Pro FX Blog

I am primarily a spot Forex trader but believe successfully diversifying your portfolio is always the best approach to maximising your profits over the long term, hence the reason I also trade Binary options on the odd occasion.

For those new to Forex trading, binary options have several advantages over spot Forex.

One of the main advantages of Binary options are they have fixed pay-outs, For example you purchase a 15 minute sell option for £10 on the USD/JPY with a pay-out of 85%, if the pair finishes below the sell price at the end of 15 minutes you will receive 85% of your investment which would be £8.50, on the other hand if it finishes above the sell price then you don’t receive a return. The advantage to this being you always know your risk: reward ratio before taking any trade.

Another advantage to trading Binary options is you don’t need a concrete exit strategy, you don’t have to plan your stops and take profits above or below crucial support and resistance, you don’t have to worry about taking profit too early or letting your losses run. So we are now eliminating two of the biggest contributing factors to a trader’s failure hence increasing your odds of being successful.

Now that we’ve covered the advantages of trading binary options over spot Forex let’s take a look at some of the possible disadvantages.

The single biggest disadvantage to trading binary options is definitely the inability to let you winning trades run and continuously accumulate more and more pips as the trend continues, although on the flipside you are also unable to let your losses run deep into your account bring you to or close to a margin call.

Another possible disadvantage to trading binary options over spot Forex is the lack of profitable trading systems and information available on the internet as it hasn’t quite managed to gain the some popularity as spot Forex has yet although it is still a much newer concept to most.

As trading Forex binary options isn’t quite as popular as spot Forex at the moment there are only a limited amount of brokers that offer this service and unique trading platform however once again there is a flip side to this, in order to encourage more people to trade Forex binary options some brokers are offering some excellent welcome bonuses and pay-out rates!

One of the best brokers available on the internet at present has to be O-F, they have the highest pay-outs and a ridiculously speedy deposit and withdrawal process hence the reason they are my broker of choice who I personally trade with, you can open up a standard account with them for as little as 200USD/GBP/EUR dependant on your chosen currency and best of all they are offering a 10 – 30% Bonus on your initial deposit! .

To get started trading Forex binary options and open your trading account head on over to my Preferred Binary Options Broker.

How do you define a successful trader?

Now there are probably a million ways to answer this but in this thread i want to discuss what i call the final step – trading unconsciously.

Now in almost any profession when you reach a sufficient skill level your actions become repetitive with little thought given to the task in hand, when this happens you will often find there is little change in the input or output and it becomes a very consistent process.

This is what you are looking to achieve in trading!

Consistency and repetitiveness through tedious and sometimes boring actions.

Now that’s not to say you cant love your job but the eureka moment in trading full time is when it becomes just that – a job!

Now when your first starting out there is a lot of excitement, experimenting and impulsiveness!

This is a recipe for bad trading!

Then you take another step where by you begin to trade your first live account with a lot of ambition, hopes, dreams and above all greed, before you know it your wiping out your capital!

This is another recipe for bad trading!

Then you move to the next step where by you attempt to start building your capital with caution and fear in the back of your head, you begin doubting your entries and closing or opening positions too early or late purely out of fear!

This is another recipe for bad trading!

You then take a step backwards, this is a step most traders don’t reach. you begin to analyse what has happened, what went wrong and the reasons why, you realise your worst enemy in trading is in fact yourself, your emotions and your lack of discipline!

This is a recipe for successful trading!

You then begin to put emotions aside and focus on the logistics and practicalities of trading, you realise that trading is far simpler than you ever imagined, you begin to see things more clearly, see them for what they are and not what they appear to be

This is yet another recipe for successful trading!

This is when your reach the final stage!

Trading unconsciously!

You barely have to think about what your doing or why!

You’ve done it a million times before!

You know what your looking for!

You know what the possibilities and probabilities are!

You know what your going to do whichever way price moves!

You let each and every trade just become a statistic in your P/L statements!

Win or lose you know it was necessary, no regrets, no looking back just forward!

Your one step ahead of the game!

And this my friends is when i believe you become a successful trader!

Lee J Brown

Hi readers

Today i wanted to cover the topic of discretionary price action trading, what it is, what it isn’t and most importantly why you should be using it.

As most will have heard or know from experience most indicators are lagging indicators, lagging indicators use previous price behaviour to paint a more visual image of what the market has already done. People trade these lagging indicators with the assumption that the market will continue in its current direction just because their 13 period Exponential Moving Average has crossed over their 50 period Exponential moving averages for example.

Another example of lagging indicators being Stochastic and the Relative Strength Index, these indicators simply tell you that there has been a lot of buying or selling of a particular currency during a particular timeframe. Again traders will trade these lagging indicators on the assumption that price can only move a particular distance before becoming “overbought” or “oversold” and run out of momentum.

These lagging indicators are all based on assumptions, mathematical formulae, inflexible systems and give you no idea of what the market is actually doing in that point of time, Lagging indicators give you no indication of where you should place suitable take profits or stop losses, they simply attempt to predict the direction the market is going to move.

There are many reasons why these systems just simply won’t work in the long run.

The forex market as with all financial markets are forever changing and we as traders need to learn to adapt to this, be flexible and willing to constantly read what the market is telling us.

Technical systems based on lagging indicators don’t have the capability of doing the above, as i mentioned earlier they are inflexible and cannot be programmed to adapt every time the market has a shift in sentiment or volatility.

ok So now we’ve established all the Moving averages, MACD, Bollinger Bands and all the other technical indicators in the world aren’t going to make you a successful trader what will?

Discretionary Price Action trading!

For those of you that don’t know what this is, its definitely time you learnt, and fast or you will inevitably blow your account chasing the elusive holy grail Forex system.

Discretionary price action trading is not a technical indicator; it’s not even a combination of indicators, its reading what the market is telling you about price behaviour and movement in the PRESENT.

It can tell you when the current move is running out of momentum through candlestick patterns!

It can tell you when the current move is going to continue at a rapid rate on the break of important support or resistance!

It can highlight possible retracement areas with the Fibonacci ratios!

It can warn you of a major move even before it happens with breakout chart patterns like flags and pennants!

So if Discretionary price action trading is so great why isn’t everyone using it and why is it not all over my Forex brokers website!?

The simple answer is you cannot buy Discretionary price action trading in a packaged, advertised and marketed commercial trading system. Learning to trade Discretionary price action requires skill, education, patience and time.

Discretionary price action takes years to master, and by master i don’t just mean understanding and being able to use price action, i mean being able to feel the market, being able to use your own discretion when it comes to judging the strength of support and resistance, whether or not that particular fib level will hold, whether the preceding trend is strong enough to trade that particular inside or pin bar, whether that potential candle pattern your watching will form or fail.

Discretionary price action trading requires you to constantly think analyse and adapt along with the market and this is why it is so powerful!

So from this day forth throw away you’re lagging indicators, pull up a naked chart and start looking at what the market is telling you right now, i guarantee you will not regret it!

If you’re not quite sure where to start when it comes to trading price action look no further than this website, over at the daily technical analysis blog everyday i post my technical analysis and potential set-ups for a range of different currency pairs.

Happy trading, Lee J Brown

Today I’m going to be reviewing the Forex broker that first introduced me to the Forex market, going back to where my trading career began almost 5 years ago now.

The Forex Broker that I’m referring to is non-other than Etoro, a Forex Broker that has more than 1.5 million users in over 130 different countries.

Etoro is the first and only broker to successfully merge an innovative trading platform with a successful social network, they really are pioneers in this respect and this unique selling point alone is what has made Etoro such a popular broker, especially amongst those new to trading the Forex or any financial market for that matter.

Etoro has a number of unique features that no other broker has managed to emulate with the same success; one of the most renowned features by far is the social trading aspect. The trading platform itself has a built in chat feature allowing traders to discuss trading ideas and signals in real time whilst still being able to see the live feed and pull the trigger on trades.

Another very useful feature, especially to those new to trading is the ability to see, follow and copy the live trades and orders of the more successful traders on the platform, you also have the ability to view the overall sentiment of all traders using the platform for each currency pair.

The platform itself is very well designed and has a number of display options to cater for both the seasoned and new traders, displays vary from the standard view to a more creative game style view of each trade as the two currencies compete with each other in races and other similar mini games.

Etoro offers a number of incentives to get you started with your trading from a massive welcome bonus of up to $10,000 to your very own account manager who will assist you in every aspect including updating you on economic news!

The platform is very stable with no re-quotes, no commissions and very reasonable spreads whilst allowing you to trade with a leverage up to 1:400.

Etoro also offers a number of other tools on their platform including live news, customisable charts and technical indicators.

You can start trading with Etoro today from as little as $50!

What are you waiting for?

Click Here To Start Trading Now

I have been trading with Oanda for a number of years and i have to say they are by far the best broker i have ever traded with so i feel they deserve the honour of my very first review here at ProFXBlog.

I’m sure many of you will have already heard of Oanda as they are one of the world’s largest and most reputable brokers, If not then you definitely need to read this review because you are missing out!

Oanda has by far some of the best spreads in the business, Although spreads are not fixed they do tend to stay consistent during normal market hours and only widen when all markets are closed or for a few brief minutes during major news releases such as the Non Farm Payroll Reports or Interest Rate Decisions.

Their typical spreads are:

EUR/USD 0.9 pips

USD/JPY 0.9 pips

USD/CHF 1.3 pips

AUD/USD 1.4 pips

EUR/JPY 1.5 pips

GBP/USD 1.6 pips

NZD/USD 2 pips

GBP/JPY 2.2 pips

Yes you read those numbers right, some are actually less than 1 pip!

Not only does Oanda offer extremely tight spreads they also offer something no other broker does, Flexibility!

Oanda dont just allow you to trade standard lots (100,000 units)

Oanda dont just allow you to trade mini lots (10,000 units)

Oanda dont just allow you to trade micro lots (1,000 units)

They allow you to trade individual units!

yes thats rights you can only actually trade 1 unit, 12 units, 542 units or whatever amount fits in with your money management for your account balance!

Oanda offers a max leverage of 50:1 which is more than enough for any experienced trader and also helps prevent the inexperienced from overleveraging themselves and blowing their account.

Oanda allows you to open an account with as much or as little funds as you want, you can choose which currency you would like your account balance in and you can also create up to 13 sub-accounts in case you want to try different strategies, hold accounts in several different currencies or anything else you can think of to use these sub-accounts for!

Oanda also offers an unlimited demo account to try their platform as well as a facility for account managers to manage client funds!

Oanda has a free mobile trading platform for both the Iphone and the android market, i use the app on both my Samsung Galaxy and HTC wildfire and it is a simply amazing app.

There are also many other free tools available to download at Oanda’s FXlab which is constantly being updated by their programmers.

So in conclusion Oanda is by far the best broker i have ever had the pleasure of dealing with and i would recommend them to any trader new or experienced.

Lee J Brown

Leverage tends to confuse a lot of new traders so let me attempt to explain it in its simplest form.

For the sake of this example lets say the GBP/USD was trading at parity, 1GBP = 1 USD

You have an account balance of £1000

If you were not using any leverage and you bought £1000 worth of the GBP/USD if it appreciated by 1%, IE up to 1.0100 your account balance would now be £1010.

A 1% increase in equity

However if you were using leverage of 100:1 for this trade

You would in fact be buying £100,000 instead of only £1000

The reason you can do this is because the broker basically lends you the other £99,000

So if the GBP/USD now increases by 1% up to 1.0100

You will make a 100% gain and double your account size to £2000 instead of a measly 1% gain

So you now have the potential to make 100x more from the same movement.

However this is a double edged sword and with leverage you of course have the ability to lose 100% of your account with only a 1% movement.

This is why money management is essential when it comes to utilising leverage to increase your trading profits.

I hope this has helped make leverage a little clearer to some of you

Regards, Lee J Brown

There is no rule of thumb when setting stops or take profit’s but generally you will want to keep your risk to reward a minimum of 1, preferably 2 or higher

In case you’re not familiar with R:R, it is how much you intend to risk vs. how much you intend to gain,

An R1 would mean you are risking as much as you intend to gain

An R2 would mean you are targeting twice what you are risking

These are controlled by stops and take profits.

An R1 would mean your stop and take profit are equal

An R2 would mean your take profit is twice your stop loss

A lot of new traders will formulate a plan as they’ve been instructed whereby they will be adamant at using a particular R:R such as 2:1, they will spot a setup and decide they want to trade intra-day so there stop will be 30 thus giving them an automatic take profit of 60.

These kind of trades are unlikely to be very profitable as there is no real premise behind the placement of stops or take profits.

You should take support and resistance into consideration when placing stops and take profits, and by support and resistance I’m referring to drawn up horizontal lines across recent highs, lows, double/ triple tops or bottoms, trend lines and Fibonacci retracements. the strongest support and resistance will be where several of these coincide, you can also try to spot candle patterns forming around the S + R areas or lines for extra confirmation.

Using the methods mentioned above, begin to work out the distance between your entry, nearest support/s and resistance/s to begin planning your trade and working out your risk: reward ratio.

For example you plan on entering at the market on the Usd/Jpy pair at a price of 89.65, you have establish a very strong resistance at 90.00 and a very strong support at 88.60. your entry is 35 points from resistance and 105 points from support, if you take a short position you would have a trade with a risk : reward ratio of 3:1 which is by any standards a very nice trade. you will most likely then want to tweak this slightly by putting your stop say 10 points above resistance and your take profit 10 points above support, you have now greatly increased your chance of protecting your stop and price reaching your target whilst still maintaining a R2+

Hope this has helped, sorry if some of it seems as though I’m pointing out the obvious to some but a lot of new traders find this harder to grasp than you may think, I have in the recent months starting teaching trading to some wealthy clients and as intelligent as they are, they sometimes really struggle with certain concepts

lee

In this short yet informative Hub i would like to highlight the importance of compounding consistent long terms profits in order to be a successful trader

Every year hundreds and thousands of new traders come into the Forex market looking for riches and wealth, trading 24 hours a day shooting for 50% a week and find their accounts blown within the month, most of which become too demoralised to ever even consider depositing more funds and pulling the trigger on another trade in the future, their trading career is over before it had even begun.

Those that become successful long term traders understand the power of compounding gains for huge eventual profits, they start small, aim low and are confident it will all pay off in the future, however most human beings are born with a natural greed, an emotion that runs so strong in most people’s veins that the thought of 2 – 3% a week sends shivers down their spine and they become part of the above club, the 95% of unsuccessful traders.

As fun as it is to dream of tripling your account every month it is important to be realistic of what to expect in terms of profit in both the short and the long term, the reality is a consistent weekly gain of 2 – 3% over the period of a year is no easy feat for even the best of traders however it is achievable for the few successful traders.

To most the idea of making a 2 – 3% weekly gain isn’t all that exciting, especially when compared to claims of 20,30 and even 40% returns a week that are often thrown around on the internet but the moment we add compounding into the equation those small weekly figures can amass to some huge yet realistic sums of money.

For those that don’t understand the concept of compounding gains or interest it is the exponential growth of a sum of money by continuously reinvesting all profits made, so although the profit percentage remains the same the actual sum of money grows at a very rapid rate.

As a very basic example let’s assume we have £1000 in our trading account.

If we were to make a 10% return every month for a year and not re-invest any of it we would have made a 120% return equating to £1200.

If however we compound our gains every month we will end up with a much larger sum which i’ll demonstrate below.

Month 1 – 1,000 + 10% = 1,100

Month 2 – 1,100 + 10% = 1,210

Month 3 – 1,210 + 10% = 1,331

Month 4 – 1,331 + 10% = 1,464

Month 5 – 1,464 + 10% = 1,610

Month 6 – 1,610 + 10% = 1,771

Month 7 – 1,771 + 10% = 1,948

Month 8 – 1,948 + 10% = 2,143

Month 9 – 2,143 + 10% = 2,357

Month 10 – 2,357 + 10% = 2,593

Month 11 – 2,593 + 10% = 2,853

Month 12 – 2,853 + 10% = 3,138

Total gain in percentage – 213.8%

Total monetary gain – £2,138

A little impressed?

Now let’s take it one step further by using our yearly return and compounding over a 7 year period with a starting balance of £1000

Year 1 – 1,000 + 213.8% = 3,138

Year 2 – 3,138 + 213.8% = 9,847

Year 3 – 9,847 + 213.8% = 30,900

Year 4 – 30,900 + 213.8% = 96,964

Year 5 – 96,964 + 213.8% = 304,273

Year 6 – 304,273 + 213.8% = 954,811

Year 7 – 954,811 + 213.8% = 2,996,198

Total gain in percentage – 299519.8%

Total monetary gain – £2,995,198

Now I think I can quite safely say that would be extremely impressive to anybody!

With the power of compounding gains figures like that eventually become realistic in the long term if you can remain consistently profitable at even 2 – 3% a week!

So if you really want to be a successful trader aim for 2% a week instead of 20%, compound your gains and begin building your future!

Happy trading, Lee J Brown

In this article i wanted to address something you probably hear over and over, and that’s the importance of keeping a trading journal!

now i know most of you find this a very tedious task and you may not see the importance of it, to most of you keeping a trading journal most likely means a spread sheet of all your trades and calculating a number of factors, etc. which can be extremely time consuming however there are a number of websites that offer free software to analyse all your trades and give you detailed summaries, percentages, charts and much more features that will greatly boost your trading results.

One of these websites that i use personally and can only praise for their excellent software, customer support and continuous updates is www.myfxbook.com.

After going to the above website simply follow the instructions for setting up your account, the software will then generate a page based on your trading history to include all useful statistics and summaries of your trading, the software will also automatically update itself every hour to show your latest trade statistics.

Now let me get to the actual importance of a trading journal and the many benefits it can add to your trading!

As most will already know Forex trading is a numbers game with no certainties just probabilities, a successful trader has to put the probabilities in his/her favour to give them an “edge” making them profitable in the long term.

In order to be profitable in the long run a trader has to know their edge and in turn has to know their win ratio and their average reward: risk ratio in order to give them a positive expectancy.

Once you know these statistics you can then begin to tweak your system further using more advances statistics such as which pairs have the highest win rate and Reward: Risk ratios or at which times of the day are more successful than others.

Without a trading journal or software that offers you detailed statistics you are trading blind, not knowing your edge is a recipe for disaster.

So if you do not already keep a trading journal or use some sort of trading analytical software or website start now!

You will reap the rewards in the long run!

Hope you’ve enjoyed reading

Happy trading, Lee J Brown

Today I wanted to review a product that has gotten a lot of media attention recently for their almost unbelievable latest offer known as the LF Boom Account!

The LF Boom account offer is so special as it really is the internet’s first no deposit Forex broker bonus, they are giving away $200 free to all new traders and there is absolutely no deposit required.

With nothing to lose and everything to gain I had to give them a go and write up my opinions in this review.

The opening of the actual LF Boom account is very easy and fairly quick, although there is a requirement of faxing or sending a scanned copy of some form of government photo ID for verification purposes this is a very speedy process as most accounts are approved within 24 hours, Providing a form of photo ID is common amongst most Forex brokers, some require it to be at the initial opening stage whereas others will only require verify your identity if you attempt to withdraw your money.

The LF Boom account and all other LiteForex accounts can be traded on the MT or MT5 platform; they also offer a number of mobile apps to cater for all smart phones including the Iphone and all Android operating systems.

Their spreads are very tight as they pride themselves on being an ECN with no fixed spreads, in times of extreme volatility such as major news releases these spreads do widen and you may experience some re-quotes but again this is to be expected with all reputable ECN brokers as they really do feed your order straight into the Interbank market.

As you would expect from an MT4/MT5 platform they are very stable and reliable with excellent charting software packed full of price action drawing tools and technical indicators as well as the function of applying EA‘s, there customer service is excellent as I have found they respond to your queries within the hour.

So whether you’re a seasoned veteran trader already happy with your broker, looking for a new broker or are a new trader looking for your very first broker the LF Boom account is for everybody, after all who doesn’t love free money?

Click here to open your account today!