What an ECN broker is and why it matters for scalping

Probably the most important aspect of the forex world is your broker. Here we will look at the difference between the two major types of broker. If you do not have time to read all this article, here is the take home point: Find out if your broker is an “ECN or a STP broker” if it is not, stop using them immediately and switch to an ECN or STP broker. What are the main difference between STP Brokers, ECN Brokers & Market Makers? If you trade with a market maker you are not ge

A simple trick all forex scalpers should use to boost profits

Most scalpers have an unhealthy obsession with the lower timeframes (1m, 5m, 15m 30m). This is the leading cause of overtrading. The fact of the matter is that looking at these lower timeframes on a constant basis to try and find patterns is not only confusing for the mind but most of the time all that really is being seen is market noise. Furthermore it is heavily time consuming and becomes very much like an unenjoyable, unrewarding 9-5 job. To counteract this problem, there

Cheap windows tablet MT4 - Metatrader

When it comes to forex trading on the go with a tablet, there is always the option of using the metatrader web/android platform. While this is not a bad platform it does not allow for the use of custom indicators that so many traders make use of. There are some ways around this such as connecting your android tablet to your home computer where you have MT4 running using programs such as teamviewer. The problem with this is that your home computer always needs to be on and onl

Do Pivot Points Really Work?

There is a lot of confusion regarding pivot points, some people find they work very well others do not. Quite simply, many people understand pivot points incorrectly. Many traders think pivot points are trading signals. For example price broke through R1 is a buy signal or broke S1 is a sell signal. Other traders think pivot points show price direction – for example price broke through R1 so it is moving upwards etc. The reality of the situation is pivot points are used to in

Scalping Forex, How many PIPS?

In a previous post we looked at why scalping on 1 hour timeframes is preferable to lower timeframes. We also looked at how a 20 pip target per day is extremely profitable when considered over monthly or yearly periods. Forex scalping is traditionally based on making rapid trades generally within 2-5 minutes and mostly on low timeframes. As a result huge amounts of trades are normally placed using this method. Here we will consider how trading on the 1 hour timeframe, using th

How to NEVER blow up your forex account

In a previous post we looked at why a 1:1 risk reward ratio makes the most sense for trading. Here we will look at how to apply it in real life trading. When looking at a 1:1 risk reward ratio theoretically such as the example on the left above we do not take into account spreads or commissions. Let us take an example of a 1:1 risk reward ratio with a target of 10 pips. Let us assume that commission and spread is 2 pips, so there is a 2 pip cost to place trades. If we placed

20 Pips Per Day Scalping Forex

There is an English expression "Take care of the pennies and the pounds will take care of themselves" meaning if you concentrate on making small amounts of money, you will soon amass a large amount. This expression applies perfectly to forex scalping, hitting a small number of consistent pips daily is by far the best way to be profitable as a scalper. In the hypothetical diagram above we can see that trading at: 1 standard lot at 20 pips/day = $1000/week = $52k/year 0.5

Why a 1:1 Risk Reward Ratio is best for forex trading

Although trading with a 1:2 risk reward ratio or higher is common, it is a hard way to make consistent profit as it results in a higher chance of hitting stop loss than take profit. The diagram above shows a hypothetical 1:2 Risk Reward Ratio with Take Profit at +20 Pips, Stop loss at -10 Pips. We will assume there are no spreads and no commissions and that twenty BUY trades have been placed randomly. Of the twenty trades placed, 50% of them will hit stop loss, resulti

6 differences between sucessful forex scalpers and failing forex scalpers

What do successful forex scalpers do that failing scalpers don't? Here we look at the main differences. 1. They follow the path of least resistance. They know how to correctly identify true trends and then follow them. 2. They understand and exploit market volatility. Without volatility there is no risk and without risk there are no opportunities to trade. 3. They interperet price action across multiple timeframes. This drastically increases the probability of entering winnin

Why it is important to use more than one timeframe when trading forex

When you are too close to a situation you need to step back and get a little perspective. This is the exact problem that one timeframe traders face. By focusing on the specific details of just one timeframe, they miss the overall view. It is nearly impossible to make consistent profits trading on just one timeframe, however it is possible to be profitable by trading on smaller timeframes whilst looking at market action on the larger ones, providing that a solid and reliable m

Price Action Trading & Moving Averages

If you have spent more than a month in the forex market you will certainly have heard of moving averages. The moving average is a core technical indicator which is used by a vast number of forex traders, the problem is that most traders use it incorrectly. Generally, traders look for moving average cross overs as buy or sell signals in other words when one moving average crosses another it is taken as a signal to either buy or sell. Essentially using this technique alone is u

The truth and lies about forex trends

It is probably the most common adage in forex, "the trend is your friend". Most of the prominent and respected authors and teachers promote the concept of trend trading, following the trend, buying when the price grows and selling when it falls. Many traders however, find it frustrating when applying this concept in practice. They enter the market on a percieved trend and find it reverses and hits their stop loss, only to then restablish itself soon after. So what causes this

Understanding Risk in Forex Trading

If you do not accept risk in forex trading then you should stop trading immediately. It is really that simple. The only way to completely eliminate risk in forex trading is to not trade at all. When a trade is opened only two possibilities exist: The market moves in your favour or the market moves against you. Again... Once a trade is opened there is no trading system in the world that is 100% accurate in determining what will happen, no market is which is better than another