Forex Brokers: 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.

Paypal Forex brokers

People Trade forex for years. It first began in the early 90′s where brokering agents were in constant contact with huge brokering companies and dealt on our (the consumers) behalf. Not anymore.

The internet brought us to a new era. Nowadays, everyone can open a forex account in the many forex brokers available online and trade from anywhere in the world without any need for 3rd parties managing our accounts (Even though some people rather have managed forex accounts).

PayPal forex trading is the latest trend in the forex industry and ever since the forex firms discovered that PayPal is a highly trusted payment processing brand; most forex companies do their best to provide the option to trade forex using PayPal; but not all of them make it.

A huge advantage in choosing PayPal forex brokers is that all currency exchange companies that PayPal agrees to work with are regulated and practice fair business. The forex market can be very confusing much like the online gaming market which is a lot bigger than the currency industry.

In general, forex companies that offer you an option to make deposits and withdraw using PayPal are safe to deal with. These are regulated and governed forex companies that are supervised externally to ensure that the consumers are provided with everything they need.

Forex terms: Forex Hedging

A transaction implemented by a forex trader to protect an existing or anticipated position from an unwanted move in exchange rates. By using a forex hedge properly, a trader who is long a foreign currency pair can be protected from downside risk, while the trader who is short a foreign currency pair can protect against upside risk.

The importance of using a practice account

When you start to learn about Forex, you will have the opportunity to find out a lot of information about Forex.  There are many sites all over the internet where you can find out information about anything from Forex terms to tips on how to handle your emotions whilst trading.  These are all well and good, but one of the main things that you will need to do when you start thinking about trading is to come up with a strategy.

The Forex trading strategy is a key point in Forex trading, and it is very important, so in order to check that it is actually going to work for you, you should open up a practice account.  You should be able to find many different brokers that offer a free practice account in addition to their investment accounts.

The best thing about having the option to use a practice account when you are a newbie is that you get the chance to try out trading under the same pressure as real time Forex trading but without the risk of losing money.  Most newbie Forex traders will make the mistake of diving straight into Forex trading and many end up losing money quickly.

You will also have the chance to put your strategy into action to make sure that it will be profitable for you.  You can change your strategy if it doesn't suit you so that it becomes more successful for you.

Another benefit of using the practice account is that you will be able to make sure that the platform will run properly on your computer and that you will be able to make trades when you come to make your initial investments.

Forex Broker Review: OANDA

Oanda.com is a website that provides financial services to investors all over the world.  Many tools are provided by the site and it even provides a free practice account for an unlimited time offering the user $100,000.  Below is an example of the Forex practise trading platform in action.  As you can see, the interface is simple and easy to read.

There are plenty of options for you to top up your account and Oanda is one of the few Forex brokers that allows paypal payments as well as credit and debit account payments.  

The sign up process is quick and simple and there is no need to worry about waiting for your account to be verified.

Forex terms: Currency

Currency is the form of coinage that a country uses to trade.  England, for example uses the GBP or British Pound, whilst the USA uses the USD or US Dollar.  The currency price varies throughout the day for various different reasons, so if you buy a currency in the morning, by the time you sell it in the evening, it wont be worth the same amount as it was when you bought it.  These changes in the value of currencies against other currencies is what makes Forex trading possible.

EBook review: Magic Breakout Forex Strategy

Forex Magic Breakout Trading Strategy is an ebook that is based on price breakout movement.  A Forex breakout occurs when the price breaks a certain high point and reaches a new price high.  Similarly, the other way, breakout can also be when a price breaks a low value and makes a new low. This ebook gives all Forex traders the chance to learn a little about a breakout strategy.


You can download the free ebook here

Forex terms: What is the Exchange Rate?

The exchange rate is the rate that one currency is transferred into another’s.  The higher the exchange rate for the euro in terms of a dollar, then the lower the value is of the dollar.  You will find that some currencies are placed in certain pairs and exchange rates are commonly viewed in only certain currency pairs.

Test drive: oanda.com practice account - sign up

I have decided that I will sign up and do a few trades with oanda's pracice forex trading platform.  You can join in with me if you like.

First of all, we need to set up a free practice account.  This post will walk through the sign up process.


First, visit www.oanda.com:

From the options at the top right, choose 'Register':

From this next page, choose the option to 'Register for FXTrade practice':

Fill out the resulting form:

Whenever you want to log on, simply use the 'My Account' link from the home page, then sign into the practice account using the relevant link:

If you decide to join up to oanda in the future using a real investment, then this practice account will remain separate from that account.

Forex terms: What is a pip?

A pip is a tiny amount that a currency changes by.  It is usually about one hundredth of a percent of the value of the currency.  If you think carefully about this, that will usually mean around 0.001 of a cent per time.  Even if the currency pair changes by 100 pips, it will only be about a cent of a change.  This is why you need to be able to make large investments at a time when you make your trades in order to see any kind of a return.

eBook review: Candlesticks and Resistance by John H. Forman

Download this ebook here

The Candlesticks and Resistance ebook by John H. Forman is quite short and simple, and explains how you can use candlestick charts to make your Forex predictions

It is quite easy to follow as long as you know the basic terms of Forex and already have some expereince with reading Forex charts, it might be quite helpful.  This is a free book that you can store in your Forex resource library.  You should be able to read the candlestick charts and know how to manage your trades a little better after you have read it.

What is Forex?

Forex or the Foreign Exchange is the largest financial market in the world. You can trade 5 days a week, 24 hours a day and trade one currency for another to mae the most of the changes that currencies make each day.

You may or may not know that over each day, various factors affect the value of a currency.  These factors result in a fluctuation in the market and if you buy a currency at one value, when you sell it later on in the day, it will be worth a different amount as it was when you bought it.

Whilst there are a small percentage of traders who have managed to make a living by trading Forex, most people who try trading with the Forex market actually fail.  This is because many new traders jump in head first without having researched it first and with little patience and high expectations.  You must have a lot of money to invest in order to see any changes and you should not take risks with the market.

It is possible to predict how the market will move throughout the day, and even in the next weeks and months.  This allows you to plan for these changes, and you will be able to follow trends in the market.

When you are trading, you will see that you can trade with currency pairs.  These are usually expressed in sets of 6 letters, for example EUR/USD to denote the price of a euro in US dollars.  If the value of the EUR/USD is 1.273, then this means that 1 euro is equal to 1.273 US dollars.

The great thing about Forex is that it is available 24 hours and it is possible to make more money on larger investments than you could with a bank.  There is no TAX on the earnings.  Some Forex brokers do charge commission, although this is up to the broker, and the only charges you will need to pay is the spread on the currency which is a slight additional charge that all brokers place on trades in order to make their money.

Choosing a Forex broker

If you want to make trades with Forex, you will need to choose a Forex broker.  You have a few options when it comes to choosing the broker, as I shall explain below.

Firstly, you should be aware that the broker will provide you with a Forex trading platform.  This platform will be the single means by which you can manage your Forex trades.  Some of the platforms use software, which you will need to install on your computer.  You will need to make sure that you can actually install this.  To find out it it will be feasible, check the broker’s FAQ page to find out the basic requirements for your computer.  You may need to have windows installed to run it, or some of the software does have a mac alternative.  You also need to check that you have enough memory in your computer to run the software too.  More simple Forex trading platforms allow you to use a browser applet which will allow you to use any operating system as long as your browser is able to run the applet.

The next thing you need to think about is the way that you are going to top up your Forex account.  Are you going to use your credit card to make payments?  If so, you will need to be certain that the broker site is safe and established.  If you have your credit card information stolen after signing up to a Forex broker site, it can be difficult to make your credit rating better again.  Some brokers allow you to use alert pay or Paypal.  I far prefer these broker sites, as you don’t need to share as many of your personal details with them.

If you will be using any kind of Forex trading software, for example a Forex robot, then you should also ensure that you are able to do so.  Not all brokers allow it, so it is always best to check before you sign up.

Follow the link to my info about practice accounts to find out more about these, but you should always take advantage of your Forex broker’s practice or demo account.  You should check out all the tools that the broker can offer you, including any advice and also customer support that they offer too.

Finally, you need to make sure that your investment will go as far as possible.  Check out my post about spreads and commission and ensure that the broker will not be charging you so much to make your trades that it is not worthwhile.

Welcome message

Welcome to the Forex Trading Stop!

This blog is created by a relatively new Forex trader.  It promotes learning and research before making that leap into Forex trading.

Feel free to visit often, as there will be 1 new post a day at the very least.  If you have any questions, please leave a comment on any post and I will get back to you within 24 hours.

A few of the things that you will learn from my blog include:

• How to decide if Forex is for you
• Information about all aspects of Forex
• Reviews about Forex resources online
• Some useful tips

I plan on walking through several processes such as using practice accounts and setting up Forex robots.
In time, this blog will grow into a great resource for all levels of Forex trader.

I hope you will enjoy following me along my blogging journey and hopefully you will find my posts helpful and educational.

I am happy for you to link back to my blog in your own posts, but please do not steal my content.