Can anyone become an introducing broker?

Almost anyone with forex expertise can become an introducing broker. However, the criteria for becoming one may differ from country to country due to varying legislative and regulatory requirements, or because of conditions set by each IB.

In most cases, a new introducing broker must provide basic identification, such as an ID card, passport, or driver’s licence. If the IB operates as a company, the firm must also submit documents like its incorporation certificate, articles of association, and a recent bank statement, along with any other due-diligence or KYC paperwork. In addition, some regions require candidates to pass specific tests before they can become introducing brokers.

What differentiates one introducing broker from another?

Introducing brokers often comes with extensive forex expertise to be able to offer new clients valuable industry insights. The level of expertise and the entire service offering of each IB may however vary. For the most part, introducing brokers will offer new traders essential tools and resources to help them become more skilled in forex trading. This includes:

• training courses
• webinars
• e-books
• guides
• video content
• FAQs, and much more.

It’s important to keep in mind that the more experienced a client becomes, the more trades they make, and the more profitable those trades are, increasing the likelihood of the IB making more money.

How does an introducing broker make money?

Unlike a regular CFD forex broker, an introducing broker (be this a person or a company) does not accept money or securities from new clients, nor do they execute trades. Instead, the IB will instruct the CFD broker to open or close a trade. The IB gets paid a commission by the CFD forex broker for every new client they introduce.  This fee is calculated based on the commission or spread that the CFD forex broker charges the client.

A frequently asked question though is why would clients make use of an IB instead of approaching a CFD forex broker directly. Well, this has more to do with the personalised service and customer support that they provide. After all, as we previously mentioned, the more an IB works towards building long-term retentive client relationships, their potential for earning more grows exponentially. As in any industry, delivering a top-tier customer experience is key to ongoing success.

Becoming an introducing broker

There are several factors an introducing broker should consider before seeking new clients. Some of the more important include:

Choosing a trusted CFD forex broker  

Ensure you select a broker with a robust reputation, renowned for their reliability and transparency. Take it a step further and open a demo account or even a live trading account to get a feel for the type of customer experience (and trading experience) a new client can anticipate. Ultimately, as the IB, you want to know that you are placing new clients in capable hands. This means introducing your clients to a CFD forex broker where opening an account is not only fast but also easy, and who provides high-quality support consistently as well as quick execution speeds.

Focusing on customer retention

Customer retention is as important as customer acquisition. What does this mean for an IB? It means prioritising customer retention (holding onto existing customers) is as vital as getting new clients. So, look for ways to keep your new clients happy for the long term. Focus on reducing churn by providing a service that sets you apart from other introducing brokers. Give your customers the tools they require to make profitable trading decisions. Keeping your clients happy increases the opportunity for you to generate more income for an extended period of time.

Keeping informed of industry trends and updates

Keep learning through constant education. Regardless of your level of expertise in giao dịch Forex, ensuring that what you know remains current is critical to be able to provide a quality service to new clients. Listen to the news daily to keep informed of economic or geopolitical events that may have an impact on the forex market. Analyse global financial markets. Keep honing your skills and ensure your knowledge is always current. Read the news daily. Analyse the financial markets and geopolitical events. Sharpen your own trading skills through practice so that you are better equipped to help your clients.

Focusing on long-term business goals

If you’re only now venturing into the role of introducing a broker, know that as with any new business, building a client base takes time, grit, and patience. Identify your goals and build a business strategy that will help you achieve them. Adjust the strategy as and when required.

Criteria for choosing a CFD forex broker to partner with

In the process of looking for a CFD forex broker to refer new clients to, consider the following criteria:

• choose a broker that is renowned for their dedicated customer support across all channels, including email, telephone, or live chat
• ensure the broker delivers reliable forex insights and industry expertise
• find a broker that offers a cutting-edge trading platform, with useful tools and features, technical analysis, charts, educational resources, webinars, and more, to help your clients make profitable trading decisions
• compare brokers to establish who offers low trading costs and competitive spreads

Disclaimer:

This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

The post What is an introducing broker appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Managing your time

Beginner forex traders frequently become fixated on trading in what is a 24-hour, five-day-a-week foreign currency market. But trying to keep up with forex markets operating in different time zones can quickly become exhausting and impede forex trading successfully. To reduce the risk of overtrading or losing trades, rest is essential. Traders must also know when to enter or exit a trade, i.e., at what time and on what days.

When should you trade?

• Start trading when two sessions overlap. This is when important economic data is usually released which may cause volatility and directional changes.

• Begin your trading with the London session. It has the most trades overall, followed by slightly less activity in Sydney and Tokyo. 

• Most of the main currency pairs’ pip ranges broaden around the middle of the week, which normally sees the most volatility.

• Pay attention to opening and closing times. The trading week starts from Sunday 5 p.m. EST until Friday 5 p.m. The most beneficial time to trade is when the market is very active. When two or more markets are active simultaneously, the result is often a greater variation in currency pairs. Use a Forex Market Time Zone Converter to see which trading session(s) are active during your local time zone.

When not to trade

• During important news events: you may find the way you trade inadvertently swayed.

• On Sundays and during the holidays when everyone is usually away or relaxing.

• On Fridays when liquidity declines toward the end of the American session.

So, what are the most popular markets for forex trading and when are they open?

The 4 biggest forex markets worldwide

Luân Đôn

London is the largest currency trading market. It accounts for almost 43% of all global commerce according to a BIS estimate and is where currency trends typically originate. London massively influences currency fluctuations because it’s home to the Bank of England which oversees the monetary policy of the pound and determines interest rates. The London session usually begins at 3 a.m. and ends at 4 p.m.

New York

Open from 8 a.m. to 5 p.m., the New York market is the second-largest Forex marketplace globally. It is closely monitored by international investors being that 90% of all trades involve the U.S. dollar. The value of the dollar is also strongly impacted by changes in the New York Stock Exchange (NYSE).

Tokyo

The first commercial hub in Asia, Tokyo is where most commercial activity happens, followed by Hong Kong and Singapore. GBP/JPY, USD/JPY, and USD/JPY are generally the most traded forex pairs. The Bank of Japan (Japan’s Central Bank) has significant impact on the USD/JPY currency pair when only the Tokyo market is open, which is from 7 p.m. to 4 a.m.

Sydney

The trading day in Sydney begins at 5 p.m. to 2 a.m. Although the smallest of the markets, Sydney sees a lot of activity when markets re-open on Sunday afternoon as individual traders and financial institutions regroup after the lengthy break from Friday afternoon.

DISCLAIMER: This information is not considered investment advice or an investment recommendation but a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked, in this communication.

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Currencies are important because they allow us to buy goods and services locally and internationally, as they are exchanged when trading on the forex market or conducting business.

The market is open 24 hours a day, five and a half days a week across almost every time zone, and currencies are traded worldwide in the major financial centres of London, New York, Frankfurt, Hong Kong, Paris, Sydney Singapore, Tokyo, and Zurich.

An overview of forex markets

The FX market is where currencies are traded. It is the only nonstop trading market in the world. Previously, the forex market was dominated by institutional firms and large banks, which acted on behalf of clients. However, the forex market has become more retail-oriented in recent years with traders and investors now participating.

It’s important to note that there are no physical buildings that function as trading venues for the markets. But instead, it is a series of connections made through trading terminals and computer networks.

Currencies are traded electronically in OTC markets (over the counter) which means that all transactions take place via computer networks.

Where is forex traded?

There are three different types of markets for trading forex: spot markets, forwards markets, and futures markets. Traders are usually trading the spot market where they can buy and sell commodities or currencies, among many other instruments, for immediate delivery.

​Trading in the spot market

The spot market is where you can buy and sell currencies based on their trading price. That price is determined by supply and demand and is calculated based on several factors, including current interest rates, economic performance, sentiment towards current political situations locally and internationally, and how the future performance of one currency against another is perceived. A finalised deal is also referred to as a spot deal.

Forwards and futures markets

A forward contract is an agreement between two parties to buy a currency at a future date and at a predetermined price in the OTC markets.

How to start trading forex

The first step to forex trading is to educate yourself on how the market operates. The next step is to develop a trading strategy based on your finances and risk tolerance. And last of all, you should open a brokerage account. It is easier than ever to set up and fund a forex account online and start trading currencies. Remember, all trading involves risk and it is possible to lose all your capital.  Read on for more information about starting your trading journey.

Learn about forex

To trade effectively, it’s essential to get a forex education as forex trading requires specialised knowledge. There are several online courses available for beginners as well as websites, books and other resources that you can make use of to learn about forex trading.

Open a brokerage account

You will need to open a forex trading account with a brokerage to get started with forex trading.

For beginner traders, it is a good idea to open a micro forex trading account that will allow you to make small trades. Trading with small amounts will allow you to put some money on a trade, but your losses will be very small if your trade goes in the wrong direction.

Develop a trading strategy

It’s important to develop a successful trading strategy and put it into action.

Having a trading strategy will help you set yourself some guidelines and a road map for trading. A good trading strategy takes into account the amount of money that you are willing to put up for trading and the amount of risk that you can tolerate without risking more money than you can afford.

Manage your emotions

Traders can be influenced by their emotions. The two main emotions to understand and keep under control are fear and greed. Don’t confuse caution with fear. Trade carefully using logic and reason. Fear can ruin your trading by holding you back from making a trade.
When people feel greedy or fearful, this may be when they’re more likely to make mistakes. Greed can make you remain in a trade when you had planned to exit. These trades may not turn out well, just when you thought the trade was going well.

Don’t allow the results of a few trades to affect your trading strategy and approach in general. Stick to what you have planned and use your trading journal to plan your next trades

Final thoughts

Just remember that it’s important to have an understanding of the foreign exchange markets and methods for forex trading. That way, you can better manage your risk, make winning trades, and set yourself up for success in your trading journey.

DISCLAIMER:

This information is not considered as investment advice or an investment re commendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

The post A Guide to Foreign Exchange Trading appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Forex can be traded in numerous ways, so it is very important that you go with an approach that suits your experience level, budget, and trading goals. Having a proper understanding of the market you are entering into and the strategy that is needed can be the difference between trading success and failure.

Choosing a giao dịch Forex strategy is similar to buying a new car. There is a lot of choice, and they come in different shapes and sizes. It is also important that you test drive a new strategy via a demo account, before proceeding with it on the real-world markets.

What is a Forex Trading Strategy?

A forex strategy is a method that forex traders use to help them decide whether to buy or sell a currency pair at any given time. They involve the use of specific trading techniques, with the aim of generating profits from the purchase and sale of different currencies.

There are many trading strategies in existence, and they can take the form of manual or automated trading signals. Modern strategies exist in the form of technical or fundamental analysis, or can be based on news events. Manual strategies involve a trader looking for trading signals themselves via manually searching on a computer. Automated strategies are where an algorithm, developed by a trader, locates these signals and executes them automatically, without being aided by human input.

An effective strategy is one that enables a trader to properly analyze the market and execute trades with confidence using sound risk management techniques.

Types of Forex Trading Strategy

There is no “one size fits all” approach when it comes to a strategy being suited to every one. Different strategies will suit certain traders more than others. See below for a brief outline of some of the main types of strategy available.

1. Trend Trading
   This is one of the simplest forex trading strategies, and also a reliable choice. It principally involves the attempt to yield positive returns by exploiting the directional momentum of a market.
2. Price Action Trading
   This is where historical prices are studied as a way of formulating technical trading strategies and can be utilised as either on its own or with an indicator.
3. Range Trading
   A strategy that includes detecting support and resistance points, in which traders place trades around the key levels. Technical analysis is a primary feature of this strategy.
4. Position Trading
   This is more of a long-term strategy, compared to the other choices available. It focuses mainly on fundamental factors, but technical methods can also be used.
5. Day Trading (Giao dịch trong ngày)
   A short-term strategy that is designed to trade financial instruments within the same trading day, which means that positions are closed before market closing.
6. Swing Trading
   This is a speculative strategy whereby traders look at the trending markets, as well as looking to take advantage of the range-bound by buying and selling at the support and resistance trendlines.
7. Forex Scalping
   Under this strategy, scalping is the process whereby a trader takes out small profits on a regular basis, which can be achieved by opening and closing multiple positions over the course of the day.
8. Carry Trading
   This involves the borrowing of one currency at a lower rate, before then investing in another currently at a much higher yielding rate.

Choose Your Strategy Wisely

As outlined above, there are many choices available to you, when it comes to selecting a forex trading strategy. When considering which trading strategy to go with, it is worth taking the time to analyse the risk-reward ratio. Also, figure out the amount of time investment is needed for each trading strategy, and select accordingly.

Ultimately, each strategy will be suited to different traders, so it really does depend on your personal circumstances, how open or averse you are to risk, and the amount of time you dedicate to trading. The best piece of advice is to match your trading personality with the appropriate strategy, as this will help to set a solid foundation on which to build your trading activity.

Disclaimer:

This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

The post Why Forex Trading Strategy Matters appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

An effective forex strategy consists of multiple components such as:

1. Choosing the Right Market: Traders need to identify which currency pairs to focus on and then deepen their knowledge regarding everything around those currency pairs.
2. Size of Position: Traders must determine the size of each position in order to minimise the risk involved in each trade.
3. Entry Points: Traders need to identify rules that will determine when to enter a long or short position regarding a currency pair.
4. Exit Points: Likewise, traders must develop rules determining when to exit a long or short position and when to avoid a losing position.
5. Trading Tactics: Rules must also be applied regarding how to buy and sell currency pairs and how to select the right execution technologies.

Another efficient idea involves developing trading systems in platforms such as the Metatrader 4 to facilitate automation of rules. Moreover, such applications allow backtesting, which gives traders the opportunity to see how they could have performed better in the past.

What exactly is a Trading Strategy?

A forex trading strategy refers to the technique used by forex traders to determine whether to buy or sell a currency pair at a specific time.

Forex trading strategies fall into two categories: technical analysis, or fundamental, news-based events. Trading signals are usually used in a trader’s currency trading strategy to trigger buy or sell positions. Forex trading strategies can easily be found online or even be created by traders themselves.

Taking the latter into account, forex trading strategies refer to both manual and automated methods for producing trading signals. In manual systems traders literally sit in front of a computer screen, searching for trading signals and deciding whether to buy or sell. On the other hand, in automated systems traders develop an algorithm to spot trading signals and execute trades on its own. The latter does not include human emotion which may improve performance.

Traders should always be careful when picking already existing forex trading strategies since it will be hard to track their record. Many successful trading systems are not in the public eye.

When do I Need to Change my Strategy?

A forex trading strategy is effective when correctly following the rules. Like any other field, one particular strategy may not be enough and may not match all approaches. If a strategy proves to be insufficient and unproductive, traders may need to consider the following factors:

Risk management and trading style: If the risk involved compared to the reward ratio is not suitable, then traders may need to consider changing their strategy.

Market conditions: Market trends and trading strategies are interrelated, so if one changes, the other might be outdated. As a result, modifications may be required.

Comprehension: If the strategy is not easily understood, there are high possibilities for misinterpretation and wrong application by the trader. When an issue occurs, and the trader is not aware of the rules, then the strategy is no longer effective.

However, everything should be used in moderation. Changing a forex trading strategy too often can be costly and will probably put you in a disadvantageous position.

Disclaimer:

This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

The post Choosing the Proper Forex Trading Strategy appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

In the US, the unemployment rate has caused demand for the dollar to rise while traders turned to safer currencies. However, you should always appraise the influence of long-term factors which current movements in dollar neglect as they are driven by short-term emotions.

Currency volatility as vaccine gets tested

As vaccine trials tested markets’ optimism across the US and Europe, the dollar dropped at its lowest for a week. Besides Pfizer’s announcement on the 95% effectiveness of the late-stage trial of its COVID-19 vaccine, it had little impact on the dollar. The US Dollar Index, which is used to measure the value of the dollar against a basket of six world currencies—Euro, Swiss Franc, Japanese Yen, Canadian dollar, British pound, and Swedish Krona—reached 92.327 after dropping as low as 92.207.

This was the lowest point it ever reached since November 9. As Giancarlo Corsetti, Emile Marin notes, ‘‘In crises, the dollar tends to appreciate – especially against emerging market currencies – and dollar liquidity becomes scarce. This column shows that today’s events are following the historical pattern. Forex market turmoil is preceded by an inversion of the US yield curve as investors, anticipating tough times ahead, require relatively high short-term yields and an appreciation of relatively risky currencies until the disaster occurs. Then, the dollar appreciates sharply. Then, emerging markets suffer massive capital flight. What’s new about the COVID-19 crisis is its scale and speed.’’

Regarding Bitcoin, which is considered to be a safe haven, it reached $18,000 which was positively surprising compared to the last three years. The euro rose about 0.1% at $1.186 despite Poland’s and Hungary’s blocking of the European Union’s 1.8 trillion-euro financial package to boost the Covid-19 depressed economy. During this global uncertainty another currency considered a safe-haven, the Japanese yen, climbed to a one-week high. At 103.95 per dollar, the yen returned to where it was in November 9, regaining big portion of the losses after Pfizer’s announcement of the working COVID-19 vaccine.

Unemployment and Forex Trading

Assessing the current situation around forex trading will also depend on one of the biggest factors, that of unemployment, which is constantly rising worldwide as a result of businesses closing due to Covid-19 and continued lockdowns.

Besides going through volatile market periods, there have been optimistic moments reflected in stock indices such as the S&P 500 and the Dow Jones Industrial Average, which signalled ‘risk-on’ patterns, at which point traders sell dollars.

This only shows that emotion rather than actual data influence those indicators and that these affect the markets in the short-term. Current prices are not representative of the longer-term results of mass unemployment.

US and Europe’s response to Covid-19

It is worth noticing that anything affecting a country’s economic growth will always have a negative impact on its currency. This is precisely the case with the most traded pair, the USD/EUR.

In the US, with the worst recession and people losing their jobs, the dollar’s value declined. In Europe, job losses were far less than the US while the economy is slowly recovering. The outcome is an unheard bull market for the EUR/USD.

DISCLAIMER:

This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication.

The post Profound impact of Covid-19 on forex appeared first on Complete Turnkey Introducing Brokers (IB) Solution at IronFX.

Opening a Trading Account

There are three main types of trading account available: a standard, a mini and a micro account. The main differences usually from one account to another is the level of fund investment needed, the size of the currency amounts that can be traded and the risk associated with each trade.

• A standard account is the most popular account that offers access to standard size lots of currency ($100,000), using leverage of 100 . It normally requires the trader to have an available minimum capital of $1,000. With leverage, you can boost your trades but at the same time it can quickly lead to losses if the market moves against you.
• Mini trading accounts are usually accounts with a smaller capital required to fund them, and traders can trade mini lots with less exposure to potential gains or losses. Mini accounts can be funded with minimum $500 or less and leverage can be 400. Such accounts are good for beginners as they can try and test strategies with less capital.
• Micro trading accounts are usually offered as an incentive to encourage traders to trade forex with low levels of risk. A micro account offers traders the opportunity to trade in micro lots of $1,000, which means less capital is needed to begin trading.
• Brokers provide managed accounts which means that a trader does not need to trade themselves, as they have the option to be assigned to a master account, which can then manage trades on their behalf.

Pips, Leverage and Lots

Pips are used to determine changes in the value of currencies as they go up or down. For example, if the value of the currency pair GBP/USD is 1.5125 and it then goes to 1.5126 then the specific change represents one pip. It is the movement of the fourth decimal place digit that is equal to one pip. Brokers usually calculate the pip value on your behalf, but it is useful to understand how this works and how the number of pips will eventually decide how much profit or loss you had.

Leverage is considered to be a blessing and a curse in some ways. On the one hand, it offers retail traders the possibility to profit from currency movements as prices move up or down, but this can be negative if prices move against traders and they incur substantial losses that exceed their initial investments. Understanding how leverage works and learning to manage it in a way that will allow the trader to make profits while reducing risks is important. Leverage should be used as a tool that allows individuals to borrow funds and in this way control larger amounts of collateral, using only a small amount of their personal investment.

Lots is another essential part of trading as once you start placing orders you will come to realise that the forex market is traded in lots: standard, mini, micro and nano lots made up of different amounts of currency units. For example, a standard lot is made of 100,000 units, a mini one of 10,000, a micro of 1,000 and a nano of 100 units. For example, a standard lot of 100,000 units can be equal to a monetary value of $100,000 and so on.

Starting to trade: Going Long or Short

Every forex trader wants to profit on prices going up or down. When a trader makes a trade they are essentially taking a position. If the trader is speculating that the price of a currency will increase over the duration of the trade, then we say that they are taking a long position or going long. If, on the other hand, a trader speculates that the price will decrease, then this is called taking a short position or going short.

As we proceed, we will make sure to include more key terms and forex basics in our educational forex trading articles, so every trader has a comprehensive idea of forex trading before they cut their teeth with real funds in the world of trading.

DISCLAIMER: This information is not considered as investment advice or an investment recommendation, but is instead a marketing communication.

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