Author:Vishal Doshi
Date:02-11-2017

How does forex trading system work ?

A technique of scrutinizing and trading a currency pair, based on indications and clues, for a specific time and at a particular price, with the expectation to earn returns, is technically termed as "Forex System Trading."

There can be two types of basic systems for Forex Trading :

  • Manual System
  • Automated System

Hand operated or Manual System:

The system of Hand operation is a technique wherein, technically a broker or an investor, conclude whether to purchase or sell, using an electronic device like a computer.

Electronic or Automated System:

An automated system is a technique through which a dealer guides the installed software, whether to buy or sell, based on clues and indications, which remove the hurdles of non-physical, rational and cognitive decisions that often lead to poor judgment.Also, it is important to note that these systems are not completely reliable, but can help traders, dealers, and investors, only as guiding tools.Huge money is making companies keep the secret of earning high returns confidential and unrevealed.

Forex Trading Signals/Indications :

  • Forex Trading Signal is a set of evaluations that a Forex dealer uses to decide whether to do trading of a currency pair at any particular time-period.
  • Traders modify these signals, buy them online and are many times available for free.
  • "Specialised Analysis" or "Graphical presentation" or "Broadcasted event" are the base for Forex Trading Signals.
  • These Indications or Signals are the parameters showing the valuation of equity, illustrating to execute a decision in real time, for equity.
  • A dealer uses a mass of signals and study together to make the final decision of purchase or sell.
  • The Internet is useful for buying "Manual" as well as "Automated" systems.
  • Money making firms always keep their signals confidential.

What is "Leverage" ?

  • The financial benefit available to the investor because of the fluctuations of prices in the market, is termed as, "Leverage."
  • The dealer dealing on behalf of his or her investor lends this money.
  • Leverage is an amount that an investor could earn as maximum possible returns.
  • Investing "Huge capital" shows you even the "Smallest Price Change of currencies in "Large Differences of overall Profits or Losses."

What is "Margin Account" ?

  • To initiate Forex Trading the investor needs to open a "Margin Account" with the dealer. The margin is the money borrowed by the trader from his broker or through any exchange, for trading. The margin is the finance accessible by the trader.

What should be the "Range" of Leverage ?

  • Usually, 50:1 or 100:1 is the range of leverage provided for the trade.
  • It can also be 200:1 for positions of $50,000 or lesser.

Forex Trading Hours :

Trading session according to EST(Eastern standard time)

Region City Open(EST) Close(EST)
Europe London 3:00am 12:00noon
Frankfurt 2:00am 11:00am
America New York 8:00am 5:00pm
Chicago 9:00am 6:00pm
Asia Tokyo 7:00pm 4:00am
Hong Kong 8:00pm 5:00am
Pacific Sydney 5:00pm 2:00am
Wellington 5:00pm 1:00am
  • Forex Trading Market works by 24 hours a day, five days a week (excluding weekends).
  • Sunday 10 pm (GMT) Sydney- Friday 10 pm (GMT) New York.
Overlapping of the trading period in various countries of the world is best trading period.
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What is the meaning of Forex Trading Platform ?

  1. An Online Trading Source is a software program that helps us to buy or sell financial products like Stocks (Equity or shares) and Debts (Bonds and Mortgage) with the help of financial brokers, money makers, investment banks and stock exchange[1] agencies.
  2. This platform removes the limitations of trading on the phone, trading by out crying bids of products, and similar trading methods.
  3. Technically Forex Trading Platform allows investors and trading firms to trade and deal online directly, for purchase or sale of the products.
  4. It also allows making the decision for trade through specific financial analysis based on future predictions of prices to fall or rise.

Types of Forex Trading Platforms :

By "Format" :
  • Downloadable Forex Trading Platform :

    • You need to install this type of software for the specific device.
    • You need to systematize an executable program with your Trading Platform.
  • Web-Based Forex Trading Platform :

    • You can operate an online software can from anywhere. They work on JAVA.
    • The dealer can operate this trading platform, using URL on the internet using personal login.
    • It is more convenient to use compared to the downloadable platform as a trader need not carry any electronic device for the access.
    • Web-Based software is less time consuming and proved to be more effective as compared to the downloadable trading platform.

By Programming Language:

  • cTrader Trading Platform:

    • Spotware Systems Ltd. Developed this platform.
    • It develops platforms for Electronic Communication Network (ECN) Environment.
  • Currenex Trading Platform:

    • Out of 2 Currenex Trading Platforms, Currenex Viking Platform is the first one – the ECN platform.
    • Second is Currenex Classic Platform – operating under the market situation of the market makers.
  • ActTrader Trading Platform:

    • It’s a product of ActForex Ltd.
    • ActTrader includes both Web-Based (online) and Downloadable versions.
    • ActTrader runs on ActFx Programming Language.
  • MetaTrader (MT4 MT5) Trading Platform:

    • MT4 is the most popular trading platform, used all over the world.
    • MT5 is its successor.
    • Runs on MetaQuotes Programming Language.
    • Traders all over the world are highly impressed by the ease of the task by the use of the MT4 platform and are forced to incorporate it in their software of product packages.
  • TradeStation Trading Platform:

    • TradeStation Technologies Inc develops this platform.
    • It runs on Lua Programming Language.
    • Forex Capital Markets Ltd. and Interbank Fx use it as a part of their product package.

Which is the "Best" Forex Trading Platform?

  • The best Forex Trading Platform is an "HTML5 Trading Platform" that comes with a source code and can be white labeled.
  • It is composed of StockChartX HTML5 Web[2] & Mobile Charting Library, SuperwebSocket Data Server, and Trade script End User Scripting Library.
  • It does auto-trading and gives alerts and notification with specialized sound effects.
Steps to connect-
  1. Link your market data using SuperWebSocket Data server
  2. Incorporate your brokerage API
  3. Link your database
  4. Install website to your server
  5. And the task of installation is done.

Advantages:

  • It also provides services of Modification and Incorporation.
  • The Web and mobile accessibility are possible, through any device, on this platform.

Forex Trading Robots

  • Computer software specially designed to indicate, suggest and guide the dealers whether to deal with specific currency pair, in particular, time, at a particular price, is technically termed as "Forex Trading Robot."
  • It uses tools like graphs and charts to indicate and guide the traders.
  • It signals after proper analyses done using these tools.
  • Trading robots[3] remove the burden of thinking over a decision manually up to a certain limit.
  • It also removes the hurdle of typical Human mindset for trading in one direction, which proves unfavorable for the investors.
  • Software developers develop the software useful for the purpose.
  • You can buy trading robots online.
  • But, again it’s important for dealers and investors to clearly understand, that, no firm in the Forex Market disclose their policy of "money making."

Important Terminologies:

Who is an "Introducing Broker"?

A broker who in direct relationship with his or her client, but appoints another individual merchant or a firm for the work of floor operation and trading purposes are known as an "introducing broker".

What is the meaning of "Futures"?

"Futures" and "Options" are financial commodities or derivatives or financial instruments of Forex Trading Market. ‘Underlying’ derives the value of futures. This underlying can be the value of gold, stocks of a company, currency of a country, etc. You can trade futures without the underlying asset.

Futures Broker:

An individual or a firm, who gives orders to buy or sell particular commodity contracts for his or her customers, is known as a "Futures Broker". The future broker[4] earns commission for providing this service.

What is the meaning of deposits and withdrawals in Forex Trading?

  • Deposits/ Funding:

    • Demand Deposits: Accounts where a customer can withdraw his or her money without any prior notice of fewer than seven days, is known as demand deposits.
    • Time Deposits: Accounts where a customer cannot withdraw his or her money without prior notice or before a set date, is known as time deposits.
  • Ways to deposit or fund and withdraw your FOREX.com account:

    • Debit/Credit Card
    • Sofort Banking
    • Wire Transfer
They solve withdrawal requests in next 48 hours of business working hours of receipt of the request.

What is the meaning of Spread in Forex Trading?

  • The cost paid by the trader to his broker to trade in the Forex market is called spread.
  • Spread is the deviation between the selling price and the buying price of the currency.
  • Each Forex transaction will lose by the spread amount, during the trade. Spread amount is added in the losing trade and added in the winning trade.
  • Every trader expects minimum spread possible for his Forex broker.
  • Tighter the spreads lower will be the trader’s losses.
  • Tighter spreads are critical for traders who open and close in many positions per trading session.
  • Sometimes low spreads demand high deposits in your account, which proves unfavorable for the trader.
  • More low spreads are available in mini and micro sized accounts.
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Forex bonuses:

Meaning:

Regular promotion given to registered and existing clients and new clients on the website of Forex trading market is called "Forex Bonus". There is no commitment for such bonus other than having a legal registration on the website. There are different types of Forex bonuses. Some ask for deposits in your account to earn a bonus. Let us find out different types of bonuses:

  • Welcome Forex Bonus:

    • The welcome bonus is only for the new traders.
    • If you are a regular and old customer, deposit bonuses are your only source.
    • New customers get an opportunity to test his or her Forex broker, with a limited sum of money given by the broker.
    • It has a lesser risk factor.
    • Forex Broker Policy determines whether the welcome bonus is a deposit bonus or no deposit bonus.
  • Forex Deposit Bonus:

    • The deposit bonus is available for all types of clients in Forex market.
    • A bonus given on the amount deposited in the client’s Forex account is called Deposit Bonus. The condition is that the client needs to deposit money in his or her account.
    • Percentage (%) is the unit to calculate Forex Deposit Bonus.
  • Forex No Deposit Bonus:

    • In no deposit bonus, your broker advises you for not depositing money in your account and to avoid unnecessary risk. But, it is your personal choice if you still want to deposit and trade on the website.
    • You earn prize money for making first trades on a particular website.
    • No deposit bonus is the best bonus type in Forex till date because of the biggest the fact that you have an opportunity to earn a profit on your trades without risking your finance.
    • On winning trade, you do not have to share your profits or pay anything in particular to your broker.
  • Pending Forex Bonus:

    • Pending Forex bonus is an amount which you do get as a bonus in your account, but, unable to use unless you trade from your account on the website.
    • Brokers use this pending bonus for their new customers, who cannot earn a bonus in an initial trade. So, brokers always advise you to clear the particular trades and then to use your pending bonuses.
    • Pending bonuses are not much beneficial, and you should opt for more beneficial bonus options.
  • Forex Reload Bonus:

    • Reload bonus ifs for regular clients of the website in Forex trading.[5]
    • Recently active customers of Forex platform are also eligible for reloading bonus type.
    • Many reliable brokers issue up to 50% bonus on every deposit of his or her client.
    • Reload bonus is the best bonus type for the speculating traders who do trading all the time.
  • Bonus for regular clients and special VIP bonuses:

    • If you are an old and a regular client you have to stay online on the website for a particular time and then ask for your VIP bonus.
    • You are paid special bonus for your experience.
    • To claim special bonus, you have to make your VIP account.
    • You will not get a special bonus on signing in any micro or any ordinary account.
    • VIP bonuses are very profitable, and customers are getting many benefits.
    • While opening an account on the website, you have to decide carefully that whether to open a VIP account or not.
Freebies, Volume bonus, Rebates, Rewards, Demo Contest, draw Bonuses, Live Contests, refer-a-friend bonus is other types of bonuses available in Forex market.