There are lots of another way to learn about the Forex trading, than to read books, you could do Demo for better learning.
What are you on about, man?! Everyone knows about demo trading. And for better learning, you should also trade with real money, small in the beginning, so you can gauge how you handle loss from a psychological standpoint. Other than that, it's as much screentime as possible to develop your intuition. And tradingview.com gives beginners a wealth of examples, both good and bad, of how to approach the market from a technical perspective. The challenge there for the beginner is to learn how to ask himself the right questions to discriminate between the nonsense and the good technical analysis people post everyday.
I am also saying that, Demo is the first step but it is not the last and small investments is also a good way to trade, but we also need to learn about the risk management and money management and various types of analysis in order to become successful in Forex Trading. Atleast I am not promoting someone in my posts. I use it for sharing the knowledge and experience with all my fellow traders here.
AFAIK yes. How? The same way they do it when market making SPOT FX. If in doubt, read their legal documents as it is written there, at least for those brokers regulated in the UK, Australia, North America, and EU. Other jurisdictions, good luck.
Not sure if you are implying I am promoting something and that is a bad thing. Are you? But, yes, and regardless of instrument, risk management comes first. One can have the worst timing and even be the worst analyst, if risk management is done right, you could still make money in the long run as amazing as it sounds.
Because retail traders in the aggregate lose a lot more often than they win. Some people throw figures around such as only 2% to 5% manage to be profitable. If true, then imagine if you owned a company operating as a market maker (not a brokerage, you would be a dealer in this case) and making a market for you retail clients: You would make a killing! That's why there are so many retail 'brokers' that don't deserve to be called 'broker', and even though profit margins have come down and it's been getting harder to get started as a dealer. Who can be trusted? In this industry, even at the institutional level they screw each other (refer to the lawsuit against Bank of NY-Mellon from Blackrock), so what do you think makes the retail level any different? However, regulators in high grade jurisdictions (so not the Caribbeans or Cyprus or Malta where a good bribe will get the dishonest business owner anything he wants) will put the brokers with bad business practices out business.... well, eventually and perhaps after a long time (just look at how long it took to shutdown FXCM in the USA). And nowadays, regulators seem to be waking up to the fact that more needs to be done to protect the ignorant retail traders (UK, EU, all passing new laws or at least considering a tougher approach--what's a happening to the binary options outfits is just the beginning). So I would reframe the issue of trust like this: If you are considering opening an account with a broker/dealer (I write 'dealer' because some market maker have a good reputation; for ex: OANDA so far has not been banned or fined in all the major jurisdiction where it is doing business and it has been in business like 10 or 15 years now)--so to get back to the point, the first question you should ask of you broker: How do you manage client risk? And use the example of the SNB liquidity event that happened in January 2015 to assess who did a good job and who didn't and who seems to know what they are doing. The reason this is critical is because, and let's assume you are with a market maker, if they know how to handle consistently profitable clients properly, then they don't need to cheat those clients because the market maker wouldn't be losing money as it is capable of properly hedging the client risk in the real market. I spoke to OANDA and was told that this is what they do. I asked because I couldn't understand at first why they only allowed a maximum open position of 10M notional. They then told me that even though that's the max per ticket, if the trader has sufficient equity, then the trader could open 10 or even more 10M tickets (assuming the liquidity is available in the real market) because what they would do then is not internalize this client risk on OANDA's book, but instead flip the trades over to their external liquidity providers for hedging purposes. Anyway, that's just an example. But based on everyone I spoke to, it seems nowadays pretty much every broker out there is using a hybrid model like this one. Some are more efficient and others less (which does have an impact on spreads and execution speed depending on notional size of your trades). In conclusion, I'd say that talk is cheap: a customer rep can say whatever; a sales rep on the phone can and will say whatever is good for his broker; you need to have proof in writing: one such way is to find a broker that has no issue providing you with a full FIX report showing the entire lifecycle of your trades from the moment they left your computer to the time they were fulfilled by the LP. Brokers who can easily do this are those using Harmony from Traiana. The other who don't use, still have STP systems on the backend recording all the trade details, but depending on how badly organized they are, you will get flat out refusals to grudging acceptance. All this to say, that this is not much to ask and should be provided to clients as a standard practice. Then you'll have brokers who will tell you, sorry we can't but hey, we can give you the historical prices and you can compare at what price you were executed to show that we are not cheating. Well, if the historical prices are generate from your broker, how is that proof of anything? In the end, live trade execution is the key (demo means nothing): if you don't experience any spikes in the price feed that trigger your SL or a margin call, no platform freezes that prevent you from closing a profitable trade, no major slippage against you when opening and closing a position (remember: during high volatility, there is slippage and the larger the trade size, ie > 10M+, and the more probability there is for slippage and spread widening not because of the broker but because of the LPs), no major platform dysfunction preventing you from managing your positions properly, then I will say the broker is OK. Next, if you can withdraw profits quickly and easily, is another test. That is how you determine whether you can trust a broker. So you start by assuming none can be trusted, and then you go down your checklist: the ones that match all these criteria can be trusted. And this is where we see that market maker model vs ECN model is irrelevant from small position sizes. If there is no cheating, you can make money with both. The only issue with most brokers is in the case of a liquidity event such as the one with the SNB in January 2015, when too many clients lose big and the broker is undercapitalized: meaning, if clients lose all, they have no money to pay the counterpart to their trades, and if broker also doesn't have enough capital, the broker can't make the counterparties whole: This is what happened with FXCM, and others during the SNB crisis, triggering broker bankruptcies. So you also need to be aware of how well or not your broker is capitalized because even if you are a successful trader, but the broker doesn't manage internal or external risk (counterparty risk) well, if the broker goes down, it will take you down and all its clients, and this is especially true with all the small and new brokers out there since Prime Brokers and Tier 1 banks don't want to extend lines of credit anymore to retail brokers.
Yeah, Risk Management is one of the most important aspect of the Forex Trading, along with the Money Management. Its nice to see that you too are sharing some good knowledge. Keep it up.