What’s more valuable than getting answers to frequently asked forex questions by the chief operating officer of one of the best forex brokers around. I’m talking about Terry Salo of Tallinex! I got the chance to talk to him recently and decided I would try to squeeze as much as I could from him so I could share with you.
So let me not bore you already. These are the questions I asked Terry for my dear readers. I am sure, you, at one point in time have wanted an answer for at least one of these questions. So here you are:
#1. How often do you redefine support and resistance?
It depends on the market. More often than not, support/resistance levels are actually price zones, not exact levels. The most common mistake traders make is they draw way too many levels on their chart.
It is best to define key levels and watch how price reacts to those levels. As long as the key levels are respected, you can keep them intact. For example, if support level has been broken to the downside, it may become resistance if price moves back to the level and bounces off. If it is breached again upwards, then it is time to redefine your S/R levels.
To conclude, market is always dictating which S/R levels to watch and which levels to redefine.
#2. Why are the gaps between buying and selling rates different between different currencies?
This is called the bid-ask spread.
The size of the spread is mainly affected by the liquidity in the market. More buyers and sellers competing in the same space bring bid/ask spreads lower.
The Bid (Sell) is the price for selling the base currency and buying the secondary currency, for example the price at which the EUR can be sold, and the price at which the USD can be simultaneously bought in the EUR/USD pair.
The Ask (Buy) is the price for buying the base currency and selling the secondary currency , for example the price at which one can buy the EUR and sell the USD (EUR/USD).
#3. Is trading foreign exchange harder than trading stocks? Why?
Trading Forex has actually many benefits compared to stocks. The Forex market is seamless 24h market. Also, forex trading costs are lower than those of any other market. Then there is the benefit of leverage – everyone can start trading forex with minimal costs.
Stock trading has many regulations and limits, forex trading does not have those issues. There are some regulations in forex, but nothing like what regulates the stock market.
In forex trading a 100% return on investment within a day or two wouldn’t surprise anyone, and in fact 1000% wouldn’t surprise an experienced trader. Because of this, Forex has become one of the most popular ways to invest.
#4. How can one be a good forex trader?
The key to become a successful forex trader is patience and learning. It is important to get to know the basics of forex trading at first, like with any other business. Then a trader should commit to finding what type of analysis is working best for him/her – fundamental or technical analysis. After that, it is all up to the aspiring trader. It is normal to test different trading strategies at first but the most common mistake new traders make is they move from one trading system to another, thus never mastering one particular system.
When you find a system that works for you – keep at it, get to learn every nuance of it and practice, practice, practice! Keep your losses small and winners big.
#5. What should everyone know about forex trading?
Forex is not a get rich quick scheme. Learning to become a profitable trader takes time and effort. That being said, once a trader has developed a trading system which works for him/her, it is a perfect way to earn your living. Just think of the benefits – you can trade (work) any time you want, all you need is a PC or a laptop and an internet connection. You are the master of your time and no one else is telling you what to do.
#6. Is it possible for an amateur forex trader to make sustainable profits trading forex?
Yes, it is possible. Forex is like any other business which needs to be taken seriously before you can reap in any profits. When a beginning trader is willing to commit time to learn and progress, he/she can soon make steady income from forex trading.
#7. What are the pros and cons of forex vs stock market?
Main benefits trading forex are:
1. High liquidity – An advantage because it means that with a single click of a mouse you can instantaneously buy and sell as there is almost always someone who is willing to take the other side of your trade.
2. Leverage – Leverage gives the trader the ability to make nice profits, and at the same time keep risk capital to a minimum. The trader can control large amount of total contract value with minimal deposit.
3. 24h market – This gives the trader freedom to choose when and what instruments to trade.
4. Low starting costs – Because of the leverage, traders can start with very low investments to earn living out of trading.
5. Huge amount of free educational material available.
#8. What percentage of Forex traders make money in the long run at Tallinex?
It is hard to say the exact percentage. As a true ECN/STP broker, Tallinex is working along with its traders, not against them. We want to see traders succeed. If you don’t have the time or skills to trade forex yourself, you can opt for our professional money managers who trade for you. A lot of clients are using this option to earn steady profits month after month.
At Tallinex, we are working to offer absolutely the best trading environment available which makes trading successfully a lot easier. With market leading execution, low commissions and spreads, everyone can become profitable in the long run.
#9. Can you please explain how Tallinex is able to provide clients with such low spreads? Do the low spreads affect your company’s ROI in anyway? How?
Tallinex gets its liquidity from reputable major banks around the world. We are constantly adding new liquidity providers who all compete to fill your order. That is why we can offer such low spreads to our clients.
Of course, our ROI would be greater if we would add to the spread but Tallinex is committed to its traders and providing the best conditions for forex trading –this is more important to us than little gain in ROI.
#10. What is the difference between your account types and spreads?
The Tallinex ECN-MICRO account type is designed for traders new to the Forex market, and those needing to trade smaller volumes. ECN-MICRO account doesn’t charge any commission on trades and minimum trade size is 0.01 lots. The maximum leverage is 1:1000.
The Tallinex ECN-PRO, raw-spread account provides the ideal trading conditions for professional and institutional traders alike. Maximum leverage of 1:500 and spreads start from 0.0 pips!
PRO-MANAGED accounts are designed for Tallinex clients who want to take advantage of the high potential profitability the Forex market offers, but do not have the time or the desire needed to master the currency markets.
Tallinex’s PAMM system provides Money Managers with the ability to trade your account, but without having (or needing) direct access to it. As the account owner, you will often (though not always) have direct access to your account, allowing you to monitor trades in real-time. Regardless, you will receive a Daily Statement by email that shows the account activity for that day and provides a more permanent record of trades placed.
You can therefore confidently assign your fund to be invested as a managed account with the Money Manager of your choice, secure in the knowledge that only you, the account owner, may withdraw funds.
Think of it as auto-trading by Professional Money Managers, with results audited by Tallinex.
#11. If you had some advice for someone aspiring to be a professional forex trader, what would you tell them?
The Internet is full of free educational materials about forex trading – study as much as you can, be patient and practice. Keep your risk minimal and ride the trend – this is how you can become a successful trader in the long run.
I have personally worked with Terry Salo before and I can say he’s a very simple and kind guy with a lot of passion about what goes on at Tallinex and how they serve their clients. Terry has amassed years in the forex market. From 2003 to 2006, Terry Salo ran his own marketing firm in Helsinki, Finland and managed a little over 200 employees. Between 2006-2009 he was marketing American Express in the Scandinavia while simultaneously, for some time, working as a money manager until 2010. He was Head of Institutional Sales at FinFx, another reputable broker located in Finland till 2011. In 2012 he started Tallinex with an associate, Turkka Partanen, who was also a money manager back then.
Within a year after starting Tallinex Terry and his team had already amassed 10,000 clients! This success is evident of the fact that they stay true and transparent to their clients and put them first. Tallinex is a true ECN broker and I know most traders love ECN brokers so they don’ have to deal with market makers.
Tallinex currently has a workforce of about 20 and operates from Saint Vincent and the Grenadines but with the support personnel based in Tallinn, Estonia.