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Discount Commodity Brokers – What Exactly Are They?

Discount commodity brokers are often the same people as regular commodity brokers. It’s just that they offer a discounted service, often alongside their regular service. They’ve come into their own since the internet brought the trading of commodities, within the reach of potentially millions of people. Before then commodity trading tended to be only available to the more wealthy sections of society, or those with the time and disposition to engage with stock brokers.

Now, you can do everything online, and you don’t have to keep up to date through magazines and newspapers, themselves often out of date in financial trading matters before they reach you. And you have up to the minute (or almost) information online 24 hours a day (especially if you subscribe to a financial trading information service such as Sharescope), so you don’t need all the services that commodity brokers have traditionally provided.

In fact most online traders with a brokerage account decide they can do without this completely. There has thus come about a discounted service, or stripped down version of what had been the traditional brokerage account.

The discounted service is basically the same as the regular service, but without the individual attention and advice you would normally get. So if you opt for a discount service you will be able to trade using the broker’s site and facilities, such as charts, trading platform, and so on, but won’t be able to call on the broker for advice on a proposed trade, nor will the broker be pro-active in suggesting trades, as often happens with a standard account.

The advantage to traders of a discount service is, of course, that it’s cheaper. The majority of newcomers to financial trading via the internet wouldn’t have the money or resources to trade in any other way, and so they are happy not to have the advice, which they believe they can obtain free or cheaper elsewhere online, and to pay a lower set of fees.

And it’s because of the internet and advances in computer technology that brokers are able to offer these discounted services at low prices. The automation that web-based applications enable free up staff and reduce the running costs of a brokerage. So, as they say, it’s “win-win”.

Deep discount commodity brokers have taken this business model even further by offering an even cheaper type of account in which all they do is accept and execute orders. There’s no advice or customer service to speak of, and only a basic web-based trading platform. But there is still everything a trader needs to simply make one trade at a time, so it is a very popular type of account.

Another advantage of a discount commodity broker is that he will usually accept a lower initial deposit in order to open an account. This can often be as low as $2,500 – substantially lower than the amount required to open a traditional account. This has in turn helped to increase the popularity of this type of account and discount stock trading in general.

Find out more about online financial trading and how you can make good profits from it very easily by filling in the form on our home page and clicking on Submit.

Philip Gegan

An Online Currency Trading System that Works – Does One Exist?

Why should I even have to ask this question? Because not only are there dozens of different systems out there, but there is a rapid turn-over in that  new online currency trading systems are regularly coming onto the  market as the old ones, having been sold to death, are quietly withdrawn.

The truth is these systems make money for the people who sell them, both the original creators and their affiliates, and that, above anything else, is what drives them. There’s an insatiable market for these currency trading systems comprised mostly of people who have lost their job or face financial hardship and are desperately looking for an alternative way of earning money. So let’s take a look at what these systems are.

An online currency trading system can be anything from an expensive trading robot that makes all the trading decisions for you and implements them on your trading platform, down to a system devised by some remote trader that he posts in an online forum for anyone to download for free.

Most sellers of currency trading systems are affiliates who don’t actually know anything about financial trading. They cynically use the fact that over 95 per cent of new currency traders fail and lose all or most of the money in their account to try and persuade you to buy their particular system so you yourself can avoid that fate.

But what are the chances of anyone buying such a system avoiding the fate of the 95 per cent? Most of the people who fail have bought one or other of the systems on the market, so how do you know the system you’ve bought is a good one? The fact is that online currency trading requires not only a sound system but also the self-discipline to follow the rules to the letter.

Few people have this most desirable attribute. This works to the benefit of the sellers of these bogus systems, who invariably use a Money Back Guarantee to clinch the sale. The buyer feels more comfortable about parting with money he can ill afford by telling himself he can get it back if the system does not work for him within 90 days or so.

What usually happens is that after a while, when the system has not been bringing in the vast profits promised or, most likely, it has been losing money, the new trader tries to “catch up”, i.e. get his losses back on one or two trades on which he risks much larger amounts than the system tells him to. It’s very tempting to do this, and most new traders succumb and end up losing a big chunk of their money in one day.

As the terms of the guarantee require a record of trading to be produced with any refund request, the Guarantee itself is voidable on the part of the seller of the system who, of course, knows this is likely to happen and he therefore probably won’t have to honour his Guarantee.

So how can you, as someone new to fx online trading, avoid this fate? First, ask yourself whether you really need a “system”. This applies particularly if the system tries to tell you that you can make regular profits from day trading foreign exchange using a spread betting account. If it does then stay away. It’s almost impossible, especially for newcomers, to profit from day trading forex in this way. The market is simply too volatile. You need to be able to risk thousands to ride the volatility, and even then success is by no means assured.

Secondly, ask yourself how likely it is that the system you choose actually works at all. There are so many different systems, but still the success rate in forex remains abysmally low.

There is an easier option, which is to find someone who has been successfully trading the financial markets (not necessarily the currency markets) for years, and seek to copy what he does. Such people rarely trade forex. Finding one is not so difficult. Just go to our home page, fill in the form, and click on Submit.

Philip Gegan

Forex For Dummies – 7 Vital Points

1. Forex for dummies – the subtle deception.

You’ve probably read that only around 5 per cent of new forex traders make a success of it, with the remaining 95 per cent losing all their money. Virtually every sales letter you will ever read for forex will use that statistic to convince you that, in order to avoid becoming one of the 95 per cent who fail, you should subscribe to their course or sign up to their brokerage services.

But think about it. These sales pages are nearly all selling a different method of trading forex, or a different brokerage service. They can’t all be right. So who’s selling you a chocolate teapot and who’s got the real deal?

In most cases it’s impossible to tell. So let’s leave that for a moment and consider point number 2 below.

2. Most sellers of “How to make money in forex” information don’t actually trade themselves.

This point alone should have all your alarm bells ringing. Like the nineteenth century gold rushes, it’s a market in which it’s easier to make money by selling information and equipment to the gold diggers than by digging for gold yourself.

Before you agree to purchase anyone’s course or DVD on how to trade forex, ask them how much money they have made over the last 12 months trading forex (not from selling information on how to make money from it). Unless you receive a straight answer that impresses you with the amount then move on to the next. And this brings us to the next point.

3. It’s easy for someone who knows nothing about forex to sell phony information on how to make money from it.

A couple of Google searches will turn up several sites giving away ebooks covering various techniques that have been used to make large profits in forex. Anyone can download these and rehash them into their own unique product, set up an attractive web page with a compelling sales pitch and start selling it for $97 or so. It’s being done all the time.

4. Beware of back tested results.

Nearly any online currency trading system can be back tested against a convenient chart from the past and shown to have forecast the price  movement correctly. This in fact proves nothing. When you’re looking for a particular pattern on a chart from the past it’s not difficult to find it. Then you can “prove” that your system works.

If you are given examples of how the seller’s system has been successful in the past, make sure that it has been tested live in real market conditions, and not simply back tested against a carefully selected chart.

5. It’s almost impossible to make regular profits by day trading.

If anyone tries to convince you that you can make a full time living by day trading the forex market then be very careful. Most beginners are  encouraged, not least by their brokers, to day trade, and we know what happens to most beginners in forex. The few successful forex traders seldom day trade. They tend to hold positions for at least days at a time, and often much longer, even months.

6. Most claims of forex profit potential are vastly exaggerated.

It’s common to see web sites that say it’s easy to turn, say, $500, into $5,000, again and again. The truth is that even successful forex traders only average gains of around 30 per cent a year, and they only do that by having massive amounts of money to trade with, so they can enjoy large stop loss levels and ride the volatility. Now I’m not knocking a 30 per cent gain each year. In fact I’d say it’s a brilliant rate of return, especially at present when savings rates are barely above 1 per cent. But it’s a bit different from “turning $500 into $5,000 again and again”, which is what the sellers of all these
systems would like you to believe. And if you’ve only got $500 to invest, then, please, keep your money.

7. There’s a far better alternative to forex.

The stock market, and trading shares, indices, commodities and futures doesn’t have the color and appeal of forex, it’s true. But it’s much easier to make regular profits in those markets than it is with forex, and you can start with just a few hundred dollars.

Consider finding out more about those markets. There are traders making large, regular profits, without the stress of constantly keeping an eye on forex movements, and who are willing to share their methods with you, if only you ask. Just click through to our home page, fill out the form and click on Submit.

Philip Gegan

FX Trading Software – Who Makes the Most Money – Users or Sellers?

FX trading software is promoted all over the internet. You’ve probably read the sales letters telling you how easy it is to make money with it. The technology sounds convincing and the testimonials saying it works for the people who write them must surely be genuine. But something doesn’t add up.

A particularly interesting aspect is the number of “reviews” of these software packages on the internet. They’re virtually all “independent” reviews, as if the writer had no interest in whether you bought any of them or not. But the hyperlinks are usually to a site that is a sales letter written by a professional copywriter.

The people writing “reviews” of the software are often affiliates of one or more of these packages, and their intention is to sell it to you. Often their heading is used to make it sound as if they are going to reveal the package as a “scam”.

So when you read a “review” with a headline of, “XYZ Forex Trading Robot – Is It Really A Scam?”, you’ll quite likely be told that the writer originally thought it might be a scam but has now investigated further and found – surprise, surprise – that it’s genuine after all and – more surprise – it actually makes you lots of money!

That leads me to the other thing that doesn’t add up in this field. If the software can really make you that much money, why is it so cheap? If this or that program really can double my money every couple of weeks, I’d say it was a bargain if it were priced at several thousand dollars. And why are these people selling it in the first place, instead of quietly raking in the phenomenal profits that it can produce?

I don’t endorse any fx trading software because I don’t believe any actually work. Not over the long term, anyway. In fairness, I don’t believe any human or group of humans can devise any software that correctly predicts human behaviour in any set of circumstances with sufficient regularity. And if any market is driven by irrational human behaviour it’s the forex market.

Surprisingly, though, I do actually have a currency trading account, and make profits from it fairly regularly. There was a time, though, when I lost a fair amount of money trying vainly, with the “help” of fx trading software, to make money from it on my own.

I came to realise, as you will too very soon, that the only way I could profit from forex trading was to find a successful trader (not just someone who sells forex get-rich-quick information or who has created a “trading robot”) and imitate what he does. Just go to our home page, fill in the form, and click on Submit. That’s it.

Philip Gegan

FX Online Trading – 3 Questions to Ask your Broker First

The coming of the internet and now the onset of the recession has caused a greatly increased level of interest in fx online trading. New brokerage web sites are springing up all the time and it’s difficult to decide which one to opt for. But whatever you decide, here are 3 questions you must ask your broker before you open an account.

1. Are you an FCM (Futures Commission Merchant) broker or an ECN (Electronic Communication) broker?

The trouble with FCM brokers is that very often they have their own dealing rooms and tend not to pass on their customers’ trades to the actual fx market. They match one customer with another, or alternatively bet against them.  With all their facilities and the ability to manipulate the prices on their  system, it’s no surprise that they usually profit at the expense of their customer-traders.

By way of contrast, ECN brokers don’t have their own dealing rooms, but pass on all trades to the market, as they should. They therefore cannot bet against you, but simply collect the “spread”, whether your trade is profitable or not. In addition, they have no restrictions on trading or hedging, and tend to have the best prices and spreads.

2. Where are you registered and how much is your capital?

Avoid any broker who is registered in an offshore jurisdiction. If he is then you may have problems if you decide to withdraw your money. He should be registered in the US, the UK, a major European country, Australia or Japan, with the appropriate regulating authority. In the UK it’s the Financial Services Authority and in the USA it’s both the US Commodity Futures Trading Commission and the National Futures Association. Ensure the company’s capital is at least $7 million (USD), or £5 million (GBP). This keeps to a minimum the danger it could go bust and take your money with it.

3. Can I trade with covered warrants and ETFs (Exchange Traded Funds) as well as spread bets?

A spread betting account is the most profitable account for the broker, so  that’s what he will recommend to you. But there are other methods of trading fx which can, once you master them (which is not difficult), be far more profitable for you.

When you make a spread bet on a currency pairing, for example the British pound and the US dollar (GBP/USD), there will be a “spread” that you have to overcome before you get into profit. This is how the broker makes his money.

So, for example, as I write, the GBP/USD pair are trading at 1.6257. If your currency trading account has a 3 point spread your broker may set his buy/sell prices at 1.6259/1.6256, so you can go long (buy) at 1.6259, but the price would have to move up 3 points to 1.6260 (1.6262/1.6259) before you would be at “break even” point. The same applies in reverse if you chose to sell, or go short. You are always at a disadvantage compared to the market or your broker.

Spread betting with absurdly low “stop loss” levels makes it almost impossible for the new trader to avoid losing all his money very quickly. The small amount of capital required by most brokers to open an account, which is presented as being generous on their part, enabling the “ordinary Joe” to “open a currency trading account and start profiting”, actually works against you.

Each trade becomes a major risk to your entire capital, and you can only trade with tight stop loss levels. In the volatile fx market, where prices move erratically and seldom go up or down in a straight line, this is crazy. The few successful traders in this market employ large stop loss levels, even on trades they are very sure about. This enables them to ride the volatility of the market.

The only solution is to avoid spread betting altogether, and use instead covered warrants and Exchange Traded Funds. Hence this question. You may, however, have to go further than your broker in order to learn how to trade these instruments. Just click through to our home page and fill in the form. Click on Submit and you’ll be on your way.

Philip Gegan