I am in search of a suitable online forex broker recently. Though I have already signed up with one because of the extensive free trading education that it provides I still need one that suits my trading style. Through my relentless search, I have come up with some criteria which I feel that everybody can reference to when choosing a forex broker for themselves.

Our money must be safe! - What is more important than this? Especially for some of us who sign up with overseas brokers. Our funds have to be wired overseas. I think we have to be quite concern about our money not by our side. What should we look out for?

• Net excess capital > Net capital requirement. In fact, in the excess of US$20-30 million is the best. Download the latest financial data of the brokers. Check the column headers for “Net excess capital” and “Net capital requirement”. Also see this article for more ways to verify the financial health of the brokers.
• Currency depreciation. 3 years back, I deposited my trading funds with a US broker in US dollars at an exchange rate of 1.6. Now the exchange rate has dropped to 1.3. A S$10,000  (my local currency) trading fund became S$8,125. I lost S$1,875 without even trading! How scary is that!!? How to get around this?
  • If this has already happened, continue to trade in US dollars and hope your winnings will cover your currency depreciation and at the same time, hope that US dollar will strengthen eventually.
  • Find a broker that allows you to keep your money with them in your local currency. Currency conversion will only be done when the trade is made.
  • Hedge against currency rate fluctuations. Easier said than done for me. Hedging is a whole big subject by itself.

(to be continued…)

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I did not expect that I will be able to turn up for Mr Ashraf Laidi’s talk last night. And I will regret it if I’d missed it. Mr Ashraf Laidi is the Chief FX Analyst at CMC Markets. Go on, google for his name. He is all over Google’s first page of results.

Well, he did not mention explicitly (he is not allowed to anyway), but the evidences he showed the crowd all points towards rising oil prices, failing USD and failing S&P500. The following are the main points:

• VIX at a low
• Oil supply has maxed out, demand is still increasing
• War is likely
• 50 and 100 weekly MA bearish crossing (last bearish cross is during 2001 dotcom bubble burst)

Targets are $150-$160 oil, 1.70 EUR/USD and 1250 S&P500…

Analysis, strong fundamental and market historical knowledge aside, Mr Laidi is a fantastic presenter when presenting such a dry subject. His humourous and black-joke-style managed to keep me awake throughout the session, which went way beyond the stipulated timing due to crowd interest. Great (and FREE!!!) learning session!

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Check out this article. Mainly, the article talks about slippage and stress that makes trading shorter timeframe (the likes of 1 min and 5 min) charts difficult.

Is anyone of you trading off the 1 min or 5 min charts and finding it a challenge to do so? Well, I for one, used to be demo-trading a strategy on the 5 min charts. Allow me to share some of the reasons why I have stopped doing so:

• Slippage : when trading on such small timeframes, profit targets of 10-15 pips are the norm for respectable risk-reward ratios. But the spreads even for the majors can be from anything from 2 pips to 4 pips and are broker-dependent. Slippage takes  a huge cut out of the profits! This was discussed in the article above.
• Stress : Another point that was also discussed in the article is the stress that accompanies trading on smaller timeframes. I’ve got to monitor the charts closely for any split-second opportunities. When I am in a trade, I also have to monitor it closely to adjust my profit target and stop loss. A trade on the 5 min chart can typically close anywhere from 10 mins to an hour. Imagine the stress level and how one’s psychology can be affected, especially when he/she has to monitor the charts and follow the candles tick up and down!
• Whipsaws : are more common in lower timeframe charts, especially if you are using market-maker, dealing desk type of brokers. The super long tails take out our stop losses before the price moves in our favour. How many times have you experienced this? Furthermore, I heard from an experience trader that some banks employ a big team of full-time scalpers to trade using the smaller timeframes. They always have an edge over us, the retail traders, because they can afford to have the fastest internet connection, the fastest PCs etc which are all very costly.
• Passive Income? : I intended for trading to be a passive source of income for myself. Of course I am aware that nothing can be truely passive. Well, at least I hope for minimal time investment. And I find trading on the 5 min charts very time-consuming, personally. I’ve got to monitor the charts while the trade is on. Not my type of passive at all. Contrast this to playing daily charts. After I entered a position, my trade will be there making money for me for the next few days or even weeks.
• Time to analyze the market : This point ties in to stress. Playing longer timeframe charts allows us to have the luxury of time to do more detail analysis. When playing short timeframe charts, decisions have to be made swift. One has to make use of tools to speed up the process, even for calculating number of lots to enter based on the stop loss and whether or not to take a trade based on the risk-reward ratios. What it takes is super discipline!

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At the Kathy Lien event that Greeksman shared about in his blog (and also congrats to Greeksman on his new blog! I am sure all traders new or seasoned will benefit from his blog ).

Yep, definitely agree with Greeksman that it was a power-packed session (though I was recovering from high fever). A definite value-for-money session. The young lady’s passion and wealth of knowledge on forex had wowed the crowd.

Kathy presented on trading news with forex, her forte, and went into details of the trading strategies that were presented in her e-book that was given to us free as part of the seminar (talk about value!). If not for her unfamiliarity with the trading platform and her forgetting a trade, she could have totally blown away the crowd with her live trading. What I also liked was the global forex market outlook that she provided towards the end of the session. We were introduced to the central bank chairmen all over the world and given an insight on what are going through their heads. Mind you, Kathy did the entire seminar on a limping feet. That’s what I call passion!

Thanks to FX1 Academy and the directors for organizing this wonderful event!

Waiting for the Canadian unemployment numbers 7 pm tonight, anyone?

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New player on the block! Check it out! Under MasteryAsia.

Also updated is SmartForex that took a novel way to promote their course.

Check under the “Courses” section.

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