Forex Brokers - How To Avoid Losing Your Live Trading Account

There are very few forex traders out there who can claim to be completely satisfied with their forex broker

. You will generally find that nearly all of them have their faults, however you should still try and stay on the right side of them because otherwise you may suddenly be faced with increased spreads, a frozen trading platform, or worst still a closed account.

So how can do stay on the right side of your forex broker?

Well there are two main rules you should follow. The first is simply to stay away from short-term trading, or scalping as it's known in the industry. This is basically where you are constantly opening and closing trades within minutes of each other, or seconds in some instances.

The reason why a lot of forex brokers are against this style of trading is because if you are constantly making money, then they are probably losing money. This is because due to the very short duration of each trade, they do not have enough time to cover your trades elsewhere.

There's nothing wrong with day trading in general but it's when you start looking for hit-and-run profits of say 2-5 pips that you may start running into trouble.

Another example of how you can potentially lose your trading account is if you employ a forex robot. With more and more brokers using the popular MetaTrader4 platform, this is becoming more of an issue because there may be thousands of traders all using the same robots.

So if the robot in question is actually profitable, which although quite rare is actually possible, the forex broker will not sit back and allow themselves to suffer excessive losses for long. They will either ban the robot altogether or in extreme cases they may even decide to close your account.

So the point is that if you do find a good forex broker, you should avoid doing anything that may result in you losing your account. Brokers don't generally mind if you are making consistent profits providing that your trading style is clear and transparent so they can hedge your trades if they need to.

However if you try and steal a few pips after major news announcements, or are consistently scalping the markets, then you will not be able to carry on trading this way for very long. It's a similar story if you use a highly profitable forex robot, so you should ultimately try and find your own profitable trading system that won't jeopardize your trading account in any way.

by: James Woolley

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