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Where-To-Trade-Forex-Online-And-Type-Of-Forex-Brokers-in-Sri-Lanka-by-Prathilaba

In present-day situation, a forex broker is an intermediator who buys and sells foreign currencies on behalf of the clients in return of for a commission. Before the internet, forex brokers used to operate by phone. Clients would contact their brokers though phone to tell them about what currencies to buy or sell, and brokers would just do that and in return, they would receive the commission. Now, with the emergence of the internet in last two decades, online forex trading has come into existence. The trading could be done through a variety of electronic platforms and computer applications.

How to choose a forex broker ?

You can find many forex brokers in Sri Lanka. However, choosing the right forex broker can be a very daunting task, particularly if you do not have any idea what you are looking for. Given below are a few factors you must consider when choosing a forex broker:

  • Security and Reliability - The most important characteristic that a forex broker must possess a high level of security and reliability. You will be handing over your hard-earned money to a stranger. Least you could do is make sure that the stranger is reliable and legit. Luckily, there are regulatory bodies all over the globe who can help you recognize a trustworthy broker. You can choose any regulated and licensed broker to do trading in the forex market.
  • Cost of the transaction - When you trade in foreign currencies, you would also have to pay transaction costs. Every time you do forex trading in Sri Lanka, you have to pay commission or transaction cost. So the best approach would b to find the forex trader with the most affordable rates to do the trading. Also before making final decisions review your every option. 
  • Convenient deposits and easy withdrawals - A good forex broker will let you deposit or withdraw your funds from the forex market without creating any difficulty. Usually, forex brokers do not have any ground to make things difficult for their clients when it comes to depositing funds or withdrawing profits. They only use your funds to trade on your behalf. Look for the brokers who will make the trading easier and make the withdrawal procedure easier and smoother.
  • Forex trading platform - Majority of forex trading happens through brokers’ online trading platforms. So it is important that the trading platform your broker is using must have user-friendly characteristics and must have a stable infrastructure. When choosing a forex broker, make sure their trading platform has a lot to offer to make your trading easier and successful.
  • Best advisor - When you are looking for forex brokers in Sri Lanka, make sure that the one you are choosing gives you the best price for your orders, for both buying and selling. It is also important that your orders get filled at the right time so that you can make best of your circumstances.
  • Best Customer support service - Usually, forex brokers try to do their best for their clients, but they are not perfect. So choose a broker whom you can approach without difficulty and who is always willing to help you and give the right advice. Also, make sure that the broker is knowledgeable and knows what he or she is doing.

Types of Forex Brokers

Forex brokers can be divided into 2 categories:

Dealing Desks Brokers or Market makers

No Dealing Desks Brokers  - can be divided into 2 parts:

a) Straight Through Processing (STP)
b) Electronic Communication Network (ECN)

Dealing Desk Brokers  

A dealing desk broker will offer its customers the functions of both the sides of the market. The broker puts both a bid and asks price for at which they are prepared to buy and sell the foreign currencies. Due to this, the forex broker's customers can always fill up the trading orders. Dealing desk brokers are also known as market makers. Their main purpose is to acquire a share of the spread and to maintain adequate volume on both buyers’ and sellers’ sides of the market to avoid risks.

No Dealing Desk Brokers

No Dealing Desk brokers do not process their customers’ orders using a Dealing Desk. It means that they don’t take the other side of their customer’s dealing as their main purpose is to just connect the buyer and seller together. Usually, no dealing desk brokers charge a small commission for their trading services or just increase the spread by adding their own net income into it. No Dealing Desk brokers can be divided into two parts, STP and ECN

a) STP Brokers

STP stands for Straight Through Processing. In this, the STP broker directs their customers’ orders straight to those who bring liquidity to the market such as banks and larger brokerage firms. It is called straight-through processing as the broker does not operate through a dealing desk and brings down the frequency of delays and requotes while trading is taking place. STP has been developed to enhance the speed at which the transactions in the forex trading market takes place. This is done by letting the information that has been filled using electronic means to be passed from one party to another during the settlement procedure without actually re-entering the same information repeatedly at every stage.

b) ECN Brokers

ECN stands for Electronic Communication Network. An ECN forex broker utilizes the electronic communications networks or ECNs to offer their clients an opportunity to have direct contact with other participants of the forex trading market. The ECN provides the buyers and sellers with an electronic system where they both the parties come together in order to execute trades. This network has been designed in such a way that it can match the demand and supply of the currencies at the prices customers want to pay or want to receive for the currencies. Basically, this network match buying and selling orders available in the exchange. Through ECN, customers can also check the ask and bid prices of the currencies listed in the open market.

Some of the Best Forex Brokers

ic-market-in-sinhala-sri-lankatickmill-sinhalarobo-forex-in-sinhalapepperstone-forex-brokerfbs-forex-broker

Forex Broker Account Opening Tutorials

IC Market Forex Tutorial

Tickmill Forex Tutorial

Type of Forex Trading Platforms / Applications

Online forex trading is similar to any other trading platforms which are used to buy and sell the securities. The forex trading platform act as a mediator between the forex broker and the trader. Platforms also provide the customers with both current and historical data pertaining to a particular foreign currency and provide the customer with an access to all types of orders available in the forex trade market. For forex trading in Sri Lanka, you can use MT4, MT5, and cTrader ( Your chosen broker will provide one or all these platforms ) to enjoy a smooth and easier trading experience.

If you want to know more about Forex markets, you can visit our article, Introduction to Forex Trading for more information.

October 18th, 2018

Posted In: forex school

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Introduction-to-Forex-Trading-in-Sri-Lanka-by-Prathilaba

The currency market is the largest and enjoys the highest level of average daily turnover amongst all the financial markets. Forex market serves many purposes, but its main purpose is to cater the currency requirements of importers, exporters, and travelers from around the world. However, forex trading in Sri Lanka is enclosed in a circle of mystery and confusion. However, here in this article, you will learn what is foreign trading and how the forex market provides a number of opportunities for investors around the world.

What is the Forex Market?

Forex stands for foreign exchange. Forex market is the market where all the interested parties can purchase and sell the currencies. The forex market includes banking institutions, non-banking commercial establishments, investment management companies, and retail forex brokers and individual investors. The forex market is regarded as one of the largest financial markets with more than $5 trillion value of transactions on an everyday basis. The foreign exchange market is not just one market exchange. Instead, it comprises of a worldwide system of computers and brokers from all over the world.

The forex market operates in two ways, the interbank market, and the OTC (over-the-counter) market. In the interbank market, large banking establishments buy and sell currencies with the aim of hedging, making adjustments in the balance sheet, and also for their clients. In the OTC market, individuals buy and sell currencies directly through online platforms and forex brokers.

Brief History Of Forex Market

When it comes to the forex market, all you have to do is switch on your computer, open a forex account with a brokerage firm, deposit an amount, and start trading with currencies straightaway. However, in the past, it wasn’t this easy. In the last few decades, the forex market has changed significantly.

At the end of World War II, major currencies around the world were measured against the economic value of gold. In the beginning, this helped in bringing stability in the exchange rates. However, as economies began to develop after the war, gold became more and more costly. In the year 1971, the gold system was eliminated, allowing the exchange rates to work independently.

In the 1990s, the internet era had begun and many companies were adopting it to create their online networks in order to generate quotes and allow instant trading. Advancement of technology allowed the individuals to buy and sell currencies in the foreign exchange market. Today, foreign exchange market is the largest financial market in the world and every day a large number of investors operate in this market exchange.

Who Trades Forex ?

The traders and investors who trade in forex market come from a wide range of backgrounds, and fields. Some of the key players of the forex market are commercial banks, central banks or countries’ national banks, hedge funds, corporations, and individuals. Let’s have a look at how forex traders are categorized:

a)  Institutions and Institutional Investors

The biggest participants in the foreign exchange market are institutional investors and traders. A majority of forex trading money comes from institutional investors and traders, about 94.5% of the market volume.

  • Institutions - Physical establishments that directly buy and sell the currencies for their own forex accounts. For example, authorized central banks and commercial banks.
  • Institutional Investors: An institutional investor is a larger entity who has access to large funds for investing in the forex market. For example, banks, investment advisory firms, pension funds, etc.

b) Retail Traders and Investors

Retail traders and investors buy and sell currencies from their own private Forex trading account, using their own money. They invest in two ways, short and intermediate term trading, and long-term trading or investing.

Rewards & Risk factor of Forex

You must be already having loads of questions to ask as follows most probably ;

How to make money online ?

How to make money from home ?

How to make money on the internet ?

What are the online part time jobs for Sri Lanka ?

What are the online jobs in Sri Lanka ?

What are the Ways to make money online ?

Forex trading will be one of the best solutions for all above questions but forex market is a financial market and just like any other financial market, it comes with its own set risks and rewards. So let's learn about them before considering forex trading.

Risks Involved

  1. Interest Rate Risks - When a nation’s interest rate rises, its currency also get stronger due to the influx of large investments in the country. Similarly, a fall in interest rate leads to a fall in the value of the currency. Change in interest rate also affects the currency exchange rate, hence leading to risky circumstances.
  1. Leverage Risks - In forex trading, at the start, a small amount of investment is needed in leverage, known as margin. It is done to get access to considerable trades in foreign currencies. Sometimes due to fluctuations, an investor might have to pay additional margin. Larger fluctuations can lead to hefty losses.
  1. Transaction Risks - This risk is associated with the change in the exchange rate of the currency between the start and settlement of the trade contract. Forex trading works on the 24-hour basis and exchange rates keep changing and it might even change while a transaction is taking place. Exchange rate might go up and down from the contract price.
  1. Country Risk - This risk is associated with the economic structure and financial stability of a country issuing the currency. Change in economic and financial position and policies of a country also affects its exchange rate.
  1. Counterparty Risk - The counterparty is that company in a financial transaction which provides the investor with the asset. The counterparty risk is the risk of non-payment from the trader or broker during a transaction. In the forex market, there is no guarantee on spot and forward contracts on foreign currencies and risks come from the solvency of the broker and market conditions.

Rewards

  1. No commissions to be paid - In forex trading, you won’t have to pay any fees or commission like exchange fees, clearing fees, and brokerage commission. Most retail brokers are paid through bid-ask spread. It is the difference between the highest price a buyer is ready to pay and lowest price seller is ready to accept for currency ( for keeping trades open for more than a day may require you to allocate a tiny fee.  ).
  1. Low transaction costs - The cost for a retail transaction usually stays under 0.1% during the normal market circumstances.
  1. 24-hour trading - Forex market stays open for 24 hours. This is especially beneficial for those who want to trade in currencies on a part-time basis. They can trade at any time they want, be it in the morning, noon, evening or even past midnight.
  1. Cannot be affected by one single entity- The foreign exchange market is the biggest financial market in the world and there are several participants who trade in this market every day and during all hours of day and night. So basically, a single entity cannot control the market price for a longer period of time.
  1. Small deposit needed - In forex trading, you can start with a very small deposit in leverage. A small deposit can give you control over a much higher contract price. It means that investors can make big profits with just a small investment.
  1. Higher Liquidity - In the forex market, liquidity is very high. This is a very rewarding situation as under normal market circumstances, you can buy or sell the currency just with a click of your mouse.

Forex Success Stories

Forex market is huge and opportunities are endless. Let's have a look at some of the most successful Forex traders who changed the ways of forex markets with their approach:

George Soros

George Soros is renowned as one of the superlative investors in history. He is known for his excellent trading move when he made a profit of over £1 billion from the short position in pound sterling. Moreover, he did this successful deed before Black Wednesday of 16 September 1992.

Soros had a strong grasp over risk and reward factors. It was one of the characteristics of his financial mind that assisted in shaping his reputation as one of the leading Forex traders in the world.

Warren Buffett

Warren Buffet is an American investor and business tycoon and also one of the richest men on this planet. In 2014, Mr. Buffett was estimated to have an overall wealth of $63.2 billion by Forbes. When it comes to working in the forex market, he works on one simple principle. He believes in having patience and gather a proper understanding of the market so as to earn high profits in the long run. Buffett’s investment plan has been the most successful to date.

Bill Lipschutz

Bill Lipschutz earned profits from listing the millions of dollars of Salomon Brothers at FX department in the 1980s, even though he had no past experience of the currency markets. Lipschutz believes that market perceptions along with the market fundamentals help in determining pricing patterns in the market.

You can read more about them and more forex success stories here " Most famous Successful Forex Traders " article by us.

Are you interested in finding the right forex brokers in Sri Lanka? Find out here, ‘ Where to trade Forex Online and type of Forex brokers ?

Some of the Best Forex Brokers

ic-market-in-sinhala-sri-lankatickmill-sinhalarobo-forex-in-sinhalapepperstone-forex-brokerfbs-forex-broker

October 18th, 2018

Posted In: forex school

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Forex Trading for beginners in Sri Lanka

Forex has been long time assumed to be the "High Reward High Risk" scheme, which draws on the interests of many. To begin with the Forex Training it is essential to understand the potential of this particular sector that is equally outweighed by its risks.

What is forex trading ?

Forex is the short form of Foreign Exchange, and to be more clear it deals with currency trading. Majorly for commerce and tourism, there is a need to change the currency of one country to its equivalent value of the currency in another country. With globalization considered as the best step towards a perfect industrial world, businesses across the world require Forex.

Forex Trading Risks

Commercial initiatives and businesses that work in foreign countries are under a constant risk of the fluctuations in the value of the currency. When they sell or buy services or goods in other countries, they aim to prevent losses at least, if not gain huge profits. Therefore the foreign exchange markets have a regularized way to provide a hedge against these risks by fixing a particular rate at which the transaction would be concluded by the end of a certain period. In order to comprehend these risks completely, we need to understand the concepts of decentralized markets and centralized markets.

This is often referred to as Forex Volatility. It tells about the level of uncertainty or the risk involved with changes that could be possibly involved with currency exchange rates. A higher volatility denotes how an exchange rate can be spread over a large number of values. Therefore, this risk of high volatility is one of the major things to be considered when you want to invest in Forex services.

Where to trade forex ?

As the risks involved with forex trade is equally perplexing as the potential for gain, it is essential to find a regulated licensed forex broker. Many forex solutions companies exist in the market today, who have gained trust through the years of service. It is recommended to go for a reputable Forex broker like IC Markets, Tickmill, IQ Option, Roboforex or Pepperstone. You can learn about each of these brokers by referring to Regulated Forex Brokers in Sri Lanka article in both English and Sinhala.

Nowadays banks are taking up the forex trading expertise to ease out the process for their clients. The interbank market is a network of various banks around the globe that have commerce and currency exchange among themselves, in various countries. The banks need to work on the sovereign risks and credit risks by themselves, through deep processes of internal auditing. This is needed to keep themselves and their clients safe from losses as much as possible.

Forex acts as an entity to circulate the various currencies with the equivalent value from and to different countries.

Forex Trading Platforms

With most of the forex beginners opting for Forex Trading Software, most of them are available for free.

Some of the beginners resort to FX bots too. These are nothing but Expert Advisors aka EAs. Though it is designed to be helpful throughout, it is often not very reliable when the market changes and they are hardly on the high-profit side. If you are good with the code it works on, you can change it according to the market trends. But this is even more difficult while you are just a beginner.

If you still believe in rising huge profits with EAs, then the best would be MTA 4  / MT5 .

If you want to go by the news updates, the stock updates you see on CNN and Bloomberg are already the discounted prices with the inception of volatility. As the news is out, the Spreads grow, with a high number of re-quotes and slipping stop-losses. So keeping in mind that you a beginner, it is recommended to stay away from new trading until you become a professional in that mode.

cTrader is yet another trading platform similar to MT4 ( Meta Trader 4 ), with more features as it is new to the market. With a better user interface and advanced codes to take stop loss and profit systems, varying chart time frames, cTrader is a good retail trading platformyou can resort to as a beginner.

If you are starting this forex venture, with little investment of your own and think you have the talent to survive the

Must know Forex Trading terms

Pip

Based on the market convention, it is the smallest price move that a particular exchange rate results in.

eg : If GBP/USD jumps from 1.3360 to 1.3361, the .0001 USD is considered as 1 pip.

Upto 4th decimal place is considered in most currency pairs. Upto two decimal places considered in Jap Yen pairs.

Leverage

In literal means, Leverage indicates the control over big things using something small. On the similar tone, Leverage in Forex terms means to control huge transaction in the market with just a small amount in your capital. It involves a great amount of talent and knowledge in Forex domain to take much out on the leverage part of it ( Higher the leverage, higher the risk and higher the profits ! ).

eg : 100:1 leverage means you can control upto $100 with just $1 while 500:1 leverage means you can control $500 with $1

Spread

It denotes the brokerage costs and the equivalent replacement in transaction fees. So basically this is the difference between Buy and Sell price denoted in pips. ( In Meta Trader 4 / 5 you can enable the spread column to get the values easily while in ctrader, it will be shown with currency pairs )

Margin

The investor takes a loan ( not exactly but will refer to it as loan to get the idea correctly ) from the broker on a short-term basis. This loan is equivalent to the amount of leverage taken by the investor. Before a trade can be placed, it is essential for the investor to deposit the money in the margin account. The Forex margin account is on the equivalent level of an equities margin account.

Slippage

When an order is implemented, a slippage occurs if there is no limit order. Otherwise, a slippage can occur when there is less favorable rate than that which has been set initially. Slippage is widely linked with High Volatility.

Learn About Technical and Fundamental Analysis

If you are involved in forex trading, the analysis is the major key to success. Looking into daily, weekly, and monthly charts is essential for both short term and long term trading.

The technical analysis revolves around trend lines, support and resistance lines and eventually the indicators based on these.

The fundamental analysis is needed to understand the impact of news and commerce trends of each country on the Global forex system.

Learn to trade with the trend

Though many believe to invest in the major currencies like the Dollar or the Euro, it is often suggested to go for more of what you see rather than what you believe. It is essential to invest in the currencies that you can significantly see a profit coming in rather than the ones you believe would yield profits later. This is mainly because the market is quite unpredictable and most often assumptions lead to disastrous losses.

So always be up to date with the current trends in the market analysis and align your investments and forex trading accordingly.

Learn Money Management techniques

Before you jump into the deep pool of the Forex market, it is essential to have a good exposure to the requirements in a viable trading plan. Do read about the Forex Money Management Techniques before you decide on the investments wisely.

When it comes to investments, be it short term or long term, patience is what yields you the money. The longer you wait for the market to change, the larger the income. Again it could be risky, as it is FOREX - the huge trend among most people in any country.

Conclusion

As Forex is completely unpredictable, to get off to a good profit start in this domain, we would like to suggest you use a demo account in one of the online trading platforms, without any investment so as to learn the way the market analysis works. Once you make some good improvements, it is better to begin the journey of Forex ventures through a small investment as low as $1 ~ $200. This keeps you confident enough as you learn along, preventing huge losses and yet good incomes.

You can refer useful Forex Trading articles section to learn about Forex in English and Sinhala in Sri Lanka.

July 21st, 2018

Posted In: blog, forex

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General Risk Warning: The financial products offered by the companies carry a high level of risk and can result in the loss of all your funds. You should never invest money that you cannot afford to lose.

We are not an official website of Binary.com, ICmarkets, Tickmill, Roboforex, Pepperstone, Oymptrade or any third party website mentioned in the website.

This is the only Sinhala website that we operate as a Trading Educational Website. We do not operate any other sinhala trading educational website. අපගේ වෙනත් කිසිදු සිංහල ට්‍රේඩින් වෙබ් අඩවියක් නොමැත. අප සිංහල අධ්‍යාපනික වෙබ් අඩවියක් ලෙස මෙය පමණක් පවත්වාගෙන යන බව කරුණාවෙන් සලකන්න.

Countries not supported for Trading InstrumentsPlease refer relevant brokers websites for countries that are not supported for trading.

*EEA – European Economic Area Notice :

Binary and Digital options are prohibited in EEA*

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Please be advised that certain products and/or multiplier levels may not be available for traders from EEA* countries due to legal restrictions

* සැලකිය යුතුයි  : ඔබ බයිනරි ඔප්ෂන් ට්‍රේඩින් / ෆොරෙක්ස්  සදහා යොදවන මුදල දැඩි අවදානමක ලක්විය හැක. අවදානමක් ගත හැකි අයට පමණක් සුදුසු කරුණු පමණක් මෙහි අඩංගු වේ. මෙය මුදල් ආයෝජනය කිරීම සදහා ලබාදෙන උපදෙස් නොවේ.   ප්‍රතිලාභ.com වෙබ් අඩවියේ අරමුණ ඔබට බයිනරි ඔප්ෂන් ට්‍රේඩින් / ෆොරෙක්ස් සහ වෙනත් අධ්‍යාපනික තොරතුරු ලබාදීම පමණි.  බයිනරි ඔප්ෂන් ට්‍රේඩින් / ෆොරෙක්ස් හරහා සිදුකරණ ආයෝජන අධික ලාභ ලැබෙන සහ අධික අවදානමක් පවතින ආයෝජනයන්ය ( ඉවසීම සහ කැපවීම නොමැති අයට මෙවැනි ට්‍රේඩින් ක්‍රම සුදුසු නොවේ ). කිසි විටක ඔබේ එදිනෙදා වියදමට හෝ ණයට ගත්ත මුදල් මේ සදහා යෙදවීමෙන් වලකින්න. ඒවගේම ඔබගේ රටේ මුදල් නීති සහ රෙගුලාසි වලට අවනත වන්න. ඔබ සිදුකරණ ආයෝජන සදහා සම්පුර්ණ වගකීම ඔබ සතුය. මෙම වෙබ් අඩවිය, එහි ඇඩ්මින්වරුන් හෝ මෙහි සදහන් වෙනත් වෙබ් අඩවි කිසිම වගකීමක් භාර නොගනිණ බව කරුණාවෙන් සලකන්න.

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