What is Copy Forex Trading? | Pros and Cons of Copy Trading

There are a few Forex brokers in the markets that facilitate copy trading. Copy trading is a technique where traders imitate the trades made by successful traders in hopes of getting the same outcome as the latter. Once a professional trader publishes his/her trade, the settings are mimicked on other traders' accounts. An approach growing in popularity, copy trading opens up a number of windows for traders in Forex trading markets!
 

However, is copy trading viable as a long-term trading approach? Let's find out. Here are the major pros and cons of Forex copy trading:
 

Advantages of Copy Trading:
 

Pros and Cons of Copy Forex Trading Strategies

1) Learn How The Professional’s Trade: Mirroring another trader's moves will allow you to observe how professional traders function. Doing so consistently will allow you to imbue yourself with those qualities and implement them in your own Forex trading approach.
 

2) Make Use Of Other Traders' Knowledge: When an expert trader is at the wheel, you can gain a lot of contextual knowledge, which would on a normal day be a very intensive job. Understanding how trades function and responding to them in real-time is something you can observe first-hand while copy trading.
 

3) Perfect For The Busy Trader: Some dedicate a lot of time to Forex trading and pursue it full-time while others like students or office-goers prefer participating part-time. For part-timers and busy traders, copy trading is an incredible approach to follow.
 

Copy Trading Disadvantages:
 

1) Mimicking Doesn't Always Bring In Identical Results: What works for someone else might not work for you. Mirroring the Forex trading strategies a professional follows is viable, but only up to a point. If you blindly follow another trader without the necessary stops and measures in place, any sort of backfiring will cost you a lot!
 

2) Lack of Proper Brokerage Might Cost You: Many times shoddy brokerage has led to traders following the wrong trades to mirror - which ultimately ends up bringing in losses. 
 

3) Mirroring Risky Traders Will End Up Badly: Not all traders follow a steady approach; some are erratic, and copying these traders won't work out too well at the end of the day.
 

With a good Forex demo account, you can see how to copy trading works and if at all it'll work for you. A number of such stellar approaches exist for traders to follow and succeed! Our experts at WesternFX provide traders with world-class, tailor-made strategies to make sure they love their trades. Backed by us, you will be able to zero in on profits and bag them swiftly. Call us now to know more!

A Book or B Book in Forex Trading? Which is Better & Why?

We seldom worry about the growth of coffee beans or the milking of cows, all that concerns us is the quality of the coffee we drink. Forex trading follows a similar analogy. As a trader, you don't think about the underlying brokerage processes, only about the smooth conduction of currency exchanges. Traders don't feel the need to understand the functions going in the background, but is such a mentality beneficial?
 

A books, B books - these must be sounding unnecessary to most Forex players. However, these are substantial elements that will help see the bigger picture in a much clearer fashion. A very simple reason is that as a Forex trader, you should know how your trade is executed. Since the trading majority is ever-keen on improving strategies and analyzing trends, not much focus can be driven towards seeing how the trade is made by the broker.
 

Some basic level of transparency should be strived for. Else, as you start making increasing profits, you will end up shelling just as much, if not more, too fishy brokerage processes. Fortunately, however, traders are beginning to see the importance of being aware of what goes on once their trades are placed. 

A Book or B Book in Forex Trading in Pakistan

A Book Trading:
 

An A book isn't a book in case you were wondering, it is a trading model (Straight Through Processing) aimed at trading without having the broker as the counterparty. When trading with this model, your order goes directly to the liquidity pool - here there are a number of bodies to serve as your trade's counterpart. A big chunk of Forex traders don't like trading with their broker as their counterparty since there isn't a conflict of interest.
 

Despite there being a transparent brokerage method available, why do the majority of Forex traders go for the more dubious ones? This is because a book brokers tend to charge higher spreads in most cases. Spreads can be tight when availing the brokerage provided by a book brokers, more so when trading exotic pairs. The problem with this isn't just the expense, it is the risk held by open positions that are the bigger issue.
 

B Book Trading:
 

The opposite of A book Forex trading, B book trading essentially allows you to avail brokerage where your broker is the trade counterparty. What this basically means is that you will sell to and buy from your broker. Doing so puts you in a position where your broker is more or less aware of your trading styles, the information of which can be used against you.
 

What's beneficial, however, is that the spreads are fixed in this type of brokerage. This means that irrespective of market hours, you will be paying the same amount to your broker for the trades. Another advantage of B book Forex trading is the guarantee of fills. Be it liquid markets or completely stagnant ones, with your broker acting as the market maker, you can bank on the fact that a good number of orders will come by.
 

Hybrid Model:
 

A subtly advantageous mix of A and B, this Forex trading model is of incredible benefit to the broker. By taking selective elements from either style, the hybrid model essentially allows the broker to decide which style of brokerage to follow with a particular trader. This means that depending on their decision, you can be subjected to STP brokerage or fixed spreads, and you won't be able to find out which! Traders who are working with a large capital are typically given the B book brokerage since this is more advantageous to the broker.
 

What's The Right Type For You?
 

When choosing a good brokerage solution, first importance has to be given to your expectations from a trade. If you are trading on stable grounds with little to no volatility, a brokerage with fixed spreads will work perfectly for you. Likewise, another aspect to be kept in mind is the trading expense borne; commissions and spreads aren't in your control but are mandatory. Sign up for services that charge honestly and don't rob you in broad daylight. 
 

How Do I Find The Right Broker?
 

Start off by going through user reviews. One of the best ways to study a broker's efficiency is by filtering out reviews. Be aware of the fact that some reviews, good or bad, are going to be fake! So having just one measure will not suffice. Take a demo test from the broker and avail their live assistance - this will give a clear idea of whether or not the broker is sincere in his/her approach.
 

Be it A book or B book, WesternFX strives to always be in your good books by providing you with high-quality brokerage! Of the various Forex brokers in Pakistan, we continue to be the crowd favorite. How? By keeping our promises and delivering excellence. Try a demo with us and see for yourself, call us!

What is Trendline & How to Trade with Trendline in Forex Trading?

"The trend is your friend." - You will come across this saying a lot in foreign exchange markets. As a Forex trader in 2019, you have to be extremely meticulous in your approach and have a keen eye on the charts. Opportunities, though plenty, have to be caught properly to make the most out of a trade. The competition is getting stiffer by the day, and traders have to be immensely adept if they want to have a profitable run! 

This is what makes catching trends an important aspect of Forex trading in Pakistan. Being an extremely volatile and liquid market, trends are always on the rise. The challenge is to net in ones with healthy strength and momentum, so you can ride them long enough to see good profits.
 

What's a Trendline?

 

Forex Trading Using Trendlines

Take a candlestick chart and draw a line through a point, and voila - you have a trendline at your disposal. What makes trendlines a substantial element of every Forex trading strategies are a simple fact that they are used to construct several other technical concepts. Once you start employing trendlines, it becomes a subconscious act after a point of time, allowing you to visually study charts and observe Forex trading movements swiftly.
 

A simple example would be working with candlesticks, with the sticks all moving downwards like a flight of stairs. When you draw a line between the first candlesticks on top, all the way till the one on the bottom, you can gauge the momentum and also deduce what's obvious - that the market is seeing a downtrend.
 

With a trendline to work with, you can land profitable trades and avoid letting erratic market movements catch you off-guard. The simple knowledge of a trend's strength and momentum can help you decide if it's going to be profitable, and if you should invest in it.
 

Why Trendline Trading is Advantageous?

You might wonder at this point, that if a trendline is just a simple line, why to spend so much time reading about it when one can just draw a line across the chart. A point fair enough; but how will you measure the value of a trend when it sees continuous ups and downs? When the Forex trading markets are seeing a mix of uptrend’s and downtrends, that's where a trendline truly helps. You can figure out if you should go long or short, or not trade at all! Likewise, the strength of a trend will show you if it's a valuable investment to make.
 

Want to get more tips on finding profitable trades while Forex trading in Pakistan? Sign up with WesternFX today! Our seasoned veterans will help you perfect your approach and see increasing profits in no time. Call us today to know more.