A dealing desk is simply a feature through which your order passes through before being transferd to the market. This means that the broker actually processes each order that you place.
The fact that the broker stands in between you and the inter bank market place is the reason that they can offer fixed spreads, they in effect manipulate the prices to keep them constant. On a traditional non-dealing desk broker the prices of each currency would almost never remain constant or fixed because they are constantly streaming live prices provided by several banks at any given time.

This means that there are many times during a day when the spread on some of the more popular pairs is 0 pips. So for the broker to make money from providing the service that they do, they need to charge commissions. Many traders believe these commission charges to be expensive, and that brokers that offer “No commission charges” are the best way to go, however these brokers can only do this by keeping the spread fixed AKA manipulating the price feed, which of course is not the kind of environment that is ideal for free inter-market trading.

So what kind of brokers allow you to trade without a dealing desk? and how can you find such a broker?

Well the answer is in the type of broker that you choose, for example brokers that have no dealing desks are commonly known as ECN brokers, and i will be going into much more detail on these in my next blog, so stay tuned!

So why use a regulated broker? what are the benefits of doing this?

Well when a broker is regulated they must adhere to various rules regarding good practice and risk reduction, so for example a regulated broker would be required to hold a minimum amount of capital to facilitate customer withdrawals etc…. these rules are designed to prevent the broker being able to simply shut up shop and take customers deposits with them overnight. The process of becoming regulated is a long and expensive one, so the theory is that completing regulatory registration would be prohibitive if the broker didn’t plan to stick around for the long term.

Regulated brokers also usually keep clients funds in segregated accounts so if the company did come into financial difficulty there is less chance of your funds being sucked away with this. (although there are notable exceptions such as Refco in recent years.)

In summary, if you want to have the best chance of keeping your investments safe in Forex, the minimum safeguard that you can demand is that your broker is regulated in your home country.
If you have had any bad experiences with brokers or indeed good experiences let us know in the Forum so that our community can benefit from each others experiences.

Many new traders are unaware that differences even exist between brokers, for example they are not sure what terms such as ECN, Dealing desk and clearing house mean, and are even less sure of the significance of such things.
The aim of this series is to clear up any confusion that may exist regarding brokers but more importantly to make you better informed as to the features that you need to be looking for when selecting which broker you will use.

I hope you find this upcoming series interesting and informative, and if you have any comments or questions remember to post them in the forum.

The benefit of position trading is that the analysis is potentially much easier as it is more concerned with keeping tabs on just a few core economic indicators in one or two countries. therefore as long as this balance remains the potential for the trade to succeed should remain high despite any technical chart patterns or set ups that appear in the short term.

The reason that this style of trading is best suited to experienced traders is that it requires very large amounts of trading capital, and a great deal of patience. Positions can swing against you by many pips before reaching your profit target. Many new traders would simply struggle to hold throughout these draw down periods.

In summary, Position trading can be an effective way of trading the Forex markets but only if it is carefully planned and executed based on solid trading techniques, so not recommended for new and inexperienced traders.

Anyone can join and discuss a system that they have put together, or they can learn from the more experienced traders in the room. The aim is not to give Live calls but rather to encourage everyone to become an Independent trader, based on the concepts that we teach in the course.

If you would like to Join our room simply click on the link provided on our home page, and once you are in the room introduce yourself to everyone in there. We hope you enjoy your experience and that it helps you to get where you want to be in your trading.

Swing trading is basically taking a longer term approach to the market, so rather than looking to analyse the market on a daily basis you may decide to look at data from the previous week or perhaps even further back, when deciding on safe entries into the market. It then involves using higher timeframes to select entry point and take profit levels.

The benefit of swing trading is that it allows people to trade part time whilst attending to their other commitements such as their employment etc…. There is also far less emotion involved in taking a few long term set ups, and the effect of a loss is minimised as is the fear of taking the next trade, because by the time a new set up emerges there has been time to reflect and rationalise on your loss and reset your mind to taking the next qualified set up with out hesitation. There is also the obvious adavantage from a risk point of view, i.e it takes far longer to reduce your account balance through losing trades when your only taking one or two set ups a week etc…

The thing that many traders find negative about swing trading is the fact that there are not as many good set ups throughout the week, so if you do have the time to be at your charts during the day there can be a great temptation to “find” trades to take through boredom etc… and this in itself can have a bad effect on your overall profitability.

In summary i would reccomend that you only swing trade if it suits your circumstances or if you are happy to wait several days for a potential trading opportunity. but as an overall style it has to be one of the most versatile and well suited to both new and experienced traders alike, ,so definitely one to look at regardles of how long you have been trading.

The positive aspect of day trading is that trading can be carried out regularly and profits can be higher due to the higher volume of trades completed. It also a much safer way of trading due to the fact that the set ups are usually of a better quality.

The negative side to day trading is that there is still a large amount of psychological stress faced by the trader, for example several losses are still possible within a single day, which can create fear and aprehension when taking the next trade. The other problem faced by traders is that of a lack of patience, for example some traders get into particular mindsets  and a classic mind set of a day trader can be that they must be making trades every day. This is a bad mind set to have, especially if it leads you into taking trades just for the sake of trading, rather than waiting for perfect opportunities to present themselves. 

In summary, if you can avoid the common pitfalls that daytrading bring, you can enjoy the great benefits that regular short term trading brings, without the stress and risks associated with something like scalping. I would recommend that day trading be attempted once you have found a safe, robust methodology for entering and exiting your trades, and this has been tested on a small micro lot account for a sustained period of time.

The fantastic benefit of scalping is that a trader can risk a very small portion of their account on each trade (i.e 1% or less) but because there are many trades during the trading session, the potential is there to take many wins, thus increasing the balance of your account by 1% or maybe 2% each and every day.  This is a phenominal return if one can attain it. 

So why isnt everyone in Forex making themselves millions from scalping?

The answer is two fold: First of all many new traders that try and scalp become disheartened very quickly because their account balance is so low that 1% or 2% profit each day has a really low cash value, and when you factor in losing days this value is diminished further. For example for someone with a $5000 account 1% profit would equate to $50, and when you factor in one or two negative days the cash value of a decent weeks worth of scalping would be maybe a couple of hundred dollars at best. This in fact would be a return of around 4% in one week, which in the real world is staggering, but because the trader has unrealistic expectations and they have been “working” solidly all week, $200 just doesnt seem worth all the stress.

The second reason that most new traders cant find success through scalping is the fact that it is a very intense form of trading, and many new traders just arnt prepared for the levels of stress that sclping poses. Many traders also neglect the aspect of risk control and when a string of losses does occur it tends to wipe out all of their previous profits, which again can become disheartening.

In summary, scalping is probably the most profitable form of trading but it is also by far the most advanced technique to master and so i would really only recommend that a new trader attempt this style once they have already proved themselves consistent and profitable in another, easier, form of trading.

For anyone who is not aware of the set up, it is detailed at the end of our Advanced trading course… here: http://www.invest-fx.com/forex-advanced-course/example-trading-plan

If you have any questions or comments about the safe trade set up, why not post them in our Forum?

As you may be aware i strongly advise each person to allow themselves to develop into traders that can make money using many various styles, but i also stress the importance of selecting one particular style to start off with, and master until you are consistent and profitable with it. Once you are consistent and profitable with one method and style, you are much more likely to succeed by adding another method to your trading arsenal, rather than descending into a system chasing black hole.

The following blog posts in this series aim to inform you of what to expect from each style so that you are better informed to select the most appropriate one for your personality, thus reducing your learning curve and allowing you to attain consistent profitability much quicker.

I look forward to recieving your feed back on which particular style suits you best, and how you have managed to remain consistent.