There are many factors to consider when selecting a Forex broker. One of the most important factors to take into consideration is forex trade Forex trade execution. Knowing how trades are executed by your Forex broker is very important. The type of trade execution and type of broker you use may end up making a substantial difference in your trading results.

There are two different categories among Forex brokers when it comes to trade execution. The first is a Forex broker that acts a market maker or has a dealing desk. This broker is usually taking the other side of all of their clients trades. In the early days of retail Forex trading this was the one of the most common type of Forex broker. These brokers do not usually use any type of standardized pricing so when compared with other brokers there might be a discrepancy in the pricing levels. These types of brokers that are in non regulated jurisdiction have been known to manipulate prices in the brokers favor.

Nowadays forex traders have become more and more sophisticated and have a better understanding of the forex market. There have been more demands for the other type of Forex broker. This broker is known as a non-dealing desk forex broker. Trade execution is generated from the interbank market and from the participants of the interbank market like the banks and financial institutions.
Just as the name indicates a non dealing desk Forex broker does not have any dealing desk intervention and has the trades go through to the market.

A dealer on a dealing desk was acting as a buffer to make sure that the trades the transactions that were coming in from their clients were within the parameters of market execution. Pricing systems and trade execution systems have become so sophisticated that the need for a dealing desk has really gone away. Non dealing forex brokers have systems like Currenex and Integral in place that allow the broker to verify that pricing is in line with the Interbank market before allowing the trade. All of this takes place in a fraction of a second and is in place to protect the broker as well as the forex trader.

Many people who do forex trading online love the concept of day trading due to the high leverages hoping that they will be able to get some quick returns. Whereas day trading can be a good strategy, it can result into massive losses if its not conducted with discipline and knowledge on its dynamics. Here are the common mistakes that a lot of day traders make and end up making big losses.

Prepositioning for news

Major news is known to move the market only that the direction is never known in advance.

Most traders normally anticipate the direction of market movement and position their trades accordingly. This is a poor practice as the trader will end up making losses should the markets move in the opposite direction upon the release of the news.

Trading immediately after the news is released

News events are known to cause whipsaw like action in the financial markets. This is because there is no liquidity and the news reports havent been thoroughly assessed. At this point, the market is moving aggressively in both directions and taking positions at this time without a solid trading plan to buffer you from making losses can be very detrimental to your trades.

Averaging down

Many day traders like to average down when they realize that they have a losing position.

This will not only waste time but money as well. Instead of holding onto a losing position by averaging down, you need to close the position and stick to the ones that are doing well. Besides, disciplined traders know how to stick to their trading plans and there is no need to average down if it was not part your trading strategy.

Risking a lot of capital

Many day traders think that excessive risk is equivalent to excessive returns. They therefore end up risking a large amount of their capital hoping that they will make large sums of money during the day trades. The results are always the opposite. It is advisable that you do not risk more than 1% of your capital. This implies that the difference between your entry and stop points should never exceed one percent of your total account. Adopting this will ensure that you manage your risks effectively and avoid losing a lot of money in a single trade or a single day trading.

Unrealistic expectations

A lot of people who do forex trading online are victims of unrealistic expectations. They set up trades hoping to make a lot of money and in the process, they fail to watch the markets and conduct a thorough market analysis before executing their trades. To be effective in day trading, one must learn to isolate expectations and emotions from the trading plans.