Leverage Ratio

Leverage ratios are the best indicators for businesses and banks as they tell how their assets are financed, whether through debt or equity. In addition to this, they are also a useful tool for traders and investors because leverage ratios tell them how they can fulfill financial obligations easily. But what a leverage ratio, actually is? Here’s everything you need to know about it.

Understanding Leverage Ratio:

In simple words, leverage ratio means the proportion of debt as compared with equity or capital. Banks and other financial institutions often use leverage ratios to monitor their finances. However, businesses can also make use of a leverage ratio for their own benefit. For a company, a leverage ratio represents the debt amount in comparison to different accounts like a balance sheet, income statement or cash flow statement.

forex

Meaning Of Leverage And How It Is Created?

Many companies depend upon a combination of debt and equity to finance their operations. Leverage is created keeping such scenarios in mind; however, the end objective is always financing. A few examples of it are asset-backed lending, cash flow loans, leveraged buyouts, equity investing and financial instruments.

Leverage In Forex Trading:

Leverage in forex trading is similar to a “loan” that the broker offers to the traders. Using leverage, traders can have more capital to trade with than what they initially deposited. Leverage is represented in the form of a ratio. A typical forex broker’s common leverage levels are 1:50, 1:100, 1:500 and so on. However, the leverage level can vary from broker to broker and depend upon the traders’ knowledge and expertise and online evolve markets review and rating. 

How To Calculate Forex Leverage?

Let’s understand this with the help of an example. Say a trader has an initial trading capital worth $10,000 and uses a leverage of 1:100. Thus, according to his leverage ratio, he can trade with capital which is 100 times more than his initial capital, meaning he now has $1,000,000 (10,000*100) to trade with. If he decides to purchase the forex pair USD/EUR, with a current exchange rate of 1.3255 and closes his trading position at 1.3355, his capital will almost double the actual capital ((1.3355 – 1.33255)* $1,000,000 = €10,000).

Similarly, if the same trader buys USD/EUR at 1.3075 and closes his trading position at 1.3025, he loses his capital almost by half. ((1.3025-1.3075) * $1,000,000= – €5,000. Therefore, it’s worth mentioning that leverage has the potential to multiply your capital and offer you opportunities to increase your profits; but at the same time, it can magnify your losses too. Thus, it is recommended that traders (especially beginners) use leverage wisely. 

How Much Leverage Is Right For You?

In the forex market, you can access leverage as high as 1:2000. But just so it is available does not mean you need to use it. For a conservative risk-taker or someone who is new to forex trading, low leverage is the best option. 1:5 or 1:10 might work best for such traders. If you’re in the market for an online broker, read kucoin review to help determine which brokerage account is for you.

One can choose the right leverage based on the following factors:

  • Risk appetite- a risk taker would not mind putting all his capital at stake, but how much are you willing to lose?
  • Risk management strategies- do you have a risk management strategy such as stop-loss?
  • Experience in forex trading- low forex leverage is preferable for a beginner.

Can I Trade Without Leverage?

Yes, indeed, it is your personal choice whether or not to use leverage while trading forex. Some traders only prefer to use money available in their trading account for trading, but their potential gains are much lower as compared to those traders who use leverage. Forex trading without leverage can benefit traders in the following situations:

  • Traders with large trading account balances; of more than $100,000. 
  • Traders who just want a steady return on their investments without risking too much.
  • Traders who do not aim to make a living with forex.
  • Traders who are just out there to get a gist of the forex market and want to expand their market experience by practicing numerous strategies with real money- but do not want to risk their entire deposit. 

Some Tips That You Can Follow When Trading With Leverage:

  • Try to use low leverage if you are a forex beginner.
  • Never try to get out of a losing position by investing more- “cut your losses!
  • Use stop-loss and other risk management strategies to protect your capital.
  • Read online coinmama review

 

Forex

Just like any other industry of the world, the forex market has also witnessed the impact of the ever-increasing use of the internet with every passing day. The Forex market has turned out to be the largest market worldwide, with millions of active traders and many more joining every day. However, this also pokes the number of unregulated brokers entering the market. Unregulated brokers are those who are not covered by any regulatory body. It is essential to understand the significance of regulated brokers and why an investor should always choose a broker authorized by regulatory bodies.

Understanding Forex Regulation

The first criterion for choosing a reliable forex broker is that an authorized body should regulate it. The best forex brokers are always regulated. A regulated forex broker is expected to follow specific rules and regulations and online plus500 review and rating. which are established by regulatory authorities. The main objective of a regulator is to ensure that the brokers behave ethically and honestly so that fraudulent activities in forex trading can be minimized. So, to fulfill the quality assurance criteria, these brokers are required to be licensed by the country where they operate. They have to conduct regular assessments and evaluations and adhere to the market guidelines. Additionally, they should have adequate funds in their account to execute forex contracts. Some of the most renowned regulatory bodies that you see today responsible for supervising and overseeing the behavior of the forex brokers are FCA, ASIC, FINMA, and CySec.

Forex

Top Reasons To Opt For A Regulated Broker For Trading:

  • Assuring the Funds’ Security:

The primary objective of a trader is to secure his capital first. After that, he should go for making profits through executing trades. For this, not only is focusing on relevant strategies essential but choosing a reliable broker should also be the trader’s topmost priority. It is so because the broker will be responsible for holding your capital in the first place. Therefore, even in the worst scenario, where the broker goes bankrupt, the trader will be assured his money is safe because it is illegal for a regulated broker to use the trader’s funds for anything other than investing in a transaction with his approval.

  • Maintaining Transparency:

The regulatory bodies require authorized forex brokers to be fair and transparent in their activities and provide as much visibility to investors as possible. Regulated brokers also keep the traders and investors updated regarding everything related to your trades. Find the best online broker for you. Read spreadex review research and compare broker features, rankings, and offers.

  • Protection From Frauds And Scams:

Regulated forex brokers are refrained from engaging in any sort of unlawful trading activity. Simply put, they can only engage in legitimate deals. Failure to do so can result in severe fines and penalties, including lifetime suspension of license to prevent investors from getting involved in any scams.

  • Chances of Minimizing Risks:

Authorized forex brokers are also under an obligation to prevent traders from various risks by issuing them notices about any potential deal that can turn out to be risky in future. Hence, the investors and traders will always know what they are getting themselves intofor this check real traders review rand rating for crypto rocket review. Traders, especially beginners, can take advantage of regulated broker’s platforms to access a wide range of educational resources to learn about the forex world. This will help them reduce potential risks in forex trading and better understand the forex industry.

Offerings Provided By A Regulated Forex Broker:

  • Audits:

Since the brokers are in continual surveillance of the regulatory bodies, they follow all the set guidelines and regulations. This covers everything from reports to audits that can have a significant impact on the trader.

  • Compensation:

Several regulators offer a high degree of security and protection to the traders. However, the laws in existence can vary from jurisdiction to jurisdiction and country to country; therefore, the investors must review the terms and conditions of the broker beforehand prior to opening a trading account with him.

  • Anti-Money Laundering:

Money laundering is a significant source of funds for fraudulent activities in the forex market. However, traders who open a trading account with a regulated broker are required to submit relevant documents to prevent such actions.

Conclusion:

In forex trading, risk management is of utmost significance. Therefore, traders must opt for a registered forex broker who can offer excellent security and safety and minimize potential risks when trading.

 

forex-trading

To be a successful forex trader, one has to work with a reliable forex broker. The foreign exchange market sometimes presents information which can mislead traders. Rather than providing traders with statistics, the forex market must offer them profitable opportunities. Therefore, selecting the best broker is essential, and for this, firstly, you need to decide between a dealing desk broker and a non-dealing desk broker. 

DD brokers are also called market makers, meaning they trade against their customers for earning profits. They offer liquidity to the traders; thus, when a trader places an order to buy, DD brokers place an order to sell for the exact trade to complete the client’s order. Conversely, NDD brokers never trade against the traders. Instead, they offer them liquidity through external providers such as institutional traders, banks and hedge funds. One can find two kinds of non-dealing desk brokers in the forex market. 

  • Straight Through Processing or STP forex brokers
  • Electronic Communications Network or ECN forex brokers

While STP brokers offer liquidity through numerous external providers, on the other hand, ECN forex brokers tend to have their own network of liquidity providers, including hedge funds and big institutional investors. Sometimes, they even offer liquidity via both external sources and the network of liquidity providers. Such types of brokers are known as hybrid NDD brokers.

How Can You Select A Reliable ECN Broker?

The forex market comprises all types of brokers. Some are true and reliable; others are fake and con artists. If you are stuck with a bad broker then check kraken review nonline. Additionally, you can find some brokers who act as ECN forex brokers; but actually, they aren’t. Therefore, it is vital to differentiate genuine ECN brokers from fake ones. Following are some practical tips that can help you do so:

  • Disclosure In Client Agreement:

Every genuine ECN broker states in their agreement with the trader if or not they are an actual ECN broker. For every ECN broker, it is a compulsory requirement to disclose this particular information to their customers before they start serving them. If they fail to disclose it to their clients, it is likely that the broker is faking to be an actual ECN forex broker.

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  • Check Whether The Broker Offers Fixed Or Variable Spread:

The second effective tip for finding a true ECN forex broker is to check the type of spreads provided by them. An actual ECN broker always offers variable spreads to his clients. So, if a broker claiming to be an ECN broker states he offers fixed spreads to the traders, it’s a sign that he isn’t a genuine ECN broker. If you’re in the market for an online broker, read bityard review to help determine which brokerage account is for you 

  • Monitor Slippages:

Another way to determine whether the broker is a genuine ECN broker or not is by monitoring the types of slippages. One important characteristic of a genuine ECN broker is that he allows positive slippage. So, if by any chance you see the broker offering negative slippage, then there are chances that the chosen broker just pretends to be an ECN broker while actually, he is not.

  • Restrictions On Trade Order:

Another practical tip to check whether the broker is a genuine ECN broker is to check if the broker places certain restrictions on placing trade orders. This can be done by placing a trade order of more than five standard lots. In case the broker rejects your trade order, it indicates that the forex broker in question might be a fake ECN broker.

  • Restriction On Stop Loss Dan Take Profit:

Another way to check if the broker you have selected is a true ECN one is by seeing if he puts any restriction on the limits of ‘Stop Loss’ as well as ‘Take Profit’. A forex broker may have restrictions about how far away from the current market price, a trader is able to place the stop-loss. If this is the case, he is not a true ECN broker. Furthermore, ECN brokers do not restrict their clients from scalping. Hence, if your broker restricts you from scalping, he is not a real ECN broker.

  • Non-Dealing Desk Broker:

An ECN broker is a type of non-dealing desk broker. So, if you see your broker placing trade against you or other clients, he is a market maker, not an ECN (non-dealing desk broker).

Final Words:

To summarize, an ECN forex broker offers liquidity to their clients through a pool of liquidity providers. Read in-depth reviews of  pionex review . By following the tips mentioned above, you can easily find an ECN broker who is genuine.

 

Trading

Forex trading involves different trading terminologies, and one of them is spreads. The spreads are an essential part of trading, and the traders must ideally understand the concept before investing a significant share of their capital in the market. The article highlights the meaning and relevance of spreads in the forex market. Take a close look at it:

What is a Spread?

In a simple sense, spreads are the differences between the bid and ask prices. The spreads are available for every financial asset; thus, every trader must understand the meaning of spreads.

The spreads are an essential part of CFD trading and derivatives cost. Typically, the forex brokers, market makers, and different liquidity providers quote the prices in the form of spreads. Although the spreads hold a different meaning in several markets, the significant purpose in finance is the difference between the prices of the two currency pairs. Generally, it is seen that the buy price of an asset is pretty high, while on the other hand, the selling price of a financial asset is low. Read lqdfx review for finalized trading platform.

Trading

Understanding Bid-Offer Spread

Typically, the bid-offer spread is all about the price applied to an asset. Furthermore, it also highlights the supply and demand of an asset. It is important to note that when the bid and offer prices are close to one another, it is called the tight spread. While on the other hand, when the difference between the bid and offer price is more, it is called a wide spread. Both the tight and wide spreads have a different meaning in the forex market and account for an essential aspect from the trader’s standpoint.

Furthermore, the overall value and worth of the asset are also affected by the change in the bid and offer spread. Therefore, as a result, the overall trading cost enhances and decreases significantly for a trader. If the spreads are more, the trader will pay more amount to the broker, while on the other hand, fewer spreads indicate less trading costs. Accordingly, the traders must make a wise choice by considering several aspects.

Video Credit – Rayner Teo

What Changes the Spread?

Here are some factors that directly influence the bid and ask price.

  • Volatility

The forex market is the most volatile market in the world. Extreme volatility causes prices to change rapidly. Typically, it is seen the spreads turn wide when the market prices keep on changing instantly.

  • Liquidity

Other than the volatility, the forex market is also extensively liquid. With the increased liquidity, the traders usually experience tight spreads.

 “I just wait until there is money lying in the corner, and all I have to do is go over there and pick it up. I do nothing in the meantime.” -Jim Rogers.

  • Trading Volume

The currency pairs that highlight extensive trading volume are more likely to showcase narrow bid and ask prices.

Hence, the factors mentioned above directly impact the forex market. Furthermore, with the changes in the forex market, the traders are more likely to get affected. In a simple sense, it is best to say that the spreads are the charges that the traders pay to brokers for executing a specific currency position. The spreads also differ from asset to asset. However, on some financial assets, the traders don’t charge any spread. All these things can be ideally learnt when the trader understands and grasps the concept completely.

The Bottom Line

Therefore, when indulging in forex trading, it is essential to understand the meaning of different terms related to it. The spreads are an essential part of forex trading as the traders have to pay them in the form of transaction costs. Hence, once the traders significantly understand the ideal meaning and implementation of spreads, the overall profits are enhanced considerably.

Trading Account

ECN trading accounts are highly beneficial for forex brokers. In other words, they are regarded as the most cost-effective trading account in the forex market. Thus, currency traders earn excellent benefits when trading via ECN accounts. The traders usually consider the ECN trading accounts to be extremely costly. However, the situation is the opposite as the traders do not have to spend a lot when trading with these accounts. The forex brokers are the ones that trade on behalf of the traders. They match the trading demands of forex traders and ensure excellent trading conditions. Visit fxglory review and get some ideas from one of the best ECN trading.

What Are ECN Accounts?

The brokers are a comprehensive platform that connects forex traders with liquidity providers. The ECN brokers typically provide ECN accounts. The ECN accounts ensure competitive rates, so the traders get better and more lucrative deals. Hence, the forex traders also benefit significantly by trading with the ECN brokers, which large financial institutions once solely enjoyed. Therefore, the ECN accounts enjoy massive popularity among the forex traders because they get direct access to the competitive forex currency rates and other significant benefits, which are generally unavailable when trading with other accounts.

Trading Account

Hence it is right to say that the ECN accounts provide better spreads, trading conditions, and order execution than the other trading accounts. Once the traders begin trading with the ECN trading accounts, they get better trading conditions. Additionally, the overall trading experience is enhanced significantly.

Benefits of ECN Trading Accounts

Thus, the ECN trading accounts ensure an excellent trading experience. The ECN accounts offer some incredible benefits to traders. These are as follows:

    • Low spreads: The traders that trade with ECN accounts experience low spreads. It is due to the direct link between the forex traders and the liquidity providers. Once a direct connection is established, the intermediaries are removed, and the forex traders can select the ideal spread per their trading conditions and demands.
    • Snappy order execution: Unlike the other trading accounts, the ECN accounts facilitate quick order execution. The traders need not wait long to get their trade on track. It is done instantly; thus, the trader enjoys better liquidity and can engage in more trades in a single day.

Video Credit – illyrian forex

  • No trading against the clients: The significant benefit of trading with the ECN accounts is that they don’t receive any countertrade from the brokers. In other words, the ECN brokers cannot trade against their clients. The ECN broker is just a platform which connects the liquidity providers and the retail forex traders. Therefore, the broker ensures a safe trading environment and never turns to the other side of the trading. Besides, a conflict of interest never arises between the trader and the broker.
  • Limited price manipulation: As mentioned, the ECN brokers offer ECN accounts to forex traders. The significant feature of the ECN brokers is that they don’t make the market; therefore, they don’t quote their prices. When the broker cannot quote its own price, the probability of overall price manipulation reduces significantly. Consequently, the forex traders operating via ECN trading accounts get a transparent experience as they access the authentic and near-market currency rates.
  • Real-time details: The ECN account holders usually access real-time details and information. Therefore, the traders get current market updates. Besides, the data is sourced from authentic platforms. Hence, the traders get instant updates. Their trading decision is also largely influenced by the details. In other words, the trader ensures informed decision-making.

 “I have two basic rules about winning in trading as well as in life: 1. If you don’t bet, you can’t win. 2. If you lose all your chips, you can’t bet.” -Larry Hite.

  • Say no to requotes: The ECN account holders safeguard themselves from the requotes. The requotes usually deplete the overall trading experience. Requotes typically arise when the trading order gets rejected due to the change in the price of the monetary assets. When the order gets rejected, the broker offers a request. Hence, such an issue is never faced by the ECN account holders.

The Bottom Line

Therefore, one can conclude that the ECN trading account is highly efficient. It offers multiple benefits, and forex traders can trade more effectively and efficiently. Besides, a direct link is also established between the forex traders and the liquidity providers. The link provides more convenience to the traders, who can trade as per their trading needs. The transparency is maintained significantly, and the traders receive ideal market details without manipulation. Hence, it is an ideal account for the traders actively trading in the forex market.

Forex Trading

Forex trading is a widely prevalent market across the globe. Typically, there are several benefits of trading in the forex market. The traders generally get the benefit of extreme leverage and liquidity. Due to these two benefits, the market attracts different forex traders from across the globe.

Successful Forex Trading

As told before, many forex traders enter the market to earn extensive profits and rewards. However, not every forex trader reaches the heights of success, and, as a result, they are forced to leave the market. Generally, it is suggested that forex traders must learn to implement different trading tools for a successful trading career. Read firewoodfx review for finalized trading platform.

For novice traders, it is highly essential to understand the relevance of forex trading tools. Therefore, let us know the true meaning and importance of different trading tools. Take a close look at them.

Forex Trading

What Are Forex Trading Tools?

In simple terms, forex trading tools are the elements that assist forex traders in better understanding the forex market. For instance, the traders can use tools like economic calendars, trade journals, volatility calculators, currency converters, and more. Besides, these tools are offered by different forex brokers and platforms. When combined and implemented, all these trading tools help forex traders earn extensive returns and profits in the forex market.

Currently, the market is all about those forex traders with extensive knowledge and skills to perform different forex trades. Hence, it is suggested that forex traders must lay their hands on various online resources to learn and understand the market in-depth.

Looking at the intensity and importance of knowledge and skills in forex trading, many forex trading platforms and brokers offer online resources. With these resources, forex traders can ideally make the right move by selecting the perfect trading technique that best matches their needs and demands.

 “The biggest risk is not taking a risk. In a world that’s changing really quickly, the only strategy that is guaranteed to fail is not taking risks.” –Mark Zuckerberg.

Three Online Tools To Learn About Forex Trading:

Talking about the learning tools, there are numerous of them available in the market. However, not all learning tools are ideal for traders. Hence, it is suggested that the forex trader must choose wisely the ideal online learning tools. Below are the three online tools that are highly popular among forex traders for learning and grasping new concepts of forex trading.

1. Webcasts

Webcasts or webinars are the popular choice of many forex traders for learning different concepts circulating the forex market. With the webinars, the traders get the time to observe and experiment with a trading technique or strategy to make an informed decision. Typically, several webcasts allow forex traders to share screens; thus, the comprehensive experience is enhanced. The webinars are ideal for visual learners; therefore, they can view and learn different concepts within no or less time.

2. Electronic Books

Individuals who are keen readers must go ahead with electronic books or Ebooks. It is best for individuals who are always on the go. The best part is these books can be downloaded and taken anywhere. Hence, intriguing readers can learn different aspects of forex trading at any hour of the day with Ebooks.

Video Credit – Etienne Crete – Desire To TRADE

3. Video Training

Individuals who think they can learn better via classroom experience must go ahead with video training. It is perfect for individuals who want to understand the market with the utmost classroom experience. Furthermore, the learners can pause and play the video tutorials comfortably.

The Bottom Line

Therefore, in a nutshell, it is fitting to mention that forex traders must choose the ideal forex trading tools that best suit their trading aspirations. The trading learning tools are perfect for novice traders who have just entered the market. With the perfect trading tool, the traders can learn about the concepts of several forex trading tools. It accounts for a better future and more rewards in the forex market.

Forex

Forex brokers are a vital element of the foreign exchange market. Therefore, they are regarded as the most important aspect of forex trading. In a general sense, forex brokers form an essential link of intermediate between forex traders and the market. Besides, no forex trader can enter the market without a forex broker. 

It is suggested that when forex traders are looking for an ideal forex broker that offers them the best trading environment, ECN brokers are a perfect choice. In a simple sense, these brokers are the platforms that directly connect the small market traders with the large liquidity providers. Furthermore, these non-dealing desks are relatively more heavily demanded than the other forex brokers.

Looking at the popularity, many forex brokers claim that they also operate under non-dealing desks and are ECN forex brokers. However, sometimes, the case is the opposite. Hence, it is significant to lay hands on the perfect ECN forex brokers that best match your trading needs. Many currency pairs and lots of technical research tools or one of the best way to finde best crypto and forex broker check Huobi Review

Selecting the best ECN forex broker

As the market is flooded with several forex brokers, including ECN brokers, it is pretty challenging for the trader to lay their hands on the best one. Hence, there are some criteria when choosing the best ECN forex broker. Here are some points that assist you in finding the ideal ECN forex broker. 

Forex

  • Trading needs

Before selecting an ECN forex broker, it is essential to consider your own trading needs. For this purpose, the traders can compare different brokers and also you can check tradestation review for better ananlysis. By doing so, they will find the perfect fit that suits their trading demands. The comparison allows the traders to find the ideal broker. Therefore, an informed and rational decision can be made. 

  • Research the track record

Research is the golden key via which the traders can lay their hands on the most reliable ECN  forex broker. It is suggested that the traders must check the broker’s license. The license highlights that the broker is well-regulated and licensed by a regulatory authority. Furthermore, the regulated ECN forex brokers offer excellent trading conditions per the ongoing standards.  

  • Forex spreads

Forex spreads are essential to consider as they are directly related to the overall trading costs. The ECN forex brokers are well-known for providing variable forex spreads to traders. Generally, the brokers account for fixed and variable spreads. While on the other hand, if any ECN forex broker offers fixed spreads, it is critical to make a wise decision.  

  • Consider the commissions

As the ECN forex brokers charge commission for their services, it is essential to look at the charge rate before making a final decision. It is suggested that the traders consider low commissions the best because it will reduce the trading costs. The profits are also maximized, and the traders can gradually grow in the trading industry.  

  • Trade execution rate

The ECN forex brokers are more well-known for executing the trade at a quick speed than the other brokers. Therefore, looking at the trade execution speed during the busy market time is essential. 

  • Non-dealing desk

Many forex brokers claim to operate as non-dealing desks; however, it is not always true. Hence, it is suggested that the traders look through the working model of brokers to ensure that they are non-dealing desks. 

The Bottom Line

Therefore, one can say that the forex market is incomplete without the services of a forex broker. When choosing an ideal ECN forex broker and crypto check the online voyager crypto review. traders need to consider certain aspects. With the right broker, the traders can eventually grow and significantly diversify their investment portfolios. Thus, it is recommended that the traders must make a wise decision and select the broker that ideally fits the trading needs.