Forex Trading Indian local deposits

About Forex Trading Indian local deposits: 
The brokers like FBS, Alpari ,Octafx and XM, Mtrading,  Uniglobe Markets  offer an Indian local bank deposit option where the client can make deposit to an Indian local bank Account(third party account officially appoint by the broker to act the intermediary body to handle and maintain the local payments of clients for the specific regions and the country (not in the company name though,but given officially by the company) and funds are credited to the trading account with no issue.

Its is obviously advantage for trader to trade Forex currency with no issue.  As you know payment are depositing and withdrawing locally.




Some usually asked questions related to Forex Trading in India, which Are listed below:-

  1. How safe is this option to trade Forex from India and is this anyway risky? if someone is doing this? please share the opinions.
  2. Could you kindly mention a couple of reliable brokers having this indian local bank deposit option. How is octafx. How about withdrawal of funds from these brokers. Is there any problem with withdrawals. Please suggest a few reliable brokers.
  3. Can you please tell us which company that u checked told u to deposit this way and if it worked okay for you? is there a way to verify the account?
  4. In such local funding, you are no authority of funds and your funds are deposited on own name or third party names?
  5. I was checking one of the brokers mentioned in the thread. They are accepting local Indian bank deposits. However, the account they mention to transfer fund to belongs to some individual. Apart for the security of the fund, I am more concerned about the tax treatment of such transactions. Effectively I would be transferring fund to some person's account ( pay-in) and would also receive fund from him ( pay-out )... I would like to know what would be the tax implications for such transactions... can anyone throw some light on this please ?
Answers: 

I use Hantec Markets & Octafx for higher acc sizes 25,000$+. They are FCA regulated and safest broker in India, I use Lite Forex for medium sized acc 10,000$+  operating in India since 3+ years, I use Uniglobe Markets FOR smaller sized acc 5,000$+ . this is new kid on the block .. just about 8 months.I use both cash funding and local bank deposits with these 3 brokers . I use both Cash withdrawals and withdrawals to different bank accounts. I never ever faced any problems 4 years of regular funding & withdrawals to the accounts.

PLZ NOTE THAT I GAVE BROKERS NAMES AS REQUESTED ... I'M JUST A TRADER WITH THEM AND DO NOT HAVE ANY OTHER BUSINESS ASSOCIATION. I'M NOT ADVERTISING ABOUT THEM ...
If you wanna trade serious spot FX use direct LMAX exchange(Multilateral trading facility-balance 10000 USD) or some introducing brokers for LMAX like fxmtf.com (1000 USD)

That is the normal procedure ... Transferring to and from either an employee or a third party ... I never faced any issues ... in either the way, including cash transaction .Worry about tax implication ONLY if you are planning million dollar accounts .I have 70,000$ account spread over 5 brokers .Never ever faced any issues .Do note I'm paying tax since good 7 years ..i am new to forex and want to make sure i stay away from scammers, No FX broker (in India) has a current account in their own name.
Most of the times, its the bank account of their employees or bank account of a money merchant.
I'm using both methods and never faced any issue till now.

Yeah, you need to have a good amount of practice and that you could do it through the investments into live account with the small amount to learn about the Forex Market.

ForexTime (FXTM) is making available local transfer options for countries in the Asian region. Clients in India and Pakistan can make deposits and withdrawals using their local currency.


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what are the major news which create forex market more volatility and liquidity?

Fundamental analysis is a method that attempts to predict the intrinsic value of an investment. It is based on the theory that the market price of an asset tends to move towards its ‘real value’ or ‘intrinsic value’. Fundamental traders believe that the markets will react to events in certain ways and that they can predict future market prices based on these events. 

Fundamental analysis in Forex entails predicting the price valuation of a currency and its market trends by analyzing current economic conditions, government policy and societal factors within a business cycle framework.

Forex Traders gauge a country’s economic state by examining macroeconomic indicators. When properly used, these indicators can be an invaluable resource for any Forex trader. After publication of these indicators we can observe volatility of the market. The degree of volatility is determined depending on the importance of an indicator. That is why it is important to understand which indicator is important and what it represents.

When properly used, these indicators can be an invaluable resource for any Forex trader. After publication of these indicators we can observe volatility of the market. The degree of volatility is determined depending on the importance of an indicator. That is why it is important to understand which indicator is important and what it represents. 

Some important economic indicators(Economy Calendars or hot News)  which are listed below:-

  1. Interest Rate Announcements
  2. GDP(Gross Domestic Products)
  3. CPI
  4. Employment
  5. Retail Sales
  6. Balance of Payments
  7. Government Fiscal policy and monetary policy Announcements 
Forex trading in India with local bank depositsInterest Rates Announcement:
Interest rates play the most important role in moving the prices of currencies in the foreign exchange market. Interest rates dictate flows of investment. Since currencies are the representations of a country’s economy, differences in interest rates affect the relative worth of currencies in relation to one another. When central banks change interest rates they cause the forex market to experience movement and volatility and accurate speculation of central banks’ actions can enhance the trader’s chances for a successful trade.

Gross Domestic Product (GDP):
The GDP is the broadest measure of a country’s economy, and it represents the total market value of all goods and services produced in a country during a given year. Since the GDP figure itself is often considered a lagging indicator, most traders focus on the two reports that are issued in the months before the final GDP figures: the advance report and the preliminary report. Significant revisions between these reports can cause considerable volatility.

Consumer Price Index(CPI):
The Consumer Price Index (CPI) is probably the most crucial indicator of inflation. It represents changes in the level of retail prices for the basic consumer basket. If the economy develops in normal conditions, the increase in CPI can lead to an increase in basic interest rates. This, in turn, leads to an increase in the attractiveness of a currency. 

Employment Indicators:
Employment indicators reflect the overall health of an economy or business cycle. In order to understand how an economy is functioning, it is important to know how many jobs are being created or destructed, what percentage of the work force is actively working, and how many new people are claiming unemployment.

Retail Sales:
The retail sales indicator is released on a monthly basis and is important to the foreign exchange trader because it shows the overall strength of consumer spending and the success of retail stores. It can be used to predict the performance of more important lagging indicators, and to assess the immediate direction of an economy.

Balance of Payments:
The Balance of Payments represents the ratio between the amount of payments received from abroad and the amount of payments going abroad. If coming payment exceeds payments to other countries and international organizations the balance of payments is positive. The surplus is a favorable factor for growth of the national currency. 

Government Fiscal and Monetary policy:
Stabilization of the economy (e.g., full employment, control of inflation, and an equitable balance of payments) is one of the goals that governments attempt to achieve through manipulation of fiscal and monetary policies. Fiscal policy relates to taxes and expenditures, monetary policy to financial markets and the supply of credit, money, and other financial assets. There are many economic indicators, and even more private reports that can be used to evaluate the fundamentals of forex. It’s important to take the time to not only look at the numbers, but also understand what they mean and how they affect a nation’s economy.

How to open forex trading account in india

Whether a currency is increasing or declining in value, there is always a way for you to make money in Forex! 

Entering the Market 

The first step for becoming an FX trader is to open an account with a Forex Broker. Brokers in these markets usually give the investors the opportunity to test their trading system and trading facilities through opening a demo account on their trading platform and start practicing buying and selling currencies. 
How to open forex trading account in india
The most important aspect of FX trading is to understand the FX platforms, as they are the direct connection to the financial and Forex markets. They are the software you use to place your orders, watch the market prices and also place transactions. 

As a trader, you would be sitting at the computer screen, looking for signals and interpreting whether to buy or sell. The main concept is to buy a product hoping to sell it on a higher price or vice versa, so that the difference is your profits, i.e. you need to buy low and sell high. 

Tools to get started 
• Computer or Smartphone 
• Reliable internet connection 
• Trading software (platform) usually made available by the broker 
• Trading capital 

Forex trading in india with local bank deposits

Forex trading in India with local bank deposits

Forex trading in india with local bank deposits

Difficulties of Forex Trading in India: As a Forex Trader, I have experience various difficult while Forex trading in deposit and withdrawals as you know there is  no regulatory bodies in India .RBI is disallowed the Forex trading in India. instead of this If you are currency trader you can trade pairs such as EUR/INR, GBP/INR, JPY/INR with Indian brokers like Zerodha, SASOnline and more which is regulated by SEBI.

In the beginning, I was started with Avatrade with little amount $100 using Nettler .com , Also tried various broker such as Forextime, XM, OpenFX, but I left trading such broker who only allow to trade with depositing via credit card/debit card and wallets so I was looking for A Forex Broker who provide lowest spread for Forex pairs and commodities and quick withdrawals and deposits option. Finally, find this broker with all this facility(local bank deposits) and I start  trading with this broker(OctaFX) with no issue.

So, my recommendation for you to trade only with this type broker who provide at least deposit and withdrawals option quickly and faster.

Recommended Broker: OctFX

Post by Victor
Victor, Research Analyst & Forex Trader (2013-present) at quora.com 

Legality of the Forex Market:- Literally, Trading in Currencies and other financial derivatives like Commodities(Crude Oil), Crypto Currencies(Bitcoins) etc is not legal in India as Reserve Bank of India doesn’t allow or will never regulate any such sort of un-regulated markets in the country and in fact, India would never like to let her nation’s money or wealth to go out of the country.
Since independence, this great country’s rulers and governments has had kept a policy of keeping people’s money in the banks. In the 1980-90’s, during the rule of Indira, banks used to give a massive 13–14% interest on deposits in the savings account. However, this scenario and performance of the banks has been retrograded in the current period with NPA’s or Non Performing Assets of more than 2–3 lac crores on the government banks of the country offering a minute interest rate of 4%, ultimately making people to think and invest their money in some other options.
Share Market vs Forex Market:- Investing money in the share markets is good option that’s been considered and found suitable by most of the Indians. However, Forex Market with nearly everyday transactions of $4 trillion when compared with Share Markets, the latter one doesn’t even stand against the giant Forex as you can earn quite big profits comparative to Equity Market. Therefore, its one of the best markets to earn massive profits with your investments.
Searching for a Broker:- With abundance of brokers providing services across the globe, there is always a tough competition between the top contenders in the forex market. It’s just like the two best beverage companies Pepsi and Cola fighting for their hegemony in the market. Brokerage firms are registered under international regulations and laws and therefore become eligible to provide services all over the world.
Getting Started:- In India, you can find good brokers like Uniglobe Markets. You can open a trading account with a minimum 50-100$ and can even avail offers like No Deposit, Credit Bonus, Cash Back and so on.
You are required to deposit funds in Indian Rupee(INR) using e-wallets or Visa Cards etc and your broker will put an equivalent funds(in US Dollars) in your trading account enabling you to enter in the forex market. For more information on account types, spreads and products you can visit:-
For forex basics, you can visit my previous article at:-

Post by Victor
Victor, Research Analyst & Forex Trader (2013-present)



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FOREX TRADING STRATEGIES

FOREX TRADING STRATEGIES

TRADING STRATEGIES

Forex trading strategies vary in time and effort required, analysis and tools they are based on and, most importantly, market situation they suit. Getting familiar with several strategies may prove beneficial for your trading.
Below you will find a brief description of several commonly used trading strategies. Note, however, that you do not have to follow them to the letter. Whichever strategy you choose, feel free to modify it whenever market situation dictates. Before applying a strategy to your real trading, you can test it risk free on a demo account.

Position trading

Position trading is a polar opposite of scalping: it is a long term strategy where trades can be open for days, weeks or even months. The main objective is to gain substantial profit by participating in a major trend. It requires a proper understanding of fundamentals and a deposit sufficient to sustain minor adverse price fluctuations.
When applying this strategy keep in mind that positions held for more than one day are subject to swaps or rollover fees. In MT4, swap is applied to all orders opened from 23.59 to 00.01 (server time). Forex calculator available on our website provides swap charges for both long and short positions.
In cTrader, however, fee is applied when you keep an order open from Friday to Monday. Weekly rollover rates can be found here.

Hedging

Hedging is a strategy that is often employed to reduce the risk exposure in case of adverse price fluctuations. A hedge trade is opened in opposite direction to a primary position; required margin in this case is divided among the two orders.
Hedging strategy how
However, even when the trades are hedged you still may be at a risk of suffering significant losses. Since buy orders are closed at bid price and sell orders are closed at ask price, spreads widening can increase the loss for both long and short position.

News Trading

Hundreds of economic news are released around the world every day. While some of these news events have little to no impact on the market, others are followed by sharp moves and increased volatility. News traders seek to predict how the market is going to react to a particular event.
Economic calendar is the major tool a news trader employs to track the upcoming releases and predict how can they affect the market. All events scheduled for the current or the following week can be filtered by impact, country, category and time. Since currencies are always traded in pairs, news from both countries involved should be taken into consideration.
In the Economic Calendar you will also find a forecast provided by a financial news agency that conducted a survey among a number of economists regarding their opinion on a particular event. The more actual release data differ from the forecast, the sharper move you can expect.
To learn more you can check our introduction to Fundamental Analysis here.

Scalping

Scalping is a trading strategy that allows you to benefit from minor price fluctuations that occur throughout trading day. Scalpers aim to gain several pips per each trade rather than receive large profit on one position.
Scalping is often considered one of the most profitable strategies since smaller market moves are usually easier to obtain and are more frequent than larger ones. Moreover, it can lessen the risk exposure as the trades are relatively short term.  However, it is still recommended to combine it with various risk management techniques and factor in the volatility increase that may occur during major news releases.  
Scalpers frequently implement basic technical analysis into their strategy to identify short term market trends. For example, a trader can open a position with 2 pip stop loss and close it once it has gained 3 to 5 pips in profit if the price is approaching support or resistance level, a pivot point or Fibonacci level.
Another key aspect  to consider before applying this strategy is the choice of the broker. A number of companies simply prohibit scalping or restrict minimal order length. Tight spreads and low latency in execution are more preferable for those who choose this strategy. OctaFX competitive spreads along with no trading commission and market execution under 0.1 second provide a suitable environment for scalpers.

GRID TRADING

Grid trading strategy involves placing pending orders at regular intervals above and below a predefined price level. It does not require definitive forecasting of market direction and can be easily implemented when there is no clear trend.
LEVELORDEROPEN PRICELEVELORDEROPEN PRICEHEDGE
1Buy Stop1.35150-4Sell Stop1.34400-75
2Buy Stop1.35300-3Sell Stop1.34550-75
3Buy Stop1.35450-2Sell Stop1.34700-75
4Buy Stop1.35600-1Sell Stop1.34850-75
Maximum grid loss (pips)-300

Martingale

Originally introduced in the 18th century, martingale was a betting strategy based on probability theory. The underlying principle it is to double the bet anytime you lose; eventually one winning bet will cover all previous losses. It follows the same principle when applied to forex trading: the volume is doubled whenever the trader using this strategy fails to gain profit. In case the market trend is against the trader, he or she increases the volume twofold in anticipation of a breakout or reversal.
Let say EURUSD is currently at 1.09450: 
ORDEROPEN PRICECURRENT PRICEPROFIT/LOSS
1 lot Buy1.094501.09400-50 USD
2 lots Buy1.094001.09350-100 USD
4 lots Buy1.093501.09400+200 USD
Martingale requires a relatively large deposit that can sustain the potential losses. Moreover, this strategy might involve substantial risk and you may experience a stop out before recovering your losses or turning them into profit.
We would like you to be aware that even when applying the most profound and complex system you may encounter situations where it fails to predict the direction of the market and thus provides false trading signals. Always spend enough time developing your trading strategy before applying it to real trading.
FOREX TRADING- TECHNICAL ANALYSIS

FOREX TRADING- TECHNICAL ANALYSIS

TECHNICAL ANALYSIS

Technical analysis is a method of price forecasting that involves pattern recognition on a chart. Analysts employ various tools to identify levels of support and resistance, breakouts and breakdowns, trends and trading ranges. Knowing the strategies basics, one can likely find oneself able to implement some of the key elements into a self-designed strategy.

Charts

A chart is a graphic representation of how the price changes within the set period of time. In almost any trading platform you will find candlestick, bar and line chart types. All three are based on the same data but display them in different ways.
  • Line chart is a simple and basic type that only shows closing prices.
  • On the bar chart you can observe open, high, low and closing prices for each period of time. The vertical line is created by high and low prices, the dash on the left shows the open price and the dash on the right represents the close price.
  • Perhaps the most popular type, candlestick chart shows open, high, low and closing prices during the set period of time as well. Each candlestick consists of the “body” created by open and closing prices and the “wicks” that show high and low prices for each period. This type of chart is usually displayed in two different colours - one represents bullish candlesticks while the other represents bearish.  Bullish candlestick means that close price was higher than open price while bearish candlestick represents the opposite - close price was lower than open price. 
Forex Line - Bar - Candlestick charts
Note, however, that all of the charts described above show bid price only and you should not rely on them to identify where the ask price was at any given time.

Timeframes

Time frame denotes the amount of time it takes to complete each candle or bar and how much data it includes. For example, time frame H1 shows how much the bid price fluctuated within an hour. You can customize time frame for each chart in your trading platform.
In general, shorter times frames are believed to produce more signals, however a significant part of them tends to be false. In contrast, longer time frames may provide relatively less signals but they will be stronger and more significant for a particular trend.
Here is how the same price data look when you change periodicity:
Timeframes in Forex trading platform

Trend

Identifying the trend or the direction the market moves towards is one of the basic techniques in the analysis. Occasionally it can be determined by simply looking at the chart. Other cases will require more profound analysis of the price data.
There are two major types of market trends:
  • Uptrend - a series of escalating highs and lows;
  • Downtrend - a series of lower highs and lower lows on chart. 
A lack of any particular direction is occasionally referred as to sideways or horizontal trend. 
Forex trends
To identify a trend you can simply draw a straight line in the direction of the price moves on a chart. "Trend lines" are available in almost every trading platform and may be considered one of the beginner-friendly technical analysis tools. Another option is a technical indicator that can determine and display a trend when added to a chart.

Support and resistance

Finding support and resistance levels allows to determine when and in which direction should a position be opened and the potential profit or loss may be. Support is the price level which an asset has difficulty going below and resistance denotes the level which the pair has a difficulty rising above. These levels, however, do not always hold and a "breakout" or a “breakdown” occasionally occurs in one direction or another.
Support and resistance levels form a trading range - a horizontal corridor that contains price fluctuations during a period of time.
Technical analysis: Support and Resistance levels
A price movement through the identified level of resistance is referred to as breakout. Its bearish counterpart is called breakdown - a price movement through the identified level of support. Both breakout and breakdown are usually followed by increase in volatility.
To identify support and resistance you can simply mark the levels where the price had difficulty rising above and falling below in the past. Various technical indicators (i.e. Fibonacci or Pivot Points) can determine and draw the levels on the chart automatically. 

Chart patterns

Chart pattern is a distinct formation that predicts future price movement or creates a buy or sell signal. The theory behind it is basedon the assumption that certain patterns observed previously indicate where the price is currently headed.
  • Head and Shoulders is considered to be one of the most reliable chart patterns which signifies that the trend is about to change. There are two types of this pattern - head and shoulders top that shows that upward movement may soon end and head and shoulders bottom, which means that downtrend is about to reverse. Technical analysis: Chart patterns
  • Doji – is a candle with a short body (which means that the candle opened and closed at almost the same price) and relatively long wicks on each side that show market volatility during a period of time. Doji usually signifies market indecision since neither bullish nor bearish trend prevails.Doji candle
  • Bullish hammer - a candle that usually occurs at a turn of the downtrend. This candle must have wicks twice as long as the body.Bullish hammer
  • Hanging man - bearish counterpart of bullish hammer that has a shorter body and long wicks and is usually found at the before the reversal of the uptrend.  
    Hanging man
  • Another popular chart pattern is the triangle. There are three types of triangles: symmetrical, ascending and descending. The symmetrical triangle is a pattern where two trend lines that meet at one point and neither of them is flat. This pattern usually confirms the direction of the current trend. In an ascending triangle, the upper trendline is flat and the lower one is headed upwards. This pattern is considered to be bullish and may predict a breakout. Descending triangle has a flat lower line and the upper trendline is descending. Descending triangle is a bearish pattern signifying an upcoming breakdown. 

Indicators

One of the tools that allows to predict or confirm trends, patterns, support and resistance levels or buy and sell signals is a technical indicator. It is a software developed specifically for your trading platform that makes calculations based on price movements and volatility. Both cTrader and MT4have a wide range of readily available indicators, however you can always download a custom one or even create it yourself.
Simply adding an indicator to a price chart may greatly extend your understanding of the current market situation and help to decide in which direction you should be trading. For instance, to identify support and resistance levels, such indicators as Fibonacci or Pivot Points may come in handy. Momentum indicator will help you to measure the rate of price change and Zig Zag can be used to predict when the trend will be more likely to reverse.
To learn more on how indicators can be installed and customized, please check instructions for MT4 or cTrader in our Manuals section

FOREX TRADING - RISK MANAGEMENT

FOREX TRADING - RISK MANAGEMENT

RISK MANAGEMENT

Risk management, also known as money management, refers to a number of trading techniques employed to lessen risk exposure. Being affected by various factors, currency rates may be quite volatile at times, thus protecting your account against adverse price fluctuations is an essential part of a trading strategy.
The core concept of money management is to avoid risking more than 1-2% of personal funds on any single trade. This principle may greatly reduce risk exposure: provided that only 1% of initial deposit is at risk, even after several losing trades you are likely to retain the majority of account balance.
Risk to reward ratio denotes the potential profit in comparison to the amount you may lose for any given trade. For example, when you risk 100 USD on position to potentially gain 300 USD, the risk to reward ratio is 1:3.
Ratio of 1:2 is considered the minimum one should aim for as only a third of positions would need to be profitable to remain break even.
Potential profit and loss can be defined through Stop Loss and Take Profit levels.
Stop Loss and Take Profit are orders to close the position when price reaches a certain predefined level. Stop loss or Take Profit level can be identified with various technical analysis tools:
  • Support and resistance: for a short position stop loss is usually placed just above resistance level, while a long position often has stop loss set a little below support level.
  • Trend lines and channels: stop loss price is commonly placed outside the channel, above or below the trend line.
Let’s say you open 1 lot EURUSD Buy order at 1.12097. To achieve risk to reward ratio of 1:2, you can set stop loss level at 1.12077 (2 pips)  and take profit level at 1.12137 (4 pips). Thus, you will only be risking 20 USD to gain 40 USD. Depending on your initial deposit, you can set SL/TP levels even further, as long as your risk is below 1-2% of the personal funds.
How to identify Stop loss and Take profit levels
It is important to note that the price of each pip depends on the trading tool and the volume of your position. You can find pip price per 1 lot on the Spreads and Conditions page or simply calculate it here.
Trailing Stop can be used to adjust stop loss level automatically whenever the price moves in a favorable direction. Along with reducing the risks, it may also eventually lock in the profit already gained.
Keep in mind, however, that neither stop loss nor take profit is guaranteed: when the market is volatile or during a price gap your order may be executed at a different price than expected.
You can learn more about events and indicators that affect market volatility here.
ABOUT ECN TRADING

ABOUT ECN TRADING

WHAT IS ECN/STP TRADING?

It is a broker's business model in which clients` orders are sent directly to one or several liquidity providers to be executed on their end. Liquidity providers include companies, banks or financial institutions that quote both buy and sell price in a financial instrument or commodity. 

The more liquidity providers a broker has in general, the better execution for its clients will be (more liquidity available generally means less price slippage). What makes a true STP (Straight through processing) broker is that the STP broker doesn’t internalise the orders, but sends them to liquidity providers, acting as an intermediary between their client and the real market.
How ECN brokers work on Forex market

DO YOU HAVE REQUOTES?

No, we don't. Any broker who re-quotes your orders is a dealing desk broker. A requote occurs whenever the dealer on the other side of the trade (whether human or automatic) sets an execution delay during which the price changes. Therefore the broker can’t open your order and sends you a message that the price has changed. That is, a requote. You usually get a new price which can be different from the one you requested (especially when the market is volatile). Often the requote is not an improvement for the client. OctaFX doesn't have any requotes simply because we don't have a dealing desk, human or automatic (a piece of software usually referred to as a virtual dealer, automatic dealer and so on).

CAN I SCALP? DO YOU ALLOW NEWS TRADING?

Yes, you can. Unlike some brokers who prohibit scalping, OctaFX welcomes scalpers. Dealing desk brokers hold the other side of client trades, and have to decide whether to hedge or run their client’s overall net position at any given moment. Therefore trading styles such as momentum scalping can make it difficult for dealing desk brokers to manage client positions, particularly as scalpers generally open and close trades relatively quickly.
Another potential issue for dealing desk brokers is that scalpers generate a proportionately large number of requests to trade at the same time during busy periods, for example during the release of key economic data, which above a certain trade size are generally handled individually and can lead to an increased number of requotes for clients.
OctaFX are not a dealing desk broker. Instead all the trades are passed to our liquidity providers. The larger the volume of orders to trade we receive, the better it is for us, as we receive a commission based on trade volume.

HOW DO I FIND OUT IF MY BROKER IS A DEALING DESK?

Indicators could be:
  • A direct or indirect prohibition of scalping, news trading, or some other similar strategies
  • Fixed spreads
  • So-called "guaranteed" stop orders
  • A possibility of requotes
If you encounter any of these, the broker is quite likely to be a dealing desk broker. Dealing desks brokers (also known as "market makers") create their own markets based on the underlying market. NDD (No Dealing Desk) brokers such as OctaFX act as intermediaries between the trader and the real market, and receive a defined and transparent commission for it.

HOW DO DEALING DESKS EARN?

They earn the difference between overall client losses and client gains that aren’t hedged. In general dealing desk brokers experience a two way buying and selling client flow in a given market. Dealing desk brokers need to manage the net position of the flow, whether long or short, at any given moment. Depending on the broker, a portion may be hedged in the real market and the remaining exposure, up to the brokers risk limit, run naked as a trade of the broker in its own right.

HOW DOES OCTAFX MAKE MONEY? OCTAFX NEEDS PROFITABLE TRADERS? WHY?

OctaFX receives a commission from its liquidity providers for each transaction.
We receive our liquidity from a wide range of liquidity providers around the world. Our system is designed to offer the best aggregated prices of our liquidity providers direct to our clients. When you open a new order, you get the best available bid (or ask) price which is available from our liquidity providers with our commission already included in the spread you see on the trading platform. Therefore we are interested in you trading more, and staying with us as our client. Therefore it’s in our interest that your trading is as profitable as possible.

YOU HAVE NO REQUOTES. WHY?

Putting it simply, we don't requote you because we have nothing to do with the quotes (i.e. the prices you see in your trading software). The order is filled when a price from one of our liquidity providers is available. It is important to understand, however, that we do not guarantee that your order will be filled exactly at the requested price; our system is setup to fill it by the next best price from another liquidity provider. But, again, your order will not be requoted, since we are more interested in your profitable trading.

CAN LIQUIDITY PROVIDERS SEE MY ORDERS?

No, they can't. From their point of view they see only one customer, that is, OctaFX. You remain anonymous to them in all cases.

THE CHART WENT THROUGH MY LIMIT, BUT MY ORDER WASN'T OPENED. WHAT'S GOING ON?

It is a possibility, and usually happens due to a lack of liquidity at a given time. For example, a number of clients place sell limit orders above the market prior to an important news release with a total volume of 1000 lots. When the news is released, the market goes up 50+ pips to where the chart hits the price of all these orders and requests are electronically made to open a number of orders worth 1000 lots in total. It may happen that only 200 lots are available from the liquidity providers at this price and at this given time. In this case the first 200 lots out of 1000 will be filled, while the remaining 800 will not be filled (no available liquidity) and will remain pending until the price hits the level or beyond again.

DO YOU ALLOW EXPERT ADVISORS (EA’S)?

Absolutely. All Expert Advisors (EA's) are welcome.

WHAT IS SLIPPAGE AND WHY DOES IT HAPPEN?

Slippage is a slight order opening price movement which is a result of lack of liquidity (when it's already taken by other traders' orders). It may also happen during market gaps.
Why does slippage happen
Slippage is an order execution price difference which can be a result of a lack of liquidity or speed (Other traders have got there first). It may also happen due to gaps in the pricing of a market.
It is important to understand that OctaFX do not guarantee that your order will be filled exactly at the requested price; our system is setup to fill orders with the next best price available from the liquidity providers when slippage occurs.
So during these news times it's possible that there won’t be liquidity available at the price you requested. For example you want to open a 5 lot Buy order, EUR/USD, price is 1.30000. Now, in this case we can see the following liquidity available on the basic illustration above:
Provider 1: price is 1.30010, 20 lots available
Provider 2: price is 1.30005, 5 lots available
Provider 3: price is 1.30000, 1 lot available
In this case your order will be offset with Provider 2, since he has the best price and enough liquidity to fill your order. And the open price will be 1.30050, which is 0.5. pips away from the price you requested. But, again, your order will not be requoted, since we are more interested in your profitable trading.

WHY DON'T YOU GUARANTEE STOP ORDERS?

In the real market there is no such thing as a "guaranteed stop". They are offered by dealing desk brokers who create synthetic markets based on the underlying market. As dealing desk brokers generally run a proportion of the net client positions as an in-house trade against the clients, and the market is an in-house market, they have greater flexibility on stops. Guaranteed stops are typically set by the client at point of execution, can rarely be moved and incur a charge of additional spread to enter the initial trade.
In the real market any stop order is considered pending until its price is hit. After that the order is offset to a liquidity provider which may or may not involve slippage depending on the available liquidity. Therefore it's impossible to "guarantee" stop orders in the real market.

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