How does a non-dealing desk Forex broker work?

April 5, 2016 at 10:22 pm

There are two general types of retail Forex brokers:

Dealing Desk Brokers, also called Market Makers, provide liquidity to the market by offering both buy and sell quotes (Bid and Ask) and taking the other side of the trade. That is the reason they are also called Market Makers. Dealing desk brokers do not charge commissions for trading. They add commissions to the spread in the form of extra pips added to the interbank quote (see also What Is A Spread? and What Is A Pip?).

No Dealing Desk Brokers. There are two types of No Dealing Desk brokers:
– Straight Through Processors (STP) – brokers who connect traders with the interbank market. They collect quotes from multiple sources and present the trader with the best bid and ask prices adding some pips as their commission.
– Electronic Communications Networks (ECN) – brokers that allow direct trading between all participants of their network. They do not alter the spreads and charge small commissions for each trade. The true ECN model eliminates conflict of interest that exists when brokers take the opposite side of the trade.

Is forex trading betting or gamble?

April 3, 2016 at 11:50 am

I don’t see the difference between betting and gambling. You can do either one with intelligence by trying to increase your chances of winning.

In the same way, when trading Forex or any other financial market for that matter, you can gamble by placing random orders or you can use a profitable trading system with proper money management. The latter gives you a much better chance of succeeding. But it’s important to understand that nothing is guaranteed in trading.

 

In the forex technical analysis, was the mid price or bid price used?

April 2, 2016 at 11:48 am

For the purposes of technical analysis you can use any of the 4 prices and their combinations: open, close, high and low.

Charts are usually plotted using closing prices for the time period selected. Trend lines are drawn by connecting highs or lows. It’s not uncommon to plot moving averages of high, low and close for the same period.

 

How do you short a currency?

April 2, 2016 at 11:38 am

There are basically 3 ways to short a currency:

1. You can sell a contract for that currency in a Futures Market.

2.
You can sell an index of that currency. For example, if you believe
that the US dollar is going to weaken, you can sell a US dollar index,
which measures the value of the USD against a basket of currencies: U.S. Dollar Index

3. You can sell that currency against another currency in the Forex market.

In
Forex all currencies are traded in pairs. Each pair’s name is an
abbreviation of the names of its currencies. There are many different
pairs but the main trading activity is concentrated in the following:

EUR/USD  –  Euro versus US dollar

GBP/USD  –  British Pound versus US dollar

USD/JPY  –  US dollar versus Japanese yen

USD/CHF  –  US dollar versus Swiss franc

USD/CAD  –  US dollar versus Canadian dollar

AUD/USD  –  Australian dollar versus US dollar

NZD/USD  –  New Zealand dollar versus US dollar

There are also pairs called crosses such as:

EUR/JPY  –  Euro versus Japanese yen

EUR/GBP  –  Euro versus British pound

EUR/CHF  –  Euro versus Swiss franc

The list goes on.

The
price of the pair states how much the first currency is worth in the
second currency denomination. For example, if the price for EUR/USD is
1.3500, this means that one Euro is currently worth US$1.35.

You
are always long or short one side of the pair against the other side of
that pair. When you buy the EUR/USD pair this means that you
simultaneously buy the Euro and sell the USD. When you short the Euro,
you basically sell the Euro and buy the USD.

 

Apr. 1 End of week Forex signals results: Break Even

April 1, 2016 at 11:31 am

This week the result is break even.