Forex Trading - Understanding the Dangerous Schemes in Forex

By Onyebuchim C Obike

Forex Trading is one of the highest yielding financial investment in the world. According to the Bank for International Settlements, as of April 2010, average daily turnover in global foreign exchange markets is estimated at $3.98 trillion, a growth of approximately 20% over the $3.21 trillion daily volume as of April 2007. Some firms specializing on foreign exchange market had put the average daily turnover in excess of US$4 trillion of which $1.490 trillion us being generated from spot transactions (i.e. Forex transactions)

The above fact is the key factor that entices most people to invest in Forex. The enormous returns in Forex also gave rise to fraudulent schemes, which have been on the rise since Forex began.

Fraudulent shemes in Forex is also referred to the word "scam".

What is scam?

"Scam is a fraudulent business scheme" or "to deprive off by deceit" - (TheSage's English Dictionary and Thesaurus)

Scam is synonymous with fraud. It is deception, make belief, trickery, pretense, cheating, e.t.c.

A lot of people have fallen one time or the other to scam deals knowingly and unknowingly. Some got out with partial loss, while others lost everything without a single recovery. Scam victims usually suffer unbearable psychological pain due to the level of trust built with the scammer and the loss incurred.

Unfortunately any venture with high potential for money making is always alluring to scammers and Forex is one of those ventures.

Scamming in Forex had been in existence right from when Forex began, only that it has taken a new dynamic dimension in this current era. Forex Scam is the act of fraudulently taking money from a client or customer with the intention of providing a rewarding service for the client or customer, which is not true. In some cases the services provided by the vendor could be rewarding or true, but at the long run, when a glitch occurs due to poor design then the vendor disappears after months of negotiations without making any refunds.

Examples of Forex scams include;


Fake products
Ponzi Schemes
Fake Managed Account Schemes
Pyramid Schemes


These examples are more prevalent in Forex due to the nature of the perceived returns and high rate of unsuspecting traders who patronize them.

Understanding the true perception of Forex scam is very important in detecting and protecting yourself from fraudulent schemes in Forex. A lot of traders have a wrong perception of Forex scams due to their limited knowledge about Forex. A case scenario might look similar when it's being matched with real scam cases. But when you look deeply into such complaints, you'll find wrong perceptions and false alarms.

A lot of inexperienced Forex Traders are quick to scream "I've been scammed" due to their level of knowledge in Forex. If you fail to follow the instructions of a product, and experience loss then that is not a scam.

For example when a signal service provider says "use default settings for accounts lower than $1000, and do not adjust the Money Management Settings otherwise you will get undesired results. However you'll make little pips but on the long run your account will grow steadily".

If a user of this signal service gets impatient or greedy, and ignores the warning by tweaking the settings in order to attain short term quick gain in his account, such a trader would unfortunately experience undesired results to his/her account.

Let's assume the trader gets infuriated and sends series of complaints to the vendor about the poor performance of the product and later request for a refund. When the vendor refuses based on the trader's negligence, then a scam alarm is raised. Unfortunately this does not qualify for a scam case.

Every forex product has its threshold or required standards because they cannot be 100% perfect at all times. Most vendors usually state this caution or disclaimer notice on their website in order to protect users from unprecedented loss from market uncertainties. So it is the duty of a customer to keep to the product's limits. When you go against it and face the undesirable consequences then asking for refunds would not work, and establishing a scam case would be extremely difficult.

When a trader uses a Forex product not designed for news trading or for a particular trading session or configures the settings against the design of the Forex Product and gets losses then the trader cannot claim he/she has been scammed.

One of the best ways of understanding and protecting yourself from fraudulent schemes in Forex is to get yourself updated with the Forex regulatory agencies like CFTC, NFA and your local financial regulatory agencies. These regulatory agencies regularly publish red alerts and warnings about fraudulent schemes in Forex to protect Forex traders.

Fraudulent schemes in Forex can be very enticing, cheap, alluring, and certain. Understanding the hidden traps in any alluring offer is the first step of protecting yourself from loss.

10 Differences Between MetaTrader 4 and MetaTrader 5 Forex Platform

By Onyebuchim C Obike

10 DIFFERENCES BETWEEN MT4 AND METATRADER 5

1. Installation

MT4: Installation is simple, and straightforward.

METATRADER 5: Installation is not as simple when compared to MT4. The manufacturer's demo trading server (METAQUOTE) is a default in the opening account phase of the installation. An option to add new trading server from METATRADER 5 for a demo account is also included.

2. Charts/Timeframe

MT4: There are nine (9) timeframes. There are limitations to the number of charts that can be opened at the same time.

METATRADER 5: There are 21 timeframes ranging from 1 minute to 1 month, and unlimited number of charts. One hundred charts can be opened at the same time without limitations.

3. Fundamental Analysis (news trading)

MT4: Forex Economic Calendar is not included in the news tab.

METATRADER 5: The platform has an inbuilt Forex economic calendar tab with features like news event, schedule, impact, forecast, earlier events, e.t.c.

4. Commerce/Market

MT4: The market utility tab is not integrated into the platform. You have to visit MQL4.com in order to buy any of its product in their market place.

METATRADER 5: The market utility tab is built inside the platform. You can directly buy Forex products through the market tab.

5. Indicators & Analytical Objects

MT4: There are 30 inbuilt indicators pre-installed on MT4 platform.

METATRADER 5: There are 38 inbuilt indicators pre-installed on METATRADER 5 platform. There are 22 analytical objects, and 46 graphical objects added to the platform.

6. Orders

MT4: It has only two (2) market orders, and four (4) pending orders.

METATRADER 5: More order types are included in the platform. There are two (2) market orders, six (6) pending orders, and two (2) stop orders.

7. Expert Advisor

MT4: The MQL code editor and strategy tester are the main utilities used for expert advisor design. Expert advisors are programmed with MQL programming language, and they are faster to compile. It is not possible to transfer expert advisor codes from MT4 to METATRADER 5. Therefore expert advisors designed in MT4 would not work on METATRADER 5.

METATRADER 5: It comes with more utilities for expert advisor design. The strategy tester utility has been upgraded, and a strategy tester agent manager for remote optimization of expert advisors was also added. Expert advisors are designed with C++, and they are slower to compile due to the dynamics of C++ programming language.

8. Interface

MT4: The interface is easier to navigate when compared to METATRADER 5. The one click trading feature, and the drag and drop functionality is included in build 500 version only.

METATRADER 5: There are slight differences on the platform's interface. A search box has been included on the platform as well as a details tab on the market watch window.

9. Trading (Hedging, FIFO, e.t.c.)

MT4: There are no restrictions on any trading method. However broker regulations is implemented on their proprietary MT4 platforms.

METATRADER 5: It does not support hedging of trades, and it also implements the FIFO policy by default.

10. Brokers

MT4: Most brokers deliver their services on MT4.

METATRADER 5: Fewer brokers deliver their services through METATRADER 5 when compared to brokers who deliver their services on MT4.

It is quite obvious that METATRADER 5 has more features when compared to MT4. But why do most Forex traders use MT4 in trading the Forex despite the improved features in METATRADER 5? Here are the reasons.

1. Expert advisors designed with MQL programming language cannot work on METATRADER 5. They cannot also be transferred to METATRADER 5. The only way out is to rewrite the codes in C++.

2. Hedging, and closing of orders irrespective of their positions is not allowed in METATRADER 5 platform. The platform automatically implements NFA rules

These two reasons are the main discouraging facts of METATRADER 5. This is the reason most Forex traders still prefer to trade the Forex with MT4 rather than trading with METATRADER 5.

Forex Trading has great potentials for success and at the same time high possibilities of loosing funds. Success in Forex requires the best resources and skills, which F provides. Keep in touch with our product updates page where we keep you informed of FREE Offers & New Products.

Online forex trading: Of drawdown and recovery

by ’Kunle Adeyer

There is always downtime in all ramifications of life. It is always a crucial period when survival instincts and strategies come alive to those who want to overcome. My previous articles have been serially written involving education, live trading and discipline. But there comes a time when one goes overboard or something goes wrong. This is the acid test of a forex trader.

Every trader must be in this ‘mess’ once or many times. Drawdown is simply when your equity or trading fund falls short of the initial value. It is psychologically disturbing. It literarily is as if one’s business is sinking. It could still be tolerated if it is just the trader’s account but when it comes to funds or client’s account being managed; it is not a funny story or smiling time for traders.

I can guarantee you as a prospective trader that you will find yourself or your account in this situation, at least once, as compared to the late Tai Solarin’s ‘May your road be rough’. It will definitely be in forex to climb to the top. But for every problem there is a solution. I once wrote in this column about recovery plans and management. Recovery of drawdown to equity level or breakeven point and later profitability is the focus of such trader.

The very first thing is the belief that you can do it. If the courage or confidence is not there, then there is no way you can deploy the techniques even in the face of a sure trend. That is the reason why I proposed that one should start live trading early after training provided good training has been obtained. This refines you as a trader. I always tell my trainees that the difference between me and them is that I have somehow overcome fear and that they will go places if they surmount the market without fear.

In this quagmire, a trader should deploy the following. First, is profit management. I have used this weapon a lot of times to get positive results during drawdown.

A trader who lacks this technique may not have a backup to rely on. Profit management account gives me the psychological boost that something is in the kitty and I can always access, if need be.

The second thing is to adhere strictly to discipline. With discipline you can ride to the top again. Never be too much in a hurry to recover. Rely on the adage that a damaged/wounded skin takes time to heal.

Reduce your lot size in comparison to earlier ones. In addition, if your stop loss is not in place, never find it difficult to close your orders at losses to have fund to trade. It is better than you having a margin call or burn out. 

Thirdly, let your technical skills come alive and be bold to go for your ‘sure’ trade orders. You may also trade economic news to boost your account. Scalping – that is profiting on short trades – can help but never scalp too much not to incur the wrath of your broker if your broker discourages much scalping.

Hedging is another method as proposed in my article dated February 15 in this column.

Best Forex Trading Indicators - 4 Simple Effective Ones For Bigger Profits

By Samuel Leslie Berkovits 

Here we will look at some of the best Forex Trading indicators and how you can combine them into a simple robust Forex trading strategy for long term gains.

No single Forex trading indicator works all the time by itself and the way you combine them is essential. Many traders make the mistake of the thinking the more indicators they combine the better - Wrong!
If you do this the system has too many elements to break; you only need a few and your Forex trading system will be simple and robust in the face of ever changing prices.
Right lets build our Forex trading system and look at some of the best Forex trading indicators to help you build a trend following Forex trading system. First Identify the Trend.

This is obvious by looking at a bar chart but you also want to use moving averages as well. Simple moving averages are great in terms of smoothing out the fluctuations and two great periods to use are first, the 40 day MA to identify the long term trend. Secondly, use the 20 day MA to buy and sell back to in a strong trend and you will find this moving average is excellent for getting in on a trend in motion, with optimium risk / reward. Spotting the Set Ups

We don't have time to cover this in detail here but there are a couple of points that are the key to maximizing profits. Firstly, be patient and only trade high odds set ups and secondly, make sure you trade breaks to new highs and lows all the big trends start and continue from them so you need to trade them.
Bollinger Bands - Check Volatility and Standard Deviation

Ask most traders what standard deviation of price is and you will probably get a blank look but an understanding of standard deviation of price and volatility is something that all forex traders need to know about and if you don't, make part of your forex education and learn about Bollinger Bands.

Bollinger Bands are not used to for market timing - but give you an all round view of volatility price and when you understand this concept, Bollinger Bands can help you in 3 ways:

They can alert you to potential big moves, help set targets and spot market value and entry levels.
Best Forex Trading Indicators for Confirming
When you spot a potential opportunity, you need to confirm the move and make sure price momentum is going the way you wish to trade. There are plenty of momentum indicators but for the last 25 Years I have found the following two the best. There easy to learn and apply, lets take a quick look at them.

The Relative Strength Index (RSI)
A great leading indicator to time your trading signals with. If the RSI supports your view of the market you can use it in strong trends - or when it diverges from the prevailing trend ( from over bought or over sold) to enter trades against the prevailing trend.

The Stochastic Indicator
The best Forex trading indicator of all for better market timing and when combined with the RSI you have a dynamite combination. The stochastic is a simple indicator but is the ultimate timing tool for timing trading signals in my view. If you use stochastic crossovers to confirm your move, you will get the odds on your side.

It's also very effective for timing contrary positions. A stochastic cross, from over bought or oversold levels, against the trend is a highly effective way of getting in on the big contrary trades.
Simple and Effective

There are other great indicators around such as the ADX indicator, MACD and many others but as a blend the above 4 indicators with a bar chart are my best forex trading indicators for profit and they have served me well over the last 25 years.

The indicators are easy to learn, apply and if blended correctly, can add a new dimension to your forex trading strategy.

Proper Forex Risk Management

By Amanda L Stucky 

For those involve in foreign exchange, it is important that you know proper Forex risk management so you can sustain the pressure and for you to succeed in the long run. When you know what the risk involved, you will also be able to find ways on how to lower these risks.

Everyday there are numerous companies and sole traders who exchange currencies on the Forex or foreign exchange. If you are involve in the buying and selling of foreign currencies then you are already participating in spot market. Buying and selling simply means exchanging your currency for another.
To manage the Forex risk, you should know how to use responsibly factors such as leverage, stop loss, lot size and risk reward ratio.


Leverage enables you to use small amount o money to control larger ones. Although this can bring increase your wins, it can also accumulate your losses. So if you're new with Forex exchange, it is best if you work with lower leverage first.
As with stop loss, it serves as your insurance when you are trading. A stop loss can prevent too much loss when exchanging rates.

The risk reward ratio would help you determine whether it is good to trade or if it's better to wait until the next trade. When you know how to work with reward risk ratio, you will still get profits even if there are only 50% chances that you win with the trade.

If you are new to Forex trade there are still things that you should get to know first. You should understand what the difference is with spot market vs. future Forex trading. Although there are risk involve with Forex management, there are several strategies you can use in order to lessen the danger involve. The more you know about these strategies, the more advantageous it is for you.

Forex pathfinder Thursday, September 19 Tradable News.

UK Retail Sales    -    9:30am Paris time   (Thursday, September 19)

--–––––————————————————————–––––--

	Traded pair	Expected figure	Deviation trigger
	GBPUSD	0.4 (%)	±0.4 (%)

	Buy	GBPUSD	if actual figure is or is above	0.8 (%)
	Sell	GBPUSD	if actual figure is or is below	0.0 (%)

Expected move during first 20 minutes after the release is 20 pips or more.


Review historical charts where the same deviation of at least 0.4 (%) occurred:

UK Retail Sales history of charts.

Once there, set filter to Difference Actual-Forecast >= 0.4 and click "Filter" to see list of charts.


  UK Retail Sales    -    9:30am Paris time   (Thursday, September 19)

--–––––————————————————————–––––--

	Traded currency pair	:	GBPUSD
	Initial spike duration limit	:	15 seconds
	Initial spike price action threshold	:	12 pips
	Triggering retracement percentage	:	35 %
	Retracement duration limit	:	40 seconds
	Maximum trade hold time after release	:	10 minutes
	Stop loss	:	10 pips
	Take profit	:	10 pips
	Maximum spread	:	2 pips

USA Existing Home Sales    -    3:00pm Paris time   (Thursday, September 19)

--–––––————————————————————–––––--

	Traded pair	Expected figure	Deviation trigger
	USDJPY	5.25 (M)	±0.40 (M)

	Buy	USDJPY	if actual figure is or is above	5.65 (M)
	Sell	USDJPY	if actual figure is or is below	4.85 (M)

Expected move during first 30 minutes after the release is 30 pips or more.


Review historical charts where the same deviation of at least 0.40 (M) occurred:

USA Existing Home Sales history of charts.

Once there, set filter to Difference Actual-Forecast >= 0.40 and click "Filter" to see list of charts.

  USA Existing Home Sales    -    3:00pm Paris time   (Thursday, September 19)

--–––––————————————————————–––––--

	Traded currency pair	:	USDJPY
	Initial spike duration limit	:	30 seconds
	Initial spike price action threshold	:	12 pips
	Triggering retracement percentage	:	40 %
	Retracement duration limit	:	80 seconds
	Maximum trade hold time after release	:	15 minutes
	Stop loss	:	10 pips
	Take profit	:	10 pips
	Maximum spread	:	2 pips

Forex Risk Management Precautions

By Tony Scalf 

The foreign currency exchange industry is one of the most unpredictable, liquid and volatile business industries ever operating worldwide. It accommodates to approximately 1.5 trillion U.S. dollars worth of transactions and it becomes a chance for banks, large corporations, business companies of all size and even individual investors to gain profit through forex.


The forex risk of losing or gaining profit in the market is as inevitable as the rising and setting of the sun daily. There is no way that a trader can fully and perfectly go about his trading business without undertaking risks of any sort. Because of this very sensitive and crucial topic in the forex trading industry, all traders must at least exercise some form of forex risk management in order to avoid unnecessary and devastating losses that can kick you out of the game completely.

There are a few things an investor must remember before he or she makes any trading decisions. One among which is cash flows, liabilities and assets are directly affected by any change in the exchange rates that may occur and of course since the exchange rates can change in a snap of a finger, international transactions especially dealing with finances will consequently greatly affect businessmen, traders and investors.
It is important that a trader must perform forex risk management measures especially on economic exposure, translation exposure, accounting and real operating exposure.


Because of the unpredictable changes in exchange rates, the transactional exposures are one among those that contribute highest risks to forex because cash flows, import and export services, lending and borrowing of foreign currency can greatly affect the exchange rates of involved currency pairs. A wise investor must therefore remember to incorporate this in his forex risk management strategy.

There are two general types of risk when dealing with forex risk management and these are: systematic and unsystematic risk. Systematic risk is the risk affecting business aspects such as inflation risk, interest rate risk and market risk. On the other hand unsystematic risks are more specific to the individual events happening to a particular transaction such as business risk and financial risk.

For all the traders out there it is always a good habit to have a trading strategy and you must see to it that both your online broker and your trading platform have forex risk management procedures incorporated into the system. There are many advanced software that contain reliable risk analysis features.

Please check my website Forex Risk Management [http://forexriskmanagement.net/] if you looking for forex risk management tips.

Article Source: http://EzineArticles.com/6325793