Demo and real accounts. Why a demo account? What’s the difference?

For every experienced and successful forex trader, there is a plethora of new and/or inexperienced would-be traders out there. We strongly recommend, especially for the novice trader, that you start by using a demo account.

Why?

Simply because it eases you into the world of real forex trading without financial risk to yourself, because you are, in effect, using an entirely virtual money account.

With a demo account it does not matter to you nor anyone else if you happen to lose a fortune on your first trade. You can always open another demo account or ask your broker to top up the accounnt.

Moreover, it gives you time (over how ever long-a-period you feel you need) time to play with all the brokers facilities and become orientated as to how online forex trading really works and can, in fact, work for you – to your advantage.

A demo also gives you time to realise what type of a trader you are and allows you to develop your own trading strategy. In a nutshell, it gives you the time to develop your wings.

Finally, whether or not one is seasoned trader, when using a new Forex site, for the first time, it is our strong recommendation that one should always become acquainted with how each and every Forex site works, by using the site’s demo trading platform – in order to understand exactly how the site’s software works.

What’s the difference?

Simply put, apart from (as mentioned above) you are using virtual money the difference is virtually unnoticeable – all the features are exactly the same, as in the real account.

The only difference being is that your PC is your dealer, which will always open or close your positions automatically – in accordance with the current market rates. In real trading, it is done manually, by one of our traders.

  1. In demo trading, with the benefit of no risk, should you use up your initial credit, you can easily top this up. Simply go to our user zone with the help of your account and password (Section “Demo Account”).
  2. There are almost no delays, between your inquiry and offer of the exchange to open or close a position. However, in real trading there could be delays of 30-40 seconds.
  3. Rubbish quotes (these are single bounces for more than 30 or more pips from current quotes) are accepted by the PC as real ones on a demo account – participating in the quote system. In a live account they are ignored.
  4. With a real account, it could happen that there is market movement, whilst you are in the middle of closing your position, in line with a certain rate. Should this be the case, your order might not be fulfilled. Hence you will be in receipt of an order to close the position at another (current) market rate.
  5. We believe that there are or can differences, in psychological make up, when a player is using virtual money and real money. It is important not to get carried away, when using a demo account, and not to forget that you are there to study and make good on your real objective – of preparing for the day, when you decide you want to try and spread your wings and fly and become a fully-fledged trader; with the objective of using real (your) money, with the sole objective of making more money, via way of return.
  6. You should be aware of the fact that the market is always moving and sometimes very quickly. An exchange rate are by nature, very changeable and subject to world events and breaking news and it is possible for rates to leap either up or down by several pips on breaking news stories. The speed at which you enter your order into the system may influence the rate according to which you can enter the market. This is one of the many factors that influence the results of your trading.

We strongly advice that you learn, develop and trade the market using a planned forex trading strategy- one that works the best for you.

Remember, there is no one plan which fits all. We are all individuals, and what might work rather well for one person, does not mean that it will work well with you. You should also consider what are the up’s and downs of the loss you can stand.

In essence we cannot stress enough, the importance of having a plan and following that plan. This does, however, call for a rather ruthless approach and it is all too easy, for the human emotion to kick in.

However, the other thing is that with real trading, you are using real money and it could be those very human emotions, which could also stop you from making a good kill. Therefore you need to be able to temper your emotions with the cold realisation of the hard facts of what all the indicators/signals are telling you.

Our demo version will give you all the tools and the time necessary, preparing you for the day when you will be ready to take your first flight, into the real world of Forex.

We wish you good luck. As usual, you should always be aware that there is the potential for loss as well as very attractive gain.

The Ultimate No Bullshit Guide to Choosing a Forex Broker in Kenya

I am a member of several online forums where members discuss all matters forex. One of the hottest/recurrent topics that I see in these forums concerns problems with online forex brokers. In fact, I would go ahead and say that not a day passes without someone posting about a ‘problematic’ broker.

The problems discussed range from forex brokers not processing withdrawal requests on time; forex brokers who are so aggressive in stop loss hunting or forex brokers who close all your open positions and liquidate your account for no evident reason.

Almost every beginner to online forex trading passes through a phase where they mistrust their forex broker. I understand this skepticism. It is actually an excellent survival mechanism. Online forex brokers range from highly reputable and strictly regulated firms handling a lot of client accounts honorably, to those that are highly questionable in price quotation and order execution, to the outright frauds that sprout overnight and are gone by morning, depriving you of your money even without giving you the chance to set up your MT4 trading software.

It is therefore recommended that you do thorough research when you are choosing a forex broker to trust with your money. Carrying out due diligence when choosing a broker is the number one rule that will help you avoid future problems with your broker.

Who/What are Online Forex Brokers?

Online forex brokers are financial institutions that act as intermediaries between you and the major liquidity providers or the interbanks. The brokers execute orders on your behalf or, in the case of ECN brokerage firms, provide a platform for the retail traders to place buy and sell orders.

Forex brokers operate through websites which allow you to make trades via proprietary software or through an independent trading software such as the MetaTrader4.

Forex brokers usually make their money via the spread, which is the difference between the bid and the ask price. For instance, a forex broker may buy Euros at 1.5475 U.S dollars and at the same time sell the Euros at 1.5478. In this case, the spread is 0.0003 USD or 3 pips.

Before you start investing, it is important that you do background research to establish whether the broker you are thinking of investing with is reputable and whether he has the features that you are looking for.

Here are 9 questions to ask yourself when you are shopping for a forex broker:

  1. Is the broker regulated, if so, which bodies/organization regulate the broker?
  2. How efficient is the brokers trading platform?
  3. Capitalization
  4. Is the company a broker or a dealer
  5. How supportive is the broker’s customer support department?
  6. What is the cost of trading with the broker?
  7. What account types does the forex broker offer?
  8. Does the broker offer any value added services?
  9. What are the broker’s requirements concerning margin and leverage?

Is the Broker Regulated? In Which Country?

Regulation for forex brokers differ from country to country. I have heard people argue that since we are trading forex in Kenya, it does not matter where the forex broker you choose is regulated. This is a big no. I’d rather choose a broker in a country where there are strict regulations (the US of A) than choose a broker where the regulatory framework is a sham (Russia or Cyprus?).

Some of the countries where the regulations are intact include:

  • The USA
  • UK
  • Eurozone
  • Japan
  • Australia
  • Switzerland

Choosing a broker that is regulated in one of these countries brings you one step closer to avoiding future problems with your broker or to avoiding an outright scam.

However, you shoudn’t take a broker’s word for it. It is easier for a forex broker to write that they are regulated by so-and-so on their website. Anyone can do that. Take it a step further. Visit the regulatory authorities website and seek whether the broker is really regulated by the said authority.

How Reliable is the Brokers Trading Platform?

Depending on your hardware and software limitations, you may either choose to trade forex on a web-based application or on a software that you install on your computer. You need to decide which platform suits you best before you choose a broker.

The broker you choose must be able to offer the trading application that suits you. More importantly, however, the trading platform needs to be perfectly stable. You do not want the agony of a platform that hangs whenever the market activity increases. Nothing else is as important as the stability of the trading platform; forget the look and feel. Stability is king.

User-friendliness is another unique characteristic that you need to watch out for when vetting a broker’s trading platform. In the forex trading circles, user-friendliness refers to the ease with which you can place your orders, including limit and stop-loss orders. Most brokers offer one-click order platforms.

How Capitalized is the Forex Broker?

The more capitalized a forex broker is, the better their credit connections with liquidity providers are.

Since forex is traded over the counter (OTC), it becomes exceedingly difficult for a forex broker to get competitive currency pricing without depositing a considerable margin with a lending institution or bank.

In addition, many forex brokers are required to comply with a minimum capitalization level. This capitalization level is directly related to the broker’s ability to stay solvent. If a forex brokerage company does not publicly declare its minimum capitalization level, this could be a warning sign about the company’s solvency.

Is the Brokerage Firm a Broker or a Dealer?

Understanding the nature of a forex brokerage company is an important step as there are several types of brokers in the OTC forex market.

Dealing with a broker

Brokers act as intermediaries between you and the market makers/dealers. Brokers make use of computer systems to process your orders. The orders do not typically go through a dealing desk, hence the term ‘non dealing desk’.

The technology through which a broker sends your orders to the market makers/dealers is called Straight Through Processing or STP. The spreads that you get on your orders are dependent on the market maker that your broker routes your order through.

Brokers can either charge you a fee for this service or are compensated by the market maker for the transactions that are routed to the market makers desk.

Dealing With a Market Maker aka Dealer

All market makers make use of a dealing desk, which is the traditional method used by conventional financial institutions and banks to process customer orders. As the name suggests, market makers ‘make’ their own bid and ask price and display them on their trading platforms.

The market makers are always ready to take your order. However, in doing this, they become counterparts to each transaction you make. If you happen to sell 10 lots of USD, the market maker must be prepared to buy the 10 lots from you. In others words, whenever you sell a currency, the market makers must buy. The vice versa is also true.

As counterparties to your trades, the forex market makers may try to hedge or cover your order by passing it on to someone else. There are also times when the market maker will decide to hold your order, and trade against you.

Most market makers provide you with a fixed currency price throughout the day. The exchange rates that they set is based on their best interests. However, they try to keep the prices fair due to the stiff competition that characterizes the market maker industry.

On paper, market makers are supposed to make profits through the spread that their charge you. However, this is always not the case and some forex market makers have been known to utilize unscrupulous means to get an edge over you.

ECN Brokerage Model

The ECN brokerage model is the new kid on the block. An ECN broker will pass you prices from various market participants including banks, market makers and other financial institutions. ECN brokers display the best bid/ask price on their trading platforms.

Unlike the market makers who offer fixed spreads, the spreads offered by ECN brokers vary depending on a currency pair’s activity in the market. During periods of intense market activity, ECN brokers will not charge any spread.

Unlike the other brokerage models that charge spreads on your trades, ECNs charge a commission on every trade that you place. Really authentic ECN brokers do not play a part in price determination, therefore, your risk of losing trades due to price manipulation is non-existent.

Customer Support

Customer support is one of the core pillars of online forex trading. Since the forex market is a 24-hour market, the forex broker you choose should be able to provide support around the clock.

Most importantly, what medium of communication does the forex broker offer? Email, toll-free phone numbers and online chat applications are some of the most important communication tools offered by forex brokers.

You also need to deal with a forex broker whose customer support staff are knowledgeable. There is nothing as agonizing as having to deal with customer reps who do not have a clue to what you are talking about. It wastes time, which is one of the most precious resources you have as a forex trader. You can tell how knowledgeable the customer support staff is by the way they answer your questions.

It is not uncommon to run into technical issues when trading. Try to simulate a technical glitch, formulate the questions that you would have, and see how the support staff answers them.

Cost: Spreads and Commissions

The forex market prides itself on being a cost-free market to invest. Many market markers try to entice retail traders to trade more and more from this unique feature of the forex market; they promise no commissions, no regulatory fees and no data fees.

Something that the market makers fail to tell you is that your trading costs depend on you trading. Your frequency of trading, ratio and size have an impact on the cost of your trading.

Depending on the forex broker you choose, you will either pay:

  • a fixed spread
  • variable spread, or
  • commission on your trades.

As a quick reminder, spread is the difference between ask price and the bid price.

Which is the best choice?

Depending on how you look at it, you may take the fixed spread as the best choice since you always know what your trades will cost you. On the other hand, a variable spread means that you may sometimes pay a very low transaction cost, especially if you time your trades to coincide with the periods of heightened market activity.

Most forex brokers do not charge commission on trades, so the spread is the way that they make money. In such a case, the lower the spread, the higher the hypothetical profit that you will make.

In the case of forex brokers who offer variable spreads, you can expect the spread to be as low as 1 pip or as high as 7 times during periods of low market activity.

The best deal lays in choosing the right forex broker. If you choose a broker who is well regulated and capitalized, you have less to worry about. Secondly, you need to factor in your trading model and choose a cost model that is favorable to your trading model.

Slippage

Reduced liquidity or high volatility may cause your forex broker to apply ‘slippage’ (or requotes) on your orders. Slippage occurs when your order is executed at a price that is different from the one that was quoted. If you trade the news or you are a small timer, this is a cost that you cannot bear to bear. You should therefore choose a broker who does not offer requotes.

Account Types

Many online forex brokers offer different account types ranging from standard accounts, to mini accounts, to micro accounts. The size of the account depends on the lots that you wish to trade.

If you have forgotten about lots, here is a quick overview of lot sizes:

  1. A standard lot is a lot that consists of 100,000 units of the base currency
  2. A mini lot consists of 10,000 units of the base currency
  3. A micro lot consists of 1000 units of the base currency.

The mini and micro forex accounts require low initial capital while the standard account may demand that you invest a lot of money.

As you can see, the account type is depended on the amount of capital you have to start trading. Choosing a forex broker that offers an account type of your size will save you a lot of headaches when you are managing your money and risks.

Does the Broker Provide any Value added Services?

Easy access to charting tools, real time data, news analysis and economic data are the bread and butter of all professional traders. If your forex brokers offers all these tools, you have landed on a winner.

Leverage and Margin Call Policies

A lot of forex traders in Kenya gravitate towards forex brokers who offer high leverage. However, you should remember that leverage is a double-edged sword. It can make you freaking rich or agonizingly poor. Do not base your decision of a forex broker in Kenya only on this feauture.

Some brokers offer a fixed leverage rate while others will vary the leverage rate depending on the currency that you are trading.

You also need to understand your broker’s margin call policy.

How to Deposit Money in Your Easy Forex Trading Account

Easy Forex is one of the most recommended forex brokerage firms in Kenya. Opening an account with them is easy, and you can start practicing how to trade forex by opening a demo account. However, after some time, you may feel that the time has come to start trading with real money.

So, how do you deposit money into your Easy Forex account?

Easy Forex: Account Types

Easy Forex provides forex traders with 4 types of accounts to choose from depending on the minimum amount of deposit that you have, the lot sizes you wish to trade and the level of desired margin level.

The four account types offered are:

  • Mini Account– Requires $25 to open.
  • Gold Account– Minimum deposit is $500
  • Platinum– Minimum deposit is $5,000
  • VIP– Minimum deposit is $10,000

Funding Your Easy Forex Account

Your trading account needs to be funded before you can start trading. Doing so is easy and takes less than 5 minutes.

You can fund your account from your debit (ATM) card, Credit Card, Direct Bank Transfer or using one of the accepted E-wallets.

Credit cards have become the most convenient way for traders to deposit money into their Easy Forex accounts. The payment method is secure and takes only a few minutes. Simply type your credit card details on the deposit form, and hit ‘Deposit”.

However, you need to note that most forex brokers insist that you can only withdraw funds from the same source that you used to deposit funds. Don’t use your friends Skrill account if you do not wish to withdraw your profits from the same account.

 

Easy Forex Review

As the Kenya Forex Firm always does, I am delighted to be bringing you information about forex trading that you won’t find anywhere else on the internet.

Today, I will be reviewing one of the forex brokerage firms that is spending a fortune in Adwords advertising and in paying forex affiliates to get their word out there.

If you have not been living under a rock for the past few months, you might have heard of Easy Forex. What you might not have heard is whether all the hype about the brokerage firm is for real or there are skeletons hiding deep in the closet waiting to swallow you and your credit card in one single swoop.

So, in this review of Easy Forex brokers, I will be giving you the inner details about the forex broker who follows you everywhere like a shadow.

Who/What is Easy Forex

Easy Forex is a forex brokerage firm that is based in Cyprus, Greece (honestly, stop looking for a forex broker in Kenya. We do not have them in Kenya. The Central Bank of Kenya even considers it illegal to trade forex in Kenya!)

Easy-Forex has been in operation for the past 11 years, having started operations in 2003.

In my opinion (after thorough research and reading reviews from other forex traders) Easy-Forex is a well-rounded forex brokerage firm that is well suited for beginner traders.

The trading platforms supported by Easy Forex include Desktop MT4 trading, Mobile Platform Trading and Web Interface. If you are in Kenya, and you own a strong Android Phone, iPhone or tablet, there is not reason why you should not invest in forex trading now.

Minimum Operating Balance

One of the excuses that I get from my Kenyan friends is that they cannot afford the capital to start trading forex. Of course, many of them do not take the opportunity to research and find brokers who do not require substantial deposits to operate an account.

While many brokers require a minimum operating balance of $200, Easy-Forex has a minimum deposit requirement of a mere $25 (about 2500/= Kenya shillings). Now, tell me what is that if it is not cheap.

On top of that, Easy Forex offers 20% bonus on all deposits that you make up to $2000. I have heard that forex brokers who offer bonuses are scammers but I have been operating with such a broker and I am yet to have any issues trading or withdrawing my profits.

To get your 20% bonus deposit, click on this link when you are opening your account.

How to Fund Your Account

With Easy Forex, you can use your Visa or MasterCard Branded ATM Card (from whichever bank) to deposit the money into your account. Alternatively, if you already use online payment gateways, you can deposit funds via Web Money, Skrill or Neteller.

Note that the mode of funding you use will be the same mode through which you will receive payments. I therefore recommend that you use your ATM card or Skrill to fund your account.

Leverage

Leverage is what makes forex trading so lucrative yet so risky. With leverage, you can control trades worth thousands of dollars with minimal deposits in your account.

Easy Forex offers a maximum leverage of 1:400. That means if you deposit the minimum $25, you can control trades worth $10,000 (24 multiplied by 400). Your profits will be likewise magnified. So will be your losses.

Caution: If you are new to forex trading, I do not advise you to use such a high leverage. Start with a leverage of 1:10 or no leverage at all. This way, there is very little chance that your account will be wiped clean by a trade gone sour.

It is also important that you learn the basics of risk management and risk/reward ratio before you start using high leverage on your account.

Easy Forex Demo Account

A demo forex account is invaluable in your entire career as a forex trader. Unlike what many traders assume, demo accounts are not limited to newbies.

Whenever I learn of a new forex trading strategy or I want to test the viability of a new technical indicator, I use my demo account to simulate the real trade.

Easy Forex offers a demo account loaded with virtual (fake money) which you can use to practice and learn forex trading.

The only shortcomings with the Easy Forex demo account is that it is limited to 30 days only. There is however a cool way to lengthen the life of your demo account.

Open a demo account here.

Verdict

 

XM Forex: Get $30 Bonus When You Open a Live Account

Have you been thinking of trading forex but you are afraid of losing your money?

Fear no more.

XM Forex Global– a reputable forex brokerage firm based in Greece, offers a free bonus of $30 when you open a live account.

You do not need to deposit any money in your live forex trading account to access this discount.

Simply open a Live Forex Trading Account and you are ready to roll.

You can withdraw all the profits you earn from the Live Account at any time that you want.

The most convenient way to withdraw your forex profits in Kenya is using Moneybookers/Skrill. You can withdraw funds from Skrill right into your Mpesa account in Kenya.

If you do not have a Skrill Account, click here to open one for free.

 

XM Forex Bonus on Deposits

One of the reasons why I always recommend XM Forex Brokers to my forex proteges is because of the low amount of minimum deposits required to operate an account.

The minimum deposit stands at $5.00 only.

And incredibly, you get up to 50% bonus on the amount that you have deposited. So, whenever you deposit $5.00 into your XM forex account, you will get a bonus of $2.50. Your total trading balance will therefore be $7.50.

The 50% bonus applies to all amounts below $1,000. For amounts exceeding $1,000, a 20% bonus is included.

The XM Forex bonus keeps accumulating with every subsequent deposit you make until you have earned a total bonus of  $5,000!

If I were you, I would be headed to XM Forex Brokers right now to claim my bonus.

Click on this link to open your account and claim your bonus right now.