The results were also complemented by market research Forex Datasource had generated previously.

For this special study, both retail and institutional forex traders were included. Each respondent was asked to rank from 1 to 10 (10 being the highest) how important were specific technical and nontechnical factors in their forex broker selection process. The survey also asked their forex trading experience in years and whether they managed the Forex accounts of other people (institutional traders).

The most important variables in the Forex broker selection process were four, and two of them had a technology component:

Hot button #1: Regulatory Body (9.5 out of 10)

Registration of a Forex broker with the NFA or FSA has come to represent a commitment to transparency. It should not be surprising that many well established broker firms, such as ACM USA, Alpari, and FXDD have sought NFA registration in 2008. The registration process enables them to acces~ the lucrative US market, representing between 35% and 40% of the global retail Forex market. Conversely, a number of firms operating under a less comprehensive regulatory environment (such as Switzerland, the Cayman Islands, or Cyprus) may be placing a limit on their potential global appeal.

It is also true that the NFA registration can be burdensome, as evidenced by the decisions of two large European brokers to shutter their NFA foray and just keep their FSA (UK) registration. In Nov 2008, CMC Markets US withdrew its membership after 3 years and Saxo Capi tal Markets US opted to withdraw its membership application.

Capital and regulatory requirements have been on the rise for Forex brokers since 2006 when the US National Futures Association (NFA) started an ongoing push on this regard. By the end of Oct 2008, the NFA raised from $5m to $l0m the minimum capital requirement for Forex Dealer Members -the same used to be $250,000 through Jun 2006. By May 2009, this requirement will become $20m. It is quite conceivable that in a challenging credit market and faced with a competitive broker market, some Forex brokers will be forced to sell their book of business to larger firms. This consolidation process has been taking place quietly since 2006 without much impact on Forex traders.

Hot button #2: Fund Security (9.4 out of 10)

Major firms with tens of billions of dollars in capital are going bankrupt or needing government bailouts. Many investors wonder whether market turmoil will also hurt forex brokers. Institutional forex traders surveyed appeared to apply a two-stage filter in their broker selection, where fund security and regulatory environment was the first filter, and technology factor comparison was the second filter.

Mikkel Thorup, Capricorn Group Chief Investment Officer, espoused this two-tier approach:

"In today's markets our primary concern is credit risk when dealing with brokers or execution providers. It does not really matter that a broker provides top notch execution, but then could be out ofbusiness the next day, and taking our clients money down with them. Therefore we only deal with banks or top rated FCM's. When looking at execution and technology it is paramount for us that platforms are reliable and have low latency, together with the ability to deal via phone as a backup if there should be system failures. If these conditions are not met, then we will not be entering into business relationships. "

On a positive note, virtually all Forex brokers are focused on one line of business (retail Forex) and are not directly affected by what is going on in the market. Despite the credit difficulty that corporate borrowers face, forex brokers polled do not have plans to curtail the leverage level offered to clients. In terms of financial backing, however, it is worth noting that the majority of forex broker firms are each owned by 1-5 wealthy individuals, while most of the larger ones have received capital infusions from private equity firms.

As a former management member for a major Forex broker dealer, I understand that a great degree of sophistication is required to manage all financial operations between the broker and clients and between the broker and the interbank market. As an illustration, a single major broker may transact more than 5 million trades with clients in a single month -a level of trades that may actually exceed the turnover seen at Deutsche Bank, the largest FX market maker. So even though the average trade size of these Forex brokers will be a fraction of the average trade of Deutsche Bank, the technical requirements to keep all back office operations in order are high and expensive.

Hot button #3: Trading platform features (9.3 out of 10)

In a close third place, traders polled cared about the features of their trading platform. This category refers to having the desired charting tools and technical indicators, within a stable environment conducive to a high system uptime. Drawing on the wealth of information from its trader evaluation database (more than 500 unique evaluations from traders in more than 65 countries), Forex Datasource is able to expand on the findings from the e-Forex survey.

The CMS Forex and FX Solutions platforms are the highest ranked trading platforms, followed closely by that of Interbank FX. Conversely, four of the Top 7 trading platforms tracked by Forex Datasource belong to brokers offering the MetaTrader (MT) 4 platform. The MT4 platform is a very popular choice among traders because it combines integrated charting, a robust indicator library and a simple language to program custom indicators or automated trading strategies. FXCM trading platform has gotten high marks by some traders for enabling them to trade from the charts.

Hot button #4: Trade execution features (9.1 out of 10)

Trade execution is also a key technology factor for traders, both retail and institutional. Traders are interested in having stable spreads, little or no slippage, little or no price requote, as well as low price latency. Some firms -such as MIG Investments -are taking steps to increase the number of data centers around the world to decrease price latency and improve execution speed.

Besides the factors described above, traders polled did not show a consistent preference for the remaining factors. Some traders cared about getting low or fixed spreads, or related business factors such as (a broker) not having a dealing desk. Newer traders tended to care more about the reputation of Forex broker dealers in discussion boards than more experienced traders did. An even smaller segment of participants cared about the quality of customer service or about advanced technical features -such as API trading or money manager software.

Favourite Broker Dealers

Now that we have a sense of the hot buttons affecting traders today, it would be useful to know what are some of the most popular broker dealers today. The collective wisdom of a community, whether it be one of ants, bees, or Forex traders, is infinitely greater than that of a single individual.

The Forex Datasource broker dealer database consists of hundreds of trader evaluations which began to be collected in August 2008.

In these evaluations, Forex traders from over 65 countries ranked their preferred broker dealer from 1 to l0 on key areas, such as overall evaluation, platform, and customer service.

Most Forex traders appear to be content with their Forex broker selection and the edge that the top seven brokers in any category have over others tends to be small. It is safe to say that the high regulatory burden imposed on all brokers is also forcing brokers to keep up in terms of technology investment, while tightening spreads and offering outstanding services to clients. So, while Forex traders have quite a bit of work selecting a broker, the latter have a tough assignment carving out a niche in a very competitive broker dealer environment.

There are approximately 100 forex brokers worldwide -40 of which reach to international audiences and the rest concentrates on domestic markets. This forex broker mix is now enhanced by major banks that are partnering with established forex brokers.

Clearly, as the number of participants grow the forex broker choice gets tougher.

The competitive forex broker landscape showcases firms highlighting their perceived strengths and what (broker firms perceive) traders wish to hear: broker financial strength, technology prowess, great customer service, and the list goes on. But what are the hot buttons of forex traders nowadays and is technology one of them?

To answer those questions, e-Forex magazine and ForexDatasource.com partnered to conduct a special study. The results were also complemented by market research Forex Datasource had generated previously.

For this special study, both retail and institutional forex traders were included. Each respondent was asked to rank from 1 to 10 (10 being the highest) how important were specific technical and nontechnical factors in their forex broker selection process. The survey also asked their forex trading experience in years and whether they managed the Forex accounts of other people (institutional traders).

The most important variables in the Forex broker selection process were four, and two of them had a technology component:

Hot button #1: Regulatory Body (9.5 out of 10)

Registration of a Forex broker with the NFA or FSA has come to represent a commitment to transparency. It should not be surprising that many well established broker firms, such as ACM USA, Alpari, and FXDD have sought NFA registration in 2008. The registration process enables them to acces~ the lucrative US market, representing between 35% and 40% of the global retail Forex market. Conversely, a number of firms operating under a less comprehensive regulatory environment (such as Switzerland, the Cayman Islands, or Cyprus) may be placing a limit on their potential global appeal.

It is also true that the NFA registration can be burdensome, as evidenced by the decisions of two large European brokers to shutter their NFA foray and just keep their FSA (UK) registration. In Nov 2008, CMC Markets US withdrew its membership after 3 years and Saxo Capi tal Markets US opted to withdraw its membership application.

Capital and regulatory requirements have been on the rise for Forex brokers since 2006 when the US National Futures Association (NFA) started an ongoing push on this regard. By the end of Oct 2008, the NFA raised from $5m to $l0m the minimum capital requirement for Forex Dealer Members -the same used to be $250,000 through Jun 2006. By May 2009, this requirement will become $20m. It is quite conceivable that in a challenging credit market and faced with a competitive broker market, some Forex brokers will be forced to sell their book of business to larger firms. This consolidation process has been taking place quietly since 2006 without much impact on Forex traders.

Hot button #2: Fund Security (9.4 out of 10)

Major firms with tens of billions of dollars in capital are going bankrupt or needing government bailouts. Many investors wonder whether market turmoil will also hurt forex brokers. Institutional forex traders surveyed appeared to apply a two-stage filter in their broker selection, where fund security and regulatory environment was the first filter, and technology factor comparison was the second filter.

Mikkel Thorup, Capricorn Group Chief Investment Officer, espoused this two-tier approach:

"In today's markets our primary concern is credit risk when dealing with brokers or execution providers. It does not really matter that a broker provides top notch execution, but then could be out ofbusiness the next day, and taking our clients money down with them. Therefore we only deal with banks or top rated FCM's. When looking at execution and technology it is paramount for us that platforms are reliable and have low latency, together with the ability to deal via phone as a backup if there should be system failures. If these conditions are not met, then we will not be entering into business relationships. "

On a positive note, virtually all Forex brokers are focused on one line of business (retail Forex) and are not directly affected by what is going on in the market. Despite the credit difficulty that corporate borrowers face, forex brokers polled do not have plans to curtail the leverage level offered to clients. In terms of financial backing, however, it is worth noting that the majority of forex broker firms are each owned by 1-5 wealthy individuals, while most of the larger ones have received capital infusions from private equity firms.

As a former management member for a major Forex broker dealer, I understand that a great degree of sophistication is required to manage all financial operations between the broker and clients and between the broker and the interbank market. As an illustration, a single major broker may transact more than 5 million trades with clients in a single month -a level of trades that may actually exceed the turnover seen at Deutsche Bank, the largest FX market maker. So even though the average trade size of these Forex brokers will be a fraction of the average trade of Deutsche Bank, the technical requirements to keep all back office operations in order are high and expensive.

Hot button #3: Trading platform features (9.3 out of 10)

In a close third place, traders polled cared about the features of their trading platform. This category refers to having the desired charting tools and technical indicators, within a stable environment conducive to a high system uptime. Drawing on the wealth of information from its trader evaluation database (more than 500 unique evaluations from traders in more than 65 countries), Forex Datasource is able to expand on the findings from the e-Forex survey.

The CMS Forex and FX Solutions platforms are the highest ranked trading platforms, followed closely by that of Interbank FX. Conversely, four of the Top 7 trading platforms tracked by Forex Datasource belong to brokers offering the MetaTrader (MT) 4 platform. The MT4 platform is a very popular choice among traders because it combines integrated charting, a robust indicator library and a simple language to program custom indicators or automated trading strategies. FXCM trading platform has gotten high marks by some traders for enabling them to trade from the charts.

Hot button #4: Trade execution features (9.1 out of 10)

Trade execution is also a key technology factor for traders, both retail and institutional. Traders are interested in having stable spreads, little or no slippage, little or no price requote, as well as low price latency. Some firms -such as MIG Investments -are taking steps to increase the number of data centers around the world to decrease price latency and improve execution speed.

Besides the factors described above, traders polled did not show a consistent preference for the remaining factors. Some traders cared about getting low or fixed spreads, or related business factors such as (a broker) not having a dealing desk. Newer traders tended to care more about the reputation of Forex broker dealers in discussion boards than more experienced traders did. An even smaller segment of participants cared about the quality of customer service or about advanced technical features -such as API trading or money manager software.

Favourite Broker Dealers

Now that we have a sense of the hot buttons affecting traders today, it would be useful to know what are some of the most popular broker dealers today. The collective wisdom of a community, whether it be one of ants, bees, or Forex traders, is infinitely greater than that of a single individual.

The Forex Datasource broker dealer database consists of hundreds of trader evaluations which began to be collected in August 2008.

In these evaluations, Forex traders from over 65 countries ranked their preferred broker dealer from 1 to l0 on key areas, such as overall evaluation, platform, and customer service.

Most Forex traders appear to be content with their Forex broker selection and the edge that the top seven brokers in any category have over others tends to be small. It is safe to say that the high regulatory burden imposed on all brokers is also forcing brokers to keep up in terms of technology investment, while tightening spreads and offering outstanding services to clients. So, while Forex traders have quite a bit of work selecting a broker, the latter have a tough assignment carving out a niche in a very competitive broker dealer environment.

Volatility has come back to the forex market with a vengeance after seeing it trend down in price swings over the past several years. It feels like the 1980s again when large daily swings and sharp trend moves were more the norm. The advent of electronic trading and price transparency as well as the introduction of the euro among other factors had led to a reduction in volatility that favored the market makers, where there were limits to risk on an intra-day basis. Large swings, such as after a key economic report, were more the exception than the norm.

All of that has changed. The global financial and economic crises have seen the forex market experience a sharp increase in volatility. Although I have not quantified it, the price action suggests reduced participation and reduced risk taking have contributed to the increase in volatility. There are fewer players in the market with some hedge funds and other players falling victim to the financial meltdown experienced late last year. Those still in the market have been forced to reduce leverage. Banks have been forced to pullback on taking risk. This has probably made it more difficult for the market to absorb large orders during periods when liquidity drops. The volatility has forced traders to take a more defensive approach to protect capital.

The market has thus been forced to shift gears. There are clearly opportunities to make large profits in this environment but also risks where one can get wiped out on a surprise move in the market. Examples of surprises were the recent move by the Swiss National Bank to intervene to weaken the CHF (vs. the EUR) and the FOMC decision for the Fed to undertake quantitative easing. In both cases, the markets reacted violently with large gaps and large swings, especially by recent historic standards. For example, the EUR/USD was trading at 1.3105 just prior to the FOMC announcement and it closed around its high (1.3499). This represents a 3% swing in less than two hours. For the day, the EUR/USD experienced a 3.9% swing from low-high. This may not seem like a large move for equity traders but in a leveraged market such as Forex, it is a mammoth move.

The question is then, how does one approach trading this market? Prior to the increase in volatility, a lot of strategies were based on trading ranges as the dollar seemed to spend more time ranging than trending. With risks contained, many favored this approach as there seemed to be limits on both sides. In the current environment, daily ranges have expanded and tend to overshoot more often than not. This argues for leaving larger stops and lowering leverage to account for the volatility. Larger stops do not guarantee your position will get stopped but at least provide more protection than tight stops, which have a greater risk of being triggered. In addition, expect more “slippage” from your bank or broker due to volatility in pricing in the interbank market.

The risks in the market also argue to be aware of the fundamentals, especially in a world where government interventions in the free market have increased significantly. The two large moves over the past week have been triggered by fundamental news (i.e. SNB and Fed) so being aware of fundamentals is critical if you don’t want to get blindsided. Some technicians will argue that everything is factored into the prices. However, there is no way technicals can price in future fundamental headlines so an awareness of the fundamentals, even for a technical trader, is important.

To sum up, the world has changed. Everything goes in cycles and this one has seen a return to volatility. This means it is no longer business as usual and one has to keep in mind the importance of protecting capital so you can live to trade another day. This argues for defense as well as offense when employing trading strategies. It also argues for being aware of fundamentals in a world economy where government actions are playing a key role. Stay disciplined. Live to trade another day!

Forex zone: Forex – What is it?

The currency trading or foreign exchange (FOREX) market is the biggest and the fastest growing market on earth. More than 2.5 trillion dollars is “sold” every day, giving turnover rate manifold times greater than the NASDAQ daily turnover. Markets are places to buy, sell, and trade goods; the same is true with trading FOREX. The FOREX goods (or merchandise) just happen to be the currencies of various countries. For example, you buy Euro, paying with US dollars, or you sell Japanese Yens for Canadian dollars. That's really all there is to this entire market. The objective of FOREX currency trading for beginners is actually very simple and obvious: buy a currency cheap and sell it for more than you paid! The profit is generated from the fluctuations (changes) in the currency exchange market. Coupled with technical analysis tools such as candlesticks, stunning profits are possible. Why use candlestick trading tactics? This method, with all of its signals and analyses, can help even the newest investor see great gains with FOREX currency trading for beginners.

Once you learn FOREX trading, the nice thing about the FOREX market is that you are able to leverage your investment at a rate as high as 200 to 1. This is called “marginal trading”. Marginal trading is simply the term used for trading with borrowed capital. It is appealing because of the fact that in FOREX, investments can be made without a real money supply. This allows investors to invest much more money with fewer money transfer costs, and open bigger positions with a much smaller amount of actual capital. Thus, one can conduct relatively large transactions, very quickly and cheaply, with a small amount of initial capital. This can become a strong part of any investor’s long term investing plan. Marginal trading in an exchange market is quantified in lots. The term "lot" refers to approximately $100,000, an amount which can be obtained by putting up as little as 0.5% or $500. In virtually every time zone in the world, there are currency dealers who are able to quote rates and exchange currency literally 24 hours a day. These dealers, in many cases, offer credit lines to investors, which makes the ability to participate in marginal trading possible for the smaller investor.

FOREX currency trading for beginners is incredibly rewarding, and it can evolve into one of the most potentially profitable types of investment skills available. There are significant risks, but the ability to participate in marginal trading on FOREX means that potential profits are enormous relative to initial capital investments. This, coupled with the knowledge and experience of a method such as candlestick chart analysis, provides the opportunity for impressive gains. Another benefit of FOREX is that its tremendous volume prevents almost all attempts by others to influence the market for their own gain. It is possible to feel confident that each investment made has the same potential for success. Although investing in FOREX as a short term practice requires diligent research, investors can use there own ability, paired with a technical analysis tool such as Japanese Candlesticks, to analyze the daily fluctuations in the market and make intelligent decisions for each transaction. FOREX currency trading for beginners is not for everyone, but it is for the investor who is ready to step forward in an effort to make profits that are the dreams and envies of those nearby.



Source: http://www.candlestickforum.com/blogs/2006/09/forex-currency-trading-for-beginners.html

With the modern times of mobile communication, it is not unusual to find hidden in a home a trader or a broker who is doing their Forex Trading from the comfort of their own home. Today to be a forex trader all that you require is a computer setup to multi screen investing servers, the number of the casual or evens serious home based forex traders has grown a great deal of late and this is because of the internet and the popularity of certain commodity trades.

Today, this article will discuss about the Forex market, and how you can find a great online Forex broker when you do decide to jump on the wagon and become a Forex Trader. Most of the Forex Brokers today offer the ability to be able to trade online, forex trade over the phone, or forex trade from you mobile phone.

With the growth of the virtual Forex Trader, we have seen an explosion of online forex brokerages on the internet in the almost predictable economic elastic demand and supply. Today we are seeing more individuals turning to commodity trading as a viable source of second or even third income, brokerages and financial firms all over the world have responded by extending their services to the modern technology world. Before you choose which firm and which broker to choose, there are few things you need to do.

First step is to find the black list of online Forex brokers and those that have a bad reputation. There are a few collectives that collect a list of names of individuals and companies (including all their aliases and permutations) and place them upon a compiled list for everyone to refer to. If that is not enough, you must also check your local finance and governing body and run a list of potential brokerages and companies you want to join with them - you never know what you might find. Deal with well established companies that have strong regulation. Recently the CFD FX REPORT has researched all the online Forex Brokers and have come up with who they believe to the Best Forex Broker.

Do not be swept off your feet by a long list of credentials if you do not know what they mean or where they even came from in the first place. Be wary of customer testimonials that are written on the website itself, as these can doctored or fabricated.

Use a company that has great references, and has good client testimonials. Check also for longevity, the more years a broker and his company have been around, the more chances that it is a legitimate and viable source of investing advice. Always be careful where you place your money and it is very, very important that you choose a good online broker that is both legitimate and has the needs of your finances at heart. You must feel comfortable with this broker, remember a bad broker can make you BROKER.

The CFD FX REPORT is a real time trading tool that offers clients free trading reports, with trading ideas, stock market and forex market education as well helping them with. Also if you are looking for a Forex Broker, then feel free to visit our broker section as we recently reviewed all the forex brokers and have found the best on the market.



Source :http://www.forexarticlecollection.com