Author Archives: Nathan Kay

The Disappearing of Price – How Many Trading Indicators are Too Many?

Why do Too Many Forex Trading Indicators could get you Broke?

Today we are going to talk about mistakes. Yes, simply what not to do. I’m actually kind of sick of all the trading advice you get all over the internet; stuff like ”cut your losses short and let the winners run…”. Really? When should I exit a bad trade and how much should I let a winner run? Nobody gives exact advice but it sounds cool to talk riddles and in case the trade goes south, they say “You should have done this or that”. So here’s one of the first article in a series focused on a real trader’s mistakes.

How you can go Broke from Using Too Many Indicators?

I don’t like talking about something I didn’t experience on my own so you can be sure that everything you will read here is a mistake I made at a certain point and it probably cost me money so… learn from the mistakes of others if they already paid the price. Today’s mistake: the cluttered chart.

It all begins with a strategy or indicator found on a forum somewhere. The pictures look great, the other users are praising the strategy for its amazing signals and huge amounts of pips made. So you decide to take a look at your charts and spot a few good entries so you move to the next step which is to back test it to make sure it’s really profitable. But that’s when things start to go sour: you realize the strategy is not so good after all… not really the Holy Grail you thought it was… ah, but you still think it’s good… the only problem is that it’s missing something… yes, a few more indicators, filters to keep you out of bad trades. What can a trader do, eh? There’s only one answer: add more indicators. But which one? No problem, you open your trusty folder of indicators and start trying out different ones… yea, this one would have kept me out of a bad trade. Ok, I’m going keep using it. Let’s back test again: now the strategy gives better results… but still you have losses and since you are on a frantic search for the Holy Grail, you don’t want any of those so you decide to add another “filter”…. And another… and another, until you realize Christmas came early this year… or so it seems because your chart starts to resemble a Christmas tree. Where are the candlesticks? Somewhere in the back, covered almost completely by a Semafor on top of a Zig-Zag, 5 Moving Averages and a Bollinger Band while the lower part of the screen is covered by Oscillators, Histograms and all sort of Red/Blue indicators [Check ForexFactory Forum for more details]. The problem now is that you don’t really know what to look for, what your conditions for valid entries are. Some indicators say “Short” while others say “Long” and by the time they all agree, price moved 50 pips and it’s too late to enter. What’s worse, you realize you started with a potentially good strategy and modified it almost completely, turning it into… the one in the link below. Bad idea if you ask me.

Conclusion - Less Is More!

You might be thinking that I am the one talking in riddles, but let me explain why “less is more”. As I said in the opening of this article, everything I talk about comes from my experience and I fell many times in the fallacy of a cluttered chart. I had a strong belief that each indicator on my chart serves an essential purpose and that I cannot trade without all of them. But wrong I was… because once you decide to get rid of some indicators, your mind will be more active, you will not seek guidance anymore from a Red/Blue histogram, but you will start to analyze price movement from a different perspective. You will start looking for clues which were present when all your indicators were on the chart, but you didn’t notice them. Think about it: blind persons still find their way because they learn to “look” at things differently. So why can’t we? Here are a few tips on how to do it:

Stop attributing more importance than necessary to indicators. They are all derived from price!
Limit your use of indicators to 2 or 3 max
If you don’t want to delete them off the chart, at least drag their window down until you cannot see them anymore. Soon you will realize you don’t really need them but until that happens, you can still look at them by dragging the window up.
Do not try to filter out all losing trades with the use of indicators. You’ll end up filtering out the good trades as well.
Don’t just add a new indicator after a loss because losses will occur even if you use 100 indicators.
Let indicators confirm your trade bias and don’t follow them blindly

Invest in Yourself, Invent it Yourself! Someone Else’s Strategy Might Get you Broke

Why does Using Other Trader’s Forex Strategy could get you Broke?

Did you ever ask yourself why investment banks, such as Goldman Sachs, Merrill Lynch, or hedge funds as Blackrock and Pimco have an army of analysts and strategists? Why Blackrock is not using Goldman Sachs’ strategy? If it works for Goldman, it should also work for Blackrock…right? Those companies know what others are doing but they also know they will lose big time if they follow someone else. So why should a trader follow someone else’s strategy then? One thing is to ask for some advice and another thing is to blindly follow a trading strategy. I met many people desperately looking for the winning strategy, mostly newbies or less experienced traders. One of those places where these traders try to find the Holy Grail is the Forex4Noobs where Nick (who I believe is the owner of the website and an experienced trader) provides his trading strategy and tries to “help” the traders to be profitable. Following someone else’s strategy might get you broke. Is this what you want?

How you can go Broke from Using Other Traders Trading Strategies?

Let me give you an example of “wasted time” that I met on that website. Using the “dave11111” nickname [As seen on Forex4Noobs], someone wrote:

“Hi Nick, I’m trying to follow your strategy for trading the support and resistance levels on the 8h eur/usd pair. I have all your levels on my chart but not sure, what to look for that would signal a reversal or a continuation. Take the 1.3020 level where it is now. I’m really guessing as to whether it will continue to go down or turn and head back up from here. Can you help me spot the correct indecision signals please?”Of course, “dave11111” does not know what to look for on someone else’s chart, but he does not seem to realise that this is the whole problem. Nick knows what to look for because he built those levels, and he has a strategy to trade those levels, while “dave11111” is only “guessing” how those levels should be traded. This is the best example to see how it is possible to have two different outcomes by following the same strategy: Nick probably cashing the profits and “dave11111” collecting losses. Believe it or not, the same outcome would result if Blackrock would follow Goldman’s strategy. Instead of doing that, Blackrock hires their own analyst and strategists to build and follow their own investment strategy. This is what you should do too. Stop looking for someone else’s strategy. It will not work for you even if it is the best strategy you have ever seen.

There was another person on that blog – John - who seemed to have a problem with the trend and the time frames: “Hi Nick, similar problem to some, on the 8HR TF which indecision candle is the right one. Eg. Right now on the GBPUSD there is a great pinbar almost completing, like a reversal signal, but the trend is clearly down. How do you determine whether to take it or get caught in a bull trap? Do you jump to lower TF or is it a gut feel? Thanks….John”

I have to say that this time I was impressed with Nick’s answer: “It is all about the entry. I want to see a transition of power from the sellers to the buyers. I want buyers to prove that they have taken control of the market. In the trade you mentioned I had my entry at 1.5280. Buyers would need to do two things to break that level: 1. Break the highs of the previous two candles, this creating a higher high. 2. Make a twenty-pip move from the open price and break a minor psych level (1.5280). These two things would indicate that buyers have taken control of the market. It is not always about the indecision. Indecision means that price is undecided; it could still go either way. You need to wait for a clear winner before you enter. You need to work on your entries!”Did anyone notice that Nick teaches John to “wait for a clear winner before enter” while he already entered that trade? He says all that stuff about “buyers need to prove they have taken control” and that he needs to see “a transition of power from the sellers to the buyers” and only a few words later he continues: “I had my entry at 1.5280”. What happened with all those conditions needing to be fulfil? I underlined some key words from John’s comment because I noticed so many traders having a hard time to establish the trend. If John was so sure that the trend on 8HR TF was “clearly down” he should trade that trend and not to “jump on lower TF” to get help. Do you people know that we can have a bearish tertiary trend into a bullish secondary trend into a bearish main trend? Now I sure did a big mess eh? But it is true: we can have a bearish trend on the daily chart, a bullish one on 4h&8h chart and again a bearish trend on 1h chart. So if you see a bullish trend on 8h chart John, trade it there, on 8h, looking for support and resistance to exit your trade. If you go on lower time frames you will see another film and get confused.

Conclusion – The Only Strategies that Works is your Own

The time spent trying to trade someone else’s strategy is called “wasted time”, while the time spent building, your own strategy, is called “investment”…in yourself. Groucho Marx (American comedian) once said: “Man does not control his own fate. The woman in his life do that for him.” Do not let another trader to control your fate in the Forex market. And as for John, (and there are many traders in his position), instead of asking Nick about the trend, you better read the Dow Theory: no one will ever teach you better than the “Dow Theory” how to establish the trend. In my opinion, to start trading not knowing the Dow Theory is like throwing you in the sea without knowing how to swim.

Stop Loss Orders Make Your Dreams Come True. Or Get You Broke.

Why does Stop Loss Orders could get you Broke?

Lots of people are afraid of heights but not me, I am afraid of depths. Let me tell you a little story: “there were two sad employees in the back of a circus and a stranger stopped in front of them:

- Hey, what happened? Why are you so sad?

- Because an old elephant died today!

- Oh poor animal. I guess you care a lot about him, isn’t it?

- No, it’s not that. We have to dig a hole to bury him and we only have shovels”

When you place a trade don’t move the stop loss order (see Investopedia). Stop digging your own hole!

How you can go Broke from Misusing Stop Loss Orders?

They say that trading is very easy. There is a 50% chance to be right and only 50% to be wrong. How’s that? Well, whatever you are trading, either Forex, commodities or the stock market, your asset can only go up or down. There’s no other way. Whatever side you chose to be though, there is a very high probability for the market to turn against you. That’s why you have to use a stop loss order – to limit your losses. But, you know what I was doing when I was young and inexperienced? I was moving my stop loss order larger hoping that the rate action is gonna come back on my track. In other words, I was digging my own hole. Larger I was moving my stop loss, larger the hole was. By acting like this is not a matter of “if” you gonna fall, but “when”! There is a saying that only a few of the Forex traders are aware of: “take care of your losses and your profits will take care of themselves”. You have no idea how true this saying is. Remember that you are the only one digging the hole. Well, if your broker is a market maker (see http://en.wikipedia.org/wiki/Market_maker) he will be more than happy to help you and when you gonna ask him why he did it, he will answer you: “I thought you wanted to build a swimming pool”. Isn’t this the reason why we all got into the Forex trading? Because we all dream to have a villa with our own swimming pool and a Mercedes in garage? Sometimes the dreams come true, but you have to work on the foundation of the house first.

Conclusion - Be the Mouse or be the Elephant?

If the chances to be right or wrong on a trade are 50/50 did you ever asked yourself when were you more wrong? when you first set up the stop loss order or when you decided to move it larger? The chances in this case are the same: 50/50. If you want to become a successful trader, you have to limit your losses. Stop adding more “wrongs” to your trades.

‏If you are an elephant falling in a mouse hole, nothing will happen to you, but if you are a mouse, falling into an elephant’s hole, you will never get out of there. Either you are a “mouse” or an “elephant” here are some tips for you:

Place your stops at a point that, if reached, will reasonably indicate that the trade was wrong.
Do no move your stop loss larger, no matter what. You can move it closer though, once the trade is running in your direction.
You should trade with a risk management no larger than 2%. If the trade you are thinking to take needs a wider stop loss than 2%, don’t take it. Look for other trades.
The stop loss orders should always be placed above a resistance or under a support. Never place your stop loss in no one’s land even if respects the 2% risk management.
Never trade without a stop loss.
If you want to be a profitable trader, you should look for a minimum 1:1 risk/reward ratio. If your stops needs 50 pips then your minimum reward should be the same.

FXDD Is Why Im Broke

50 Words on – Why you can go broke with FXDD?

From where I come, there is a saying: “Never fight with an idiot. He will bring you to his level and will defeat you! He’s got more experience”. And I’ll be damn if FXDD has no experience to rumple the clients. If someone would organize a competition called “the worst broker of the year”, FXDD would never miss it. Every year, they collect nominations and sometimes even “victory cups” from international regulators.

June 2012: The NFA has charged FXDD with differential slippage as well as with violations of NFA rules regarding trade cancellations.

October 2012: The NFA has file a complaint against FXDD for AML failing to implement an adequate AML Program.

September 2013: The NFA and CFTC have fined FXDD approximately $2 million dollars. The company also must repay $1.8 million to clients for asymmetric slippage.

January 2014: FXDD Malta has been fined €25,000 by the Malta Financial Services Authority.

If you want to see how they qualified for these nominations, you can see it here [1].

How can you avoid going broke with FXDD:

Don’t say bad things about them. You risk getting an invitation to the law court. Raimundas knows it better [2].

Although this is more like a general rule, especially in this case you should deposit only money that you can afford to lose.

On their website, in the “about us” section is written: FXDD – “defining the future of online forex trading.” Forget about the “future”. You need to focus on the present: with no money in your trading account, there is no future for you in online Forex trading.

Don’t trade with FXDD on normal trading sessions. There is high risk of market volatility and could trigger some spreads widening or huge slippage. Is better to trade when everything is calm: in the weekend

Their minimum deposit is 250$. That’s more than enough to test them and if you are a profitable trader I would ask for weekly withdrawals of the sums above the deposit.

On the live account section, it says that it takes you around 10 minutes to apply. It takes you even less to leave their website.

Editor’s Note – Would I Trade with FXDD?

The broker has been around for many years, and it has caught the eye of people from all over the world since it has put its name out there with numerous sponsorships of motorsports teams. This forex broker is looked upon as one of the more popular ones on this planet. I really like the way the website looks and it has a bunch of key information making a trader’s life that much easier. Also, the trading tools, education and services provided are going to be very beneficial for traders. If I will ever run in any motorsports competition, I will give them a call. If I will ever need inspiration to build a forex related website, I might have them as a muse but for hell that I will give them my money. Since there are other brokers available, I don’t think is a good idea to invest my money with FXDD. And if I wasn’t clear until now, I don’t think is a good idea even for you to invest your money with this company.

References

XForex is Why im Broke

50 Words on – Why you can go broke with XForex?

Can you obtain light using water? Yes…wash the windows! XForex is suggesting they could bring more light in the trader’s accounts with good trading signals; however most complaints seems to be very worried of dirty “windows”. Taking into consideration this broker’s standard account allows you to make a small deposit of 100$ but forces you to trade minimum 0.10 lot size position – It could almost be looked at as a guaranteed failure. I don’t know what sophisticated method XForex is using, but if you chose the “water”, you can still be a profitable XForex trader with a little help. Unfortunately for you, the next section will teach you nothing but how to avoid going broke with XForex.

How can you Avoid Going Broke with XForex:

I did not know XForex personally and I needed a lot of time and many researches to do to know them, but with the help of almost 100 traders, who left interesting comments around the internet, I managed to develop a relationship with this broker. After many hours of confronting the information on their website with the information obtained from the unsatisfied traders, I reached the conclusion that is not hard to avoid going broke with XForex. Here are a few tips:

Even if you are a newbie, you should know the bases of technical analysis before going live with your trading account, so every time you receive XForex’s signals, be sure you make your own analysis before introducing the order in the market;
Always use a lot size that is appropriate to your account, regardless of XForex’s recommendations;
Ask your account manager (or the signal provider) to send you the signals by email and not by phone. Seeing them as many times as you need, will help you to understand better the trade and gives you time to make your own analysis;
Close your opened trades any time you feel like, regardless of XForex’s phone calls advising you not to do it as you could get a bigger profit. Remember that you are trading your money and is your right to decide what to do with them;
Use XForex’s tips or recommendations as an advice and not as an obligation to act;
Be sure that your deposit is big enough to apply a good risk management, trading 0.10 lot size positions.

The Good, the Bad and the Ugly Speak

Being Wrong Most of the Time

The overall rating that XForex has on various websites is an average of two stars out of five. The first thing a trader thinks about, when he sees this rating, is to be careful when dealing with this broker. These two stars are mostly due to the XForex’s trading recommendations and some withdrawals issues. I am the first to say that being right all the time in Forex is impossible. Being right more times than you are wrong is very hard but being wrong most of the time is unacceptable – for a trading signals provider. Nad from Australia is one of the many traders complaining of XForex’s trading recommendations [1]. Nevertheless, it seems like providing wrong trading signals is not the only controversy for Xforex. On the same website, I found Mohi complaining about withdrawals [2] issues as a reply to another trader with similar problems.

I have to say that while I was looking around to see how many unhappy clients XForex has, I also found many of them satisfied by the services this broker offers. Two of them caught my attention: the first one is Sam from Australia, who seems to be very angry [3] with the traders who posted negative comments. The second trader is shocked to see bad reviews [4] about XForex while for him it’s a blessing to trade with them.

For being an Australian, Nad (also Sam) has a bad English but for being a Forex trader, Nad has no excuse for blindly following any trading recommendation. I don’t think I’ve ever seen a Forex Broker who only received positive comments. If I will ever do, I would get suspicious. XForex definitely has to improve their withdrawal service but don’t rely on traders’ comments who claim to receive money from a company, without providing any ID. So yea, XForex has some issues to fix, like to fire their trading signals provider or to make the withdrawals less bureaucratic but overall, I don’t think “scam” is a word to use next to XForex.

The Minimum Is Too Big

Even if I don’t approve it, I can understand why many traders are looking to make small deposits using higher leverage for their trading accounts. However, the XForex minimum position size of only 0.10 lots - or 10000 units of the base currency – is way too big for their standard trading account, which allows traders to make deposits as low as 100$. If you trade 0.10 lots on 100$ account is a matter of when and not if you will go broke.

I guess this is very common between Forex brokers, but I noticed on their FAQ section how bureaucratic is to withdraw your money confronting to the multitude of options you have and how easy it is to deposit. First, you have to fill a form, providing your bank details even if you don’t want to withdraw in your bank account, print the form, sign it, then scan it, and send it back to XForex by email. If you want to withdraw money in another way than using your credit card or bank account, you are not done yet, as you have to email XForex to another email address than the one you sent the signed form in the first place and wait for them to call you. No one tells you for how long you have to wait though. Could be days, weeks, years….who knows!? Aren’t the big profits the reason why you started to trade in the first place? Then why is it so easy to deposit -and you have so many options to do it- and yet it’s so hard to put your hands on the profits? Overall, this issue is not so big that it could make a trader run away. If you have patience and you follow all the steps, you have good chances to be a happy trader. However, there are some ugly complaints regarding XForex’s withdrawal process and their recommendations that are supposed to help traders to make money.

Custom Tailored Spreads and Hedging Allowed

XForex offers normal spreads (1-5 pips) for their standard accounts but if your intentions are to trade and not to play in the Forex market, you have to open a Premium Account with a minimum 1000$ deposit and they will offer you custom tailored spreads. On their website [5], they also promote a fixed spread as for example 3 pips for eur/usd. Beside the well-known MT4 platform, XForex offers a web-trading platform that doesn’t need any download or installation of any software in your PC. It’s enough for you to have an internet connection and to open a browser from any corner in the world and you can start trading. The last but not the least, if your trading strategy requires hedging, XForex allows you to hedge, but only on their MT4 platform.

Editor’s Note - Is XForex a Scam?

As I said it at the end of the “ugly” part, I don’t think “scam” is a word to use next to XForex. Yes, it is true that there are many accusations pointing at a scam-like picture, but I also know that when someone loses his money, he finds guilt in anyone else but himself. Until proven otherwise, XForex is not a member of the “club of scammers”.

Would I trade with XForex? Premium Users Only

Twenty-three international authorities regulate this brokerage and this says a lot about their efforts to respect the laws and to protect their customers. If I had limited financial possibilities, I would walk away and look for another broker, who allows me to trade 0.01 lots on my 100$ deposit. The same thing I would do if I would be a scalper as this brokerage does not allow scalping on their trading platforms. However, having so many authorities to back me up in case I need it, I would definitely open a trading account with XForex using their premium account, benefiting the VIP treatment.

References

EasyForex is Why im Broke

50 Words on – Why you can go broke with Easy Forex?

This company offers me about… zero reasons to trust them. I can get over the fact that the website looks old and cheap, I can get over the fact that CySEC fined them $10.000 [1] but I cannot get over the huge number of complaints found all over the internet. People say they are unable to withdraw, platform freezes, spreads widen; basically everything that can go wrong… goes wrong. However, the cherry on top is the fact that Easy Forex threatened to sue Forex Peace Army if they don’t take down a user comment posted on the FPA forums, containing a link to that user’s website which explained in detail and with evidence how Easy Forex scammed traders (he even planned on writing a book about this matter). What happened to freedom of speech, huh? However, all this happened a while back and now the website is not active for unknown reasons [2].

How Can You Avoid Going Broke With EasyForex

For the Standard trading account there is no minimum deposit amount. Yes, you can deposit as little as you want. So try depositing just one dollar and this way you will avoid going broke.
Don’t say bad things about them. You risk getting sued and a lawsuit is expensive, I’ve heard.
Don’t trade at news time, don’t trade in the morning, don’t trade in the evening, don’t trade at all
Just trade on their Demo account.
Don’t buy what they are selling.
Choose another broker… there are so many.

Editor’s Note – Would I Trade With EasyForex?

I am sorry if I wasn’t too helpful in the section above but the thing is: I don’t know any other way to avoid going broke than just… not trading with them at all. Sure, all brokers have complaints against them, but with Easy Forex is hard to find a positive comment (which is not made by one of their affiliates). They don’t even feel like a Forex broker and I don’t know why a trader would give them money, especially when there are so many other options out there. It’s true that we are all a bit Good, Bad and Ugly, but I believe the Good part of Easy Forex is perfectly captured by an user-comment over at FxEmpire.com: “Pros: they screw over idiots making the world a better place” [3]. Maybe I don’t need to say it but I will anyway: nope, I wouldn’t trade with Easy Forex!

References

Dukascopy is Why im Broke

50 Words on - Why you can go broke with Dukascopy?

When a woman is pregnant, everyone touches her belly congratulating her, but no one touches the man’s ankle spanker to say “good job”. The moral: to do great things you need to be in two. When you trade with Dukascopy, the stop loss orders seems to be hunted and the slippage helping to get you out of the business, while no one thinks that is you that is not doing a “good job”. The next section will show you how to be in synonym with Dukascopy.

How can you avoid going broke with Dukascopy Bank:

Dukascopy is one of the few brokers that I know personally but I still needed tens of hours of research in order to write a fair review about them. Let’s just say that my experience with Dukascopy was like one of those marriages that falls apart because you asked your partner to marry you before knowing him enough. Dukascopy has a lot to offer and if you know how to manage this relationship you gonna be a happy trader. Here are a few tips for you (remember that we are talking about my ex here:

On the Dukascopy website, on the client protection area, they speak about the Slippage Control Functionality. You should use it, despite the fact they warn you that reducing the tolerance to slippage, increases the probability of an order reject. It also increases the probability for you to be profitable [1].
Do not trade during important news releases. Is then when the “market conditions” triggers the slippage.
Making a bigger deposit than their minimum 100$, will allow you to have wider stop losses and avoid the “hunting”. If they are really doing it, Dukascopy cannot follow your stop loss order endlessly.
Although long-term trading seems to be the perfect strategy to apply in order to avoid a stop loss hunting, if you adjust your money management, intra-day trading and scalping could work as well.
I recommend opening trades using limit orders instead of stop orders or “buy/sell at market”. The benefit to these order types is that you are guaranteed not to see any slippage or even to obtain a better price then you requested.
Use longer time frames to reduce the noise when the things get hairy in the market. Place your orders only after the noise is out as also the “hunters”.

The Good, the Bad and the Ugly Speak

To be or Not to be…an ECN broker! That is the Question!

I assume that after many years, the Dukascopy are still asking themselves this question. Every time they are accused of NOT being an ECN broker – as stated on their website – their answer is containing the definition of what the ECN means and I’d say that they accomplish the requirements to be considered an ECN Broker. However, their behaviour is more like a Market Maker and the funny thing is that they do notify the traders about this, but they do it in a place that most of the traders don’t look at: the papers that you need to sign when opening an account with them. On the page 7/7 of this document, you will find the following text: “The Client understands that the business model of the SWFX Swiss Forex Marketplace consists in ensuring best execution for the transactions of the Clients and matching the transactions between any of its Clients or Counterparties, each trade being instantly hedged with a countertrade. In that respect, on the SWFX Swiss Forex Marketplace, Dukascopy Bank SA is counterparty to each trade and counter trade. In some circumstances, Dukascopy Bank may not hedge entirely or may not hedge at all certain trades. In such cases, Dukascopy Bank may have opposite positions towards Clients.”You can find the full document here.

Many traders noticed this on their own. Their comments are saying that Dukascopy’ s behaviour is far away from an ECN Broker. Two of them, John Dillinger from US and Christian Riedl from Switzerland, offered some details[2] in their remarks about their experience with Dukascopy.

In the first part of this review, I told you how you could avoid getting broke with Dukascopy. I know it might seem hard to believe that you can be profitable with this broker after reading the “Ugly” part but there are many traders, who seem very happy and satisfied with Dukascopy. For example, “mastergunner99 [3]” from Babypips.com and “some guy [4]” on Forexpeacearmy.com website would tell you to screw the negative comments and to open an account with Dukascopy.

I have no idea if sharing publically your bad experience with a broker makes you a dumb (as “some guy,” said in his comment) but this characteristic is not far from the truth if you don’t gather all the informations you need and weight them, before opening an account and make a deposit. In my opinion, this market is divided in two categories: Forex Brokers and Forex Scammers. In the Forex Brokers category, you will never find the perfect broker. Everyone has something to offer and something to take of the table. Dukascopy Bank is definitely a Forex Broker who has a lot to offer. You only have to decide if their offer suits your needs.

Need help? You Better be a Patient Guy

Whatever their complaints are, almost all the time, the traders add some words about a bad support. Too long time needed before they get an answer to their emails, never get the promised call from their account manager or not getting a proper answer to their questions. I’d say this is unacceptable from a broker who looks mostly for traders with big deposits. Seems like you need to have a lot of patience and to send them more than one single message with your problem before getting an answer. By getting it, does not mean you will get the proper answer, so you might need to start all over again with the messages.

As stated on the website, in their willing to differentiate from other brokers, Dukascopy Bank chose not to offer an MT4 platform. From the multitude of tools they could have pickedto apply their strategy, unfortunately they chose the wrong one, in my opinion. Almost all indicators and EA are built for MT4 platform and most of the traders use these tools. As good as their other 5 options are, they still cannot compete with the professionalism that the MT4 trading platform offers. However, they come up with a solution for this: Third Party Bridge to MT4 platform. Well….they think is a solution but I don’t. Using Third Party Bridge, forces the clients to pay a fee for “renting” the MT4 platform. If low spreads plus the commission makes theDukascopy very competitive, the low spreads plus commissions plus MT4 fee, makes the competiveness of the Dukascopy, to vanish.

Low Spreads and Exclusive Capital Protection

Although Dukascopy charges a trading commission of $35 for every 1 million USD traded, for deposits lower than 5000$, they remain very competitive with their spreads as for example 0.2 pips for eur/usd or 0.4 pips for usd/jpy. Putting it another way, a 35-cent charge is applied when you trade just 0.1 of a lot (10,000 currency pairs). The commission prices get lower the more money you deposit [5].

Should your funds be managed by a money manager or by any other third party, Dukascopy gives you the unique opportunity to limit the possible losses on your account through its “Stop-Loss” functionality. Should your account reach the Stop-Loss level set by you, the trading would be instantly deactivated and all open positions would be closed, to protect your remaining capital against further losses.

Speaking about the capital protection, the deposits of clients who joined via Dukascopy Europe are protected by EU Regulation – up to 20.000 euros for each client while larger deposits, up to 100 000 CHF, are protected by the Swiss Government because before being a Forex Broker, Dukascopy is a bank and your money are covered by the local banking laws.

Editor’s Note - Is Dukascopy Bank a Scam?

Definitely not! I don’t know the laws regarding the banking sector in Switzerland, but I am sure the Swiss Government doesn’t just give the licence to operate in the financial markets to anyone that comes and asks for it.

Bottom Line - Would I Trade with Dukascopy Bank?

The ECN liquidity and transparent pricing make Dukascopy a worthwhile trading platform for an advanced forex trader. Large volume trading is handled well at Dukascopy with traders having the capacity to make trades going up to a couple of million U.S. dollars. There are better discounts in addition to nicer platforms and top-notch services available to traders with account balances running more than $100,000 USD. Therefore, Dukascopy is better suited for active and professional traders, banks and hedge funds and as I am not ready to through me into the market with 100 000$ or more, I will just walk away and look for another broker.

References

Lose Weight or Lose Money? Diet Plan and Forex Trading Plans are not that Different…

Why does your Trading Plan could get you Broke?

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Abraham Lincoln

While I was reading my favorite sports magazine (the online edition), I’ve noticed a shiny banner: “7 day diet meal plan to lose weight”. The slogan seemed very familiar to me but to be sure it’s not a coincidence I typed “plan to lose weight” on Google. To my surprise, the results all looked the same; everyone was offering plans to help you to lose weight. But every single plan had the same problem: it was limited. There was a 7 days plan, 1 month plan, a couple of weeks plan and so on. Seems like everyone has a plan to lose weight, but what happens when your plan expires and your goal was not yet accomplished? Interesting.

How you can go Broke from Following Other Traders Trading Plan?

I cannot stop thinking of this astounding analogy with the Forex trading plans. Let’s forget the fact that if you type “Forex winning plan” you are going to find thousands of suggestions but my question is: if you find a plan that really works and suits you, why dropping it after 7 days, 1 month, or whatever? I think this is one of the most common reasons why traders are losing money. I know it was for me when I started to trade Forex. Calvin Trillin (he is an American journalist) once said: “Health food makes me sick”. So is this the reason why we quit our trading plan? Are we afraid to get “sick”?

By “sick” I mean we are afraid of success.If you’re going to stick with your trading plan, the result will be, simply, getting sick. Getting broke. While the diet plans are limited by their designers, a trader’s plan – strangely – is limited by the trader himself. No matter which trading style you decide to pursue, you need an organized trading plan, or you won’t get very far. The difference between making money and losing money in the Forex market can be as simple as trading with a plan or trading without one. A trading plan is an organized approach to executing a trade strategy that you’ve developed based on your market analysis and outlook. No trader is right 100 percent of the time. Taking losses is as much a part of the routine as taking profits. You can still be successful over time with a solid trading plan. It took me a while to understand this, as the reason why I quit following my trading plan was because the losses I had. I didn’t realize then that losses are a part of the routine but I do know this now. The people with nice bodies tend to be hardworking and follow a gym schedule. Paradoxically, their goal is not to have a sculpted body but a healthy life. As for Forex traders, their goal should not be the money but to trade well. If they trade right, the money follows them almost afterthought.

Conclusion: Your Trading Plan is suited only for… You!

If you are thinking to start a diet, be sure you don’t cheat and follow your nutritionist’s plan. literally. It’s even harder when you’re a trader because you must also play the nutritionist role. Don’t look for other trader’s plan. What suits for them might not suit for you. Your new journey in the Forex world starts with a good personal trading plan. Here are a few tips for you:

Write on a paper sheet the reasons why you think you lose money when trading. Read that paper as many times as needed and on another paper write the tools that might help you to avoid those mistakes. That’s your “diet” or your trading plan.

Whatever happens in the market, stick to your “diet”. You might lose money sometimes but you will earn more on long term.

There is no perfect trading plan so adjust it (improve it) anytime you feel like but be sure you test it for a long time on a demo account. Only when you are satisfied and consider that cannot be better than that, move on real money account.

Be sure that your trading plan is realistic and that it fits your trading account size.

Do not look for approvals or other trader’s opinion on your trading plan. Keep it personal and private.

Remember that the market is always right and no trading plan works all the time in any circumstances. You have to identify the market conditions you need to apply your strategy.

The Never Ending Forex Temptation - Double Bottom Patterns Dreams

The Young and the Restless - Temptation Could Get you Broke!

“I generally avoid temptation unless I can’t resist it.” Mae West.

Temptation is the desire to perform an action that one may enjoy immediately or in the short term but will probably later regret it for various reasons. Try to remember how many times you fell in the “trap” of temptation in your life. I know I did. Joey Adams (an American comedian) once said: “Do not worry about avoiding temptation. As you grow older it will avoid you.” It’s time to wake up. Stop dreaming of Double Bottom patterns.

How you can go Broke from Tempting into Double Bottom Patterns?

Did it ever happen to you to go for a “sure” trade based on a perfect technical pattern and nevertheless to lose your money in that trade? It happened to me, unfortunately, more than once. The latest “temptation” was a perfect double bottom pattern for the Aud/Chf pair. According to two of the most known educational websites for the Forex traders – as DailyFx or Investopedia - the characteristics for the double bottom pattern are: The double-bottom pattern is found at the bottom of a downward trend and is a clear signal that the preceding downward trend is weakening and that sellers are losing interest. Upon completion of this pattern, the trend is considered to be reversed, and security is expected to move higher.

As you can see in my chart, this Aud/Chf trade had everything: had a downward trend, the second attempt to go lower failed and the rate action reversed, the buyers managed to break the “neck” of the pattern and the sellers seemed to lose their interest. All these were suggesting a clear signal that the trend was reversing and was expected to move higher. How can you resist to such a “goodie”? If you don’t trade these signals then what? Yet, I lost money in that trade, but at the same time, in thousands of many other situations, tempted by the same pattern, I made money. So you see…the technical patterns are like women: you can’t live with them, can’t live without them. After this I can’t help myself from asking you: how many times was a woman your temptation? Did you have regrets about falling in her “trap”? As far as I’m concerned I can say that many times I wanted her to set a trap so that I can fall in it. You see, if the Forex pairs’ movement in the market would not create these patterns or signals, it would be hundred times more difficult to make money, trading.

Bottom Line – Temptation is Irresistible, Learn to Acknowledge it

Getting back to Joey Adams, I can say that he is so right: “as you grow older it will avoid you”. I can say that as you earn more experience in the Forex trading, it will be clear to you that such signals are fake and will keep you away from them. If only I had paid attention to the other signs of that trade, it would have been another winning trade for me, but hey, even an 80 years old man is “tempted” by a 20 years old female. How can you resist it?