How to trade on forex?
Learning to trade forex can be your pathway to financial freedom. There are billions of forex trades each day. The massive trading volume generates profits for those who are experts’ forex traders. The forex trading dividends are in the billions. Once you learn to trade forex, you can start making money from it, and once you mastered it, you could make millions starting with a small investment capital.
What is Forex Trade?
It is the forex exchange market or a place where currencies from all around the earth are sell, buy, or exchange. The forex trade is a virtual over the counter market in which one currency is exchanged for another.
Understanding forex trade
·Learn the basic kinds of currencies; there are two main types of currencies base on the world wide acceptance and its stability.
·Majors currencies are the group formed by the most widely used currencies, such as. USD, GBP, EUR, AUD, JPY, and CNY. all major currencies are quoted in dollars, and they represent the global commerce.
·Exotic currencies are the group formed by the fewer trade currencies or all the other currencies which trade volume is low. e.g., Venezuelan Bolivar BSF, or Algerian dinar DZD, etc.
·Currency pair is any combination of two currencies, in which one is the base currency and the other the quote currency.
·Quote currency is the amount of one currency needed to buy one unit of the base currency. GBP/USD, EUR/USD, MXN/USD in the previous examples the quote currency is the USD, and it is located in the inferior part of the equation or the second currency. The base currency is at the top, or the first currency.
·Exchange rate is the market value for that moment of any currency pair.
·Long position means that you want to buy the base currency or the one who is in the upper part or the first in the equation. Therefore, you are selling the quote currency,(paying in the quote currency), e.g., EUR/USD, you are buying Euros and selling dollars or paying the transaction in American Dollars.
·Short position means that you want to buy the quote currency or the one who is in the lower part or the second in the equation. Therefore, you are selling the base currency,(paying in the base currency), e.g., EUR/USD, you are buying USD and selling Euros or paying the transaction in Euros.
·Bid price is the preset price at which you order your broker to sell a currency in the forex market.
·Ask price is the preset price at which you order your broker to buy a currency from the forex market.
·A spread is the difference between the Bid price minus the ask price.
How to Trade Forex Step by Step
1. Learn the basics trading forex is a skill, which needs to be developed by traders by studying and practicing.
2. Choose the currency pairs you are interested in buying It may look simple but it is one of the critical parts of forex trading, selecting the best currency pair for your trading. Initially is better if you only choose one or two pairs of currencies until you become a proficient trader.
3. Select in which forex market you want to trade. Remember forex market are available in almost any stock exchange and security market, This means you can trade forex on Tokyo, London, New York, etc.
4. Do your technical and fundamental analysis; forex trading requires a similar approach to the stock trading. You need to consider the indicators and analyses to anticipate the currencies price moving direction. Additionally, fundamental analyses of the political or economic news are critical.
5. Set your investment capital for forex trading, you need to separate the amount of money you wish to invest in forex trading and be sure that you won’t need that money.
6. Select your broker before paying any fee or transfer any money; you need to investigate that your broker can trade in the forex markets, which you want to trade. You also need to review your broker reputation and professional trajectory. You need to ask about broker’s fees and minimum trading amount for buying and selling forex. No to forget to ask about withdrawing limits, times delays and how soon can you request a withdraw, etc.
7. Open a practice account on forex trading platform offer a free demo account in which you can practice with fake money the forex trading in real time with real quotes. You need to try this before using your real money to be sure you understand the market behavior.
8. Open your real account and funded it by depositing money.
9. Make your currency pair selection; you need to be sure you select the pairs that you have studied and the base and quote pair are correct.
10. Decide how much money you want to invest in the day or the transaction.
11. Do the technical and fundamental analyses afterward place your orders. You can find out more about fundamental and technical analysis in TIps & Tricks section.
a) Market order is a clear and direct instruction to your broker to buy or sell you selected currency at the current market price.
b) Limit order is a direct instruction to your boker to buy or sell your selected currency only at a preset price. You can instruct your broker to sell a currency if it reached a particular price or buy it at a specific price.
c) Stop orders are similar than the limit order in which you preset the asking/bidding price. However, the stop order allows your broker to buy above the current market price if you are sure the price will increase beyond it. On the other hand, sell your currency a lower price than the current quote, if you think the price will drop, in order to limit or cut your losses.
12. Create an investment strategy and follow it. Keep a record of all your trades, the technical analyses and the outcome of those trades. Evaluate your win rate Weekly and be sure you are following your strategy, If you have losses, go over the information.
13. Create a money management plan and follow it to the letter after a good strategy an excellent money management plant is needed to be a successful forex trader.
“Your capital may be at risk. This material is not investment advice.”
Enjoy Trading Forex