Starting a new business relationship with a company is always a nervous time. You don't know what to expect and trust is low. When it comes to Forex brokers, there's good reason to be wary because many brokers come and go every year.

So this short guide will show you the 3 simple steps to test out any broker that you're working with for the first time. You'll learn why you want to send a test deposit, execute a few trades and test the withdrawal process. 

Before you get started, be sure to put in the time to research brokers before you ever send any money. Read this guide to learn how to do the background research on brokers.

But once you've done that, it's time to test out the brokers that you've selected. Follow these 3 simple steps to test your top picks.

Step 1: Send a Test Deposit

Once you've decided on a broker that you want to test out, never send all of your risk capital in the beginning.

Send a little more than the minimum.

This is essentially a broker stop loss. If the broker does not perform well or if you find out things about the broker that you do not like, worst case scenario, you have the ability to walk away from that broker without losing too much money.

The amount that you send is entirely up to you. But as an example, let's say that the broker's account minimum is $100. You might consider sending $300 in the beginning.

Remember that you aren't trying to build your account yet. You're simply testing out the broker with real money. Some brokers can treat you very differently when you have a live account versus a demo account.

Step 2: Execute Some Trades

Now execute a few small trades. It's best to do a few shorter-term trades, just to test the system.

Be sure to test stop losses, pending entries, take profits and any other order type that the broker offers.

There are a few things to look for here:

• Do you get the price you see on the screen, or is there slippage?
• How wide are the spreads?
• Are your stop losses honored, or do they get triggered early (remember to factor in the spread and rollover)?
• Is it easy to execute a trade, or is the trade entry/exit process clunky?
• What kind of order types do they allow?
• Is the trading software reliable?

These questions will be answered very quickly after you take a few trades. Some trading platforms also perform differently when you do live trading versus demo trading.

You'll never find out these things by only doing online research or trading a demo account.

So take some time to observe how their live system works and that will give you confidence to continue with them. 

Step 3: Test a Withdrawal

If you're happy with how the broker executes trades, now it's time to test the most important step in this process.

Getting yo' money back! 

First, find out the broker's procedure for withdrawing money. It's usually published on their website.

Do a search for: Withdraw money from [your broker's name]

I would suggest using DuckDuckGo for your searches. If you want to earn cryptocurrency for every search you do, then consider switching to Presearch.

So if you deposited $3,000 in your account, see if you can get $500 out. The withdrawal fee might be expensive, relative to this small amount of money, but it's worthwhile to see how the entire process works.

If there are any withdrawal policies that weren't published on the website, you'll learn about them here.

Then actually go through the process and see how easy or hard it is. If you have any questions, be sure to contact the broker's support desk.

I would also recommending doing a second withdrawal. Sometimes unforeseen issues can pop up on the second withdrawal, even if the first one went smoothly.

Final Thoughts on Testing a Forex Broker

After doing these three simple steps, you'll find out very quickly if you want to deal with that broker or not.

If everything checks out, then it's all system go!

Now you'll have the confidence to send in all of your risk capital.

One final reminder: It's a good idea not to send all of your money to one broker, if you have a significant amount of money.

But now that you understand this testing process, it's easy to test multiple brokers that you might want to use at the same time.

The post 3 Steps to Test a New Forex Broker appeared first on Trading Heroes.

If you're new to Forex trading and are looking for your first Forex broker, this is the guide for you. I'll give you the most important things to look for and show you the little tricks that expose hidden fees and shady broker tactics.

In order to find the best Forex broker, you'll have to research the broker, do small tests, ask about hidden policies, and find out if they are regulated. Also decide if a ECN or DD broker is best for you. 

This guide will walk through all of the steps, in detail. 

Check the Reputation and Reviews of Brokers

This is the easiest part in the entire process. Just do some internet research on the brokers that are out there.

The first thing to look for is how long the broker has been in business. It's actually fairly easy to start a Forex brokerage in some parts of the world.

So if a broker has only been around for 6 months, it's not a good idea to be the lab rat that will help the broker work out all of the bugs in their systems.

Another good way to check the reputation of a broker is to ask full-time or active traders which broker they trade with. If an active trader has been with a broker for many years, without any issues, the broker is probably reliable.

Also read through forums, Facebook Groups or anywhere else that traders hang out. See which brokers those traders like and why.

However, keep in mind that many unsuccessful traders want to blame their shortcomings on everyone else, instead of taking responsibility for their results.

So some broker reviews may be negative, when it's not the broker's fault. Keep an eye out for reviews that say things like:

• The broker keeps triggering my stops
• The broker screwed me out of a trade
• The broker is trading against me

While those statements could certainly be true, it's usually the sign of a trader who doesn't want to take responsibility for his or her trading.

Learn to read between the lines.

Trade Their Demo Account

Most reputable brokers offer a demo account. So take advantage of this opportunity to see how well their trading platform works. 

Since you're trading with play money, you're free to stress test the platform and do things that you probably wouldn't do with real money.

Trade oversized lot sizes, see what it takes to trigger a margin call, experiment with different types of orders. See how hard it is to enter trades quickly and try exiting trades from other devices, like your phone.

In other words, try to break their trading platform. This will expose the strengths and weaknesses of the platform. 

Test Their Customer Service

Another thing that you can do in your preliminary research is to reach out to their customer service and ask questions. It doesn't matter too much what you ask them.

This is just a test of their customer service. 

All you're looking for is the following:

• Response time
• How well they communicate
• How thoroughly they answer your questions

Ask all of the questions you have on your mind, no matter how basic you think they are. 

Sure, there are companies that have great customer service before you become a customer, then forget about you after you sign up.

But if you test them out beforehand, there's a much better chance that they'll also have great service after you become a customer. If they have terrible service before you're even a customer, then that broker should be avoided.

Be sure to test multiple contact methods, chat, email and phone.

Understand How Your Account Balance Effects Lot Sizes

The next thing to consider is how much money you have to trade with.

A trader who has $5,000 in risk capital will usually choose a different broker than someone who has $500,000 to risk.

This is mostly because of minimum lot sizes. Brokers that have small minimum account sizes usually allow smaller minimum lot sizes, like nano lots or micro lots.

On the other hand, brokers with higher minimums may only allow mini lots as their smallest lot size.

If you trade lot sizes that are too big for your account, you are guaranteed to blow out your account.

To learn more about how Forex lot sizes work, watch this video.

Are There Trading Restrictions?

Some brokers don't allow certain types of trading. For example, some brokers do not allow you to scalp or use trading robots.

Most traders don't scalp anyway. But if that's your jam, then you should ask potential brokers if they restrict any types of trading in their accounts.

Check for Hidden Fees

There can be some fees that you only find out about after you actually deposit money into your account. So be sure to ask about them before you open an account.

These can include:

• Unusually high transaction fees for withdrawing/depositing money
• Inactivity fees
• Minimum activity fees
• Monthly fees for keeping your account open

You should avoid brokers that charge these fees, at all costs. There are brokers that don't charge these fees.

Find Out if a Broker is Regulated

Next, find out if a broker is regulated or not. Sure, they can still do shady things even if they are regulated, but it's much less likely.

You can usually find the regulating body on the bottom of their website or on their “About” page. There's usually an ID number that identifies the broker.

But don't stop there.

The broker might be posting a fake ID number or using someone else's number. This was what they were doing in the Shiroma scam.

So take the ID number and actually contact the regulator to see if it's a real number. You can usually search by broker name or ID on the regulator's website.

On top of seeing if the ID number matches the broker name, you can find out if there are any violations or legal actions against the broker.

If there actions against the broker, be sure to read through them to see how serious they really are. Sometimes they are minor and can be ignored. 

The broker doesn't have to be regulated in your country, but understand how much protection you have in the broker's country, if you choose to do business with them. 

Dealing Desk or ECM?

Another question that people ask when choosing a broker is: Should I go with a dealing desk (DD) or electronic communication network (ECN) broker?

If you're just starting out, a DD broker is usually a better choice…in most situations. Most of them only charge a small spread (instead of a commission), and they usually have minimum lot sizes that are favorable to smaller accounts.

Another benefit of a DD broker is that they can take the other side of your trades. Some people see that as a negative, but the upside is that it provides you additional liquidity that you might not get on the open market or through an ECN.

As you get better at trading and build your account, consider moving to a ECN broker. They can usually offer tighter spreads and the commission fee structure usually makes larger trades cheaper than with a DD broker.

An ECN broker passes your trades directly through to a trade matching marketplace, eliminating their interest in any of your trades because they are not taking the opposite side. This gives you an extra layer of protection against trade tampering.

You can see our picks for great Forex brokers here.

Test the Withdrawal Process

This is a very important step and is part of the 3 step broker test process. Once your research has identified a potential broker that you want to trade with, do not give them all of your money at once.

Only deposit a small amount of money, an amount that you're willing to lose.

Then wait a couple of weeks…do a few small trades…then withdraw some of the money. Doing this will show you how easy the process is and if the broker has any hidden fees associated with withdrawal.

Doing this test might seem a little tedious, but it's a small price to pay to make sure that you won't get screwed later. 

After you've gone through all of the steps above and are satisfied, you can be reasonably sure that you have a solid broker and you can go full speed ahead with trading.

How to Avoid Scams (The Biggest Red Flags)

Don't suffer the same fate as the person above. Here are some things to look for in fake/scam brokers.

If someone contacts you randomly via email or a social media network and says that they are a broker, and offers to manage your money, run away.

Fast. 

Real brokers don't manage money, they are only in the business of executing trades.

Another red flag is when a broker charges a large fee for withdrawing money. I've heard that this can be as high as 25%. Another variation of this scam is they tell you that you have to pay “taxes” or a “trading fee” in order to withdraw your money.

Next, read through the broker's website. If it looks like they used Google Translate, then run away. A real broker will have a well-written website that clearly explains what they do.

Finally, beware of Forex “brokers” that insist on cryptocurrency as the funding source.

Forex trading involves trading fiat currencies, so you should fund your account in fiat. Scams ask for cryptocurrency because it's non-refundable.

Final Thoughts on How to Choose the Best Forex Broker

One final word of wisdom…if you have a significant amount of money, do not place it with one broker. Consider using 2, or even 3 brokers.

What constitutes a “significant amount of money?”

That's for you to decide.

But consider this…if that broker went bankrupt and you lost all of the money in that trading account, how sad would you be? If you would be very sad, then consider using multiple brokers.

If you go with a broker that has been around for awhile and that many active traders are using, you should be safe.

But do your research before you send in your money. 

The post How to Choose the Best Forex Broker For You appeared first on Trading Heroes.

This tutorial will help you understand what a Forex broker is and how they can help (or hinder) your trading career. It's a perfect article if you're just getting started in Forex and want to learn very basic concepts.

A Forex (foreign exchange) broker is a financial services company that holds your money in their account and gives you the ability to use that money to buy and sell currencies, so that you can potentially profit from the trades. Brokers provide customers with access to liquidity providers, which are the “exchanges” where the currency pairs are actually traded. Some brokers may also take the other side of a trade, in order to help you get your trade filled. 

Now let's get into the details of how brokers work and why you need them.

What Does a Broker Do?

In the simplest terms, a broker gives you access to trade the markets. 

You send them your money, they deposit your money into your brokerage account and you can start trading Forex with that money.

When you want your money back, you ask them to withdraw your money and they return your money to you.

The Different Types of Brokers

In Forex, there are basically 2 types of brokers: 

• Dealing desk, also known as market maker
• Electronic Communication Network (ECN), also known as a “non-dealing desk” broker

Each type of broker has its benefits and downsides. 

A dealing desk broker takes the opposite side of some customer trades, if they cannot find another trader to match your trade with. When a reputable dealing desk broker takes your trades, they play fair and generally allow you to take a trade that you may not have been able to get at an ECN broker.

One big upside of a dealing desk broker is that they can take less of a fee per trade than ECN brokers, especially for traders with small accounts.

ECNs are generally thought of as more “fair” because they do not take the other side of customer trades. They simply match customer orders with each other.

These brokers usually charge a commission on every trade, and offer a lower spread, which benefits traders with larger accounts.

The downside to ECNs is that they might not be able to match your order with another trader on the opposite side and they may end up canceling your order. Since they don't take trades themselves, they cannot step in and take the trade.

There's no right or wrong answer when choosing between a dealing desk or non-dealing desk broker.

It all depends on the brokers available in your country and what makes sense in your situation. 

What is a Liquidity Provider?

A liquidity provider is a company that provides access to trading markets. These trading markets can include banks and large institutions.

Brokers have connections to multiple liquidity providers, which allows them to find the best prices for their customers. 

Liquidity providers do not take on retail (independent) traders like you and me because they only want to be in the business of providing market access.

They leave it up to the brokers to find retail customers and deal with customer service.

Examples of Forex Brokers

Here are some of the biggest brokers, at the time this article is being written.

• Oanda
• Pepperstone
• Forex.com
• Saxo Bank
• Dukascopy
• Scandinavian Capital Markets
• See our recommended brokers

Some brokers specialize in working with customers in only certain parts of the world, so do your research and find out which brokers are the best option where you live.

How Do Brokers Make Money?

There are 2 ways that brokers make money. They can charge a bid-ask spread and/or charge a commission on every trade.

The bid-ask spread is the difference between what you can buy a currency pair for and what you can sell a currency pair for.

You buy at the bid and sell at the ask.

So as soon as you buy a currency pair, your account immediately shows a small loss, because you have to sell at the ask price, which is lower than the buy price.

…and vice versa if you sell a currency pair first.

A commission is a flat fee on every trade. 

Usually dealing desk brokers only charge a spread, but the spreads are wider than at ECN brokers. ECN brokers generally provide smaller spreads, so most also charge a commission to make up for the small spread.

For traders with larger accounts, the additional commission can still come out cheaper than paying the larger spread with a dealing desk broker.

Avoid brokers that charges you a monthly fee or an expensive withdrawal fee (beyond a basic transaction fee). Reputable brokers usually won't charge these fees.

Also avoid brokers that charge a monthly inactivity fee. This is a fee that you have to pay if you don't make a certain number of trades per month.

Some brokers will also offer other products and services for sale to create income.

Forex Leverage Explained

Most Forex brokers allow you to trade with leverage. 

Leverage is a good thing to have in Forex because if you traded without it, you would barely make any money on your trades.

Most currency pairs move in the equivalent of pennies in US Dollars per day. Therefore if you did not have leverage, you would only make (or lose) a small amount on every trade.

However, if you trade with leverage, every currency unit in your account, $1 for example, would control many times that amount of currency.

For example, if you trade with 50:1 leverage, every dollar in your account now controls $50 of currency. If you put on a trade using $100 in your account, you now control $5,000 worth of currency, at 50:1 leverage. 

If the price goes against you by 10%, you would lose $500, much more than the original $100 in your account.

Obviously, the trade could also go in your favor, leading to a big gain.

But if you did not use leverage, you would only gain or lose $10 on the same market move, because your profit or loss would only be calculated on the original $100. 

Therefore, leverage amplifies gains and losses and should be used responsibly.

That's a very simplified version of how leverage in Forex works, but you get the point.

Broker Regulation

One important thing to consider when choosing a broker is if a broker is regulated or not. Make sure that they are registered with the regulating organization in the area you live.

There are several dodgy, unregulated, fly-by-night brokers that come and go every year. Here's an example of one.

Here are a few examples of regulating organizations around the world:

• Commodity Futures Trading Commission
• National Futures Association
• Swedish Financial Supervisory Authority
• Financial Conduct Authority
• Danish Financial Supervisory Authority
• Finantsinspektsioon
• And many more!

These organizations provide varying levels of protection against fraud and broker bankruptcy. So be sure to understand how things work in your country.

Find the organization that regulates brokers in your country, then only deal with brokers that are on their “approved” list. 

Can You Trade Forex Without a Broker?

Technically, yes.

You can take your physical currency and find someone who is willing trade it for another currency. Then you would have to another person who is willing to trade that currency for your original currency, in order to realize your profit or loss.

So in a practical sense, it's not possible to trade Forex without a broker. 

Even if you go to a bank or an exchange window at a store, they are acting like a broker, but they won't give you leverage.

Since you aren't getting leverage, it won't be worth your time.

Therefore, just open an account with a Forex broker…it's much easier.

What's the Best Forex Broker?

The best Forex broker will really depend on where you live and how much money you have to trade. 

There is no one best Forex broker for everyone. 

As I mention here, beginning traders with a small account are probably better off starting with a nano lot, market maker broker.

If you have a larger account and you're consistently profitable, then an ECN broker is usually a better option.

Keep in mind that all brokers will have negative reviews against them.

This is normal.

There are many people who try trading because they think it's easy. When they realize that it's not that easy, they start blaming everyone for their losses…especially their broker.

So try to read between the lines to find out of a review is credible or not. Is the reviewer bringing up a valid point about the broker, or are they just someone who doesn't want to take responsibility for their poor trading results?

Once you find a broker that you feel is good, open a small account and start trading. It also helps to try to withdraw some of your money to see how easy the process is. You can always put it back later.

Conclusion

So that's what a Forex broker is and how they work. In future articles, I'll get into the details on how to select a broker, how to fund an account, and much more.

If you're a beginner and have a question about Forex trading, feel free to contact us and ask a question.

Also take our free beginner's course to jumpstart your trading education.

The post What is a Forex Broker? appeared first on Trading Heroes.

Someone is hunting your stops.

But it's probably not who you think.

Let's first take a look at why brokers don't hunt stop losses. Then I'll get into who does and how to avoid it.

Brokers Don't Hunt Your Stop Losses

This is true for regulated brokers in major financial countries.

The only traders who complain about broker stop hunting are rookie traders who don't have a proven trading strategy, and/or are using a shady broker. 

If you are using a super dodgy unregulated broker from a suspicious country, then you might see some abnormal price movements. When you see that, it's time to get a real broker. Find out who we recommend here.

But legitimate, regulated brokers could really care less about your stop losses. In fact, they make more commissions if you hang around. So there's no motivation for them to take out your stops and blow out your account.

Even if they are a market maker broker, they are not “trading against you.” They're simply providing liquidity for their customers.

…and since over 90% of traders lose money on their own, market makers don't have to hunt stop losses. The odds are hugely in their favor already.

If you are really concerned about your broker trading against you, then use an ECN broker.

Who Really Hunts Stop Losses

The real stop hunters are the large institutions. 

Banks, hedge funds and other institutions have the capital to temporarily push the market past key levels. Large institutional traders cannot enter their trades all at once…like retail traders can.

When a large order enters the market, it moves the market in the opposite direction of the trade. This is because there are no more traders to take that trade, at that price. Therefore, the trader with the large order has to pay more to get the trade done.

It's a liquidity issue. There isn't enough liquidity to absorb a big trade. 

In order to avoid this, large traders break up their trade into much smaller pieces. On top of that, they can also push the market in the opposite direction, in order to take out some stops and clear out liquidity in their desired trade direction.

Here's an example of what it might look like on a chart:

It's kind of like what Paul Rotter would do in the bond market. He would enter a large pending order in one direction and when traders tried to ride that trade, he quickly cancelled the order and entered a trade in the opposite direction.

Classic misdirection. 

How to Avoid Stop Hunting

Can you completely avoid stop hunting? Of course not, but there are a few things that you can do to minimize its negative effects.

Use Price Action Confirmation

Only enter a trade when you see price react in a way that's in line with what you think the market will do. The bottom line is that you will never know if a support or resistance level will hold because in reality, it's more of a fuzzy zone.

So wait until the market “tips its hand” and gives you a clue as to what it will do next.

One type of confirmation is a consolidation below a support level.

Once it pops above that level, this can be a good confirmation that price might start to reverse.

Don't Place Your Stop Too Tight

Retail traders tend to get greedy and with their stop losses. They dream about hitting 10R trades and get stopped out repeatedly.

Now, there are some trading strategies that are profitable with a very low win rate, and a super high return per trade. But most traders don't have the trading personality to stomach such a low win rate.

So set your stop loss at a level that gives the trade room to move and will show you that you were wrong about your trade idea. To get more details on where to set your stop loss, read my post on how to figure out the ideal place to set your stops.

Avoid Obvious Levels

New retail traders love to place their stop losses at round numbers (00) and half numbers (50). Those levels can act as support and resistance.

So whenever possible, set your stop on the other side of those levels.

Things That Don't Work

Now let's take a look at some of the advice that is out there in internet land about avoiding stop outs and I'll show you why it doesn't make sense.

More Touches Means More Reliable

Some educators will teach that a support or resistance level is more reliable if it's touched multiple times, on the same side.

Like this…

In reality, when price action hits a level multiple times, it's actually more likely that price will break through it.

Even in the example above, only the second touch from the left turned out to be a really good trade. The other trades might have been profitable, but they were not nearly as good.

So don't believe that an obvious level will continue to hold.

It's a prime candidate for a stop run or reversal. 

Drawing Exact Levels

It can be tempting to draw a line on a chart and feel like price must respect that level.

But the reality is that levels are fuzzy zones.

Here's an example:

If you set your stop loss exactly at the line that you draw on your chart, there's a good chance that you will get stopped out. But if you set your stop on the other side of the zone, that can be a much safer place to have your stop.

…and if price ever gets to that level, you will be sure that you were totally wrong about the trade.

Trade “Ghosting” EAs

Trading software that hides your stop losses can be useful in some situations, like when you don't want other traders to copy your trades.

But it won't help, in this case. 

If you place your stop loss at an obvious level, or set it too tight, then you will still get stopped out a lot.

But using this type of software can be a good exercise for traders who are convinced that their broker is running their stops. When you hide your stops from your broker and they still get triggered a lot, then it's on you…not your broker.

Mental Stop Losses

If your stop loss is in the wrong place, it doesn't matter if a stop loss is in your head or in your trading platform.

It's going to be taken out either way. 

A mental stop loss could even be worse because there can be a tendency not to honor the stop, or you could be away from the computer when the stop loss is hit.

So don't think that a mental stop will improve your performance.

It's more likely to make your results worse.

Conclusion

A reputable and regulated broker won't run your stops. It's not in their best interest.

But if you are getting stopped out a lot, then there are other factors that could be causing this. Take some time to review your trading journal and find out what's really going on.

Let us know if you have any questions about brokers and stop losses, in the comments below.

Happy Trading!

The post Do Brokers Hunt Your Stop Losses? No, But Here’s Who Does appeared first on Trading Heroes.

Why would you want to hide your stop loss from your broker?

In this post, I'll show you why some traders do this, how to do it, and the situations where it makes sense.

If you prefer the text version, it's provided below the video.

Why Hide Your Stop Losses From Your Broker?

Not all traders will benefit from hiding their pending orders.

There are 3 reasons why you might want to hide your stop losses.

1. Conceal Your Trading Strategy

If you have a trading strategy that works really well and you don't want other traders (or your broker) to reverse engineer it, then you might benefit from concealing your orders.

This is especially true if you publish your track record on MyFxBook or a similar copy trading or reporting platform.

Your broker will be able to see your initial entry and final exit level, but they won't know if you closed the trade manually or if it was a pre-set order.

2. Prevent Intentional Slippage

I'm not saying that all brokers do this but…

…a few do.

So if you are consistently profitable and you are not making as much money as before, then your broker could be slipping you intentionally.

There may not be a way around this and you may have to switch brokers.

However, one way to potentially prevent this is to hide your entry and exit orders.

If you think that your broker is doing this to you, try hiding your orders and compare your results.

3. You Have Very Large Trade Sizes

Traders who have very large trade sizes will benefit from hiding their pending orders. If their trades are on the broker's books, other large traders can temporarily move the market to hit their orders or ride the order flow.

Large traders typically break up their entry orders, enter them in small chunks, and spread them out across multiple brokers.

Some dodgy, unregulated brokers can also trade against large trades or hunt stops to their benefit. Regulated brokers won't do this.

How to Hide Your Stops and Other Pending Orders

There are 2 ways to hide your orders.

The method you use will depend on your budget, needs and available resources.

If you don't know how to code, then you can get started here. If you just want to hire someone to do it, our list of Forex trading programmers is a good place to start.

Create a Custom Order Execution Platform

You can create a custom platform that talks to your broker's servers via an Application Program Interface (API). This is the more complex and expensive way to go, but it is also much more customizable and scalable.

Almost all brokers and trading platforms have an API that you can use to build your own trading platforms.

You can use whatever development platform and programming language fits your situation and host it on one of your servers or use a hosting service like AWS.

Here are a few examples of trading APIs:

• Oanda
• MetaTrader 4
• Scandinavian Capital Markets
• Tradestation

Create a Custom MetaTrader Expert Advisor (EA)

Another way that you can do this is to create an Expert Advisor for MetaTrader. This is generally easier and cheaper.

You simply upload your EA to a Virtual Private Server (VPS) and have it running 24/7. Just be sure to pick a reliable VPS and setup alerts so you know when your server is offline.

To see which VPS we recommend, visit our resources page.

Conclusion

In reality, not all traders will benefit from hiding their stop losses and pending orders.

However, if you fall into one of the categories above, this post will get you started on the right track.

There is a common misconception that you should hide your stops so your broker doesn't stop hunt them. This is a myth and any reputable and regulated broker won't do this.

They want to have you as a customer for as long as possible because they make money on your commissions. So it's in their best interest to not stop you out all the time.

If you have any questions about hiding your pending orders, leave a comment below…

Disclaimer: Some links on this page are affiliate links. We do make a commission if you purchase through these links, but it does not cost you anything extra and we only promote products and services that we wholeheartedly believe in. TradingHeroes.com is a participant in the Amazon Services LLC Associates Program, an affiliate advertising program designed to provide a means for sites to earn advertising fees by advertising and linking to Amazon.com.

The post How to Hide Stop Losses From Your Broker appeared first on Trading Heroes.

Running a Forex brokerage is a really tough business.

Oh the stories I've heard….

So why would anyone want to start one?

In this episode, I sat down with Arif Ahmad, co-founder of Scandinavian Capital Markets (SCM), a ECN broker in Stockholm Sweden. As it turns out, Arif had good reasons to get into the brokerage business.

As money managers, they were tired of getting pushed around by shady FX brokers. They figured that they only way to get good service was to provide it themselves.

That is how SCM was born. 

They are based in Stockholm, Sweden and as it turns out, there are several advantages to having a brokerage there. With many countries reducing Forex trading leverage to 30:1 or lower, it is becoming harder to find brokers that will support more highly leveraged trading.

Obviously, leverage is a double-edged sword and not for the beginner. But I personally believe that traders should still have the option to be able to access higher leverage.

Having a broker in Sweden gives traders the advantage of still being able to access 100:1 leverage, in a country with a stable banking environment and a reasonable amount of regulation.

The alternative is usually to go to places that are havens for dodgy offshore brokers like Cyprus or Malta, which are like the Wild West, when it comes to regulation.

As I've mentioned before, the best broker for you will depend on where you live, how you trade and what you value in a broker. So always do your own due diligence when choosing a broker.

Even if you aren't looking for a new broker, this interview is an inspiring look at the entrepreneurial journey of two guys who saw an opportunity to create a better product and are working hard to make that happen.

I hope you enjoy listening to this interview as much as I enjoyed doing it.

Note: Since they are based outside of the US, they cannot accept US clients…per US laws.

In This Episode

• How Arif got screwed over by Forex brokers as a money manager
• Why Sweden is a great place to have a Forex brokerage
• What led to the formation of Scandinavian Capital Markets (SCM)
• The cultural changes that SCM wants to create in the Forex world
• And more!

Click Play to Listen to the Interview

Resources Mentioned

• Scandinavian Capital Markets
• Valhalla
• Book a meeting with Arif or someone on the SCM team

Other Ways To Get The Trading Lifestyle Podcast

• Click here to subscribe via iTunes (if you like it, a five-star review is greatly appreciated)
• Click here to subscribe via RSS (non-iTunes feed)
• Right-click here and “Save As” to download the MP3
• Click here to hear all of the other podcast episodes

Thanks for Listening!

I really appreciate you joining me for this episode of the podcast. If you have any feedback on this episode, please be sure to leave a comment below.

If you know of a trader who would benefit from any of the information in this post, feel free to share it with them. Be sure to subscribe to the show on iTunes and if you love it, a 5-star review is greatly appreciated!

I also want to thank Arif and Michael for flying me out to Stockholm, putting me up at a great hotel and showing me the beautiful city of Stockholm. If you have never been to this beautiful city, I would recommend you put it on your Heroic List.

The post Behind the Scenes Look at Starting an ECN Forex Broker in Sweden with Arif Alexander Ahmad // EP29 appeared first on Trading Heroes.

Managing money is one way to become a professional trader. But the process can be confusing and sometimes a little scary.

After all, you don't want to do anything wrong.

Of course, this podcast is for education purposes only and is not legal or trading advice.

However Justin Hertzberg works with quite a few CTAs (Commodity Trading Advisors) and was generous enough to share his experience with them, so you understand how the general process works and where to get started.

He is the president and CEO of Forest Park FX, a CFTC registered/NFA member introducing brokerage firm. After working for several Forex and equities brokerage firms as both trader and in-house counsel, he launched Forex Park FX in early 2013.

In 2008, He left the traditional practice of law to pursue a career in trading. Forest Park FX works with forex traders and money managers to create customized brokerage and trading solutions to suit their individual needs and concerns.

The company's offerings include cash back rebates for retail clients, algorithm development, and brokerage support for money managers and CTAs, among others. He began his career as a commercial and securities litigator for a large law firm after obtaining his juris doctorate and finance MBA from the University of Miami.

Obviously, money manager requirements will vary by country and Justin is talking about US traders in this interview. But regardless of where you live, this interview can at least point you in the right direction and help you ask the right questions.

We also chat about what Forex Park does for their clients and how broker rebates work. Since they are an Introducing Broker and not a primary broker, they have a lot more flexibility.

They can also be more forthcoming about what is really good for clients, since they have a variety of brokers and services to choose from. On the other hand, brokers like FXCM only have one product (basically), so that is what they will try to sell you.

Forest Park does their best to find out what the trader needs and steers them to the right broker.

If you have ever wondered about rebates, Justin and I get into that too. Learn how they handle rebates and their stance on what clients should get.

This is a very informative interview, so I hope you get as much out of it as I did!

In This Episode

• When you should become a CTA
• When you might not want to become a CTA
• CTA requirements
• How to choose a broker
• Educational backgrounds of money managers they work with
• And more!

Click Play to Listen to the Interview

Resources Mentioned

• Forest Park FX (US traders)
• Forest Park FX (Non-US traders)
• NFA
• CFTC
• Becoming a CTA
• Call Justin at: +1 (561) 922-7616
• For questions: support@forestparkfx.com

Other Ways To Get The Trading Lifestyle Podcast

• Click here to subscribe via iTunes (if you like it, a five-star review is greatly appreciated)
• Click here to subscribe via RSS (non-iTunes feed)
• Right-click here and “Save As” to download the MP3
• Click here to hear all of the other podcast episodes

Thanks for Listening!

I really appreciate you joining me for this episode of the podcast. If you have any feedback on this episode, please be sure to leave a comment below.

If you know of a trader who would benefit from any of the information in this post, feel free to use the social media share buttons on this post. Be sure to subscribe to the show on iTunes and if you love it, a 5-star review is greatly appreciated!

The post Justin Hertzberg: How to Become a CTA, Best Forex Brokers and How Rebates Work // EP27 appeared first on Trading Heroes.

Whenever a broker goes down, it is usually a shock and many times traders don't get their money back. This happens every so often.

On this round of shocks, FXCM has secured funding, so it looks like they will be OK for now. Alpari was supposed to be insolvent, but they are now looking for a buyer. If you want to see real-time broker status reports related to the Swiss Franc event, check out this page.

This can happen to regulated brokers who are supposedly well capitalized. The aren't necessarily shady offshore brokers. Even if you are dealing with the most reputable broker, things can still go wrong.

Many traders concentrate on trading risk (by using stop losses) and psychological risk (by meditating), but they completely ignore broker risk.

I also talked to Kim about this topic once. She had a few friends who lost accounts when Refco went down and she was adamant about implementing the tips below.

So in this post, I'm going to give you three simple ways that you can hedge your broker risk. Hopefully it helps you minimize your losses, in the unfortunate event that your broker is one that goes down next time.

If you have broker questions, you should consult with someone like Justin, who knows about a wide range of brokers.

1. Don't Keep All Your Risk Capital In Your Trading Account

Leave a portion of what you need in your trading account and have the rest in an online bank that pays a little bit of interest or in a checking account at a traditional bank. This is your holding account.

Only keep what you absolutely need in your trading account. You can still take trades based on the risk that you are taking on your cumulative balance, even if your trading account itself is relatively small. The great thing about Forex is that you can use leverage, so you don't have to have a lot of money in your trading account.

Broker risk can result in a 100% loss, so plan accordingly.

2. Clear Out Trading Profits Monthly

If you are a consistent trader, then profits will start to add up. It can be easy to just leave your profits in the account if  you don't need them.

Be disciplined and withdraw your profits each and every month. Broker failures are often sudden and unexpected. Don't get caught with your pants down.

3. Deal With Multiple Brokers

Finally, don't only trade with one broker. Have multiple accounts open at the same time, even if you only have a small amount of money at the two secondary brokers. Having the ability to transfer money back and forth between your holding account and your trading accounts can save you in an emergency. Opening a new account can take some time and you don't want to be stuck without the ability to trade.

This is also useful when something less than catastrophic happens. One broker could be having temporary technical problems or you simply may need to hedge your current position in another account. Having multiple accounts at different brokers helps you prepare for a multitude of scenarios that don't involve a broker going out of business.

Conclusion

I was happy to hear that Oanda make it through this incident fine. That is why they are my favorite broker. But who knows, something could happen to them in the future too. So even if you are trading with them, be sure to have a backup.

Trading is an unpredictable business, but that is also where profit opportunities lie. If you want something super safe, you might as well leave your money in an insured bank. Embrace the risk and be prepared for as many of those risks as possible.

So take a few minutes right now and start researching broker alternatives. If there was anything good about the Swiss Franc collapse was that it showed us the brokers that are doing well and exposed the weak brokers.

The post 3 Simple Ways To Avoid FXCM And Alpari Like Broker Risk appeared first on Trading Heroes.

If you have not heard of nano lots before, then this post is for you.

Even if you have heard of nano lots, you may not know all of the benefits of using them in your Forex trading.

I will first start by explaining what they are, then I will give you five good reasons to start using them in your trading.

What is a Nano Lot in Forex?

Forex is a great market to trade because there is so much flexibility in the position size that you can take in your trades.

Other markets don't have nearly as much flexibility.

For example, if you trade futures and want to trade the S&P 500, the smallest lot size that you can trade is a mini contract.

That means that the smallest move in this futures contract will equal $12.50.

Your account could fluctuate hundreds or even thousands of dollars a day, just trading the minimum contract size.

In addition, the margin (or “good faith” deposit that you put up to enter the trade) is $4,758, at the time of this post.

So much for starting with a small account.

Forex Lot Sizes Explained

In foreign exchange however, there are many more options.

These are the lot sizes that you can trade, depending on the broker that you have.

• Standard Lot: 100,000 currency units
• Mini Lot: 10,000 currency units
• Micro Lot: 1,000 currency units
• Nano Lot: 1 currency unit

The cost of one currency unit will fluctuate, depending on the currencies you are trading.

But if we use the EUR/USD as an example, this is what you might expect the cost per pip to be with the above lot sizes.

• Standard Lot: $10 per pip
• Mini Lot: $1 per pip
• Micro Lot: $0.10 per pip
• Nano Lot: $0.0001 per pip

Wow!

As you can see, one nano lot can give you tremendous flexibility to trade a small Forex account.

The cost per pip will depend on your broker, so be sure to check with them first.

But the per pip values for the EUR/USD listed above are pretty common among Forex brokers.

Now that you understand how a nano lot works, let's get into why you might want to start using them in your trading.

5 Reasons To Trade Nano Lots

1. You Can Start Small

Regardless if you know that Forex trading is for you, or if you are just trying this trading thing out, it is vital that you keep your risk low in the beginning.

Would you learn to be a pilot by starting in a fighter jet?

Would you learn to ride a motorcycle on the biggest Harley that you can find?

Of course not. 

You will start on something small. Forex trading is no different.

Nano lots allow you to start with a very small account and still take the proper amount of risk when trading.

An added benefit to starting with a small account comes into play if you are trying to convince your spouse or other family members to support you in your trading. starting with a very small account is the best way that I know of to convince them to let you give it a shot.

Even if you only have yourself to answer to, starting with a small account is a great way to keep your losses small while you are learning.

Only after you have proven yourself on a small account, should you start risking more money.

2. Reduce Stress

However, sometimes people will get into Forex with an account that is less than $1,000 and choose a broker that only provides micro lots as the smallest lot size.

Well, that presents a problem that may not be so obvious at the time that they open their account.

Let's say that you open a $500 account and micro lots are your smallest lot size option.

As a beginner, you should be risking only 1% at most, and probably a lot less than that.

However, to make the numbers easy, let's say that you risk 1% on every trade.

That means that you can only risk $5 per trade.

If you use the cost per pip in our EUR/USD example, then you can only risk 50 pips on any trade.

That's pretty limiting.

There may be times when the trade calls for the stop loss to be set at 75 pips, or even 100 pips.

Being limited by the number of pips that you can risk means that you will probably be stopped out more often than necessary.

Risk more than the maximum 1% and you will start to really worry about your trades.

By utilizing the power of nano lots, you can custom tailor your lot size to the individual trade you are taking.

You can set a stop loss that makes sense, based on the trade that you are taking an not because of the size of your account.

Using the same scenario above, but using nano lots instead of micro lots, you could risk up to 50,000 pips if you only traded 1 nano lot.

I have never heard of anyone needing a 50k pip stop loss, but the point is that it is there if you need it.

3. Find Out If A System Works For You

I believe that backtesting and demo trading are great ways for you to figure out if a system has a chance of being profitable.

But as you know, there is no way to tell for sure, until you actually start putting some real money behind it.

You may find that a system backtests well and you are able to demo trade it profitably.

But when even the smallest amount of money is on the line, you choke.

By risking a small amount of money, instead a lot of money, you can figure out if a trading system is something that you can actually trade in real life conditions.

You might be surprised at what you discover.

4. It's Good Practice

Even if you graduate to larger lot sizes, you will probably hit a few rough patches in your trading.

That just the way that trading works.

When that happens to you, it can be very discouraging and it can make you afraid to pull the trigger on your next trades.

Going back to nano lots can help you get back into the flow and give you time to get your mojo back.

5. You Can Always Go Bigger

Don't let nano lots fool you, if you need to trade bigger sizes, you can.

Need to trade a full sized lot one day?

No problem, just enter 100,000 nano lots.

The key is the flexibility and nano lots give you just that.

Conclusion

So which brokers allow you to trade these microscopic lot sizes?

There aren't to many out there.

The only nano lot broker that I have traded Forex nano lots with is Oanda.

So that is the only broker that I can recommend.

Even if you become successful enough to start trading with standard sized lots and move on to another broker, it is useful to keep a small account open with a nano lot broker.

You can use it in the future for testing or getting back on the horse after a bad streak.

Whatever the case may be, I believe that the option to trade nano lots should be in every Forex trader's Field Kit.

The post 5 Reasons To Trade With Forex Nano Lots appeared first on Trading Heroes.

If you wish that you could implement Forex hedging with a US Forex broker and not have to follow the FIFO rule, then this post is for you.

There are ways to legally get around both of these restrictions, if you do a little advanced planning.

Before I get started, please read this entire post, especially the warning at the end.

These are advanced tactics and definitely not for beginners!

Even if you are an advanced trader, I would not recommend using these tactics unless you have a clear strategy that you have tested and you are comfortable with.

Doing this is actually pretty simple and if you thought about it long enough, you probably would have come up with this on your own.

But if you haven't, then keep reading because I will show you exactly how I do it.

If you still don't believe that this is possible, then I have also included a video demonstration.

As you know, things may change over time and this may not work at a later date.

So if you are interested in doing this, be sure to test it in a demo account before you use it in live trading.

What do FIFO and Hedging Mean?

If you are new to trading, let me explain these two concepts really quickly.

Here are the informal definitions for each term:

• Hedging: Holding both long and short positions for the same currency pair, in the same account.
• FIFO: Stands for: First In First Out. If your broker is required to adhere to FIFO, then for each currency pair, they must make you close out your oldest trades before you can close out trades that you opened more recently.

Traders in the United States have to adhere to these rules, per US law.

These laws were created because allowing hedging and non-FIFO trading can be confusing, especially to new traders.

But if you are a more advanced trader and can handle these more complex trades, there is still something you can do about it.

How to Forex Hedge in a US Based Account

Hedging Forex trades is actually quite easy, just open two different accounts…one for longs and one for shorts.

The key to doing this safely is to remember which account is which.

If the balance one account gets low and the other starts racking up profits, just transfer money between the accounts to balance them out.

Make sure that your broker allows you to transfer money between accounts.

I don't see why this would be a problem, but you never know.

My broker is Oanda and by using their Java trading platform, I can open one account in one browser like Firefox and use another browser like Safari to open another instance of the trading platform and have the other account open at the same time.

Because I need to keep all of the longs in one account and all of the short in the other account, having a different background color for each account helps me keep track and reduces order entry errors.

Here is an example:

How to Get Around FIFO and Forex Hedging

Just like with hedging, we are still subject to certain rules, but if you know the workarounds, you can take advantage of them.

The process does take a bit of advanced planning, but it works great.

I don't mind so much that you cannot hedge, because I don't do it.

But I am really against the FIFO rule.

To me, it does more harm than good.

But that is almost irrelevant because I know how to get around it.

The trick is to use different sized lots.

The rules state that if a previously entered position is of a different size than later positions, it is not subject to the FIFO rules.

Since Oanda allows nano lots (which is awesome because it significantly reduces your risk, especially in small accounts), you can enter different lot sizes without it significantly impacting your risk.

Here is what I mean…

For example, the smallest lot size most brokers allow you to enter are micro lots, which are 1,000 currency units.

However, since Oanda allows nano lots (1 currency unit), you can enter a second position at 1,001 units and a third position at 1,002 units.

Because they are all different position sizes, you are allowed to exit the 1,001 unit position and the 1,002 position before the 1,000 unit position.

You just have to do some advanced planning when it comes to your order entry.

Break down your positions into unit sizes that you want to incrementally exit.

So if you have a total position size of 10,000 units, you may want to exit at 1,000 unit lots, so you would have to enter 10 separate positions to allow for smaller exit sizes.

Keep in mind that if these are sell orders and you accidentally enter a buy order for that pair in that account, it will still subtract those units from the oldest open position.

So in our example with the three positions, if you accidentally bought 100 units, it would be subtracted from the 1,000 unit position, giving 900 units after the mistake.

Here is what it would look like with the first two positions:

When Hedging in Forex Doesn't Work

The hedging workaround should work for most brokers, but test it out in a demo account before you proceed.

Do not make any assumptions.

There are some brokers and platforms for which the FIFO workaround doesn't work. In fact, there are probably a lot of brokers where it doesn't work.

For example, when I looked at the proprietary FXCM trading platform, they blend trades together and they do not allow nano lots, so you could not use this method.

Even if they did allow nano lots, instead of having two positions of 1,000 units and 1,001 units (like with Oanda), you would have one position of 2,001 units at the average entry price.

So even if you did only want to exit the second 1,001 unit trade, you wouldn't be getting the entry price for that first order.

The entry price would be the average of both positions.

Let's take a look at a (very) simplified example…

If you entered the first 1,000 unit short position at 100.00 and the second 1,001 position at 105.00, you would have a total blended position of 2,001 units with an average price of 102.50.

If the current price is now 104.00, you could not exit the 1,001 unit position at a 100 pip profit.

Any exit of this position would incur a 150 loss.

When we are forced to take off the oldest position first, there is no opportunity to take some profit off the table on the more recent trades and wait for the older position to become profitable.

Yes, it is true that blending and not blending positions is theoretically the same thing at the point in time when a partial position is closed out. 

But in reality (the case above, for example) it would show up as losses on our P/L when it could have been a profit.

The bottom line is that if you want to do this, be sure to test out a demo account with a prospective broker first.

There is no use in going through all the trouble to register and fund an account, only to find that your broker blends positions or does not allow different position sizes.

Also keep in mind that your position size might not require nano lots.

If you are trading 100,000+ unit positions, an extra 1,000 unit micro lot might not make much of a difference to you and you might still be able to use this technique.

It's all relative.

Don't Believe Me? Here's Forex Hedging and non-FIFO Trading in Action

Alright, check out this video and I will show you how this works in more detail.

A Final Word of Caution on Hedging Forex and the FIFO Rule

Although I don't agree with the US laws on hedging and FIFO, they are designed to protect traders from themselves because hedging and managing multiple positions can get complicated real quick.

They are advanced strategies and should only be implemented after you have a firm grasp of the basics and actually have a trading system.

Even then, these strategies may not work with your systems and your personality.

So the bottom line is that just because you now know the workarounds, it doesn't mean that you should use them.

Again, these methods may not work with all brokers.

Always test your ideas in the lab and in a demo account first!

The post How to Get Around FIFO and Hedging Forex Trades With a US Broker appeared first on Trading Heroes.

Here's a question that I get asked all the time and if you have been reading this blog for awhile, you know the answer. But for newer traders, I thought I would go over which broker I think is best and why. This is something that should have written about a long time ago and I only recently realized that I have not written a post about it.

I don't get any commissions for writing this post.

This really is the broker that I trade real money with and I really do believe that they are the best. There are a few other excellent brokers out there, so this is just a personal preference.

If you have any questions about choosing a broker outside of the US, you should talk to someone like Justin, who understands the rapidly changing broker landscape much better than me.

Other Brokers

Before I reveal which broker I like the best, it is important to go over what I have seen go wrong at other brokers so you know what to look out for.

Inactivity Fees

This pisses me off…

Some brokers will charge you a monthly fee if you do not trade that month. I think that is completely ridiculous. This forces newer traders into taking bad trades because they “have to” trade.

I experienced this with one broker and I was furious. It was my fault though, I didn't read the fine print. I was charged like a $30 fee in a $300 account.

That's a big hit!

Be sure to check for inactivity fees. If there is one, move on…there are better brokers out there.

Sketchy Foreign Brokers

Some foreign brokers are going to promise the world and you may be tempted to trade with them. Don't do it. 

You need to use a broker that is in a country that will protect you if the broker does something illegal or goes out of business. Usually the attraction to foreign brokers is the increased leverage.

If you can't make money at 50:1, you won't make money at 500:1.

Start small and learn to trade well.

Bad Ticks

Some smaller brokers may not have accurate data feeds and that can lead to large gaps or triggering your stops when they shouldn't have been triggered. The reputable brokers will have accurate data feeds.

Can't Access Certain Pairs

I have traded at a broker that only allowed me to trade 5 or 6 (I forget the exact number) currency pairs in a mini account. It's not as though I will be trading every single pair at the same time, but if I so happen to backtest a strategy that works best in GBPCHF, for example, I do want the ability to trade it. Needless to say, when I discovered that I couldn't trade the GBPCHF and the GBPJPY with that broker, I moved my money immediately.

Difficult To Withdraw Money

Another thing some brokers do to keep your money with them is make it an act of god to withdraw your money. Whenever you start trading with a broker, you should start by putting a small amount of money in first to test them out.

Do some trades and deposit and withdraw from your account. If they give you a hard time, move.

My Vote For Best Forex Broker

I'll get to the point…my favorite Forex broker is Oanda. They are really easy to deal with and I have not have any of the issues listed above. They offer Metatrader for excellent charting, but that is not always good for day trading. If you are a day trader, I have found that their Java platform works very well.

The best of both worlds.

One thing that separates Oanda from other brokers is the fact that you can trade nano lots. What does that mean? Well, in plain English, that means that you can tailor your lot size all the way down to $0.01 per pip. That will allow you to take almost any trade with almost any sized account, while still using proper risk management. Even with mini lots at other brokers, you may still be over trading with one mini lot in a small account.

Trading nano lots for $0.01 per pip will allow you to take a trade with a 100 pip stop in a $100 account and still only risk 1%. Try doing that at any other broker.

You can integrate Oanda with MT4i and MyFxBook for automated trading reports. Oanda also has some of the lowest spreads in the industry. This is one of the main reasons I trade with them instead of with some of the other big brokers.

Above all else, they are financially stable and meet all financial requirements (last I checked). Of course, there is no guarantees with any company, but my research showed that they are one of the best.

Again, there is no benefit for me to mention this, but I do because I have had a great experience with them. Which broker is your favorite and why?

The post Which Broker is the Best Forex Broker? appeared first on Trading Heroes.

Note: This article was originally written on Sept. 9, 2009. Some information on brokers may no longer be true. 

Since the NFA changed it's rules on FIFO and hedging Forex, we are not able to take opposite trades in the same currency pair, in the same account. I did get a couple comments on this blog about how it's unfair and how the ‘man' is trying to screw them, boohoo, blah, blah, blah.

This didn't bother me at first because I never hedge just for the sake of hedging. I believe that hedging can work for some people, but many times it's just a sign of indecision.

However, during the course of normal trading, I have realized that there are times when I see a good scalp trade in the opposite direction of my longer term position. Having only one account with the new rules does not allow me to take that second trade.

So what is the answer? Cry about it to anyone who will listen?

Of course not…

Why You Should Use a Forex Sub-Account

Just open a second account or a sub account, depending on your broker. It may be more beneficial to open an account at another broker just so you have a backup in case your primary broker is down for some reason.

However, if you are strictly using a hedging strategy, a sub account would probably be best because there will probably be a variance in spreads between brokers, which will eat into your profit.

Oanda features sub accounts so I can trade in different accounts on the same screen. Makes it very simple but you have to weigh the pros/cons of each broker. Your needs may be different from mine.

For example, Oanda has really tight spreads, allows variable lots sizes and is a reputable company, that is why I execute most of my trades with them.

The downsides are that they don't use the MT4 trading platform so I can't use any auto-trading programs in that account and their leverage is very low (compared to other retail brokers), only 50:1. That is fine for ordinary trading, but for more aggressive techniques, I need much bigger leverage.

For those reasons, I opened an Alpari-US account and will be reopening an IBFX account. The Alpari account uses MT4 and and pretty tight, stable spreads, so that is good for trading an autotrader program.

The IBFX account offers up to 400:1 leverage so that is what I need to trade the Counter Trend System. In this system, it is more important to me to have big leverage than to have the tightest spreads to avoid margin calls.

Conclusion

As you can see, sub accounts and multiple accounts can be VERY useful.

They are not only good for hedging, but can exploit the strong points of a broker, depending on your needs. I think the only people complaining about the new NFA rules are the people NOT making money.

I hope your trading is going well!

Update: Since this post was originally written, I've developed a hedging strategy. You can learn about it here.

The post The Beauty of Sub Accounts in Forex Trading appeared first on Trading Heroes.