Okay, so I'm very, very keen to get you set up with your trading stroke broker account as soon as possible. The reason for that is it's going to become an integral part of the course and a lot of the learnings that you'll get from the various topics will include some tools and resources from your trading account. So that's going to be something we're going to get on to in due course. But before we do that, what I'm keen to do is just give you a bit of an understanding as to why your choice of broker is absolutely critical. Now, for those of you that have been trading a while you've probably got your own broker. However, when it comes to trading the news, you need a specific type of broker to fully take advantage of the approach that I'm going to teach you on this course.

So I'm going to go through that and hopefully by the end of it, you will be completely clear as to what type of broker you need to take full advantage of trading the news. So first and foremost, in the FX world or trading world there are two options Types of broker, you've got a market maker and a market provider. And this is the business model that a broker will run. So the first are market makers and by their very name, they make the market by taking the opposite position to you. So if you take a buy trade on euro dollar, for example, they will take the opposite side. So whenever there's a transaction, there's two participants in that transaction.

There's a buyer, and there's a seller. So if you take one position, the market maker is essentially trading the opposite side of you. So then making the market so it's almost like an artificial market. However, with the second business model, it's the market provider model. And this is a broker where all they want to do is facilitate your trade into the real interbank market. So when you place a trade, they're not taking the opposite position to you.

They're just providing you through to the interbank market where another trader and anonymous trader within the interbank market from one of the major banks will take the opposite position to you that justification See the title of your order their whole ethos is to give you a seamless experience where they give you the fastest execution possible. So those are the two types. Let's go through the model in a bit more detail. So the market make the model first. As we've mentioned, if you were to buy euro dollar at one standard law or a PowerPoint, whatever it may be, the market maker the broker is physically on the other side to you. Now, because of this, they need a dealing desk.

In order to do those transactions, therefore they can intervene with certain trades, they can turn your trade down, they can slow the whole process down. And that can cause you a number of different headaches when it comes to your trading. When you make a profit on a trade, obviously they will lose on it. However, the flip side of that is if you lose on a trade, they will profit so for me, it's a it's a very unethical business model. And I can't get my head around it personally that they actually benefit and they profit from their customers struggling And losing money. The market that you're trading is not the real market, you're not going into the interbank market and trading with the likes of the big banks, you're actually just trading a virtual market with which is you and your broker.

And they usually spread betting companies such as the likes of EA at x in the UK. It's very unique to the UK, where they will have their own. They'll have their own virtual market, regardless of the market provider model, which I'm much more of a fan of. It's a much more transparent business model and the actual broker is aligning with you as a trader, they want you to succeed so you continuously trading, however, with the market maker model, you could argue that actually, they want you to fail as a trader because they will profit financially. Now, I'm not going to get into a slanging match in terms of either way I just want to give an in dependent and informal view of both sides. So you can appreciate the two models and understand why we're going to go with a certain model over the other.

So the market provider model, as we see here, you buy euro dollar at one standard lot or a pound or point whatever it may be in terms of your trade size. What happens with the broker is they pass your order into the interbank market and then someone in the interbank market so it could be one of the big banks, one of the big hedge funds or it could be just an independent trader in one of those in the interbank market will take the opposite side to you completely anonymously. So you're competing with other traders rather than your broker. All the broker is doing is facilitating your transactions. And they're often called sdps, which is a straight through processes of this passing your order straight through to the interbank market and this goes through to the real market. So you're now actually trading within the real interbank market rather than an artificial market.

It's a non dealing desk because they don't need to take the opposite side of you. So They don't need a dealing desk. Therefore there's no intervention and the speed of execution is generally a lot faster than the market maker model. There are pros and cons to both business models. I'm going to go through that now. And I'm going to suggest which one we want you guys to go with, and for the maximum opportunity for success when it comes to trading the news so the pros of market makers, you have the ability in the UK and Ireland to make tax free profits because you're trading through a spread betting company.

Usually there's no commission so your transaction costs are relatively low. They're generally easier to set set up an account because they're underneath a spread betting company. It's underneath the gambling act, so they don't need as much paperwork to open an account, which is probably deemed a little bit dangerous. It's ideal that the market maker broker is ideal for longer timeframe trading. So if you're looking at the four hour the daily and holding positions for several days, or maybe several weeks, where fast execution Have your trade and low spreads are not essential to your strategy success. This is the critical element here.

So if you are a longer timeframe trader, and you're holding positions for much longer than the speed of execution and the transaction costs aren't that important to you and won't make or break your strategy success. So that's the pros of a market maker. What about the cons? Well, for me, there's a massive conflict of interest because the broker is benefiting from their customers on successful trades. So when a customer is not doing very well, the broker is going to be benefiting. So it's a very unethical business model.

In my own opinion, there's a massive conflict of interest. Now there's slow execution during volatile times due to the dealing desk or the dealing desk, as we mentioned before they can intervene with your trades or they can slow them down. They can reject them, they can widen the spreads, they can do a number of different things where they can manipulate prices and orders and make your job as a trader. Much much harder. I did initially use a stick spread betting because I was drawn into the attraction of tax free earnings. But when trading the news it was it was it was made, my life was made so much harder.

Because there was a manipulation of prices, I was actually trying to get into the market and my positions, were getting rejected. And I wasn't able to get the efficient entry that I needed to generate the profits that would make my my, my strategy a success. And the cons of the market maker also is generally they hold more risk because they are taking positions in the opposite side to you. If things go badly, such as when we saw recently, when the Swiss National Bank removed the peg on the Euro Swiss at the 1.2 level that caused a lot of spread betting brokers and market maker brokers to go out of business have a look at our party in the UK. They went out of business because they took on a lot of risk because they were physically taking positions in the opposite direction to their clients. So when things went horribly wrong, they held a lot of risk and they got into financial difficulties.

Obviously, market providers won't have that issue because they're not taking positions. They are simply processing them through to the interbank market. And generally the spreads are wider the transaction costs are a little bit higher in regards to the spreads. That's because the broker can have control over the spreads and widen them during the more volatile times. Okay, so the pros of market providers, these are the guys that are just passing your orders through to the interbank real market. So fast execution due to something called ecn, which is electronic communications network that pushing your orders very fast through to the interbank market keeping spreads very, very low as well, because the interbank market is competing for your order.

So there's lots of competition, meaning that the transaction costs and the spreads are very, very low, because they're just facilitating your order. There is no dealing desk, they're not trading in the opposite. direction to you. There's no intervention, no manipulation. So the speed of execution is always very, very fast. There's also very tight spreads during the more liquid trading area.

So when the news is creating lots of volatility in the markets, which is essentially what we're going to go on and trade, you find that the spreads are very, very tight because more people are trading. And therefore the competition is greater and therefore the costs of bought write down when the markets go very quiet, and there's less people trading, you'll find that the spreads get larger. So that's a benefit of trading the more volatile times is you get much smaller spreads or costs of doing business when we take a trade. It's ideal for intraday news based or automated trading, where timing is of the essence and spreads need to be small. So that's essentially what we're going to be doing. We're going to be learning to trade the news where speed is of the essence.

So we need to make sure that our bad trades are going into the market very, very quick so we can benefit from the greatest possible moves They're getting held up or rejected, that's going to cause us a massive headache. And then finally, there's less company risk because if we're putting capital with a company, we obviously want to be aware that they could potentially go out of business and there's a risk of losing our capital. So not only do we want to make sure that they're regulated, so our money is protected, but also their business model has an element of risk as well. market makers take on a lot of risk. And we've seen a few go out of business recently, whilst market providers are simply facilitating trade into the interbank market and the risk is held with the opposite trader, not the individual broker. There are some cons of market providers now market providers are not underneath the gambling act and they're not spread better.

So if you're a UK client, you will not have a market provider that offers spread betting, but as I say to a lot of the guys struggling with their trading and struggling with their market maker model is it's no good having a spread betting account if you're not making any profits to have tax free earnings. So I'm more than Happy to pay commission and pay tax on my market provider model because it means that I've got a greater chance of making profit and making profit. If you're paying tax on your profits Well done, you're putting yourself in the top 20% of people that make money, your broker is a key element as to whether you're going to be making profits at the end of the month are not by making your life easier by being a market provider or making it a lot harder by being a market maker.

So we have slight disadvantages on that front. But if we're making profits, then really, it's only a small headache to have. It's a slightly longer process to open the account as well because it's seen as a as a professional trading account. And so now it needs a little bit more of authentification. So things like proof of ID proof of address, so it's a little bit longer to open your account, but it's fine. It's still normally within a few days, you've got your account open, but I actually prefer that I like the fact that a broker is going through a lot of time and effort to make sure I'm the person I am and going through all the anti money laundering all the anti money laundering processes that they they need to do as a regulated entity that's always comfort to myself when they're doing that.

Okay, so when trading the news, which is what we're going to learn to do, we only want to use a market provider, we do not want to be using a market maker. And it's also a non dealing desk model when trading us as well, because we don't want anyone interfering with our trade. We just want them to be putting us through to the market, we want our broker to be aligned with us. And that means that they want us to succeed because if we succeed, we're going to trade for longer, and they will make a little bit of money on every single trade that we take for many, many years. If all of a sudden we're struggling and they're making our lives hard. We stopped trading, they stopped making money on all of our trades.

So a market provider actually is desperate for us to succeed as a trader because we will trade with them for longer and we have a long term successful relationship with both Parties benefit. But key is when we come down to the actual strategy approach, which as you'll find out in future topics is it's all about speed of execution is waiting for a news announcement. And then if it does, as we expect getting into the market as soon as possible, we want that speed to be as fast as possible in a market provider model will provide you with that. So we've given you a suggestion because I know there's a lot of brokers out there, so you're probably getting a bit of a headache in terms of who is the one you should go with our suggestion. You don't have to go with them. But our suggestion is FX Pro.

And the main reason for that is that I use them I've got money with them and I'm more than happy. So I've got a very happy experience. I've also got colleagues and peers that have FX pro accounts, so more than happy to suggest FX Pro. They're a market provider model, which is exactly what we want because it gives us that critical fast execution, the spreads generally Very, very low, especially on the more commonly traded currency pairs, keeping our transaction costs down. And as small as possible. This is a really critical thing is that they have exclusive and key trading tools that we are going to use throughout this course.

And they're going to become a integral part of your, your day to day trading. So they have some very unique tools that we're going to use. They're also double regulated. So in the UK, they're regulated by the FCA. And outside of the UK, they're regulated by sec, which is a Cyprus regulatory body. So they are double regulated me and they have to go through and meet all the strict criteria that comes with being regulated.

And that comes with obviously a certain amount of protection of your capital if the company gets into trouble so that's our suggestion. So just to summarize, and in regards to ethics, bro, don't worry. We've got all the instructions on how to open an account with them in the next couple of videos. So watch those videos, get yourself set up. And and open that account because it will be to your benefit because you'll really start to maximize everything we're going to go through in the course. Okay, so just to summarize, your choice of broker is really, really important, it's absolutely critical, because it can have a huge effect on your profitability, especially when trading the news because it comes down to speed of execution.

Now you don't have to use FX Pro, but as a minimum, you'll need to open a demo account so you can access their exclusive tools, which we're going to be using throughout this course and what will become an integral part of your day to day trading. Now as ever, do your own due diligence and make sure you're happy and comfortable with FX Pro. If Lehman Brothers can get into trouble, any company can get into trouble. So do your own due diligence. I have an account with FX Pro, so I'm happy to suggest them based on my own experience. But always, always do do your own due diligence to make sure you're happy as well.

And as we go along I'm always monitoring my brokers performance, and I'd suggest you do the same. And don't be afraid or lazy to change. If you're not happy. I know the account opening process can take a few days, it takes a while to get money out of a broker, but don't be afraid or lazy to change if you're not happy. And I'll continue to monitor the performance of FX Pro. And if I find that they aren't meeting the strict, the strict parameters that I set for a broker, and they start to make my life harder as a trader, then obviously I'll be updating you guys in terms of who I would suggest to replace them.

But for now, FX Pro, I'm absolutely happy with them delighted to be using them. And I'm sure you will enjoy the experience of using them as well and all the fantastic tools that they have to offer. So in the next video, you'll see that we've got a bit of a demo in terms of how to get set up with FX Pro. Also, you've got a PDF document which talks you through the three key steps that you need to go through in regards to getting yourself up but I would recommend and suggest that you do this now in advance of Going through the remainder of the course because a lot of the course is going to include illustrations using FX pro and the tools that they provide