INSTANT FULL ACCESS

Important Forex Questions Answered

What are Forex scams?

There are more Forex scams nowadays than hair on your head specially if you are bold, There are scams of many types from brokers and their affiliates to reviewers with affiliates, there are Forex products and software that amounts to nothing yet sold for thousands of dollars, If you need a broker use only brokers from USA who have branches in UK and the rest of the world, Do not use a broker located at xxxx island who allows you to open account with $1.00 !

Is automated trading any good?

MT4 allows automated trading and has great support for this feature, however, I personally tested over 100 free Expert advisors and few expensive ones I bought and got poor results, and in many occasions I had entire accounts wiped out over night. so how in the world I would allow automated trading on live account. In addition, when you put one of these expensive robots on a live account you will be tired of activation messages and copy protection procedures incorporated to these robots. Further more, You wait a long time between trades and if you are a short term Forex trader you will not have the patience to wait for your robot to trade, you will feel sometimes it will never trade, and when it does, it never give you the satisfaction you get with manual trading.

Are Forex reviews truthful?

Absolutely not, Just pay attention to the links on their page, click on one and see where you will be taken, Reviews are there to get targeted traffic from search engines and redirect via affiliate links to websites that will give revenue share to reviewers who write biased reviews about Forex brokers, products, and services, and they will never help you in anyway but make the wrong purchasing decisions.

What is hedging?
Hedging in Forex is to have both sell and buy open positions for the same currency on the same account, It minimizes exposure to the market and eliminates risk unless spreads are widened. If an account does not allow hedging then each sell order will offset an existing buy order and so is the other way around, but when hedging enabled each buy or sell is entered and tracked individually, and because hedged trades require no margin by legitimate brokers it is popular specially among those traders who learned how to handle it. On May 2009, The US NFA released rule that prohibits hedging on all US based Forex accounts even if MT4 is used, this rule resulted in migration of thousands of accounts to the UK.

What is spread?

Spread is the difference between the bid and ask prices in Forex trading which ranges from 1 pip to 10 pips depending on broker, currency, and time of day or market conditions. When you buy currency you pay the higher price which is the Ask price, and when you sell a currency you sell at the lower price which is the bid price. the difference between these 2 prices is called the spread and goes to the broker as trading commission.

What is a trailing stop?

Trailing stop is a great way to protect your profits once your trade is profiting, once you you assign a trailing stop to a trade you need to to select how many pips your trailing stop should be away from the market price, so if you select 15 pips as a value, your trailing stop will slide following the market price but keeping a 15 pip constant distance from the market price, this goes on as long as the market moves your way, but when the market reverses, trailing stop will stand still and if the market moves against you for more than the 15 pips you have assigned to your trailing stop, the trailing stop will then be triggered and your trade should be closed profitable. You must know that Trailing stop works in the platform and not the server as the case with ordinary stop or limit, so your computer and connection must be both up for this to work.

What is a pip?

A pip is 1 hundredth of a cent, A US cent equals 100 pips, when you say I made 10 pips or 50 pips in profit or loss a Forex aware person hearing you will immediately calculate your profit or loss based on the amount of money you invested.

What is a  Candlestick?

A candlestick represent one bar of candlestick chart and it can have two colors but many forms, It gives you at a glance the open, close, high and the low price for the time frame, one bar can represent 1 minute, 5 minutes, 15 minutes, 30 minutes, 1 hour, 4 hour, 1 day, 1 week, 1 month, or even one year. A sequence of consecutive candlesticks and the gaps between each two compose the chart.

What is Forex lot?

A Forex lot refers to an amount of purchasing order, depending on account type, in a mini account there is a mini lot which is $10,000 or 10,000 of another currency, In a standard account, standard lot is used which is $100,000, and in a micro account a micro lot of $1000 can be used.

What is margin and free margin?
Once you made an order in your account, your deposit will be divided to two separate parts, Part one: Margin, which is the amount of your funds laid out for your open order, and Part two: Free margin which is the remaining amount of your funds that can still be used for additional orders, and at the same time is the funds in your account available to protect you from position liquidation in case you sustain a loss, via a process called margin call. Once an open position loss becomes greater than your free margin, it will be automatically liquidated, and the margin that laid out for the position will be returned to your account minus any possible slippage. Margin can be referred as USED margin, while free margin can be referred to as usable margin. Margin policies differ from one broker to another, For example some brokers will not liquidate your positions until you loss eats up both your free margin and used margin, which results in losing entire account all the way to negative balance sometimes. Also when hedging is used, Some brokers will return used margin to your account when you have opposite trades of the same size on the same currency pair, because opposite trades support each other. while other brokers will keep the margin tucked away even when hedging.

What is widening spread?
There are two types of spreads with most brokers, fixed and variable, If you choose fixed at account signup, then you do not have to worry about widening spreads, but if you are on variable spread account, you need to try to open and close your orders at times when the spread is lowest, and because widening spreads affect all open position even when hedging, you need to worry about your free margin not getting consumed by widening spreads. Certain brokers widen their spreads at news times and when the market open or close to ridiculously unbelievable levels and force you to close positions and lose money. be very careful when selecting a broker and contact me if you need help.


What is Forex leverage?
If you were to trade Forex with just the money you deposited in your account, your profits or losses would amount to dimes and nickels. Forex trading is done with high leverages which acts as amplifier to both profits and losses. Recommended leverage to use when opening account is 1:100, which means that you can borrow 100 times as much money as you have funded. Brokers, are providing you with this for the sole purpose of making larger commissions from your orders, since the larger your order size, the larger the commission will become. In your account your actual leverage is not the default 1:100, but depends on the size of your open positions, for example, if you have $10 k in the account and took a $100 k position in the market, your true leverage will be 1:10 because your order is 10 times bigger than your funds, and you should think of it as $100,000 investment, not the $1000 that is temporarily deducted from your account for opening the position.


What is account summary?
Please visit my MT4 basic learning page !

How much money can I make in Forex?
The amount of money you can make in Forex depends on the following and more factors, initial size of account, trading strategy, integrity of your broker, allocated time for trading, your self discipline and luck.

How much money can I lose in Forex?
If in losing zone, on a good brokerage firm, you can lose part of your funds that not laid out for open positions, and when new smaller positions opened, you can again lose unused portion of your account, this process can continue on until you become no longer able to open smallest available contract depending on your margin requirements and type of account, meanwhile with some other brokers you can lose entire account all the way to negative balance in one step. with most brokers you are not required to pay negative balance.

What is expert advisor?

Please see automated trading answer above !

Is there a guaranteed way to make money in Forex?

There is no guaranteed way to win in Forex market, because there is unpredictable trends and market volatility.

What is news trading?

News release make currency prices jump or drop to new territories so many trades take bigger risks for bigger rewards at news time, large institutions can afford to send representatives to give first word on major release and then they can act correctly or incorrectly with their Forex accounts making long bullish or bearish candle sticks while after news traders will take a ride up or down to reverse the direction and benefit from the move back. for the average traders, News are history.

What are the best trading platforms?

I do not like to provide this information publicly, if you would like an answer please contact by email

What are the best Forex brokers?

I do not like to provide this information publicly, if you would like an answer please contact by email,  you may also contact me by email to ask any question on the Forex subject.

What is the recommended size for Forex account?
There is a big discussion of this important matter in my Forexbody System Wizard !