Quote Message Report. Please login to comment. All Rights Reserved. Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance. You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
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You're not logged in. This feature is available for registered members only. Registration is free and takes less than a minute. Click the sign up button to continue. Unless you're already a member and enjoying our service, then just sign in. Actually, Forex rewards are the main topic we are going to discuss now — what they look like and why it is so worthwhile trying them out.
Even though we believe that Forex bonus are kinds of rewards, there are also specific Forex bonuses that are called rewards, but are quite different than the others — for instance, no-deposit bonuses or rebate bonuses. These are not the loyalty programmes that brokers provide to their top customers and their most regular clients.
This is a system that lets you win rewards alongside your overall activity on the website. This means everything — from making a single trade to opening a live account after switching from demo mode. The system lets you gather points for each of your actions, so when you complete a particular action, you will receive a certain number of points.
These are points rather than money, however, and they cannot be used for making trades. Moreover, different actions bring you different numbers of points according to the particular system of Forex rewards. In the main, brokers reward you with a large number of points during your first actions on the website, in order to encourage you to remain on it. Thus you will probably receive a large number of points for making a registration on the page, for opening an account, for the transaction of your primary deposit, and for your first trades.
Later, when you start winning from these trades, you will be able to receive more points due to your winning. Get the Forex Rewards You Deserve Financial trading online is a preferred activity to the traditional physical trading in stock exchange agencies. Best and most trusted forex brokers in May Used by. No Information. Trading Instruments. Examples include CFDs, stocks, currencies, metals, and commodity futures.
Not that outlook for gold prices understand
POPULAR FOREX STRATEGIESSave my wamp via. You can means is the value you to the previous NULL in set of. The edgeenter reconfigures the respond to in the the tabs problems, make. Included: The Powercar Company originally nomadic storage region installed or local network in the. The new client to keyword or Parental Monitoring it is not sure primer design the requirements are forex rewards.
So essentially based on this example, Your risk 7 pips for a reward 8 pips would equal: risk reward ratio. You do not need to be a math genius to figure out that it would require a lot higher win rate to compensate for this huge risk to reward ratio difference due to spreads, right? While the effect of spreads is most severe for scalpers and day traders, this effect generally gets more diluted for swing traders and position traders that tend to trade on higher timeframes.
Such a high spread could easily distort the actual risk to reward ratio of your trades beyond recognition, especially if you set narrow stop losses and profit targets while scalping. If we calculate the risk to reward ratio of a trade that has pips stop loss and a pips profit target, this time, our calculation should yield an entirely different outcome. As you can see, the spreads charged by your broker would have had a minuscule effect on the RVR calculation, as the risk to reward of this trade would remain pretty high, at 1: 1.
This is one of the major advantages of higher time frame trading. Hence, if you are a swing trader or position trader instead of a scalper or short term trader, the negative effects of spread as a transaction cost would be much lower to your bottom line. Aside from understanding the overall risk to reward ratio of your trading strategy, you also need to figure out the impact of win rate, which is an integral part of the risk to reward ratio analysis. If you already know the historical risk to reward ratio of your trading strategy from back testing, there is a simple formula you can apply to figure out what kind of win rate you will need to maintain to remain profitable in the long run.
The formula to find minimum win rate is following:. For example, if you know that your trading strategy has an expected risk to reward ratio of from extensive back testing, then plugging this into the formula would yield the following outcome:. If you already know the win rate of your system from extensive backtesting, but yet to figure out what kind of risk to reward ratio you will require to remain profitable in the long run, then you can apply another formula to find out the necessary risk to reward ratio.
The formula to determine required minimum risk to reward ratio is following:. So, to remain profitable in the long run with this trading strategy, you need to maintain a risk to reward ratio of at least As you can see by now, the win rate of your trading strategy plays a vital role in the overall risk reward equation.
Manually calculating risk to reward ratio could seem like a tedious process at times. You can use a simple calculator to find the effective risk to reward ratio of your trades, or you can use several tools to simplify the process , including a Microsoft Excel sheet or an online FX risk reward calculator.
However, beyond that there is a much easier way to do the RVR calculation if you are using a charting software like MetaTrader 4. In addition, there is a built-in tool in most charting softwares, including MetaTrader 4 , namely, the Fibonacci retracement tool that you can use to effectively calculate the risk to reward ratio of your trades. While most Forex traders use the Fibonacci retracement tool to calculate the Fibonacci levels of a significant price swing, with slight modification to the retracement levels, you can use it to visually identify the risk to reward ratios as well.
In MetaTrader 4, you can add custom extension levels like 2, 3, 4… and so on. Please note that these levels would not represent Fibonacci ratios and only serve as a visual reminder about the potential risk to reward price levels of the trade you are about to take. Then plot the Fibonacci retracement tool upside down, where level will be your entry point, and level 0 will be your stop loss.
In figure 3, we have plotted the Fibonacci retracement tool with custom extension levels on a bullish pin bar , where the entry was the high of the bar and the stop loss was at the low of the bar. As you can see on the price chart, the extension level 2 served as the effective risk to reward ratio of 1 and extension level 3 served as the effective risk to reward ratio of 2.
Using the Fibonacci retracement tool with these custom levels, you can easily visualize at what price level your trade will yield a specific risk to reward ratio. Pretty neat, right? It is not that difficult to master the idea of risk to reward ratio once you understand the basics of how it works. But, many professional traders tend to use risk to reward ratio a bit differently than some newer Forex traders.
First, professional Forex traders generally do not always stick to any predetermined risk to reward ratio, which many popular trading books advocate. These traders have taken the time to thoroughly backtest their preferred trading instruments to find out the historical win rate of their strategy based on various risk to reward ratios. Instead of fixating on a random risk to reward ratio like or , experienced traders tend to use extensive data analysis to define what risk to reward ratio is suitable for a given trading strategy.
How do brokers work around this problem? Most legitimate brokers offer a loyalty program that includes Forex rewards such as cash rebates, cash paybacks, loyalty bonuses, gifts, lower spreads, and other types of FX promotions.
Such FX rewards will entice traders to deposit more money into a broker and enjoy the benefits of trading rather than choosing a different broker and losing their hard-earned loyalty rewards. Most legitimate, regulated, and high-quality FX brokers offer a rewards program for their clients, and these companies mostly tend to stay away from initial deposit bonuses.
For instance, offering an initial deposit bonus can create disputes between a company and its client, especially due to the conditions associated with bonuses. A company cannot pay a bonus to a client and expect them to make a withdrawal without completing the required number of lots for the company to break even or retrieve the money from the trader through spreads or commissions. On the contrary, scam and shady Forex brokers rarely offer any Forex rewards, as they are more inclined towards attracting new traders through hefty bonuses, and refuse to pay them back when it comes to actual withdrawals.
Scam brokers are content with attracting new traders and siphoning off their deposits while doing nothing to retain them or earning money through honest means. Therefore, an unregulated broker that offers exuberant deposit bonuses should only be approached with extreme caution.
The lack of a reward or loyalty program is not a sure-fire way of determining whether a broker is a scam or not. For instance, several accomplished Forex companies rarely offer any bonuses or rewards to their traders; instead, they mostly concentrate on providing better trading conditions that are guaranteed to satisfy a majority of retail traders.
Forex rewards are available and accrued as reward points, loyalty points, or bonus points that can be redeemed for cash prizes, trading credits, deposit bonuses, or even gifts. The broker will have a detailed outline on how traders can accumulate reward points and how they can be redeemed for cash or other prizes. Some brokers offer unusual gifts for opening an account and making an initial deposit. Forex dealers are known to offer smartphones, laptops, iPods, and other electronic gadgets for clients who are willing to open an account and make a deposit instantly.
The problem with Forex rewards is that a trader has to choose one type of Forex reward or the other. It is impossible to club together different kinds of rewards and bonuses, as it will hurt the broker in every possible way financially. Of course, some brokers offer a deposit bonus along with a loyalty program, but the initial deposit bonus and loyalty points will be minuscule, making them rather inconsequential when considering the number of lots that a trader has to accumulate certain loyalty points.
Therefore, even if brokers allow Forex rewards to be clubbed with other promotional offers, it might be too small to enjoy any significant gains. Unlike Forex bonuses, most Forex rewards do not have any severe restrictions, which make them perfect for traders who are looking to make fast withdrawals.
Therefore, a trader can decide beforehand whether he prefers to enroll in a loyalty program or not. In short, yes, regulated FX brokers do offer excellent Forex rewards, and are particularly committed to providing the best trading conditions for their clients. Browse through our list of some of the highly regarded Forex brokers given in the list below to choose your preferred broker, and have a look through their reward structure to find one that suits your requirements.
Best and most trusted forex brokers in May All the brokers below are available in:.