Top 10 Forex brokers- Whats your view?

Etoro: 

Etoro offers a single trading platform that offers two different modes: visual mode and expert mode. 

The trading platform eToro is a user-friendly trading platform with everything you can expect quick, visual mode designed for beginner traders to make learning easier and expert mode provides sufficient functionality for advanced traders. 

Deposit withdrawals and easy credit card, paypal, NetTeller, wertern union, bank transfer and more.

Minimum deposit is $ 50. 

AVAFX:

AVAFX is a forex broker regulated by Ireland, which is established as a trust broker, their platform AvaTrader is recognized as the best trading platform to trade manual.

MT4 is available utilsateur the pure EA.

AVAFX equipped to provide forex trading very advance.

You can create an account from a minimum deposit of $ 100.

FXCM:

This forex broker is regulated by CFTC and the NFA in the U.S., Japan FSA, FSA united kingdom, ASIC.

You can open an account from a minimum deposit of $ 50.

if you are a beginner, fxcm a special offer for beginners.

This forex account provider SEVERAL liquid which includes financial institutions, and the levels of other works to compete to provide fxcm spreads emissions.

ACFX:

This forex broker is based in cyprus in, he was named best forex broker in southeastern Europe by the world finance magazine. It offers three trading platforms MT4, LeWeb AND IPAD, VIP and ECN.

The minimum initial deposit for a count of ECN is $ 50,000.

Classic account and get a bonus of $ 230.

You can fund your account via bank transfer, credit card is, paypal, moneybookers and other payment systems.

TRADING POINT:

It offers 20% welcome bonus to all new account and loyalty bonus of 10% on each subsequent deposit.

This forex brokers as ACFX is also based in Cyprus and regulated by CySEC, it is allowed to be exploited in all countries of Europe.

HOT FOREX:

This broker Maurice regulated emissions with probation and the execution STP.

They provide services of good relations with the speed of execution, to accept low on MT4 EA, and provide an account by means of ECN curenex.

You can create an account with a minimum deposit of $ 5.

Deltastock:

The Forex is one of the best forex brokers in the world, it is regulated by FSA.

It provides a platform MT4, I recommend you use the platform Deltastock L2 forex trading.

Deltastock L2 is a true platform completely transparent forex ecm aggregation of liquid from several major forex brokers like fxcm, dbfx, Dukascopy, and interactive brokers.

If you want to make money without risk its better to create a demo account to learn before you jump in real mode.

Gomarkets:

This forex is based in Australia in 2006, is a broker gomarkets regulate ASIC.

You can use the MT4 platform for trading.

You can open an account from minimum deposit of $ 1.

FXDD:

FXDD Forex broker is one of the world's most popular, it was one of the first forex broker to offer their customers the MT4 platform, it is always growing and adding new platform forex trading to their offering talc the last platform FDD swordfish.

Their office trading application offers a highly customizable interface, with advanced graphics and a single click.

You can deposit funds using a credit card, bank transfer, paypal and more.

If you want your money or your account the same day I advice you to use a credit card.

FxPro:

This world leading forex broker, famous for its football, rally, formula one and sponsorships.

You can choose MT4, cTRADER and other mobile trading platforms.

They offer very low spread and instant execution.

It is easy to supply your account FxPro account through a bank transfer, credit card, paypal.

What should you know about Forex Signals ?

Forex Trading Systems

Forex Trading Systems

Discretionary v/s Mechanical Trading Systems:

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Are mechanical Forex trading systems really any better? Can Automated Forex systems outperform discretionary Forex systems?  Let’s find out.

Some people prefer mechanical Forex trading systems while others prefer a more discretionary approach. My personal approach lies somewhere in between. Let’s look at each of them closely:

By definition, a mechanical or manual Forex trading system provides well defined entry and exit criteria and clearly describes trade setups and execution.  Such trading systems can be quite easily transformed into automated trading systems which can aid back testing, research and analysis.

The merit of such Forex systems lies in the fact that the guesswork is taken out of equation and trader only needs to follow clearly defined set of rules.  It helps to avoid emotions coming into the way of trading and with little discipline such systems can be easily be followed. Not only that but it also helps in reducing stress factor which is a bonus.

On the negative side of mechanical Forex trading systems we got problems with changing market conditions. No set of rules can cover all market conditions and there will be times when such systems would fail miserably.  Situation could become worse if the market conditions do not change for a sustained period of time. Automated Forex systems written based on such trading methods will be unable to cope with unpredictable market conditions.

These Forex systems bring out the artistic characteristics of traders. This is where the logic gets fuzzy and experience becomes paramount in making trading decisions.  A typical discretionary Forex trading system would use chart patterns and trend lines, which by a means are not determined by exact set of rules.

Adaptability and customization are two big advantages of any discretionary trading system.  Such Forex system can easily adapt to changing market conditions and rules can easily be changed to accommodate any unforeseen market scenarios. Experience and intuition are the cornerstones of any discretionary Forex trading systems and they can never be programmed into an Automated trading system.

On the flip side, such trading systems are hard to back-test and have unstable trade results caused mainly by emotions and stress level.  Such systems require much more trading experience and higher degree of discipline.In my opinion, anyone new to Forex trading should start off with mechanical trading systems, it helps to develop discipline and gain experience. It takes time to develop feel of the market and it then becomes easier to move towards more discretionary trading systems. My current method has clear set of rules that identify potential trades, I them use my experience to narrow down and chose the ones that I see fit for the current market conditions. With more work and analysis I hope to improve over time.

What should you know about Forex Signals ?

Asymmetric Risk- Taking. Are you guilty?

Asymmetric Risk- Taking. Are you guilty? 

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Why we cut profits early and let losses run? In this article I would address the real trading psychology behind it. Lets start with a simple test !

Most traders new to Forex are often guilty ofletting their losses run and cutting their profits short, even experienced traders do it every once in a while. Before we begin, answer the two questions below. When faced with a scenarios below which option would you prefer?

A. 80% chance of winning $2,000 and a 20% chance to win nothing
B. $1500 Profit for sure

A. 80% chance of losing $2,000 and a 20% chance to lose nothing
B. $1500 Loss for sure

Most traders would chose Option B in Scenario 1 and Option A in Scenario 2. Compare these results with your own answers. If you chose the same then unfortunately you will be among 95% of traders who fails at Forex. Read Forex Loser’s Checklist, and see if you qualify. Lets look at psychology behind your decisions.

The two scenarios are quite interesting. Our perception of gain and loss changes our behaviour. When the options of a risky scenario involve profits, traders are risk-averse (risk-avoidance); however when options of a risky scenario involve losses, traders are risk-seeking. The other words, traders tend to seek risk in face of possible loss and avoid risk when profits are at stake.

This asymmetrical way of risk-taking has great implications on trading decisions we make as a trader. Our decision are based “subjectively”, taking in account recent events rather than looking at overall net trading balance. Let me explain:

After a profitable trade, the decision to close trade and take profit on next trade depends on gains made on previous trade. A trader starts to think ” I’ve made enough on the first trade, lets not lose it all and give away all the profits. Take early profit and call it a day”. At the same time, on a losing position trader delay cutting losses and hold on to trades hoping that it will reverse. The result is that trader realize profits way too early while allowing losses to accumulate.

A professional trader just need to act opposite to typical human behaviour. By considering the impact of losses on net trading balance and not on recent history of trading , a trader can make right decision of letting a losing position go early while keeping the profitable position running. Trading Robots have this advantage over manual trading as they help avoid implications of trading psychology.

Another interesting aspect of trading is the impact of losses on our minds. The feeling of losing an amount is much worse than pleasure gained from winning the same amount. Hence traders, hate losing 10,000 more than they love winning 10,000. Psychologically losses have twice the impact, no wonder why a trader don’t want to close a loosing position and willing to risk more.

A good trader is not a trader who makes millions in fraction of a second. A good trader is one who know where to cut his positions. It is not about making money; it is about losing as less as possible when we are wrong. Thus managing the psychological asymmetry in risk-taking is the key for succeeding as a trader. Bottom line “An experienced trader stands out from a new trader not by how he makes money, but how he loses money”

What should you know about Forex Signals ?

The 15 Questions you should ask your Broker

The 15 Questions you should ask your Broker.

There are many Forex Brokers, but not all were created equal. When it comes to your money, you want to be certain that your Broker meets your expectations. It is your right to ask as many questions as you need to feel comfortable about your venture and if you don’t get the answers your want, you should consider finding another Broker.

Why Size Does Matter

Size matters. Because the Forex market is an over-the-counter market with no centralized exchange, not everyone receives access to the same prices or quality of execution. Institutions with the largest trade volume and the most solid financials have access to better prices and execution. The bigger the broker, the better they are able to pass on the benefits of size, better prices, and better execution to you.

Who Executes Your Orders?

Not all Forex Brokers quote rates the same way. Below are two possible options:

1. Dealing Desk means that your Forex Broker creates the pricing and executes your orders. The spread is usually fixed, which means that traditionally, the spreads are higher than average variable spreads. Check for restrictions on placing orders during news or economic events; for many traders, this is a key time to trade.
2. No Dealing Desk usually means that multiple banks stream competing prices through your Forex Broker, so your orders are executed by the banks themselves. This means that there are usually no restrictions on trading news or economic events, but you should check with your broker.

Spreads

Fractional Pip Pricing

Most major currency pairs are quoted to four decimal places, so a pip would typically equal .0001 or one basis point. Forex Brokers generally round the price up or down to the nearest pip; but some now offer Fractional Pip-Pricing. It ads an additional decimal place, so spreads are usually tighter and more accurate.

Scalping the Market

Many traders favor short-term scalping strategies, which involves placing orders inside the spread. For scalping to be profitable for the client, the market maker must lose, so some Forex Brokers disallow the strategy. This strategy involves a high level of risk.

Rollover

Rollover is interest earned or paid on Forex positions held overnight. It varies depending on the difference in interest rates between a currency pair and fluctuates day to day with the movement of prices. A Negative Roll is when you sell a currency that pays higher interest rate, so you pay interest. A Positive Roll is when you buy a currency that pays higher interest rate, so you can earn interest. Negative Rolls are routine, but not all Forex Brokers offer positive rolls.

The "Carry Trade" is a popular Forex strategy which benefits from Positive Rolls and the high leverage available in the Forex market. For example, if you buy the USD/JPY, you can earn a positive roll. You are essentially borrowing the Japanese yen at a low interest rate cost to buy the US dollar with a high interest rate earning. Remember that leverage can dramatically amplify your losses, so beware of this technique, as it carries a high level of risk.

Hedging

Hedging lets you simultaneously hold BUY and SELL positions in the same currency pair. The most effective way to trade a market if you are uncertain about its direction is to find concrete support and resistance levels. This allows you to pinpoint levels where significant price action will take place.

Hedged positions do not necessarily limit risk as traders can find themselves losing on both sides of the trade. While this strategy tends to work temporarily in range markets, it does not work well in trending markets. Placing stop-loss orders on your positions to mitigate your risk is strongly recommended.

The National Futures Association, a self-regulatory organization in the US, adopted a new Compliance Rule 2-43 in 2009 that prohibits customers of Forex Dealer Members to open a "hedged" position in the same account. This rule may not apply to Forex Dealers outside of the US.

Customer Support

Forex trading works 24 hours a day. Does your Forex Broker? When you ask them questions, do they answer them clearly and honestly or do they give you the run-around? If your Forex Broker can’t answer the 15 questions below, you may want to look for one who can.

15 Questions You Should Ask Your Forex Broker

The following 15 questions are based on the above information and relate to basic information that your Forex Broker should answer without hesitation.

1. How long have you been a Forex Broker?
2. In what financial condition is your company? Will you show me your balance sheet?
3. Do you have good relationships with reputable banks?
4. Who is quoting the rates, my broker, a bank, or multiple banks?
5. Are the spreads fixed of variable?
6. How tight are the spreads?
7. Do you offer Fractional Pip Pricing?
8. Are there any trading restrictions?
9. Can I place orders inside the Spread?
10. Can I earn interest on positive rolls?
11. Can I earn positive rolls at all margin levels?
12. Are rollover rates displayed prominently? Where?
13. Does the trading platform allow me to hedge?
14. Can I lose more money than I put into my account?
15. What is the quality and availability of customer service?

Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Source: http://www.xe.com/currencytrading/questions.php

What should you know about Forex Signals ?

Top 10 currency trading tips from Deutsche Bank

An e-mail from Deutsche Bank contained the following list, which will serve an investor well who is contemplating buying foreign currencies as part of their overall portfolio.

Top 10 currency trading tips from Deutsche Bank 

1. Know what moves currency markets. Like any asset class, there are a number of factors that drive a currency's performance. A country’s macroeconomic situation can have a major influence--economic data releases, policy decisions, and political events can change an economist’s outlook on the country, and therefore its currency. There are also technical factors such as interest rates, equity markets, and international trade, which may also have an impact. Spend time getting to know these.
2. Understand the strategies. Yes, there is a method to the madness. As a trader, you need to be aware of three crucial trading strategies, which are often used by currency traders: the carry, momentum, and value trade. Momentum tracks the direction of currency markets; the carry strategy sees investors selling currencies with low interest rates and buying those with high rates; and the valuation strategy takes a position based on the investor’s view of a currency’s value. However, the strategies that you use are up to you.
3. Decide on your trading strategy. Are you macro-driven or a technician? In currency trading, as in any form of active investment, it is important to understand how you arrive at your investment decisions. Are you someone who looks at the big picture (fundamental economic data such as inflation, or central bank decisions) and makes a call on how that may affect a currency pair? If so, then you’re macro-driven. If you are someone who looks at the changes to a currency pair and then tries to understand what this may mean from a macro-perspective over the long term, then you are a technical investor.
4. Manage risk. As with any investment decision, you must decide how much risk you’re willing to accept. Ask yourself, “how much am I prepared to lose on this position?” If you don’t have a convincing or comfortable answer then you should rethink the trade. Do not risk more than you can afford to lose. Think about how you can mitigate your downside risk; make use of trading strategies such as stop losses or limit orders.
5. Stick to what you know. There are 34 currency pairs that can be traded on dbFX, each of which have their own characteristics and considerations to understand and analyze. If you’re participating in the market on a part-time and non-professional basis, it is probably better to concentrate on just a few pairs and commit to thorough and robust research on those, rather than superficial research on the many. Some key things to consider when analyzing a currency pair are its liquidity, transaction costs (the spread), and volatility. As a general rule, major currencies usually have better liquidity, tighter spreads, and lower volatility, versus emerging-market currencies, which have poor liquidity, wide spreads, and volatile movements.
6. Plan your trade, and trade your plan. It’s one thing to have a plan, it’s quite another to execute it. When trading currency, it's important not to get caught up in the moment--the markets are fast moving and in the short-term can be unpredictable. Rather than trying to make a quick profit, stick to your long-term plan based on your research. Good currency traders make money in the long term by being disciplined, not necessarily by making short-term bets.
7. Research, research, research. It’s important to stay current. All currencies move quickly, so checking the price once a week is not going to help you make strong, long-term returns. It is helpful to use an online provider that provides you with up-to-the-minute data and statistics. Traders use data to constantly assess their trading positions
8. Keep your emotions in check. Like many important decisions, it is vital to keep emotion out of any trading decision you make. If you’re upset about missing out on an opportunity and want to trade yourself into a better position, or want to stray from your trading strategy to make up for a loss earlier in the day-- reconsider, because you’ve got the warning signs of someone about to make an impetuous, irrational decision. If you do feel yourself getting emotionally involved in a particular trade, take a deep breath, review your strategy, and establish how such a decision will affect your overall approach before going anywhere near the "execute" button.
9. Don’t expect to win on every trade. That may not sound like much of a sales pitch, but even the most successful of traders don’t win on every trade. What they do have is a robust plan and long-term strategy, which carefully considers the risks. So don’t necessarily be disheartened if a trade doesn’t go your way; review why it went wrong and see if there is anything to learn from the experience. But don’t think that currency trading is an option for those seeking quick money, because like any investment, it only should be played by those with a long-term goal in mind.
10. Don’t put all your (nest) eggs in the currency basket. Foreign exchange is only one of the many asset classes you should be considering as part of a balanced investment portfolio. Forex trading is not suitable for every investor, so if you are committing all of your financial resources to forex trading, be sure you are fully aware of the risks and rewards of doing so, because commitment to one asset-class is not recommended. The same applies for currency trading itself. Risk diversification allows you to mitigate your risk by spreading it out, that is, not placing all your faith in a single trade. Diversification is key, no matter what asset class you’re investing with.

Source:http://seekingalpha.com

Discover Your Forex Trading Niche.

Discover your Forex Trading Niche

Give a bunch of traders a proven successful system, you can bet that not everyone will make money from it. We know the system is not wrong. So what is it that makes a person successful at trading? Lets find out.

In my opinion success comes when there a perfect fit between the person and his/her trading strategy. If you are still struggling at making profits from trading then it is not because you are lazy but perhaps you are simply trading in a way which is not in sync with your personality.

Points below will help you to find your own Forex Trading Niche:

Trade Different time Frame:

Have you tried trading intra-day, swing and position trading? If not, then how you know that the current time frame you are using the best one which fits you.

From experimenting I found that I mentally handle swing trades better than trades that last for months or few seconds like in case of News trading.

Trade Different Styles:

Most people dive straight into technical analysis based on indicators. How about fundamental based trading, or even news trading (not that I recommend news trading).

I’ve played around with more indicators than you can imagine. Bottom line, I was getting no where; there is no end at finding the best combination of indicators that would work. I stopped once I found my peace in Price Action and it is where everything came together.

Trade Different Markets:

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Why trade Forex only and not Stocks, Commodities and Futures? Unless you attempt to trade all these markets how would know which one is best for you.

I am guilty of this myself. I’ve never traded any other market. I may be not performing at my best and I would never know until I try all other markets. The good thing about Price Action strategy that I currently use is that I can apply it on any other market. I’ll save this one for 2011 New year resolution.

Make changes to your trading method:

One would think that once they have found the best strategy then there would be no need to make any changes ever. That’s just not true. On the contrary most professional traders constantly tweak their systems to match current market conditions.

I’ve modified the current strategy several times in the past, and I’ll continue to do so as I seem fit. On the other hand I keep working on variations of the same strategy to see if there is more I can get out of it.

Trade long enough:

This point brings everything together. It would take time to try all the combination above. If you just got started in trading then it can take some time before you discover your trading niche.

I did not succeed for the first two years, I was barely able to keep my account above par. I think I was too adamant to follow any gurus at the time, now looking back I think I should have followed someone which could have shorten my learning curve.

In Summary of discovering Forex trading niche, one would naturally excel when they find the right market, the right strategy and the right fit with their personality. On the side note, remember it is the journey that matters so don’t forget people you meet on the way.

Looking for Forex Signals?

How to maximize trading performance?

Maximizing Trading performance:

We all know how important it is to find our edge in the markets. Finding an edge could take months even years but once we have acquired such an edge, it is not the end and expecting windfall profits could only be a dream which is as good as wishful thinking. The next step is to work on yourself and develop the right mindset. Here are some tips that can help you Maximise Trading Performance:

1. Focus on implementing your trading plan perfectly for every trade

2. Focus on long term gains For ex. Weekly or Monthly gains as opposed to results of individual trades

3. Track and analyse performance to closest minute detail

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4. Evaluate your actions and make changes on regular basis

5. Keep a positive frame of mind

6. Avoid any conversations or thoughts that instil doubts about your ability as a trader

7. Be a teacher, help others maximise their performance, which in turn will maximise your own

To find a systematic method that can help you avoid emotions and discretionary judgement is just the first step. I can’t emphasise enough how important is to then develop the right mindset. Hopefully the tips above help. What do you do to Maximise Trading Performance?

What should you know about Forex Signals ?

Looking for Forex Signals?

Forex Technical Analysis

Forex Technical Analysis: 

Technical analysis is a method widely used in stock markets and other traditional markets. They use price history and a series of algorithms in their attempt to predict future prices. You can find on the market different methods and algorithms for predicting the market’s price, but in the end they will always base their methods on past price movements. Technical analysis, however, is a bit different.

The first method used by technical analysis is using the technical indicators. Usually a technical indicator is nothing more than a graphical representation display somewhere on the screen. Usually, the price is represented. The most notorious example is the MACD indicator.

Other methods can use measure resistance and support or trend lines. These methods are based on analyzing the chart and observing the recent history. The method is trying to find a pattern for price movements. Usually the price either follows a certain pattern or it oscillates between a minimum and a maximum. If the price follows a pattern, you can predict where it will go by using trend lines. If it bounces forth and back between a minimum and a maximum then using resistance and support lines you can predict when it will change its direction.

Technical analysis can be very helpful but its predictions are not flawless. Only you can decide if to trust a technical analysis and make a trade or wait for another opportunity. On the market you can find a wide variety of indicators and technical tools. Since most traders have access to them, the slightest difference in interpretation can make a huge difference on transactions. If some traders want similar price range and they all try to buy at that point then the price can bounce quite drastically in a short period of time.


Technical analysis is different from one trader to another. Each individual has its own desires, needs and interpretations. Every trader has its own goals too, so they have different ideas about how these goals can be reached and how to set up their indicators. All these differences make the individual’s trading system. Take any number of traders and you will see that, even if they use similar tools, the results will never be the same. The current market still works only due to all these differences.

For forex trading technical analysis is quite useful. It will only show a small part of the market but you can learn a lot about trading from it. Understanding technical data will help you read the charts better and you will develop certain skills and thus you will see faster when a price movements appears.

Technical Analysis

Technical analysis refers to the study of indicators and charts in order to determine the future price movement based on the past price variation. The technical analysis is quite different from fundamental analysis, since technical analysis uses mathematical techniques and charts to examine different aspects of price movement. Due to the development of Internet, all these indicators and charts are widely available to every user connected to the Internet, and not just for professional traders and brokers, like was in the past.

Charts will give you plenty of information about any price movement regarding a certain currency, if you know how to read them. Most traders consider that a chart tells the story of the currency it represents. Since there are more than 50 technical indicators you, as a trader, can get access to a huge amount of information about currency movement. From any historical analysis you can predict the future movement of that currency.

A good trader will certainly search a trend line. Trend lines always show the price movement of a certain currency (down or up). If you can find a trend, then you can determine quite accurate the price movement. A trend is always a good friend in this type of business, and all traders rely on them for future price predictions.

Technical indicators are used to study some particular aspects of a certain currency. These indicators are quite similar with the well known economic reports since they study the movement and health of a currency in comparison with economic reports that study the growth and health of a certain economy.

Source: http://www.tradingforex.net/lesson-6-forex-technical-analysis

What should you know about Forex Signals ?

Six steps to improve your currency trading: Sixth Step

step 6: Beware of Psychological Pitfalls

Many traders take shopping more seriously than trading. Few people would spend $500 without carefully researching and examining a product. But many traders take positions that cost them well over $500 based on little more than a hunch.

This cannot be stressed enough. Most traders fail because they lack discipline. Be sure that you have a plan in place before you start to trade. Your analysis should include the potential downside as well as the expected upside. So for every position you take, you should place both a Limit Order and a Stop/Loss Order.

Set Smart Trade Limits

For each trade, choose a profit target that will let you make good money on the position without being unachievable. Choose a loss limit that is large enough to accommodate normal market fluctuations, but smaller than your profit target. Lock these in using Limit Orders and Stop/Loss Orders.

This simple concept is one of the most difficult to follow. Many traders abandon their predetermined plans on a whim, closing winning positions before their profit targets are reached because they grow nervous that the market will turn against them. But those same traders will hang on to losing positions well past their loss limits, hoping to somehow recover their losses.

Sometimes traders see their loss limits hit a few times, only to see the market go back in their favor once they are out. This can lead to mistaken belief that this will always keep happening, and that loss limits are counterproductive. Nothing could be further from the truth! Stop/Loss Orders are there to limit your losses.

No trader makes money on every trade. If you can get 5 trades out of 10 to be profitable, then you are doing well. How then do you make money with only half of your positions being winners? By setting smart trade limits. When you lose less on your losers than you make on your winners, you are profitable.

Don't Marry Your Trades

People are emotional. It is easy to do objective analysis before taking a position. It is much harder when you've got money invested. Traders holding positions tend to analyze the market differently in the hope that it will move in a favorable direction, ignoring changing factors that may have turned against their original analysis. This is especially true when losses are being taken on a position. Traders tend to 'marry' a losing position, disregarding signs that point towards continued losses.

Don't Bet the Farm

Do not over trade. A common mistake made by new traders is over-leveraging an account. Just because one lot (100,000 units) of currency only requires $1000 as a minimum margin deposit, it does not mean that a trader with $5000 in his account should be able to trade 5 lots. One lot is $100,000 and should be treated as a $100,000 investment and not the $1000 put up as margin. Most traders analyze the charts correctly and place sensible trades, yet they tend to over leverage themselves. As a consequence of this, they are often forced to exit a position at the wrong time. A good rule of thumb is to trade with 1-10 leverage or never use more than 10% of your account at any given time. Trading currencies is not easy (if it were, everyone would be a millionaire!).

Be aware that trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.

Source: http://www.xe.com/currencytrading/improve.php

What should you know about Forex Signals ?