This seems like it would be a huge benefit because it opens up the forex market for people who do not have a lot of money. But should those people be trading at all?

Certainly if a person really only has $25 that they can spare, they are probably wasting their time getting into forex. It would take years to build up anything like a reasonable return for the time spent if you start with a very tiny amount.

But maybe you do have more available, and you just want to start small so that you do not risk your whole investment fund on day one. That is great but do not forget that you can place stops. You should never be risking your whole account balance.

Forex micro accounts often have terms that are less favorable to the trader than a mini account. The spread may be greater or they may restrict your trading style in certain ways.

In many cases the broker who offers micro accounts is targeting their services almost exclusively at beginners and small time traders who are in forex for fun or as an experiment.

If you have have enough money to open a forex mini account you can probably find one on better terms than you would get from these brokers who are aiming at beginners and hobby traders. This means that if you plan to open a micro account now and trade up later, you might want to change brokers.

The trading platform will be different, the indicators may not be the same and your system that was successful in the forex micro account might not even work in the same way.

The problem with starting out with a very small account balance is that you are likely to take big risks with it. You know that you have plenty more held back, and you want to see results fast. When it comes to results, most people look at the dollars, not the percentage return on their investment.

You could be making 10% a month and that would be a great ROI, but if your balance is $100 that is only $10 that you made in a month. There will be plenty of occasions when you will be thinking you would be better off spending your time addressing envelopes.

This kind of situation prevents you from taking your trading seriously. It means that you are very likely to develop bad habits like trading too often. A few successful trades often makes people over confident, especially when their profits and risk are very small. They start to look for more and more trading opportunities even where there are none.

So starting with a small trading balance can offer some benefits but it can also be dangerous. This is something to keep in mind if you are considering opening a forex micro account.

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If you have money to invest and are willing to risk it on speculation, a managed forex service could be the way to avoid the time consuming and stressful business of developing successful trading skills.

Of course there are costs. A manager will normally charge a commission, a percentage of the profits. There may also be a monthly fee that is not dependent upon profits. These will cut into the money that you can make.

However, the chances are good that you will still be better off than somebody who starts out trading for themselves. Most people who do that, lose money.

While there are no guarantees, your manager will be an experienced trader who is more likely to make profits for you. Even if you pay some of that profit in commission, you are still doing better than the guy who is losing all of his money.

Another advantage of managed forex trading is that it takes most of the stress out of trading. It also saves you a huge amount of time. If you wanted to trade for yourself, you would first have to take some kind of a training course, then spend time learning to trade in a demo account.

After that, your actual trading would involve many hours of studying prices and analyzing charts online. You do not have to do any of this if you hand your forex account over to somebody else.

So far we have been considering the situation where a manager is appointed to trade on your account. You would have control of the account and could withdraw funds at any time.

You could also see what was happening by logging in to the account. This is the safest type of managed forex because it reduces the risk that somebody will disappear with your money.

However, you do need to have a substantial amount of money to invest. This is because it would not be worth a manager’s time to handle an account that was only making a few hundred dollars a week. Their percentage of that would be too small. So they usually have a high minimum investment.

The alternative, if you do not have so much money to put into forex trading, is to consider a pooled forex account. In this situation you pay your money to the management company, they put it into a pool with other clients’ funds and then trade the total. Here you do not know what is happening in the account other than by reading the reports that they send you.

There is an opportunity for unscrupulous companies to run a scam by taking your money and never investing it at all, or declaring lower profits than they are making. However, if you only invested a small amount then you might not be risking so much.

Whatever type of management you choose, it is important to due your due diligence when deciding who will handle your money. Do not be seduced by dreams of making millions by reading the testimonials of happy clients.

Look at the terms and conditions, and in particular, whether the company is regulated or authorized, and by whom.

Check out the regulatory body to see what protection they give you. If you do the research before handing over your cash, forex managed accounts can be a worthwhile investment.

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But just as with systems, there is no perfect forex broker that suits everybody. So here are 5 questions that you should ask yourself when you are selecting a forex dealer.

1. Are They Right For Your Level?

There are three basic levels of investment in forex accounts. They go from micro accounts where you would usually invest a few hundred dollars, through mini accounts where you need a few thousand, to standard accounts where you would be investing $10,000 or more.

If you only have a small amount to invest, obviously you need a broker that offers micro accounts. If on the other hand you plan to come in at a high level, you will not do yourself any favors by joining a service that is aimed at the very small time trader.

2. Is This An Authorized Forex Dealer?

An authorized forex dealer is a company that is approved by certain regulatory bodies. They are screened before acceptance and have to follow a certain code of practice. You are not likely to be scammed by an authorized broker and you may have some protection if the company goes out of business. In the USA, the main authorizing bodies are the NFA (National Futures Association) and the CFTC (Commodity Futures Trading Commission). Dealers based in other countries should be members of similar bodies in their own country.

3. Are The Costs Reasonable?

Not only the amount but the basis of costs can vary from broker to broker. Some simply charge a spread, that is, an imposed difference between the bid and ask price of a currency pair. Spread is different for different pairs, so look at the pairs that you are most likely to use. Also check whether there are other costs, such as a fee per transaction.

4. Is The Platform Easy To Use?

At this point you can sign up for a demo account and test the platform. Check the technical analysis tools that are available. Does your system depend on an indicator that is not provided? Do they offer a forex calendar or news alerts? When you come to place an order, is everything clear and simple? Confusion at this point could lead to errors.

5. How Fast Is The Response From Support?

When you have a live account and are trading for real, you will need support fast if anything goes wrong. Once you have the demo account set up, try asking a technical question to test the speed and helpfulness of the response from the forex dealer‘s support desk.

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Doji candlestick strategies use the chart without too many other indicators. The doji leaps out at the eye very clearly so you can see your initial trading signal at a glance.

Of course, you would then look across the previous candles to check that the market is in the right position for a trade. We will cover that in a moment.

Finally, you would normally check against at least one other indicator before actually opening a trade. However, much of this can be done very fast. This is a big advantage in day trading, and it is a day trading strategy known as doji reversal that we will be looking at here.

So first, identifying the doji. The doji candlestick marks a period where the open and close prices are the same. This means that there is no candle body, just the two wicks to the highest and lowest prices, plus a horizontal line at the open and close price.

Therefore the doji is in the shape of a cross. It is normally a sign of indecision or reversal in the market. It occurs frequently in a very volatile market and is not so useful then.

However, when it occurs in an upward or downward trending market it can predict retracement or reversal, which the trader can profit from.

When a doji candlestick is spotted in the market, first look back to see whether there has been enough movement for you to profit from a retracement.

A retracement may only be about one third of the distance since the last low. If that gives you enough space to cover your spread and allow for a little slippage, you can go on to step 2.

Step 2 involves checking an oscillator to make sure that the current price is shown as overbought or oversold. Either the RSI (relative strength index) or MACD (moving average convergence/divergence) can be used for this purpose. An overbought or oversold market plus the doji is a good indication that you can get involved.

You can also look at the trading volume. If trading is trailing off, then this is another sign that a reversal might be about to occur.

When you open a trade, be prepared at first for a retracement. Either set a limit order at the point that you would expect a short term retracement to reach, or watch and do this manually.

At that point, you might want to close just half of the trade. With the other half, you could move the stop to a no-lose position close to your opening price, and let it run in case a major reversal occurs.

Of course, there is always a risk, as with any form of speculative trading. You do need to know what you are doing and this kind of trading requires a lot of practice, even though it is a simple system.

Therefore we recommend trying out these doji candlestick trading strategies in a demo account so that you know how to operate them successfully before going live.

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What Is An Expert Advisor?

An EA is a forex robot or automated forex trading software that has been developed on the Metatrader 4 platform. Metatrader 4 is a free platform for building currency trading robots. It acts as a base so that somebody who does not have a lot of coding or programming knowledge can automate a trading system without starting from scratch.

This means that if you have just a little skill or interest in technical matters, you can probably learn to automate your own trading system. This is great if you have a successful system.

Automating it will give you access to many more trading opportunities and hopefully, make you a lot more money. Alternatively, you can look for an expert advisor download that somebody else has developed.

Benefits Of Expert Advisors

There are three main benefits to using automated forex software instead of trading manually. First, as we already said, it maximizes your trading opportunities because the robot can be online 24 hours.

It can also check more than one currency pair, although if you plan to use it that way, do test all pairs before going live. A system that works on one pair does not necessarily work in the same way on others.

Second, a robot takes the stress out of trading. This can be a huge benefit. Many traders give up before they get into profit simply because they cannot take the stress. It’s not just the actual trading that is stressful – it’s feeling that you have to be at the computer all of the time in case you miss something.

Third is the fact that a robot removes the human error element. Even the most successful traders make mistakes sometimes, but a robot will always follow its system to the letter. You just have to make sure that it is correctly set up in the beginning.

Risks Of Expert Advisors

You should always test any software that you download. Remember that a robot is only as profitable as the system that it was based on. Unless you develop the system yourself, you probably will not know what that system is. So hook it up to a demo account before you go live with it.

One thing to watch out for when you start using an automated forex trading system is the forex calendar. Some robots allow you to track economic announcements and set the software so that it will stay out of the market at these times. If you are developing your own, it is worth including that option.

If not, you may need to watch the calendar and manually close trades before certain news announcements. Otherwise your trades could be caught in whipsaws or spikes that result in stops being triggered and unnecessary losses being made.

Where To Find An Expert Advisor Download

There are hundreds if not thousands of EAs in use. Some of these are available for sale. In some cases you can even get a free expert advisor download, but be sure to test it well because sometimes these have been developed by somebody who is more interested in the programming than in whether the software’s trading system that actually makes money.

Another problem with free downloads is that there is unlikely to be any support if you have questions.

Most of the better forex robots are sold through Clickbank, an online retailer of electronic products for instant download. Most cost less than $200 for the software alone.

In some cases you will be offered other benefits e.g. forex training, online hosting of your EA (so that you do not have to rely on your computer being connected 24 hours), etc. These benefits may have an extra cost on top of the expert advisor download but in some cases it is well worth the price.

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Currency trading involves exchanging one of the world’s currencies for another, hoping that the one that you bought will increase in price. When it does, you exchange it back (close your trade) for a profit.

If it falls, you lose. So there is a risk and it can be a big risk depending how much you exchange on each trade.

Most traders do not try to monitor the values of all currencies at the same time. There are around 150 currencies altogether, so the possible combinations are in the thousands.

Most traders concentrate on just one or two of the major currency pairs. These involve the US dollar with the euro, Japanese yen, British pound, Swiss franc, Canadian dollar or Australian dollar.

You can trade forex from virtually anywhere in the world, although there are some countries such as China where online currency exchange is illegal for political reasons. Otherwise, all you need is a computer with a reliable broadband connection and some money to invest, and you are good to go.

You do not even need much money either. Online forex brokers are opening up their services to people with smaller account balances. Where a few years ago you needed thousands of dollars to start forex trading, these days you can open an account with just a few hundred.

This is because there is now a new level of brokers called market makers who have come into being since the internet opened up the forex market to brokers who do not have actual dealing desks.

It also cut brokers’ costs by enabling retail traders like you and me to control our own accounts by accessing online currency exchange software on the brokers’ websites.

In fact, you can even have software trade for you automatically. These automated forex trading programs are known as forex robots or expert advisors.

There are many of these available. You can get them for anything from free to several hundred dollars. The catch is that you need one that will actually make money for you.

Robots work to pre-set systems and these can be more or less successful. You can read reviews to check whether a robot is successful for other people, but it is also important to test it for yourself.

Fortunately, brokers offer demo accounts where you can try out their services without risk by using ‘virtual money’ instead of investing any real funds.

This can seem a little like playing a game but it is important to take it seriously if you want to learn useful skills that you can put into action on the real market later.

If you use a forex robot for your online currency exchange you can set it up with a demo account in the beginning.

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In theory, any two of the world’s many currencies can be exchanged and the trader can make or lose money on the exchange.

So how many currency pairs are there? There are around 150 currencies in the world. Of course there are many more countries than that, but many of the European countries use the euro, some countries use the US dollar and some developing countries who have their own currency keep it pegged to USD values to maintain stability.

Still, there are thousands of possible currency pairs. However, we do not need to know about all of them. Most brokers who offer forex services to retail traders (that is, individual traders operating their own personal account) limit the number of pairs that you can trade. Usually they will cover the major currencies in combination with USD and some cross pairs.

The major currencies in most people’s estimation are the US dollar (USD), euro (EUR), yen (JPY), pound (GBP), Swiss frank (CHF), and the Canadian and Australian dollars (CAD and AUD).

Therefore, there are 6 major pairs where USD is combined with any other of the majors. Cross pairs are those not including USD, such as CBP/CHF.

These are the best forex pairs for a retail trader to concentrate on. Generally, if a broker offers any minor currencies for trading, the spread will be high. The exception might be that a broker will offer the currency of their own country at reasonable rates even if that currency is not a major.

This is particularly true for secondary currencies like the New Zealand and Singapore dollars that are close to making it into the majors in terms of daily trading volume.

So you can trade any major pair or cross of the majors but unless you have reasons for doing otherwise, most beginners are recommended to start with EUR/USD for many trading. This is the highest traded pair which gives it a number of advantages.

First, there is a lot of competition between brokers so the spread is usually lowest for this pair. Second, the high liquidity means that there will probably be less slippage, and you are more likely to get the price that you see on screen. Third, forex news alerts have a lot of news about these currencies so you are not so likely to get caught out by unexpected announcements.

If you are using an expert advisor or currency trading robot, on the other hand, it may be set up for other pairs. In that case it is best to use it according to its settings.

Robots often use systems that are pair specific, i.e. that will not work so well on any but the recommended pairs, so those will be the best forex pairs for an expert advisor.

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Maybe both, because it is true that some traders do use forex scalping methods very successfully, the majority of people who start out trying to use scalper strategies in the currency trading market lose big time.

In this article we will look at some of the reasons why that happens, so that you can make an informed decision about whether to try scalping forex. This will give yourself the best chance of making money with currency trading because you are more likely to start out with something that has a good potential for beginners.

So we start with the understanding that it is certainly possible to make money with scalping strategies but there are certain things that you need. The first is a broker who accepts this method of trading.

Don’t waste time setting up demo accounts with market makers who probably will not let you scalp because they will lose money if you make it.

There is no point in hoping that you can get away with it for a while: you will simply have your trades canceled and your funds politely returned to you as soon as they figure out what you are doing, which will not be long.

This is frustrating, stressful and a big waste of time. So ask the question before you even look at their trading platform.

Second up you will need a very quick analytical mind. Forex depends on analysis and scalpers have to do it fast. Sure the charts and indicators do the calculations for you but you still have to check other time periods and take everything in at a glance.

You have to be attentive 100% of the time. You have to be the kind of person who feeds on stress.

You also have to be a person who does not easily become discouraged. Scalping systems usually involve making a lot of small wins. There will also be occasional but often heavy losses. This means you could have a day with as many as 9 out of 10 successful trades but still end up with an overall loss.

With some scalping forex systems you can even have one loss that wipes out several days or even weeks of profits. You have to be able to take this and continue without losing motivation.

So when people find that forex scalping systems do not work it is not necessarily a problem with the system. It may be just that the trader is not suited to the lifestyle of a scalper.

The same person might do very well with a long term forex trading strategy that involves following trends. Think carefully, therefore, before you invest your time and money in scalping forex.

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Of course, if there was one best system that topped them all and worked for everybody with guaranteed profits, we would all be using it. But this is actually impossible. Every time somebody makes money in the forex market, somebody else has to lose.

Sure, some of the slack is taken by people who are exchanging currency because they actually need it for import and export, travel or investments. However, the huge majority of the currency exchanged every day belongs to traders. So if everybody in forex trading used the same system, it wouldn’t work any more.

So we should celebrate the diversity of forex day trading systems in the same way that we celebrate biological diversity, and just go look for one that will work for us. How do we know that? We can ask ourselves these three questions:

1. Is It Simple To Understand?

The best day trading systems are usually simple. Forex day traders need to act fast to maximize their profits so you do not want to be having to look at a million different indicators before you can open a trade. Checking 2-3 indicators in two time frames is plenty.

2. Does It Have A Lot Of Winning Trades?

Most people work best with systems that have a relatively high number of winning trades. The reason for this is purely psychological.

Imagine that System A has 70% winning trades, making 30 pips profit on the wins and losing 40 pips on the losses. System B has 40% winning trades, 70 pips up on the wins and 30 pips down on the losses.

System B will make slightly more profit in the long term, but it will often have runs of many losses in a row. This can be very hard to handle psychologically and could result in the trader losing faith in the system and quitting when he was down. Therefore, most new traders would do better with system A.

On the other hand it can also be hard to cope with systems that have large single losses. Another system that has 85% winning trades, making 20 pips profit on the wins and losing 60 pips on the bad trades, would also make a profit in the long term but just a couple of those 60 pip losses in a row could lead to high stress and bad decision making.

3. Does It Fit My Trading Style?

Forex traders looking for day trading systems have different requirements than longer term traders. You will need to consider what times you are able to be online and trading.

If you only have a small window of time when you can trade, you may need a system that works well for a particular currency pair that is active at that time. There could be many factors like this to take into account when considering forex day trading systems, depending on your situation.

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In the end, the market is driven by economic forces, not by price charts. So we should not forget to check the financial and economic news alerts and announcements that everybody has access to online.

New traders are often discouraged by the number of economic factors that have to be taken into account in fundamental analysis. Not only are there a lot of them, but news is being released all over the world. It is not enough to watch the financial news from the USA. You have to keep on top of all of the currencies involved in any pairs that you trade.

However, the good news is that some factors are more important than others. Even better, a lot of them are related, so you can often form an idea of what is likely to happen from the knock on effect of different announcements.

In this article we will look at the most important fundamental indicators that might be used for forex trade signals, and at the relationships between them.

Top of the list is interest rates. An interest rate rise or fall in the USA or one of the other major players in the forex market can have a ripple effect across many currency pairs, even those that do not include the affected currency. Understanding this effect can provide forex trade signals for some traders who work with fundamental analysis all of the time.

The reason that the interest rate affects currency values so strongly and so fast is really quite simple. Unlike other factors that tend to be reported monthly or quarterly, a change in the interest rate can happen at any time. It is therefore the fastest indication that a country’s economy is strengthening or weakening.

An interest rate rise is a positive sign of a strong economy. International investors will immediately be drawn to investing in that country. In order to buy stocks or shares there, they need the country’s currency, so there will be a bigger demand for that currency, pushing up its value.

At the same time, they will be selling investments in countries with weaker economies to free up some capital. This leads to a drop in currency prices in countries that are perceived to be weakening.

So interest rates are probably the most important factor in determining fundamental forex trade signals. However, there are many other factors which can indicate the strength of the economy in a country. All of these will have some impact on interest rates and on currency prices. Here are some of the most significant:

- Consumer Price Index (CPI)
- Producers’ Price Index (PPI)
- Gross Domestic Product (GDP)
- Payroll or Employment figures
- Retail Sales
- Durable Goods Orders

These indices might have different names in different countries, but a rising index will always indicate a strong economy. Some rise in the currency price can be expected in the short or long term, unless of course the announced increase in an index was less than expected.

If that happens, the market may already have moved further than it should and there could be a retracement. It is important to keep this in mind when using indicators such as these for forex trade signals.

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