How To Trade Forex - Six Easy Steps
Here is what you need to know and what you need to to to start trading the Forex Market. As a new trader it can seem hard
to start trading the forex market. However it is very easy, unlike most markets you can trade the forex market 24 hours of
the week. by the markets being open 24 hours a day creates loads of opportunities for good trades to appear.
First of all you need to pick a good broker, if you are totally new to the game it can be good to pick one of the more common brokers that usually have DEMO accounts, there you can start trading with paper money(fake cash) so that you will learn the skills to be profitable. We highly recommend a broker like IC Markets or a broker like Plus 500 .
If you feel like checking out all our brokers that we have reviewed you can go over to the Home.
Now that you have done that you can either deposit money to your account or start with a DEMO account.
Now to what you have been waiting for
1. Choose a currency pair
Deciding what currency pair to trade is important, there are over 65 different ones, pick on of the larger ones EUR/USD, GBP/JPY or GBP/USD, anyone of these three is a very good start. There are a lot of people providing signals to help u pick the right entry
2. Decide on the type of FX trade
There are three ways to trade forex with City Index Spread Betting, CFD or Forex Trading. Each has its particular stake size:
In spread betting you trade USD per point movement
In CFD trading you trade a quantity of CFDs in the unit of the base currency (currency on the left). For example if you trade GBP / USD your stake would be in Pounds, while in USD / JPY your stake would be in US Dollars
In Forex trading you buy lots, in the unit of the base currency (currency on the left)
For example if you trade GBP / USD your stake would be in Pounds, while in USD / JPY your stake would be in US Dollars (the minimum stake size is 1000)
Go with the CFD or the Forex type, these are what most people start with.
3. Decide to buy or sell
Now that you have found a pair to trade go have to decide if you want to Buy the market or Sell it. Once you have picked a market, you need to know the current price it is trading at, which you can do by bringing up an order ticket in the platform. All forex is quoted in terms of one currency versus another. Each currency pair has a ‘base’ currency and a ‘quote’ currency. The base currency is the currency on the left of the currency pair and the quote currency is on the right. Put simply, when trading foreign currencies, you would.
Sell a currency pair if you believe the market is valuing the base currency to high.
Buying the market means that you think the market is undervaluing the base currency.
4. Adding orders
It's important for you to set your take profit points and stop loss points(if market moves against you), This is something professional traders emphasise.
Here are the typical orders you will be able to execute with you brokers A stop loss order is an instruction to close out a trade at a price worse than the current market level and, as the name suggests, is used to help minimise losses. There are two types of stop loss orders - standard and guaranteed.
Stop and limit orders
A standard stop loss order, once triggered, closes the trade at the best available price. There is a risk therefore that the closing price could be different from the order level if market prices gap.
A guaranteed stop loss however, for which a small premium is charged upon trigger, guarantees to close your trade at the stop loss level you have determined, regardless of any market gapping.
A *limit order is an instruction to close out a trade at a price that is better than the current market level and is used to help lock in price targets.
5. Monitor and close your trade
Monitor your trade so and see if that market follows your thesis. By checking the market daily you will learn to predict the market movements better so that you can simply put in your orders and go away from the computer. If you want to trade weekly you can put in your orders and leave for work or do something else. Let the money work for you sort to say.
6. Closing your trade
Time to close your trade, wait for the trade to come in to profit, the FX market can fluctuate in prices so its important for you to be ready when you are "in profit". You can either close your trade manually or wait for it to hit you limit order.
When you are ready to close your trade, you simply need to do the opposite to the opening trade. Supposing you bought 3 CFDs to open, you would sell 3 CFDs to close. By closing the trade, your net open profit and loss will be realised and immediately reflected in your account cash balance.