What is forex trading? But first, you should: Analyze the asset of your choice Buy at the best price if you think the price may go up Sell at the best price if you think the price may fall.

What is forex market? How to start Forex trading for beginners? Currencies Forex trading for beginners is trading currencies. EURUSD, the Euro versus the US Dollar. GBPUSD, the British Pound versus the US Dollar. USDJPY, the American Dollar versus the Japanese Yen.

EURJPY, the Euro versus the Japanese Yen. USDCHF, the American Dollar versus the Swiss Franc USDCAD, the American Dollar versus the Canadian Dollar. PIP: This is the smallest variation in the quotation of a currency pair. A lot: it can be defined as the number of currency units you will buy or sell. It is a unit of measurement of the size of a trading transaction. In Forex, 1 lot corresponds to , units of the base currency EUR, USD, GBP, etc.

There are mini lots 0. To clarify, the Forex trader can thus spend a small amount of money and actually invest a lot more in financial markets, such as Forex. Leverage increases gains, but also losses. Margin: This is the capital required to open a transaction. It is released when the transaction closes. Ask price: is the lowest price at which the investor is willing to sell the currancy pair. Bid price: is the highest price at which the investor is willing to buy the currency pair.

Spread: this is the difference between the buying and selling price of a currency pair, expressed in pips. This is the cost paid for opening a Forex trade. Going long: is equivalent to being a buyer on a Forex trade. Going short: Equivalent to being a seller on a trade. Trade: a trade means opening a position for purchase or sale. Broker: He is the intermediary who places stock market orders for his clients against remuneration. It is, thanks to the broke,r that you can make a transaction on the financial markets.

How do Forex market works? What is the best forex trading platform for beginners? Are you looking to speculate on forex markets? Do you think that the Euro EUR currency will go up in value against the U. Dollar USD? The forex market is the most liquid and the largest market in the world. It represents every global currency with 24 hours of trading a day, and five days a week.

So, to trade forex, you need a forex platform. Trading with a well-performant forex platform is a crucial factor for success in international currency markets. As a contract for difference CFD trader or forex investor, you may certainly have specific needs for some forex platform, trading tools, or requirements you have.

So, to start trading, it is important to have access to an intuitive online trading platform. Such as MetaTrader platforms, MT4, MT5, Tradingview , etc… This is an example of the platform Tradingview with which beginners can start their forex trading. How much capital to start trading? Here are the three main criteria: Your leverage. Number of currency pairs you will trade. Your risk number of lots per trade. Tips to trade in forex for Dummies Before you start your new forex trading, you should imperatively understand the fundamentals.

Know the market We cannot overemphasize the importance of self-learning in the Forex market. Make a plan Developing a trading plan is a crucial part of successful trading.

Practice Test your trading plan under real market conditions demo accounts. Predict the market Fundamental traders prefer to trade based on news and other financial and political data. Know where to stop It is all about knowing how much risk you are willing to take on each trade. Control emotions You have an open position and the market is not moving in your direction. Keep your trading slow A key to trading is consistency. Choose the right broker for you Choosing the right trading intermediary is crucial when participating in the foreign exchange market.

Advantages and disadvantages of forex trading for Dummies Advantages Forex markets are the largest in terms of daily trading volume in the world. And therefore, offer the best liquidity. This makes it easy to take and leave a position in any currency within a fraction of a second for a small spread.

The forex market is daily traded means 24 hours a day , five days a week. Each day, it gets starting in Australia and ends in New York. The broad time horizon offers traders many opportunities to make profits or cover or even reduce losses.

The major forex market is Frankfurt, Hong Kong, London, New York, Paris, Singapore, Sydney, Tokyo, and Zurich. There are many discussions on whether it is necessary to use Stop losses or not.

Some traders believe that Stop loss is essential in trading, emphasizing the ability of Stop losses to prevent the loss of the whole deposit. If the price is rapidly moving in a direction which does not correspond to the forecast, a deal that has not been closed in time can result in a significant loss.

The opponents of Stop loss believe that this order can limit not only losses, but profits as well. In this case the position is closed prematurely with a loss while it could develop into a profit later on. As a rule, the decision on whether to use Stop loss or not depends on the individual strategy and preferences of a particular trader. Trailing stop is an order which its major function is to act as an automatic maintenance of an open position with continually shifting of the stop loss level depending on the price movement.

A trader may open a bullish position and sets the gap from the current price to trailing stop in pips. When the price goes upwards, the trailing stop follows it automatically sticking to the set gap.

In case that the price goes down, then the trailing stop quote remains on the spot. In this way, a trader using a trailing stop has an opportunity to derive maximal profit at an ascending price with no regard to the set Take Profit value. Furthermore, a trailing stop is a loss limiter. Here is an example: a trader opens a buy position at the price of 1. In case that the price starts to move upwards and exceeds the mark of 1.

If the price turns down, the price does not change its position. As to a sell position opening, trailing stop behaves quite in the opposite. The trader sets it a few pips higher. At a price descending motion the trailing stop shifts according to the set size. With the up-going price, the trailing stop does not move. While applying a trailing stop in Forex operations a trader will have to remove stop loss orders manually in line with increases in the trade profit.

Trailing stop sets a stop loss level automatically at the value the trader needs. A trailing stop is mainly used by traders who run trend trading, but can't follow the price moves continually.

Trailing stop usage is also feasible at intraday trades, when quick reaction to price change is required. Please note that trailing stops work only when the trading terminal is open.

Once the terminal is switched off the stop loss is fixed at its current spot. How to Use Forex for Hedging Hedging denotes safety and security. Hedging means the protection of a client's funds from unfavorable currency rate fluctuations. Account funds are fixed at their current price through conducting trades on Forex. Thus, hedging helps to ease exposure to currency rate changes risks, which helps to prevent the risk of currency rate fluctuations. As a matter of fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it.

Hedging can also be considered as a type of investment allowing to minimize price movements risks in the market. The hedging cost should be valued with regard to the possible losses in the event of not hedging. Here's a hedging example: a trader, who imports in a foreign currency, opens a buy trade with the currency of his trading account in advance, and when the real time of the currency purchase arrives to his bank, he closes the position.

And a trader, who exports in a foreign currency, opens a sell trade with the currency on his trading account beforehand, and at a the real moment of this currency purchase in his bank, he closes it.

Advantages of Forex Over Other Investment Assets 1. Simple to comprehend and master - In a Forex trade we deal with just a pair of currencies 2. Low Minimum Investment - The Forex market requires less capital to start trading than most other markets. The initial investment could go very low, depending on the leverage offered by the broker.

This is a great advantage since Forex traders are able to keep their risk investment to the lowest level. Online Forex brokers offer "mini" and "micro" trading accounts with low minimum account deposit. We're not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn't have a lot of start-up trading capital. Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday.

High Liquidity - Liquidity is the ability of an asset to be converted into cash quickly and without any price discount. In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement. Low Transaction Cost - In Forex, typically the cost of a transaction is built into the price. It is called the spread. The spread is the difference between the buying and selling price.

Leverage - Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account. Profit Potential from Rising and Falling Prices - The Forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long.

Similarly, if you think it could decrease in value you can sell it, or go short.. No one can corner the market - The foreign exchange market is so huge and has so many participants that no single entity can control the market price for an extended period of time.

Such a huge amount of a daily volume allows for an excellent price stability in most market conditions. This means you likely will never have to worry about slippage as you would when trading stocks or commodities. The price you see quoted on your trading screen is the price you get. Market transparency and Instant execution - Market transparency is much greater in Forex than in stocks or commodities, this means it is easier to analyze the inner workings of the market and figure out what is driving it.

Instantaneous order execution is another great advantage Forex has over other markets. Retail Forex trading is generally done over the internet on all electronic platforms.

The Forex market has no central exchange and was designed to be this way to facilitate large banks and allow for instant execution of transactions, this means no delays for you and extreme ease of execution. Price movements are highly predictable in the Forex market - Due to its highly speculative nature Forex price movements tend to over shoot and then correct back to the mean.

This means there are a number of repetitive patterns that are easily recognizable to the trader who is trained in price action analysis. Forex currency pairs generally spend more time in very strong up or down trends than other markets, this is also a huge advantage because it is generally much easier to trade a strongly trending market than a chaotic and consolidating market. Now, if you were holding a futures position over night it is entirely possible that your stop got gapped around, in which case you would get filled at the next best price, which often will be extremely damaging to your trading account.

Direct participation, difficult to manipulate or influence - Forex trading operates in a decentralized online electronic market for its participants: Banks, FCMs, hedge funds, governments, retail currency conversion houses and high worth net individuals. Investors can interact directly with the market maker for pricing on a currency pair.

Access is quicker and costs are lower than in other markets. Large market liquidity makes it very difficult for any one participant to manipulate or influence it. Easier market analysis - Countries are more often stable than companies making it easier to predict their economic direction.

Primary factors affecting demand and supply for Forex investment are interest rates and economic indicators such as GDP, trade balances and foreign investment. This and other economic data released regularly determines demand and supply for currency pairs. Technology frontiers and investing - Technology enables the retail investor the ability to make better investment decisions through ready access to economic and political news events, to technical charting software and electronic trading platforms.

They also have transparent and safe access to their investment funds in segregated accounts so that the safety of their funds is guaranteed. Limited Risk - Despite the common perception about Forex being risky, it is easy to limit and reduce the risk if a trader chooses the right strategy.

In addition it should be mentioned that stops are much easier to control as well, that is why newbies have good chances to succeed even while doing their first steps as Forex investors and traders. No fees or middlemen - There are no commissions when trading on the Forex market.

The retail brokers in this market are compensated through the bid-ask spread. Businessmen can also spot currency trading which eliminates the middlemen and allows each person to trade directly with the market that is responsible for pricing on a certain currency pair.

Not only does this expedite the process, it gives each trader more options and versatility. The Basic Forex Trading Strategy The basic Forex strategy that is used by many traders of all experience levels, is Trend Following. This strategy is widely followed because of its simplicity to identify and trade and many times, strong trends can bail you out of an imperfect set of buy and sell rules.

Before we delve into the basics of Trend Following, it is important to first explain why trend trading is a popular strategy used by many new and experienced traders. Do you have the perfect Forex trading strategy? I have not found it. To me, a perfect strategy is the one that wins all of the time and has minimal trade drawdown.

Therefore, learning how to trade in an imperfect world is very important. Trend following is a simple way to cover up some strategy imperfections by identifying the strongest trends in the market. When you trade in the direction of the trend, the rest of your trading approach can fall right into place.

This doesn't mean that all your trades will be winners. It does mean that you don't have to be exact in your entries and exits once you find a strong trend to trade.

Now how do you know when a trend starts and when it is going to end? Since this is a beginners guide I will not elaborate on the various techniques that traders use to identify trends as this is beyond the scope of this book. I will however touch on several techniques in later chapters but note that these will be just in an introduction level without going too much deeper.

Any trader either a newbie or a pro should develop his own style of trading. There are several trading styles that you can adopt. You will choose your style based on your personality and financial capacities. Many traders make the mistake of adopting a trading style that is unnatural for them.

A trader may adopt one of the following two main trading styles: Day Trading and Intraweek trading. Let's discuss each of them; Day Trading Day trading on Forex means that one or few trades are conducted within one trading day.

As a rule, the time intervals between the opening or the closing of trades may take from several minutes up to several hours. Despite some difficulties of day-trading, this type of trading is very popular among the newcomers as well as among experienced traders. Day trading allows for the opportunity to make a profit in a short time with a small amount of funds.

In order to achieve favorable results in an intraday trading it is essential that you make the right forecast as to the price movement, as there are many external factors that cause high volatility in the currency market. So to make your day trading beneficial you have to track the market situation, collate facts and make conclusions about the price behavior of currencies, it is also important to be able to react fast so that you will find entry and exit points quickly at the opening or the closing of trades.

Combining knowledge of technical analysis to be discussed in a later chapter with patience and observance a trader has good chances to earn well with a relatively low risk. There are several strategies of day trading. The most widespread among them is Scalping - a strategy that is offering a fast opening or closing of several day positions.

The trader closes trades while making just a few profit pips on each trade while the earnings come from the accumulation of a large number of successfully completed short term trades. Another popular day trading strategy is news trading. Traders, who choose news trading, monitor the market events permanently, analyze the currencies behavior in different cases. Usually news trading requires an insight learning of market development and a proper trade experience accumulation.

Day trading can be a source of a nice income through the readiness to devote most of your free time to trading. Now here are the advantages and disadvantages of day trading. This style is suitable for traders with endurance and quick reactions. Intraweek Trading Intraweek trade has no such furious market movements as in intraday trade.

It may seem that the market is motionless. But it is just at the first sight. Probably, every trader can find additional styles, but the two that we've mentioned here are probably the most common.

Forex Trading Risk Management Your first concern when trading Forex should be not to risk too much money on any given trade. Unfortunately, many traders start trading Forex without thinking about the risk that they are taking - only about the potential rewards. If you want to succeed in Forex you must take into consideration the maximum percentage of the total trading money that you should risk in any one trade.

Actually, your ability to limit your losses is equally as critical or even more critical as your success in managing winning trades. The goal of practicing a good Forex money management is to minimize risk and increase payouts. For starters here are 3 quick tips: First, Trading Forex is fun and exciting and money can be made; but you must also keep in mind that like with any other trading there is the risk of losing.

Hence, Forex trading rule number one: do not trade with money you can't afford to lose. Second, never borrow money while trading, trade only with your own money this does not apply to leverage that is provided by your broker. And third, set and stick to a budget.

Write it on your forehead if you have to, but no matter what, when you hit that number, quit trading for the day. Good money management calls for adopting a conservative investment strategy that means that you should never risk your entire capital.

When you enter a trade no matter how great it may be , always ensure to only invest conservatively. Forex trading like any other investing is not a sure thing, there is always a risk factor involved. A conservative investment strategy helps you to conserve your money when things go wrong. Forex trading offers a lot of choices to the trader. A good money management strategy requires diversification. The volatility that accompanies trading currencies is much distinct from say trading commodities as well as stocks.

Obviously, the payouts may vary depending on the currency pair which is selected. As the saying goes, never put all your eggs in the same basket.

Losses in a trade should be accepted on a positive note. The effects of a trade that goes against you are able to impact the future or successive trade decisions. Expecting losses whilst investing can assist traders in identifying the areas which may happen to be unnoticed.

Losses needs to be seen as a stepping stone instead of having it affect you. Start off slow and scale up - this has a significant role particularly for beginner traders. Certainly do not fall for the emotions and commit your entire amounts right away on one trade. Investing in small amounts continually helps you to take a self-disciplined approach. The majority of Forex brokers allow for a small minimum trade sum. This step is crucial and you want to make sure you know all the basics of how to place and manage your trades before ever risking any of your real money.

This is where using free demo charts can be very handy. These demo charts will allow you to practice with virtual cash and workout exactly what you are doing before you ever risk any of your real money.

If you are going to be a profitable Forex trader who makes serious money from the markets, then just understanding the basics will not be enough. You will need to have a trading strategy and system that you can use to find and manage your trades.

This strategy will be how you find your profitable trades and how you do things like take profit or minimize your losses. We discuss different strategies that might suit you below. Often the most profitable trading strategies are those that are the simplest. The two trading strategies discussed below are swing trading and scalping. These are very different trading strategies suited to very different traders. You could test them both to see what you prefer.

Swing trading is a trading strategy where you look to make profits when price makes its next swing higher or lower.

With this strategy you are not using smaller time frames like the 1 minute or 5 minute charts and jumping in and out of trades quickly. Instead, you are using higher time frames like the 4 hour and daily charts and are holding trades for longer periods. Swing trading is often best done when price is making clear trends higher or lower. As the example chart shows below; price is in a trend higher. Although price is in a trend higher it is still making regular rotations lower.

These rotations are known as swings or dips in the market. The value and swing trader would be watching this trend higher and looking to buy these dips lower and then making a profit as price continues with the trend and makes its next swing back higher.

Scalping or what is often called scalp trading is almost the opposite of swing trading. Where swing traders are holding for longer periods of time and for the next swing higher or lower, scalp traders are jumping in and out of trades quickly. Scalping involves looking to make quick profits as price makes small movements higher or lower.

The example below is of a 5 minute chart showing a scalping trade. In this example price was stuck trying to breakout of a support level.

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FOREIGN EXCHANGE FOREX FOR BEGINNER TRADERS financeillustrated. com by financeillustrated. Majors represent f developed economies and are highly liquid with low spreads. They are stable I SELL BUY and predictable in relation to other 'V 7, As our journey progressed, it was immediately obvious that finding any 🏆 We compared losing rate, com- missions, social trading feature, customer useful trading advice for a beginner was almost impossible.

We went deep, so you won't have to. information was bad, but things got even worse when we needed to find specific an- swers related to forex. If you wanted to learn about leverage Google searches. We knew there had to be a better Instead, what this book offers is a safe way how to learn Forex Trading. So we built it.

learning to trade currencies. More and more players are entering the forex market, allowing you to leverage your capital and make money from fluctua- tions in the forex market. Work While Lying in a Hammock You can literally trade forex markets while sipping on a cool drink and lying in a hammock. All you need to get started is some capital to trade with, a computer, 📱 laptop or smartphone and an internet connection. You decide when you want to trade and therefore your working hours.

No crisis Even during a financial crisis, you can still make money trading forex markets. Any oscillation in the currency can be taken advantage of by going long 📉 or going short. Whether a market is bullish or 📈 bearish, you can trade either way with forex unlike stocks or other financial instruments. Learn from Pros with social trading You can watch what professional traders are doing and observe their trades with 💸 Social Trading.

With stocks, you 😴 have to analyse company reports and choose from thousands of companies to invest in. However, forex markets generally revolve around eight cur- rencies, known as the Majors. Social trading allows you to connect with experienced traders, see their performance statistics, discuss their trading ideas, learn from 👈 their mistakes and copy their successful strategies.

In essence, you make professionals work for you. View their past performance stats, read status updates on their strategies, analyze results and communicate with them. Your task is to carefully analyze their results and learn as much as possible from their trades. The ultimate goal of social trading is to build a portfolio of the best traders.

Moreover, leverage allows one to trade using more money than they have in their account. Currency rates move very slowly. This makes small trades unfashionable as they only return small profits and losses for every pip rate changes. Therefore, leveraging helps one to trade in larger deals hence amplifying their potential profits and losses. Typically, it is the fourth decimal point, although many brokers quote using the fifth decimal.

However, the fifth decimal doesn't really affect the price as it changes really quick. Currency pairs that include the U. The bid is the price that a trader can sell the base currency while the ask is the price they can buy the base curren- cy. Spread refers to the difference between the two prices. The spread is measured in pips. Most currency pairs- the base currency and quote curren- cy- have a pip value equal to 0. Find Out Here!

Currencies are traded in pairs as their value is relative to one another. The first currency shown is the controlling one in terms of placing your order.

MAJORS are widely traded by beginners and profes- sionals alike. This is because they have the most liquid- ity, lowest spreads and the broadest range of move- ments. Unlike small currencies, majors are generally more stable. The economic and political institutions of these nations are generally long established and pre- dictable compared to other nations. Too much US Dollar exposure can lead to all your trades heading in the same direc- tion, a big problem if that direction is against you.

THE "EXOTIC" currency pairs are less traded and so much more costly to buy or sell. Leverage in Forex trading is all about entering borrowed capital into transactions.

The money is borrowed from a broker who acts like a bank that fronts you some cash to invest, which in this case is to buy currencies. This shows that the higher your leverage, the higher your chance of a better ROI. The stop loss order lets your broker know to sell a currency when it hits a certain set price.

These stops work around the clock in the forex market, therefore, protecting your position when you are logged out of the system. In addition, the strategic stop caps the losses while also protecting the profits.

While the Forex market is open 24 hours a day, five days a week, trading is not always active during this entire time. So it is essential that you know the crucial hours and days of forex trading when traders are the most active.

As a result, there are three active and in the afternoon overlaps with main forex trading sessions you should the opening of the New York or American be aware of; the Tokyo or Asian session, session, so there can be good opportuni- the London or Eurpoean session and fi- ties to trade forex and make a profit.

Seasoned traders considered 10am EST The busiest times are when these ses- to be the best time to trade forex markets sions overlap, for example, in the early as during this time, traders in London and hours of the morning in London, the trad- Europe are preparing to close their positions ing session in Tokyo is just winding down.

and traders are getting ready to make a European traders are getting to their move in the American session. As the focus desks and analyse and digest information shifts from Europe to the US, this often cre- from the Asian trading session, so early ates big swings in currency prices, opening 6am GMT is a great time to make trades up opportunities to profit. These days generally show the biggest movements in currencies as major data releases relat- ed to the economy are usually released on these days.

Fridays are busy as well, but only until 12am. During the second half of Friday, movements can often be unpredictable since major banks, hedge funds and financial institutions will close some of their positions for safety reasons over the weekend.

Share now 🙅🏻 When NOT to Trade Forex? Also, novice traders should be very careful with the Asion sessions. Let's look at the three most popular types of forex charts: line chart, bar chart, and candlestick chart.

It is created by simply connecting the data points depicting the closing prices of certain periods with a line.

Therefore, they can track its closing prices accurately. They are also called the OHLC charts in reference to the Open, High, Low and Close values of the currency under consider- ation. These charts are similar to bar charts only that they present the price information in an aesthetically pleasing graphic format. It also con- centrates more on the opening and closing prices of the trading period. Even if you don't have time to stare at charts all day long, you can spot great trading opportu- nities by simply viewing the news and economic calendar on a daily basis.

In other words, by performing fundamental analysis. Basically, all fundamentals are indicators of where investors intend to put their money and which currencies will be influenced as a result.

All the drivers are divided in 4 major categories: central banks, state economics, political stabili- ty and natural disasters. Politics Economics Central Banks Natural Disasters 👉 Public Statements 👉 GDP, inflation, debt 👉 Finance Circulation 👉 Hurricanes 👉 Change of Officials 👉 Sales amounts 👉 👉 Stability of governments 👉 Interest from investors 👉 Mandatory Reserve Funds 👉👉 Earthquakes Interest Rates Floods 💸 In the chart below you can see how the British Pound dropped because of the Brexit related events.

This was a great opportunity to make money shorting betting that it would decline the British Pound. ative for the associated currency since the price level is relatively higher than Since people possess skills, knowledge and inflation in other countries, diluting its experience, this human capital can be used value. Therefore, employment data ed, where a lower rate of inflation translates releases have a substantial effect on ex- to an improvement in purchasing power. change rates. of that currency.

unemployment rate should act to depress A high inflation rate discourages investment, the currency in question. reduces the purchasing power of consum- ers and makes planning for the future more The most important employment data re- difficult.

lease in foreign exchange markets is the US Non-Farm Payroll figures. Some other Conversely, a low and stable inflation rate important data releases are the unemploy- encourages investment, increases the pur- ment rate, participation rate and other labour chasing power of consumers and business- market statistics, all of which have a moder- es can plan for the future more easily.

ate to high impact on exchange rates. Share now 3 Trade balance 4 Quantitative easing Trade with other countries is a major part Quantitative easing is an unconventional of most economies and therefore the trade monetary policy tool that is used to expand a balance can affect the value of a currency.

The basics of trading must be known to start trading. You can open a free trading account here with our number one broker. And thus, it gives you a wide range of tools to get started trading Forex. With that being said; teaching yourself how to trade Forex when you are a beginner is like teaching yourself how to do anything. During the second half of Friday, movements can often be unpredictable since major banks, hedge funds and financial institutions will close some of their positions for safety reasons over the weekend. He would help allay your fears, overcome uncertainty, and diminish any doubts that you might have about the markets.

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