Forex

Resources

So you want to be a professional forex trader? Great! ..but before reading anything else, do understand that trading for a living can be one of the hardest professions you've ever encountered. Make no mistake, the odds are against you, and the market is designed to chew you up and spit you out.

"Trading is the hardest way to make an easy living." - Anonymous 

However, trading can also be one of the most rewarding careers out there (both financially and intellectually.)

We are stressing this because of the huge influx in 'social media' based influencers who are pitching FX trading as "easy" and requiring only a little starting capital. Often, new traders are too greedy to see such scams for what they really are; the influencer is only trying to make money off you through referrals, selling courses, mentorship, etc.. No matter what profit track record they show you (doctored images are common, but even trading software/servers can be manipulated to display fake results,) 99.99% of the time they are out to rip you off. Here's a simple logic test: If a social media guru / mentor is showing off how they can turn $100 into $50k in a few weeks, why are they working so hard to get you to fork over a few bucks for mentorship? Or a course? Or to sign up to a given broker or service?

There are no shortcuts in this industry.

If you're serious, and want to learn, here are the resources you need to get started:

Education and Courses

We do not recommend paid courses in general. They typically teach what can be found easily online when it comes to market basics, and even when they promise a trading 'system' or method it's typically not one that works consistently. Don't waste your money. See the free courses or guilds below instead:

BabyPips School of Pipsology <=START HERE. THIS IS YOUR ENTRY INTO THE WORLD OF FOREX. COMPLETE THE ENTIRE SCHOOL. Despite Babypips being a 3rd party commercial resource, we will give credit where credit is due; their 'School of Pipsology' is a great example of the free and robust forex education you can find online without having to spend a dime.

Lehman Brothers Foreign Exchange Training Manual - Don't let the company name fool you, this is a solid manual and was used to train up institutional traders for many years.

Market Life Trading by Adam Grimes - Specifically the free 22 hour long course on trading in general. Adam comes from a prop trading background and structured his free material around the trader development process common in the prop trading world. The focus is on teaching people how to come up with strategies (observations in the market, testing out ideas, refining, etc...) instead of just trying to teach a system.

Books

Recommended Forex Books for New and Developing Traders - A list of recommended books covering not only the basics, but advanced subjects and trading psychology.

Official Live Trading Chatroom for /r/forex, /r/algotrading, and FXGears.com

Make sure to join the community in chat during market hours! Links also found in our sidebar and top nav links: [Forex Trading Discord Chat]

Economic Calendar

You need an economic calendar. Why? As you will read in nearly every 'intro to forex' resource: news is a catalyst for change and volatility the market, so you need to know when scheduled announcements are coming.

[tradingview.com/markets/currencies/economic-calendar/] [www.forexfactory.com/calendar.php]

Hall of Fame Threads

https://www.reddit.com/r/Forex/wiki/index/hall-of-fame-threads

News Websites

[www.forexlive.com] [www.fxstreet.com] [www.reuters.com/finance/currencies] [www.bloomberg.com/markets/currencies]

Forums

[1] [www.forexfactory.com/forum.php] [2]

Charting

Desktop/mobile

• [tradingview.com/] - Great for HTML5 browser based charting and alerts * Use a demo account from a high quality broker, [popular retail forex platforms for demo can be found here on FXGears' demo comparison page.]

Prop / Scouting Firms

Some traders would rather trade for a frim than on their own. [FXGears has a great writeup on forex Prop / Scouting firms which can be found here.]

Virtual Private Servers (VPS)

If you're going to run Expert Advisers (EAs) or your own custom code to trade, you'll want to do so on a reliable computing platform. A VPS for trading will typically be managed, have good latency between the VPS provider's network and your broker's trade servers, and will always be running and connected. [Considerations and overview of recommended VPS providers]

Tick Data for Backtesting and Algo Trading

For use with a backtesting suite (ForexTester 3, TickDataSuite, etc...) or your own custom code, here you'll find instructions on how to extract tick level forex data from multiple sources: [HOWTO get free Forex Tick Data for backtesting]

Paid Resources

Education

The vast majority of sites charging you for FX trading courses and education are scams or ripoffs. It is highly advised that you avoid such paid courses / sites / programs.

News Wires

These can be expensive and some traders swear by them but they are not required to trade profitably.

Bloomberg Terminal ([3]): Price is estimated at USD $20,000/yr Reuters Eikon ([4]): Price is estimated to be $3,600-$22,000/yr depending on set up Dow Jones NewsWire ([5]): Price is estimated at $1,440 per year.

Squawk Services

Typically cheaper than newswires. Live running commentary on news events. Slight delay compared to wires.

ransquawk.com livesquawk.com

*Other "Feeds" and news sources *

Recommended [Twitter] setup: [How to setup Twitter to stream the latest FX and Economic news in 2019 and 2020]

Free, but fair warning: Twitter is social media, meaning that not everything posted by twitter members is accurate, timely, or of use. Not only will there be bias in what gets popular on Twitter, but Twitter can often become an echo-chamber if you only follow like-minded traders / sources. Stick to the guide's list of sources for best results as they are news / squawk services and their business is reporting accurately.

Paid Chatrooms

We do not recommend any 3rd part paid chatroom; they are often not worth their costs and are usually part of an up-sell tactic to push more products. (That said, we do recommend the official free /r/forex community chatroom, hosted in partnership with FXGears.com, [which can be found here.])

Brokers:

YOU ARE RESPONSIBLE FOR DUE DILIGENCE.

There are many factors to consider when choosing a broker but some of the most important factors are regulation, execution quality, and ease of deposit/withdrawals. Being "regulated" on it's own is not a guarantee of protection against bad brokers; often bad brokers will be regulated out of a jurisdiction that has lax rules and weak enforcement, so their marketing team can boast about being regulated while not actually providing much protection to their clients or having much oversight by governing bodies. Consider WHERE, HOW, and by WHO a broker is regulated.

UNITED STATES BASED TRADERS

   |Brokers for US residents can be found on this wiki page.

BROKERS FOR CANADIANS

   |Writeup on Canadian broker options can be found on this wiki page.

INTERNATIONAL BASED TRADERS

EUROPEAN (EU) BASED TRADERS: ON 27 MAR 2018 the European Securities and Markets Authority (ESMA) placed new restrictions on spot FX trading. They are as follows:

• Maximum leverage of 30:1 on FX Major Pairs
• Maximum leverage of 20:1 pn FX Minor Pairs as well as Gold
• Maximum leverage of 10:1 on commodities
• Maximum leverage of 5:1 on indices
• Maximum leverage of 2:1 on cryptos
• Along with various other regulations. [Read Here]

BROKERS:

[Pepperstone]

https://pepperstone.com

Pepperstone was founded in 2010 and quickly grew to become one of the largest forex brokers in the world thanks to execelent execution quality and great customer service. Pepperstone is well regualated and has a history of doing right by their clients.

• Regulation: Regulated in Australia by the ASIC, in the UK by the FCA, in the Bahamas by the SCB, and in Dubai by the DFSA
• Pricing: Competitive spreads of 0-0.2 on Razor ECN account, and average spreads of 1.2 pips on Standard account
• *Leverage: * 500:1 in all regions except for the UK / Europe where FCA regulations set leverage at 30:1
• Account Minimums: $200 USD for all account types
• Products: Forex, CFDs on Equity Indicies, US Dollar Index, Commodities, Crypto, and US Shares
• Platforms: [MetaTrader 4, MetaTrader 5, cTrader] (cTrader also comes with cAlgo, a C# based algotrading platform for automated trading)
• Notes:
• Islamic account types (swap/interest free) available

• NEW - UK residents have access to tax free [spread betting accounts]
• NEW - Currently running an [introductory offer where your first 20 trades are commission free.] Not available to UK or European residents

Dukascopy Bank

• English but has multi language interface
• ECN based
• JForex platform and API, MT4 optional through their bridge.
• Spreads considered "good" by the community
• Based in Switzerland
• Minimum USD$1,000 with Dukascopy Bank - but ECN accounts only have a minimum of $100 with Dukascopy Europe
• Allows trade sizes as small as Microlots (1K units)
• 200:1 max leverage with Dukascopy Bank, and 30:1 max for Dukascopy Europe

[VantageFX - https://www.vantagefx.com]

VantageFX was founded in 2009 in Australia and serves clients globally. They have proven to be a reliable broker and they are well regulated in each jurisdiction where they operate.

• Regulation: Regulated in the UK by the FCA, in Australia by the ASIC, and in the Cayman Islands by CIMA. (If you're not a UK or Australian resident, you will be serviced by the CIMA regulated branch)
• Pricing: Competitive spreads of 0-0.3 on RAW ECN account, and average spreads of 1.4 pips on Standard account
• Leverage: * 500:1 in all regions serviced
• Account Minimums: $500 minimum deposit for RAW ECN account, $200 minimum deposit for Standard account
• Products: CFDs on Forex, Indices, Commodities, and Shares (US, UK, EU, HK, and AU)
• Platforms: MetaTrader 4, MetaTrader 5, VFX Mobile (proprietary)
• Notes:

• Fees for most deposit transactions are waved (including credit card)
• Has a [deposit bonus promotion (50% bonus on deposits up to $500,)] but keep in mind that deposit bonuses are basically just extra leverage and not cash you can withdrawal

Interactive Brokers

• English with multilingual support
• "ECN like" execution.
• Spreads considered fair and competitive, but minimum commission of $2.50 a trade makes any small sized trading non-viable. Consider if your minimum deal size will be well past 100k units of currency. (Also requires 25k minimum size for exchange based execution.)
• US based, but due to the SEC regulations they fall under they are no longer providing margin trading to US clients. International clients are still serviced.
• Minimum deposit for margin is $2,000USD
• Max Leverage appears to be 50:1
• TWS platform is not very useful for chart based traders. You will need a 3rd party charting package / software and most decent options that hook into IB are quite costly.

[Darwinex]

• English, Español, Français, 中文
• DMA/STP model. Liquidity from LMAX Exchange and other sources.
• Platforms / APIs include: MT4, MT5, FIX, and a RestAPI(beta)
• Spreads /r/Forex review: "Fair spreads (averaging between 0.3 and 3.0) and very minimal slippage! I only personally experienced it during news which is normal."
• OUTSTANDING customer service!
• Minimum deposit and account balance of $500 USD/EUR/GBP initial, then $100 for additional deposits.
• Located in the UK (and rebranded to Darwinex in 2014) and FCA regulated (previously in Spain under Tradeslide Trading Tech Limited)
• FCA / ESMA based leverage limits, but designations between Pro and Retail exists for additional margin rates.
• r/Forex review: "I'm honestly not aware of any restrictions. Your strategy can be manual, EA, whatever you want. But please ask them and they will promptly answer any questions you may have! ZERO conflict of interest! Also, if you are a successful trader and you land in the top 40 you will not just get funded by investors (potentially) but Darwinex themselves will give you cash to trade and you keep 20% of profits every quarter."
• [Platform available to invest in other traders / strategies, or get paid to trade for others.]

Saxobank

• Multilingual
• Headquartered in Copenhagen, Denmark
• Access to multiple asset classes (stock, futures, forex,)
• Spreads and fees are high unless you deposit a significant sum in your account (tiered pricing.)
• Dealing desk based for forex.

FXCM Inc

• Market Making and Straight Through Processing based accounts
• "Trading Station", MetaTrader 4, NinjaTrader, others
• Min Deposit $2000
• Notes: CAUTION: FXCM nearly went bankrupt in Jan-2015.
• FXCM NO LONGER ACCEPTS US CLIENTS

MyFXChoice / FXChoice

Founded in August of 2010, FXChoice has had a good operating record and services clients from around the word. They also provide crypto denominated accounts and crypto funding options.

• Regulation: Regulated in Belize by the IFSC
• Leverage: * 200:1, high leverage option for all clients including US residents
• Account Minimums: $100 for both Standard and Pro accounts
• Products: CFDs on Forex, Indices, Commodities, Crypto, and Shares (US)
• Platforms: MetaTrader 4, MetaTrader5
• Notes:

• Deposit Bonus: When using [this registration link], you can get a 15% bonus on your first deposit
• Account Denominations: Accounts can be opened in USD, EUR, GBP, AUD, CAD, Gold, Bitcoin, Bitcoin Cash, Litecoin, Ethereum and XRP

The above broker list is just a start. There are literally hundreds of brokers around the world and we can't list all of them. The team at /r/forex HIGHLY recommends sticking with well regulated (FCA, ASIC, IIROC, or ESMA based) brokers, and to stay clear of off-shore brokers.

FAQ:

RISK MANAGEMENT PRIMER

It is simple: you need to protect your money, and you are not going to get rich overnight. The temptation of Forex is that the insane leverage offered, as well as gambler's math, leads almost all new traders to think that they can turn $100 into $1,000,000 in one year. Theoretically this is possible... but then again, theoretically it's possible you'll hit the lottery. The odds are about the same (actually, your odds of hitting the Mega jackpot or the Powerball are probably better). In reality, growing your taco money to seven figures in one year DOES. NOT. HAPPEN. Inherently, you need to have a system of risk management that involves stop loss usage and a formula to calculate position size. The rookie error is to think the following:

(ACCOUNT SIZE) x (MAX LEVERAGE) = POSITION SIZE.

DO NOT DO THIS. You will lose everything, and likely not be able to recover... this is gambling. Instead, stop size and risk allowance determine position size.

The general rule is that you should risk 1-4% of your account on any given trade. Now, you can leverage the entire amount, but your stop should reflect 1% of that. How to calculate this? Use this formula:

(ACCOUNT BALANCE/100) / (STOP LOSS IN #OF PIPS) = (POSITION VALUE)

"Position value" is going to be a dollar number... which you then use to figure out how many lots/mini lots/micro lots your position will be. In order to do this, you need to use a "pip calculator" which most brokers will provide on their site. In the first bracket, you divide by 100 for 1%, 50 for 2%, 33 for ~3%, and 25 for 4%.

EXAMPLE: you have a $1,000 dollar account. You are placing a trade on EUR/USD. Your analysis determines that your stop is 20 pips. X is position value.

(1,000/100) / 20 = X 10 / 20 = X 0.5=X

What is 0.5? The value per pip of your position. Looking at our calculator, this shows us a position of 5,000 units. This means that you are using 5:1 leverage on your $1,000 account. This won't sound appetizing at first ("Hey man, I can leverage 50X and get 10x the reward!")..... but then again, losing your whole nest egg in one shot should sound stomach turning as well.

I AM CONFUSED ABOUT THIS - HOW CAN I GET CURRENCY XXX IF I'M TRADING YYY/ZZZ??

This confuses many new traders. When you create your FX account, you will be nominating what the base currency is, this is usually the currency where you live. Live in the United States? USD. Live in Canada? CAD. Live in Tokyo? JPY. Live in The EU? EUR and so on.... That is the currency that all trades will be paid out in.

The pairs that you trade have no bearing on this outcome. It may help to think of it in this way: "I am going long / going short on the asset known as USD/JPY and will be paid out in my base currency." Don't look at the pair you are trading as multiple exchanges, look at it as a single vehicle, this may help you.

Related questions we get often:

I NEED TO EXCHANGE MONEY, HOW DO I DO IT?

This isn’t what this sub is for. Your best bet is using your bank or an online exchange service. Be prepared to pay a hefty fee.

I HAVE MONEY IN ONE CURRENCY, AND NEED TO CHANGE TO A DIFFERENT ONE FOR REASONS, IS NOW A GOOD TIME?

Don’t ask us this. We speculate intraday in FX and shouldn’t be relied on to tell you what’s best for you. Exchange the money when you need it. And, honestly, if we knew whether "this was a good time to do this or not".... we'd be millionaires, right?

CAN I GET PAID OUT IN A DIFFERENT CURRENCY THAN MY BASE ACCOUNT IS NOMINATED IN? THIS IS FOREX AFTER ALL

Just because we are dealing in foreign exchange, doesn't mean that exchanges are made for you. You will need to talk to your broker, but in general if you want a payout in a different currency than your base nominated currency, you'll need a different account.

AM I ACTUALLY EXCHANGING CURRENCIES?

Yes and no. Do not over think this: your account and all transactions will always result in payments/losses in your base currency. That base currency is your home country's currency. Are you American? USD. Canadian? CAD Living in Japan? JPY. Your broker handles spot FX in currency pairs. Although they make an exchange at the settlement date they treat your position in your account as a virtual currency pair. Think of it like a contract where you can only buy or sell it as a pair. In this sense you are always long one currency while short another. You are merely speculating that one currency will appreciate or depreciate vs another.

The remainder of the FAQ:

WHAT IS MONEY MANAGEMENT?

Money management is a form of risk management and is arguably the most important aspect of your trading when it comes to long term survival. You should always enter trades with a stop loss - the distance of the stop allows you to calculate how large of a percent of your account balance will be lost if your trade stops out. You can run a monte carlo simulation to figure out the risk of having a number of trades go against you in a row to drain your account. The general rule is that you should only risk losing 1-4% of your account per trade entered. More on this here: [www.investopedia.com/articles/forex/06/fxmoneymgmt.asp www.swing-trade-stocks.com/money-management.html]

SHOULD I START BY TRADING DEMO, OR GO LIVE?

This is highly debatable. You should definitely demo trade until you have mastered how to use the trading platform on desktop and mobile. After that it’s up to you. Many think that the psychology of trading live vs demo trading is massively different. So it may pay to learn to trade live. Just be warned that most FX traders lose almost their entire first account, so start with a low affordable balance. For those who have a nest egg but are not willing to expose it to loss while they learn, the best recommendation is to scale down to a decimal of that nest egg in a broker like Oanda. Example: Great Aunt left you $/€/£10,000? When you go live, open an account at $/€/£100.00 and trade as if it were the whole thing; it makes the math easy to scale up. After you demonstrate to yourself a modicum of success (say, several months to a year of gains), evaluate whether you are ready to scale up. Then go to $/€/£1,000.00.

WHAT ABOUT AUTOMATED TRADING/EAs?

Retail FX traders have been known to program “Expert Advisors” (EAs) to automate trading. It’s generally advisable to stay away from that until you’re very experienced. Never buy an EA from a developer because the vast majority of them are scams.

WHAT IS THE BEST INDICATOR?

That’s up to you to test and find out. Many in this forum dislike oscillating indicators since they fail to capture the essence of what moves price. With experience you will discover what works best for you. In my experience indicators that are most popular with professional traders are those that provide trading “levels” such as pivot points, fibonacci, moving averages, trendlines, etc.

WHAT TIMEFRAME SHOULD I TRADE?

Price action can vary in different timeframes. In longer term timeframes the price action and fundamentals are much more clear. Unfortunately it would take a very long time to figure out whether or not what you’re doing is successful on longer timeframes. In shorter timeframes you can often tell very quickly if what you’re doing is profitable. Unfortunately there’s a lot more “noise” on these levels which can prove deceptive for those trying to learn. Therefore the best bet is to use a multi-timeframe analysis, working from top-down to come up with trades.

SHOULD I TRADE USING FUNDAMENTAL ANALYSIS(FA) OR TECHNICAL ANALYSIS (TA)?

This is a long standing argument in these forums and elsewhere. I’ll settle it here - you should have an understanding of both. Yes there are traders who blindly ignore one of the other but a truly well rounded trader should understand and implement both into the analysis. The market is driven in the longer term through FA. But TA is necessary to give traders a place to enter and exit trades from a psychological risk/reward standpoint.

I FOUND THE MARTINGALE SYSTEM, AND I WANT TO USE IT WHILE TRADING! I CAN'T LOSE!!

Martingale is a great way .... to lose your ass. Seriously, don't do this. Martingale works until it doesn't. And when it doesn't, you will lose everything. We have said repeatedly that martingale has probably been around since the first dice, card, or chicken bone was thrown for money. Its a gamblers illogical thought process that relies on the false belief that chains of losses indicate that a win is coming. It actually has the name [the gambler's fallacy]. It is entirely possible to have a string of losses that stretches into the hundreds. Your account cannot, unless you are taking such small positions to mitigate risk that I would have to ask: what the hell was the point anyway? Move away from martingale, learn to trade and most importantly learn to take losses and move forward.

I’VE HEARD TRADING BINARY OPTIONS IS AN EASY WAY TO MAKE MONEY?

The general advice is to stay away from binaries. The structure of binary options is so that when you lose the broker wins. This incentive has created a very scammy industry where there are few legitimate binary options brokers. In addition in order to be profitable in binaries you have to win 55-65% of the time. That’s a much higher premium over spot FX.

DURING A NEWS RELEASE THE MARKET DID THE OPPOSITE OF WHAT I THOUGHT IT WOULD.

This often happens because the market does not blindly react to numbers but rather to the numbers vs. what was expected. For example the market for a currency might react negatively to a rate hike if a higher rate hike was priced in already. News calendars and news sites listed above are your best resources for finding out what is priced in if you don't have access to the various interest rate futures or swaps markets.

Overview of Various Trading Strategies

MARKET PROFILE:

• [CME Group's official Market Profile Study Guide]
• [Value Area Explained]