Different Types of Trading Method
Ninth session of Forex Training
Welcome back to Forex professional training in financial markets.
In this session we are going to talk about different types of trading strategy as well as Scalper, Expert and Management accounts.
We will also cover the meaning of slippage.
First we will look at the Instant Execution. Here, the broker will process buy or sell requests from an investor at the exact price they made.
Requests from the investors to sell and close orders are handled the same way.
If a broker is not able to execute the investors request immediately due to the market fluctuations, then the broker will provide the investor with the price change or a re-quote.
Reliable brokers intend to apply their customers’ requests in float markets as fast as possible.
Now let’s look at the Market Execution. Here the broker can buy, sell or close the trades with the closest valid price possible.
For instance, imagine the current value of EURUSD is at 1.3800 and you intend to open or close an order at this time; your broker is allowed to open or close your order with only a few pip changes like 1.3803 or 1.3798.
This account type is best suited for traders to whom price index is very valuable, and who are looking for the lowest pip possible.
There are people in the market known as Scalpers, who always make a lot of transactions and trades for small profits and displacements.
They do not spend much time in the market and usually intend to close their positions with only a small profit.
As a consequence, brokers usually do not support Scalpers and a party looking to open an account with a broker should be aware of this beforehand.
It is now time to talk about something called Delay or Slippage.
It refers to the time differences from the moment an investor or trader sees the price to the time that the order request is registered for them.
This delay usually happens due to the enormous market fluctuations and spread widening.
But there are accounts with Slippage that brokers can manage, to establish a delay on an order. This is only possible for some traders with special accounts.
This way a broker can set a delay time for the account so that any order is influenced by this delay. This is a type of brokers’ policy.
If you ever felt that the platform speed is reduced and you have a delay every time you are interested in placing an order, it is possible that your account has been changed to a slippage type.
To overcome this problem, you need to open a new account under your name or any other name; if you are still facing the same problem you should look for a new broker because it is possible that all accounts that you have been working with have been changed to this slippage type.
Next we are going to talk about the Expert.
Expert is a software that is a part of the Meta trader software which allows you to use mathematical logic, and allows you to create a program that is capable of warning you, or intends to make deals automatically.
It is critical to mention that there is no Expert that can always make profit, they will be profitable for a period of time or for a specified season and after that time they will show losses.
If traders shows an Expert program and claims that it has been successful for a period of time it is not guaranteed that this program will act the same in future.
This is vitally important, and you must be very careful when dealing with this topic.
Next there are three management accounts, these are based on percentage.
The First type is PAMM or Percentage Allocation Management Module.
PAMM accounts, which are more recognizable with brokers, are usually handled by one manager who will decide the trade amount.
Based on the amount they trade and the capital flow that was trusted to them by their followers, capital will be divided into different accounts.
A follower can choose to invest a portion of their account, say 10% with one manager and another portion, say 20% with another manager.
The Second type is MAM or Multi Account Management.
MAM accounts are more flexible, because the manager can also re-assign a higher leverage to specific accounts in the MAM from investors who have a higher risk tolerance and have agreed to it.
The third type is LAM or Lot Allocate Manager.
In LAM accounts the manager will decide the precise amount of a lot for a position.
On this site, you can see all the information you need; for example, the number of trades which have been made until today and a list of investors with the best accounts and so on.
If you click on the performance and then view all, in the next page you can find people who are working as managers.
For instance, the person who is number one here and has the best possible rank has an account with HotForex. He uses an Expert and almost 1.8 million people follow his account.
The amount of 4.8 million dollars that you can see belongs to 5,325 individuals and in 55 weeks it has been 785% profitable. But as we mentioned before, there is no guarantee that this will happen in the future and you can see all other managers from here.
Managers who are working on these websites as business managers fall into 2 different groups.
In the first group, are the managers who work with the demo accounts and are usually using experts; in this software they plan the program that they have in mind and that will make investors follow them.
The result is usually not impressive, because managers themselves do not believe in their own designed plans and you can easily tell this because they mostly have demo accounts.
The majority of managers are in the second group. They have real accounts that usually have investments as big as 5,000 to 50,000 dollars in.
When the number of followers, who decides to follow their business plan rises, they will make a lot of mistakes due to being under a lot of pressure at the time.
As a result, their followers could easily face huge losses.
It is essential to mention that using experts and management accounts are not recommended under any circumstances as they involve very high risk.
Also, most managers on this website do not have enough control over their plan system and are not able to handle their situation consistently.
That concludes this session, until next time and another session take care.