Most full time forex traders started out as part time traders. When some of them found that they were making more in a month than they did in 3 months at their current job, they quit their 9-5 to trade full time. If that doesn’t sit well with you however, nothing says you can’t trade on a part time basis.

To make forex trading a viable source if income however, you need a few skills and experience. This you can get from learning as much as you can. Most new forex traders typically just learn the basics and forget about every other thing, thus increasing their chances of losing their premium. While automated trading programs –particularly when they are good- are capable of making buying and selling decisions, they do not understand complicated market trends and movements. This is where the experience and knowledge comes in. If you have the required knowledge, you won’t have to worry about whether your automated trading program is haemorrhaging money.

You’ll be comfortable in the knowledge that it is doing really well and if the worst happens, you can easily manipulate the trades to suit your needs.
While trading forex however, it is important to not get emotionally involved. Think of it as a business transaction. It is only money, so treat it as such. Don’t waste your time worrying or being in fear. If you take care of your fundamentals, you can be sure that your trades will take care of you. This is why it is essential that you do all your market analysis before entering or placing any trade. Some traders favour technical analysis, while others favour fundamental analysis. Whatever the case, they both have their advantages.

What you can do if you feel that you don’t want to master the two, is to find a trading partner that you can work with; someone who majors in the method of analysis that you aren’t interested in. Then trade information and tips on a daily basis. It is that simple. This will help you make sound trading decisions and most importantly, a decent amount of money.

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The second way of doing trading is through forex robots which are also called Expert Advisors. These forex robots are software programs running on platforms such as forex MetaTrader 4 and 5. The robots automate most of the trading tasks, collect data, perform analysis, open and close trades automatically according to market conditions.

Benefits of Using Forex Robots

There are several benefits of utilizing these robots for forex market trading and in the following sections we will look at some of those.

1.    Totally Autopilot: All forex robots work on their own without requiring any human assistance. User intervention is only necessary during the initial stage when the robot is set up and after that it runs in auto pilot. You can just set it up, come back and check few times during the day and do rest of your other work while the robot trades for you.
2.    Solution for Repetitive Tasks: Forex trading involves a lot of number crunching, comparisons and analysis of data which are to be done on a regular basis. Forex robots can do these tasks for us quite quickly as well as accurately. Forex robots analyze data from several sources and do millions of calculations within a short period of time which is not possible for us.
3.    Emotional Factors: If we are trading on our own then two things come into play, one is greed and the other is fear. Both of these emotions are not good while you are doing trading in forex market. Robots have a significant advantage here as they do not try to push any winning trade to make further gains. The forex robots just enter and exit trades as specified to them. Similarly, these robots will enter any trade with fear or hesitation if the defined conditions exist. The only thing robots will look into is that the correct signals get triggered and time to trade is right.
4.    Works 24 Hours: The most important thing about these robots is that since they are just programs running on your computer they do not require to rest and can continue for the whole day without having to eat or take rest as we do. It is quite beneficial for you as now you do not lose out on profit making opportunities just because you need to take rest or sleep.
5.    Knowledge Requirements: If you are trading manually then you will need to have very good knowledge about the market but in case you want to use a forex robot then there is no such requirement and you can leave everything up on the robot. The required steps and instructions are already in the program and you are only required to set it up on MetaTrader and start it.

Conclusion

We would conclude here by saying that forex robots are the most suitable options for you if you do not have the time to sit all day and trade manually. It also means that you are increasing your profit making chances by doing trades 24×7.

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Functioning of Forex Trading

Forex robots are generally able to handle every kind of transaction but still you need to acquire some knowledge about functioning of forex trading. Let us now look at some of the factors regarding foreign exchange market that you should know about.

1.    Do not use stop losses which are tight or inflexible. In addition to it, if the market is bull then long trades are to be maintained while in case of bear market short trades should be your choice.
2.    In case position is lost then adding to it is not advisable. However if profits occur then to it is advisable & trailing stop losses are to be used.
3.    Get more information about how the market is behaving, if it is a volatile bear market then small trades are to be used.
4.    Get information about currency pairs that are moving & others that have frozen so that profit making chances can be optimized.
5.    Be aware of forex market trends and follow them properly, if you are trading high then sell high & opposite is to be done while trading low.

Tips on Buying Forex Robots

If you have decided to buy a forex robot then the following tips will be quite helpful for you in selecting the right forex robot.

1.    To begin with utilize demo account for about six months to judge whether the software is useful.
2.    Check many of the review sites to get information on the particular forex robot you are going to purchase, see if there are positive or negative reviews about the product. The software should also be customizable and you should be able to program it as per your requirements.
3.    Purchase a forex robot which has money back guarantee option so that you can return it if it is not good.
4.    Test the software to know whether it works as required but do not use actual money while doing these tests.
5.    Check whether the software functions properly in every market condition.
6.    Get information on how if can be easily downloaded from internet and installed and whether this process is simple or not.
7.    After you start using the forex robot begin only by making small investments.

Safeguard Yourself from Scams

There are several forex robots which work on historical data only and have not being used in real trading. Therefore it is better to avoid using scam softwares which do not provide real time statistics. Additionally, ask the vendor to provide proof which shows trading details such as trading account statements.

You will know that these are scams as such softwares are sold really cheap. Any real working software can cost you up to $10,000, so it will give you an idea that you the cheap software you have been offered is a scam. In addition to it there are several predictive systems that are like horoscopes so it is advisable to do proper analysis and then only purchase forex robot software.

A Final Note

It is very clear from the above details that forex robots can help you improve your profits and trade easily in the market. But it is also true that there are many scam softwares being sold and selecting the right software is important if you do not want to lose your investments.

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Forex market is one of the biggest financial markets in the world and thus forex frauds are more than just a possibility. Some regulatory bodies do exist which oversee as well as control forex trading taking place around the world. One such regulatory body is CFTC which stands for Commodities Futures Trading Commission.

Formation of CFTC

In 1936 the U.S. government developed the legislation known as Commodity Exchange Act which came as a replacement for 1922ӳ Grain Futures Act and it had the target of reducing fraudulent conduct in future contract trading. Afterwards in 1974 this act was amended so that better framework for regulation of future contract trading can be created and consequently CFTC was formed replacing the previous act. This commission is formed using five members who are chosen by United States of Americaӳ President and their office tenure is 5 years. The president also has the responsibility of selecting one of the five members as Commodities Futures Trading Commissionӳ chairman.

Role of CFTC

The role of CFTC is to protect people participating in future markets from fraud, prevent abusive and illegal practices in financial trading, and maintain integrity of options as well as futures markets in the country.

Market Oversight and Enforcement

CFTC is in charge of market surveillance, reviewing rule enforcements as well as rule amendments plus studies related to different products. The enforcement division investigates violations of the act and also has the responsibility of prosecuting violators. It also assists in case development and informing general public about possibilities of fraud while trading in the market.

New Regulations from CFTC

Some of the new regulations from CFTC are like forex trades leverage cap of 10:1 along with rules according to which forex brokers will have to register as retail forex dealer with the regulatory body. These dealers will have to meet capital requirements for mitigating forex counter party risks and works as a safeguard for retail traders.

Additionally, introducing brokers who act like intermediaries between customers & brokers will have to make agreement with dealers they are working for and dealer in turn will be required to vouch for that particular broker.

Due to these new legislations forex trading will become safer in the country but will have its own price as 10:1 limit on leverage will impair forex market and can also make forex traders shift to other markets.

Benefits of CFTC

CTFCӳ active steps and legal efforts have resulted in many defrauded investors recovering most of their investment as well as made forex trading safer for people. At least in U.S. the existence of commodities futures trading commission has resulted in safeguarding investments of general people and made them more aware of the risks involved with trading.

A Final Note

Thus we can see that CFTC is one of the 2 main regulatory bodies responsible for overseeing forex trading in the U.S. and despite the fact that regulations are considered very stringent, the outcome of these regulations has been quite good and has reduced the amount of fraud that takes place in different forex markets.

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1. CFTC regulations against forex fraud

Determine if it is a Forex Scam

Here are some of the questions you need to ask to make sure that something offered to you as a very good investment plan is not a forex scam:

1.    Your Personal Details: First thing you need to ask them is wherefrom did they get your personal details such as phone number or email address. In case you get a reply that they have a list of very good investors from which they are contacting you then it is likely to be a forex scam.
2.    Investment Risks: Ask them about investment risks and if they tell you that the investment you are going to make is risk free then you should forget such investment proposal as almost all investments invlove some kind of risk alongwith obligation levied by the U.S. treasury.
3.    Written Explanation: You need to inquire if they can send written explanation about the process through which this investment works. Someone doing forex scam will try to avoid giving anything in written form as it can be used against that person.
4.    Involve Investment Advisor: You should also ask the person who brought the investment proposal on whether it can be explained properly to investment advisor you have. In case there is something wrong then the answer will be that there is very less time left for doing such things and apart from it you need to make your own investment decisions.
5.    Employee List: Inquire if they are ready to give name of their employees and you will see reluctance as they will want to avoid giving out any real names and such type of question will ring alarm bells for them.
6.    References: Find out if they can provide references. These references should be reputed banks or brokerage companies and not just a list f employees working in their company.
7.    Risk Disclosure Statement: In most foreign exchange market transactions it is necessary to have investorӳ signatures on a investment disclosure statement which confirms that the investor understands all the risks. If it is a forex scam then you will not see any risk disclosure statement provided to you.
8.    Regulated Forex Market: The next question to ask will be about forex market. Ask whether they will trade in any of the regulated forex markets. The most probable answer will be no as there are very strict regulations in such markets and sanctions are frequent for those breaking the rules.

A Final Note

Thus as you can see there are several ways you can check whether you are going into a trap of forex scam or not by asking several of the mentioned questions. If you get similar answers as we have mentioned then it will be better to avoid such investment scheme.

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Creation of CFTC

It all started with the creation of legislation called CEA or Commodity Exchange Act by government of United States in the year 1936. This act was replacement for Grain Futures Act or GFA of 1922. The main aim of this act was to reduce fraudulent conduct taking place in different forms of trading such as future contracts. This act was then amended in 1974 to create improved framework of regulations & CFTC was created to replace the earlier act. There are 5 members in CFT commission with five year tenure and are selected by U.S. President. The chairman of this commission is also selected by President from one of these 5 members.

Role Played by CFTC

This commissionӳ primary responsibility is protecting people from frauds in the future markets, stop illegal as well as abusive practices prevalent in financial trading and lastly preserve integrity in options plus futures market.

Responsibilities of CFTC

The commission is responsible for market surveillance, rule enforcement review and amendments of rules. In addition to it CFTC also performs different studies with relation to various financial products. Commissionӳ enforcement division has to investigate actӳ violations & prosecute violators. The other responsibilities of CFTC are case development as well as providing people information related to possible frauds that can occur while they trade in forex market.

CFTC ֠New Regulations

Many new regulations have been added in CFTC and some of which are like 10:1 leverage cap on forex trades and rule which make it necessary for forex brokers to register with CFTC as retail forex dealers. To register the forex brokers will have to qualify the capital requirements CFTC has set to mitigate counter party risks & safeguard interests of retail traders.

In addition to it new brokers who have intermediary role that involves customers and brokers will need agreement with their dealer. The dealer will also have to vouch for such new brokers. Such legislations will make forex trading much safer for investors. However, forex market will be affected negatively due to the leverage limit of 10:1 and could result in shifting of traders to outside markets.

Advantages of CFTC

The main advantage of CFTC is that it has made forex trading a lot safer and the legal steps taken by the commission has resulted in recovery of funds by investors who were defrauded. Existence of CFTC in USA has helped to safeguard investments made by people and also made people more conscious about trading risks.

Conclusion

To conclude we would like to say that CFTC is the main regulator which oversees trading activities and even though many believe that the rules are stringent, they have resulted in making forex trading safer for forex traders and reduced the number of frauds that occur.

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Common Forex Terms

As mentioned above we will now closely look at most common forex terms that are used in forex trading.

1.    FER or Floating Exchange Rate: Supply/Demand based currency value is known as FER.
2.    Derivative: In this kind of contract value changes based on price movement of future, securities and other physical instruments of similar nature. Options are the most common derivatives that are used.
3.    Square/Flat: This term is utilized by dealers meaning such position which totally reverses. For example, in case a trader purchases $100,000 & sells $100,000 it forms a flat position.
4.    Forward Points: In a situation forex pips get added to or subtracted from current exchange rate with the purpose of forward price calculation then these are known as forward points.
5.    Forward Contract: In this type of contract the rate remains fixed for any delivery date that is fixed in future. Such date is agreed upon by both seller and buyer at the time contract is made. These forward contracts also require a fixed amount to be kept as deposit for the contract.
6.    Good Till Cancelled: GTC is an order related to purchase/sale for a set price. This type of order remains open up to the time it is filled or canceled by client.
7.    Gearing: This term assists in explaining relation between actual & controlling equity and is known by another phrase which is – margin trading.
8.    Rates (Inter-bank): This means the forex rates which are used by international banks for quoting prices to other banks.
9.    Limit Order: This type of order puts constraints on lowest price to be received or the maximum allowed payment. For example, if a currency pairӳ such as AUD/EUR current price is at 103.00/05, then to buy AUD the limit order has price below 103.
10.    Libor: It is used by banks during borrowing done from similar other banks and stands for London Inter Bank Offered Rate.
11.    Margin: This term means the equity any investor needs to deposit with the aim of collateralizing a position.
12.    Liquidation: The meaning of this term is closure of position with the use of offsetting transactionӳ completion.
13.    Narrow Market: In case light trading occurs and large price fluctuations are seen in comparison to volume then it becomes a narrow market.
14.    Offer: A dealer selling currency at a specific rate is known as offer.
15.    One Cancels the Other: OCO is one kind of designation for two specific orders where execution of one order leads to automatic cancellation of the other order.

Conclusion

To conclude we would like to say that knowledge of these above mentioned terms will do a lot of good when you start forex trading and help establish your position in the forex market.

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Few of the most common mistakes are:

1.    Doing too much of technical analysis
2.    Using more emotions while trading
3.    Low quality of risk management
4.    Improper use of leverage
5.    Paying more attention on day trading

Common Forex Trading Mistakes

We will now go through each of these common mistakes in details done by many new traders.

Doing too much of technical analysis: Many few forex traders perform a lot of technical analysis and do not pay attention to fundamental analysis. In an ideal situation you should maintain a proper balance among both types of analysis used in forex trading.

Using more emotions while trading: Forex trading requires you to remain rational & also calm. To succeed in forex market you will have to let go some of your emotions. In forex trading you will not win every time ad you will have to keep note of it so that you can avoid irrational decisions in an attempt to maximize your profit levels. Consistency in addition to discipline and good planning will definitely yield you the results as desired.

Low quality of risk management: Risk management is an integral part of money management and to benefit from your forex trading endeavors it is necessary to take calculated risks. These calculated risks will help to reduce amount of loss you will have to bear in case things do not work out as planned. As part of risk management you will also have to know about things such as stop loss orders which are effective in controlling the amount of risk you have to take.

Improper use of leverage: For new entrants to forex trading using forex leverage in a proper way is also important. Leverage can assist someone make considerable gains while it can also result in wiping all the funds a person has.

Paying more attention on day trading: Day trading is quite effective in improving your revenue levels and right strategies can certainly help you achieve success. But beginners should join day trading after they have some experience about how forex market and forex trading works. Such a strategy will assist a forex trader judge the trends prevalent in the market and take right steps accordingly.

A Final Note

Thus we can see that forex trading is certainly an effective medium to make profits but there are many associated risks also which you need to keep note of and avoid. If you pay attention to the points we have mentioned above with regards to the common mistakes new traders make then you will be in a better position and understand how forex trading actually works. By having a proper plan & strategy will certainly help you and assist you in reaching your goals.

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