Foreign exchange (also called forex or FX) is a multi-billion global industry that deals with currency conversions involving two countries, such as USD-SGD and GBP-EUR. Forex can be quite a challenging industry that not only touches on and is influenced by the economic standings of countries but also by their social and political situations. Suffice it to say that it’s not an industry for the faint of heart or those with a weak resolve.
Those who do have the guts and skills enter the industry in their capacity as brokers. And brokers there are many out there. But if you want to be a forex broker, you should first identify what kind of broker you want to become.
First, there are true ECN brokers who deal with electronic communications networks (ECN), hence the name. These brokers assist their clients in accessing currency markets directly, which is something that clients are happy about.
Some are called market makers — whose main thrust is to give their clients two-sided markets out of a forex trader that operates as a part of the market maker’s in-house dealing desk.
Finally, those who are classified as NDD or No Dealing Desk forex brokers, who offer the best prospects in terms of composite quotes and are known for their liquidity as forex industry players.
Now, if you’re truly determined to become a forex broker, you should first know about these five trade secrets that the most successful brokers follow to the smallest details:
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Maintain a trading journal.
While many would argue that this is just a terrible waste of time, the most financially-successful forex brokers beg to disagree. By keeping a trading journal, you can achieve a level of awareness and control over your trading activities and strategies. This simple hack would allow you to stay on top of critical things such as profits and losses, margin usage, and buying power, among others.
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Research on and understand macroeconomics.
The best forex brokers are those who spend long hours just reading and analysing everything they can get their hands on macroeconomics. They are the brokers who can easily crunch down complex concepts such as interest rate revisions, inflation, and gross domestic product (GDP) into something that the average person or budding broker could easily understand. These top-tier brokers can make effortless correlations between these concepts and how they interplay and influence day-to-day forex trading.
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Be consistent with your trading methods but open-minded and adaptive enough.
The finest forex traders are known to execute their trading methods consistently. They hardly deviate from these proven methods but when they do decide to be adaptive, they still exercise due caution and base their actions on sound trading principles and techniques. In short, they can be formulaic with their methodologies but flexible when the situation and common sense call for it.
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Craft a trading plan and test it out several times.
They say that those who fail to plan, plan to fail. We can expand this concept further and say that planning alone without real-world testing is just putting words on paper and not letting them see fruition. As such, you should craft a sensible trading plan and then proceed to test it out as many times as possible, each time making revisions you seem fit. Only by stress-testing your plan would you succeed in coming with a final version that is responsive to various trading situations and scenarios. A battle-tested plan is the kind of plan that the most successful forex brokers use and should be the same plan design that you have to adopt for your forex venture.
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Monitor the weekly Risk Event Calendar and Central Bank meetings.
If there is one highly critical and helpful tool that would help you make proactive and wise decisions on whether to buy or sell, that would be the Risk Event Calendar. This handy forex tool allows brokers to prepare for incoming events that have the potential to shake up the forex industry for better or worse.By monitoring the weekly calendar, you can make assessments and predictions to help you act just in time. Meanwhile, the Central Bank minutes of the meeting are also helpful in predicting events such as inflation control measures and revisions on the interest rates. So, be sure to get your hands on these resources to do your job well and achieve considerable success.
With these fives trade secrets of the best forex brokers, you should have a huge advantage and increased chances of carving your own success story in the forex business.