3 Types of Forex Market Analysis
Suit up and say goodbye to your friends because at this moment, is where your journey as a Forex Trader begins.
Kindergarten
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What is the Order Execution Quality of the Forex Broker?
However, having fair and accurate pricing on your trading platform is useless if your trades rarely execute at the price displayed.
Kindergarten
What Determines the Price of a Forex Broker?
When you trade forex, you're betting on the future direction of currencies, taking a long ("buy") or short ("sell") position based on your speculation of rising or falling of a currency pair. You try to profit from exchange rate fluctuations of currency by betting on whether the value of one currency, example the Japanese yen, will rise or fall in respect to another, example the Australian dollar.
Kindergarten
The Hedging Policy of Your Forex Broker is Something You Should Be Aware Of
The method by which a forex broker decreases market risk exposure by entering into a parallel transaction with another business (a "liquidity provider") is referred to as "hedging."
Kindergarten
How Forex Brokers Manage Their Risk (C-Book)
You may come across the word "C-Book" in addition to forex brokers who "A-Book" or "B-Book." The term "C-Book" is used to represent "risk management procedures" used by forex brokers and CFD providers that are allegedly different from A-Book and B-Book.
Kindergarten
Forex Brokers' Use of the "Hybrid Model"
We discussed why forex brokers prefer B-Book execution over A-Book execution in the last lesson, despite the fact that it is riskier because the broker can go bankrupt if risk management is bad.
Kindergarten
Why B-Book Forex Broker?
When you open a trade with the B-Book forex broker, that broker executes the other side of your trade and does not hedge. The broker keeps the trade "in-house".
Kindergarten
Internalization: How Forex Brokers Aggregate Hedging Redundancy Orders and Risks
With A-Book (or STP) execution, the broker manages the risk of each individual trade. But what if one trader opens a long position in GBP/USD and another trader opens a short position in GBP/USD at or at the same time?
Kindergarten
Performing STP: How Forex Brokers Manage Their Risk
A-Book brokers are also sometimes marketed as “STP brokers”. While both are similar in that they transfer market risk, they are actually two different ways of executing an order.
Kindergarten
Challenges of A-Book Execution
The A-Book implementation model comes with its own unique challenges. An A-Book forex broker can only earn profits from markups IF the rates at which it trades with the LP are better than the prices at which the broker trades with its customers.
Kindergarten
How A-Book Brokers Make Money
Unlike a B-Book broker, an A-Book broker does NOT make money when its customers’ trades lose. But an A-Book broker is not a charity. It’s a business and needs to generate revenue
Kindergarten
A-Book: How Do Forex Brokers Handle Risk?
While your forex broker will always be your counterparty and take the other side of your trade, it does not imply it has to bear the risk of being on the losing end of the trade and losing money. If the broker does not want to "B-Book" or bear the market risk, a third party can be found and the risk can be transferred to them.
Kindergarten
B-Book: How Do Forex Brokers Handle Risk?
When a retail forex broker takes the opposite of a customer's deal it has the option of either ACCEPTING or TRANSFERRING the market risk to another market participant. When a broker agrees to accept market risk when a trade is been carried out is referred to as “B-Book execution”. The act of taking the opposite of your transaction is called B-Booked execution. Your line of work is often known as "B-Booked."
Kindergarten
How Forex Brokers Manage Their Risk and Make Money
A lot of retail traders have no idea of how an order is processed or how forex brokers or CFD providers really operate. It is aimed at forex traders wishing to gain a practical understanding of how forex brokers manage their risk and make money.
Kindergarten
Where Are Retail Forex Traders Actually Trading?
If that’s the case, then WHERE are you actually trading? When you click “Buy” or “Sell” on your forex broker’s trading platform, where do your orders go?
Kindergarten
Trading Forex with CFDs
CFD stands for “Contract for Difference”. A CFD is a tradable financial tool that reflects movements of the asset underlying it.
Kindergarten
What Are You Actually Trading In Forex?
New forex traders might be puzzled how it’s possible to trade currencies they don’t physically own. They’re also often confused about how it’s possible to sell something before buying it.
Kindergarten
Is the Forex Broker Licensed and Regulated?
Is the forex broker licensed and regulated? Is the company licensed, regulated, and authorized to operate as a forex broker where you live?
Kindergarten
Is the Forex Broker an legitimate Organization?
With whom are you trading? Is the forex broker a reputable business? Can you put your faith in it?
Kindergarten
What Are the Functions of Forex Brokers?
What is the order execution quality of your FX broker?
Kindergarten