Broker Conspiracy Theories : Are they True ?

If people new to forex trading have anything in common it is the overwhelming belief in the broker conspiracy theories. Ask ten people on their road to become successful traders about what they think regarding forex brokers and they will tell you that the main reason (or one of the main reasons) why they cannot profit as much as they want is because their brokers "play with them" in such a way that trading profitably becomes impossible (or much harder at least). The reasons why there is such a widespread belief in the broker conspiracy are many but the real question to ask is, is this conspiracy real ? Do brokers willingly play with their customers and mess with their execution and accounts in such a way that profitability is removed ? On today's post I will talk about these issues, giving you my opinion about the broker conspiracy theory and the consequence this has on your trading.

You have just bought your first extremely profitable scalping system, simulations show great results (although they are unreliable for this type of systems), your demo account shows great results and you are ready to jump into a live account with your first forex broker. You open up the account, fund it, get your VPS and start to trade your EA only to notice that your demo and live accounts almost never agree and your demo account is taking almost twice as many positions as your live trading account. Upon checking your live account you see a lot of spread widening, re-quotes and slippage that makes you think : the rumors were true, my broker is messing up my execution.

To tell you the truth, I do not believe in broker conspiracy theories because it is not in the main interest of a broker to harm their customer's performance due to the fact that they make money from the spreads and this means that the longer it takes for a customer to lose their account, the more money they make. Generally what people perceive as their broker "messing with them" is nothing but the harsh reality of trading in the real market. Sometimes if the broker is a "market maker" this may become a little bit shady since the broker may make some decisions to protect itself from quick positioning or scalping, which they do not like due to the fact that they cannot properly hedge their exposure when such small and fast positions are opened. Such decisions may include spread widening, re-quotes, etc.

I have had my fair deal of experience with people in the broker industry (well known brokers at least) reason why I can tell you that most of the things you hear about are nothing but myths. Brokers are not "evil market makers" making money when you lose money, that to me seems like a childish way of putting things such as the brokers are "the bad guys" and you become the poor good guy/gal who could only make it if he or she wasn't screwed as much by the big guys. The first thing you need to do here is to take responsibility for your profits and your losses. Forex brokers are not responsible for your opening and closing of positions and therefore the fact that you attempt to use systems that simply don't work under real market conditions is not their fault.

However I always believe that you should always work with the worst possible case available such that your trading and decisions are as robust as possible. If there is a broker conspiracy and brokers will relentlessly prosecute and make certain systems (like scalpers) totally nonviable then you should focus on trading a system that is shielded from the power your broker has over your trading. Certainly it would not be very intelligent to trade a given system that you know depends greatly on execution variables your broker controls. If brokers do seek to make traders lose, then why in the world would you want to make it easier for them ?

In the end, if you profit or if you don't depends entirely on the decisions you make. If you trade systems that are very vulnerable to your brokers bidding then you will fall prey to the problems of real market execution and - if existent - to your broker's endless hunger for new trader's flesh. As I said before the key here is to take responsibility for your trading and find systems that will allow you to trade with the smallest degree of dependency on live execution variables. Systems that trade in the medium or long term which do not have small take profit and stop loss targets will make you "immune" to any conspiracy since your broker will not be able to control your trading through the manipulation of execution variables.

However it is interesting here to note that I have never heard a profitable trader complain about execution related problems as a "broker conspiracy" since experienced traders know that this is a characteristic of the real market and that being successful despite their existence is one of the jobs YOU have as a profitable trader. It is irrelevant if these problems are or aren't caused by your broker, if they are there and you want to be profitable then make your trading style such that these problems will have a small effect on your account balance. If you are suffering because of execution issues you should know that your trading style is what gives them the room to harm your wallet.

If you would like to know more about automated trading system development and how you too can design likely profitable trading systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

Is Your Money Safe ? Think Again :The "GallantFX Hacked" Case

One of the most important things in forex trading is the safety of our deposits and the trust we have in our broker. We tend to believe that all brokers have very tight security measures that will protect our capital from being stolen or our trading affected but most of us don't really have any idea about the security measures taken by our broker or if these measures are enough to protect our deposits and trading information from hackers out there. This problem becomes bigger when people start to use very lightly regulated brokers that trade outside US-UK regulation that often do not comply with the minimal security precautions needed to avoid a very bad event taking place. Today I want to talk to you about such a case in which the GallantFX broker was hacked and its internal information exposed to an unauthorized third party. I want to show you what happened, what was at risk and what is now at risk for the people using this broker. My objective with this post is to warn you about the need for a good broker with a good trusted security system and how it can affect you if you fail to do so.

What happened with Gallant FX ? On May 30/2010 several people on the internet posted images and messages pertaining to the fact that they were observing the picture showed below within their Virtual Private Servers and the GallantFX main website (both gallantfx and gallatnvps.com domains got hacked). The websites and VPS browser requests read "hacked by Aseroh" and later displayed the admin entry login screen of the Joomla control panel. Some users confirmed that they could access the content manager by using the default administrator username and password something that exposed the websites' html content to manipulation by anyone. I checked this myself that day and found it to be true.
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I have to tell you that I was shocked when I read about this on several websites. It was the first time ever that I had seen a forex broker fall prey to the attack of what appears to be a hacker who targets Joomla exploits. The hacker made it clear on the VPS that he had gained root access to the servers, meaning that he could manipulate anything he wanted within the network. However people noticed that their accounts were intact as well as their VPS contents. So no harm done right ? Wrong ! The fact that this broker was exposed to this hacking means that it was vulnerable to the implantation of third party applications that could be used for a WIDE variety of things. From logging trading activity to wiping all accounts during a certain date to whatever other creative evil use you want it to have.

The fact is that this breach of security exposed all the content's of people's VPS severs and by extension, their trading platform passwords, expert advisors, etc. Nobody knows if there is not a guy out there with thousands of forex account passwords waiting to use them in a single day or if there is a secret bot within GallantFX right now waiting for that little event that will trigger a very nasty destructive frency. The fact is : Who knows. For this reason I consider right now that everyone running on this broker should definitely change to a different broker, merely because of the security breach they had which is simply unacceptable for any company dealing with sensitive financial data.

This event makes us reflect upon the importance of our broker's security and the fact that brokers should use non-standard solutions for content management instead of a free widely used and well-known content management system like joomla. Not because Joomla is bad but because it is under constant study by hackers world-wide and vulnerabilities are easily exploited by a wide sector of this community. Using a third party propietary solution is a good line of defense since hacker attacks would take considerably more study due to the custom character of the solution used.

What this shows is that low budget brokers have low budget solutions to their content management, web hosting and probably VPS offerings so I would advice you to think twice before using a broker that you consider extremely new or not very well known. Using brokers that have a good reputation and adequate regulation that forces them to comply with some basic internet security standards should be a basic thing we should look for. All NFA and UK regulated brokers have to abide by these standards while some brokers like FXDD (malta) comply with these regulations on their own accord, outside NFA ruling. Whatever the case, I advice you to research your brokers security so that you can rest assured that an event like the one happening at GallantFX will be extremely unlikely.

If you would like to read more about automated trading and how you too can create likely long term profitable automated trading systems please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

It is NOT Only About the Spread : Understanding Market Depth

Maybe the first thing that people new to forex learn about brokers is the fact that better brokers have better spreads. Since the spread - the difference between the bid and ask price - is the fixed cost per transaction then any given broker that offers you a better cost per transaction will ultimately be better from a profit wise perspective. This becomes critical when you are using systems that take profit in areas lower than 10 times the spread since the contribution of the market spread to your trading costs is very significant. However what traders often fail to notice is the fact that the spread is not enough to tell a broker's quality from another, often new traders will get involved with brokers who have "the best" spreads only to find that their execution is no where near what they expected. How can you judge the quality of different brokers besides the spread ? On today's post I want to talk about marketp depth, the nature of order execution and what you should look for within a broker besides an excellent spread level. This article will also further pinpoint the difficulties in achieving long term profitabilities with scalping systems and why great care is needed when choosing a broker for such systems.

What ? I thought that the spread was the only cost per transaction, determining broker quality - you might be thinking. However reducing broker performance to their spread level is simplistic and does not give you a full picture about the whole quality of your broker's trading operation. When you buy a given contract in forex trading, you are - ideally - filling a transaction from someone who wants to sell their previously held contract. For example, if you want to buy EUR/USD at 1.2345 you are actually buying a contract from someone who is selling it at 1.2345+spread. The dealer hands the contract over to you and keeps the Bid/Ask difference -the spread- as a comission.

However the problem comes when you realize that the number of contracts available at any given price level is not unlimited. Of course, not everyone wants to sell EUR/USD at a given price level or buy it at another and therefore the amount of liquidity available in the market is very limited. The consequence is that you might have a broker with a GREAT spread but it might have a very dry liquidity pool so you might be unable to get your orders filled at the price levels you want.
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Of course, the problem now comes to the difference between brokers with and without dealing desks. When a broker has a dealing desk it will try to fill all your orders, regardless of liquidity but it might not want to fill your orders at a certain price level if your orders are too large or too fast for them. The solution of the broker to this exposure you cause it is to simply requote you until you get a price level in which the broker has enough liquidity, hedging positions from other traders, etc. The end result is that you feel absolutely tricked because you are unaware of the true causes of why all this requoting has happened.

On the other hand, ECN brokers allow you to have second level market depth, which means that you are able to directly see the orders that are being placed and you can actually SEE how much volume is available for you to get. Of course, there are simply no requotes on ECN brokers because the transactions are done from peer to peer and everything is much more transparent to you (of course, someone can beat you to a transaction but then there is no requote but simply you "failed" to capture the transaction first) . Using an ECN broker allows you to see exactly how the market is moving and what volumes at what price levels are available for purchase.

For systems that need to trade fast having this added volume information and having transparency over execution is absolutely vital to have any chance of long term success. The fact that liquidity at different price levels is limited also points out why scalping systems may not have such a great chance at achieving long term profitability. Many people are fighting for very narrow price ranges with very limited volumes and the people who fail to get their desired price levels will definitely lose a significant portion of their profits. However, systems that swing trade and use very wide targets might no be affected by this fact simply because they can have a lot of flexibility around their entry points and deviations of +/- 5 pips are not bound to cause any disastrous effects in the long term.

So to sum it up, the quality of a broker is not only given by its spread levels but by the quality of its liquidity pool. When you use a regular dealing desk broker you will not be aware of this pool while on ECN brokers you will see all the action directly through second level market depth. Having brokers that allow you to see deeper is vital for people who trade scalping systems while it adds little value for traders who use swing and longer term systems. Nonetheless traders who use long term strategies but trade high amounts of volume may also need to see their broker's liquidity pool to catch better entry and exit points.

If you would like to learn about mechanical trading systems and how you can code your own automated trading systems with sound trading tactics to achieve success in forex trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !

The Five Best Non-NFA Brokers for Reliable Trading and Deposit Safety

With the start of the Atinalla project and the need to find reliable non-NFA brokers to trade portfolios of Asirikuy systems I have donde an extensive investigation about the different options available and their reliability. After going through many of the available over-seas brokers and looking at their regulation and reliability I have built a small list containing all non-NFA brokers I consider reliable and worth using to invest large quantities of money. I think that none of these brokers would ever steal your money (not allowing you to withdraw) or play games with you in trading (affecting Asirikuy systems). On today's post I will give you a list of my top five non-NFA broker choices which are perfect for anyone who wants to start trading an Atinalla portfolio or any other combination of systems that may simply not be NFA compliant.

What is the deal with portfolios and NFA compliant brokers ? The main problems is that Atinalla portfolios are using and will use several experts on the same trading currency. Even though all experts within Asirikuy are NFA compliant by themselves, they do not have this character when they are put together since they may not obey both hedging and FIFO regulations. For this reason it becomes important to find non-NFA yet well regulated brokers that can fulfill our trading needs guaranteeing the safety of our invested capital and trading conditions. Within the next few paragraphs you will find a list of the five best non-NFA brokers I could find, hopefully this list may be useful to all of you out there looking for reliable non-NFA alternatives.

1. Alpari UK. I think that this is one of the best none NFA brokers available giving us the confidence of being regulated in the UK with the flexibility of accepting accounts that can trade from 0.01 lots in 0.01 increments allowing us to trade Asirikuy systems from 1000 USD. Alpari UK is a very recognized broker with very good trading conditions and a perfect escape from NFA regulations. Sadly they do not currently accept US citizens so Americans should use one of the other obtions outlines below.

2. Forex.com UK. Even though Forex.com UK has Sunday candles - a not so great characteristic for Asirikuy systems - it remains a reliable broker with accounts available that fit the necessary profile to trade with Asirikuy systems from 1000 USD. The broker accepts US and non-US citizens and its regulated in the UK. It is the English branch of Forex.com, one of the first and most trusted brokers available online.

3. FXDD (Malta). Earlier this year, FXDD decided to open a branch in Malta in order to accept traders outside NFA regulations. The fact that they decided to get regulation in Malta instead of the UK might sound suspicious but in general I can say that FXDD has been a good broker for me for several years and their Malta option has all their support and seriousness. However they are still regulated in Europe and remain one of the most trusted names in the forex industry.

4. ActivTrades. This is one of the most trusted London based brokers available, giving you the opportunity to trade outside NFA regulations within the comfort of UK law. ActivTrades has the conditions to trade Asirikuy systems from 1000 USD and although it has Sunday candles, the use of the "Without Sunday" solution - explained within Asirikuy - is compatible with this broker. ActivTrades is a very trust worthy broker and definitely a choice worth considering when going out of the NFA kingdom.

5. GoMarkets. Finally I would like to recommend go markets as a reliable Australia-based broker. Having a bnoker that is regulated but away from European and UK regulations may provide you with another hideout in case NFA regulations catch on and start spreding to other legislations. GoMarket has proved - up until now - to be a serious well-regulated broker which has the necessary conditions to trade Asirikuy systems with at least 1000 USD (even 100 USD with their 10,000 USD contract size accounts).

As you see, the key here is to find brokers which are regulated outside the US but within developed countries. This allows you to have the flexibility of avoiding NFA rules without having to worry about the safety of your funds or profits. When you are investing large amounts of funds it definitely becomes important to trust your broker and the safety of your deposits. There are a bunch of other good brokers outside NFA regulations which I did not include since they don't have the necessary conditions (trade in 0.01 increments from 0.01 lots) to trade Asirikuy systems from 1000 USD but definitely once you reach values of 10 or 20K you might also consider Swiss brokers (like MIG trading) which I believe also provide very reliable safety conditions. Do you know any well-regulated non-NFA broker that allows trading from 0.01 lots in 0.01 increments you would like to share with us ? Please leave a comment and tell us why you like this broker !

If you would like to learn more about my journey in forex automated trading and how you too can learn to develop likely long term profitable systems to profit from forex trading please consider buying my ebook on automated trading or joining Asirikuy to receive all ebook purchase benefits, weekly updates, check the live accounts I am running with several expert advisors and get in the road towards long term success in the forex market using automated trading systems. I hope you enjoyed the article !