Forex Broker With Flat Commission

I received an email from a visitor this morning who had this to report.

I have been following your blog for a while. I enjoy your posts.
Interesting and informative. I just came across a forex broker - no
spread (practically) and $5 per lot commission. This beats the 3-5 pip
spread for most pairs (i.e. $30 - 50). Please check out Mbtrading.com at tell me what you think.

I don't know if he/she is affiliated with MBTrading but nevertheless, I looked at the site and responded back with the following email:

It
seems like it's a flat $5 USD for every $100,000 traded.  So if you
trade 10 mini-lots (for a total of 100K), the total commission is only $5.  The only thing is
3DForex, which is MBTrading's forex incorporation doesn't have a lot of excess
capital.  Neither does MB Trading…  I tend to want to put my money
into Forex brokers who have at least over 20 million.   3DForex has an
adjusted net capital of $544,000 with an excess of only $44,000 as of
November 2006. This makes it difficult to want to deposit money
there.

Are the reports that Forex brokers (FCM's) are required to submit to the CFTC any indication of financial health? I've talked about this in the past and the CFTC states that they are meaningful to a certain degree.  If a broker reports month over month of declining Net Capital, does it mean anything?  I don't know.  It could be meaningful or it could just be their process of accounting.  For instance, should we be concerned about Oanda's reported net capital for the last 5 months?

• July 2006 - 38 Million
• August 2006 - 31 Million
• September 2006 - 29 Million
• October 2006 - 32 Million
• November 2006 - 19 Million

I doubt it even though Oanda was pretty steady at 30 million the latter part of 2005.  I'm just using Oanda as an example here.  There are other brokers that show the same type of trend.

Popularity: 1%

Busy Trading Week

I’ve been keeping a close eye on the charts this week.  I have never quite felt out of the market whether I’m studying the charts or thinking about what might happen next.  While this can be mentally draining, I feel like it is necessary for my training. 

I’ve kept the indicators on my chart quite busy this week as they must constantly dodge each other on the screen.  Yes, I still have too many indicators yet I don’t feel like any of them should be taken away at this point in time.  I am using the following indicators this week:

1.  Ichimoku - I love this indicator. I’m still learning to use it.  Ichimoku actually means "one glance cloud chart."  I’ve found it very useful for support/resistance confirmation.  In addition, the current trend can be determined in a glance.

2.  Trend Lines - Where would any of us be without these

3.  EMA’s - 21 EMA Wave, 8 EMA, and 50 EMA

4.  Bandwidth - Similar to the squeeze.  This indicator is used to indicate volatility or lack thereof

5.  RMOM - An indicator that I developed that uses MACD histogram values to compute whether the existing MACD value is greater than or less than the last up or down segment

6.  RSI (7) - Relative Strength Index (7 period)

7.  Directional Movement Index

8.  MACD(12,26,4)

9.  Pivot Point Oscillator - An indicator that I developed that I find quite useful now that I made modifications to it last night.  I now paint the pivot point values directly on the indicator.  This saves having to plot pivot lines on the price chart.  Using the 15 minute charts can indicate trend nicely.   See the indicator below:

 

 

 

 

 

 

Popularity: 6%

Rob Booker was right

Rob Booker was right on with his posting yesterday:

Here is what I said last night:  “I really like this one.  The trade would come on a close below the redline.  The profit target is all the way down at 1.3020, or perhaps 1.3060 for more conservative traders.  I would like to just use a 30 pip trailing stop on the trade.”

 

 

 

 
And here is what happened.  The profit target is solid.  I think it can easily get there.  I would also consider a short position, again, if the pair rises up and hits the 62 Exponential Moving Average (the blue line at 1.3155).  The target would once again be at about 1.3060.

 

 

 

 

Popularity: 1%

Site Visits to forexproject.com

Forexproject.com broke another record this month increasing unique site visits by 41%.  Thanks to all for the inspiring words also.  I hope that we will all be that top 10% that "make it."  Good luck in March.

Graph of unique site visits from October-February:

 

 

 

 

Popularity: 1%

Good John Carter Video Today

John Carter’s video shows him looking at state of currency pairs last night.  This is a great video to see his style of trading.  I didn’t watch Hubert’s.

Hubert’s Video Link:
http://clicks.aweber.com/z/ct/?xuxu5Tj0WJC3cCp1gKG.1A

John’s Video Link:
http://clicks.aweber.com/z/ct/?fSwEJQwvvTxDdcBKWSuyUg

Popularity: 1%

The Trend is my Friend

My profit so far this week is $883.  I have felt very comfortable with the flow of the market and when I look at the charts, everything just seems to make sense.  A big reason for this is because of my reluctance to trade a fade or go against the trend.  My trades have been with the trend therefore I’ve been trading the faster time frames.  It’s amazing how much easier a trade can start in your favor by simply trading with the trend.   Even so, my week has not gone without mistakes.

My biggest mistake is exiting positions too early.   I had a short position in the USD/JPY open overnight and through the GDP announcement this morning.  Shortly thereafter, I closed it out for a slight profit.  Afterwards, the pair declined over 40 pips.  The trade was going just fine before I decided to micro-manage it.  I must try to curb this bad habit. 

Popularity: 3%

Interest Rate Comments from Morgan Stanley Chief Economist

"As always, central banks are in ultimate control of the liquidity spigot. And policy ‘normalization’ is now the over-arching objective for the Federal Reserve, the European Central Bank, and the Bank of Japan. For different reasons, each of these monetary authorities had to run policies of extraordinary stimulus in recent years — the Fed in response to the post-bubble shakeout of 2000-01, the ECB in response to Europe’s fierce structural headwinds, and the BOJ in response to nearly a decade of corrosive deflation. With those risks perceived as now subsiding, all three central banks are seeking to end their extraordinary accommodation and put their policies on a more neutral setting. The Fed has obviously made the most progress in doing so, whereas the increasingly tough-talking BOJ has yet to act. The ECB is somewhere in-between. But there can be no mistaking the endgame that is now coming into focus: To the extent that a powerful upsurge in the global liquidity cycle has been fueled by extraordinary monetary accommodation, those days are coming to an end."

Stephen Roach

Popularity: 3%

Rob Booker Analysis Tuesday

From fxcmtr.com:

1 Hour Chart

I really like this one.  The trade would come on a close below the redline.  The profit target is all the way down at 1.3020, or perhaps 1.3060 for more conservative traders.  I would like to just use a 30 pip trailing stop on the trade.

 

 

 

 

Popularity: 3%

Filed Under Learn Forex · 2 Comments  

Waiting for a Yen pullback?

February 27, 2006

I’m waiting on a Yen pullback.  The price has been hanging around the S2 pivot point all day.  Depending on where the pair is during the Asian open, I may be shorting this pair if it pulls back a little more.   Remember that this pair is trending on the 240-minute and momentum indicators aren’t worth a bit.  Right now I’m watching the Directional Movement Index, pivot points, and trendlines.  The pair will have to pull back quite a bit for my continued interest, at least to the high 116’s.

The chart below shows the S2 pivot point at 116.08, .09 below the price (bottom red dotted line).  The pivot point for today was 116.807 (thin solid black line)

 

 

 

 

 

 

 

 

 

 

 

 

Popularity: 4%

Filed Under Investing and Trading · Leave a Comment  

Staying with the Trend

February 27, 2006

I have started the week on a positive note and sit at +$1000.  I have been watching the DMI indicator to confirm that a trend is still in place before buying or selling a pullback.  Though I have done this successfully today, I have a hard time holding on to these trades and have not followed my own advice on where I’ve been placing my limits..  Once I can net about $300-$400 on the trade, I’ve been exiting.  Now this might look good on paper right now but the simple fact is that I don’t do this when a trade is going against me which means that my risk/reward is poor.  I set a stop but never a stop that triggers when I’m only down about $300-$400.  My stops are usually a minimum of about 30 pips so this would net me a loss of $900.  One bad trade and I’m back to square one.

Call this rationalizing but I feel like exiting now with a smaller profit may be sufficient due to the lack of liquidity in the market until either the Asian or European sessions. 

I’ll continue to work on holding on to my positions longer when the pair is going in my direction.  I should learn my lesson after exiting my USD/JPY position last week right before the big 100 pip move down.  I could see using my exit strategy if I was trading the 15, 30, or 60 minute charts but I’m usually trading the 240-minute (my favorite period.)

Popularity: 4%

Filed Under Investing and Trading · Leave a Comment  

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