More than $ 5 trillion is traded in the foreign exchange market every day! This is why foreign exchange trading, also known as Forex trading, is one of the best places to invest and a great place to make money. Big initial investments are not always necessary to succeed in Forex trading and nothing can compare to the excitement if you make the right call and earn the bulk of the money in the market. This article will discuss how to trade Forex online. There are three main components you must go through to learn how to trade Forex:
1. Learn the basics of Forex trading
The basis of Forex online trading is the sale of one type of currency in exchange for another currency. The currency you sell is called the “base currency” and the currency you buy is called the “bid currency”. The amount of exchange rate you will receive for sale depends on a constantly changing exchange rate, and learning to understand the movement of that exchange rate is key to learning how to trade Forex. Another important term is ‘Long Position’. A “long position” simply means that you are buying a base currency and selling a currency. In contrast, a “short position” means that you sell the base currency and buy the currency. So how do we decide which currency pair to trade?An infinite number of factors affect the price movement of each currency pair. To learn how to trade Forex, we need to understand at least a few of these factors and how they can affect the price. One of these factors is the state of the country’s economy. When the economy weakens, the value of its currency also weakens relative to other currencies in the market. Political events can also affect price changes. The upcoming elections may increase or decrease people’s faith in a country’s economic future, which affects the strength of that currency. Follow recent economic reports to spot a particular currency pair and make a smart decision based on the facts
*** Please note that the total turnover is 200% due to the fact that you trade currency pairs in the foreign exchange market
The final part of the basics is learning how to calculate your earnings and loss. Price changes are measured using pips. One is one ten thousand units. For example, if the original price was 5.6930 and the price dropped by 10 pips, the new price would be 5.6920. To turn a tap change into an actual gain or loss, multiply the tap change by the current exchange rate and you will get an increase or decrease in the value of the bill.
2. Open a network account
To trade Forex online, you must have an active network account. Many brokerage houses offer online accounts and joining the right one is very important. Before making a decision, consider several alternatives taking into account these key factors:
- Experience – In the online Forex trading experience is very important, and choosing a company without the appropriate experience is a big risk. Keep companies with 5 years or more of work experience safe.
- Regulation – Most countries provide government oversight and the best brokerage firms voluntarily adhere to that oversight. Check who oversees the work of the company and make sure it is a fair and serious body. Some well-known oversight bodies are:
France: Autorité des Marchés Financiers (AMF) Switzerland: Swiss Federal Banking Commission (SFBC) Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN) United Kingdom: Financial Services Authority (FSA) Australia: Australian Securities and Investments Commission (ASIC) United Countries: National Futures Association (NFA)
- Reviews – A great way to learn what others think of a particular mediation is to read its reviews. Some companies post fake reviews for themselves, so keep that in mind and try to distinguish between true and false reviews.
- Website – Compare websites between different brokerage houses. Professional mediation will have an active website without blind links and will provide a professional look and feel.
Once you have chosen a brokerage house that suits your needs, start filling out the paperwork. You can choose between a personal account and a managed account, or an account that is automatically managed by your Forex broker. Check the fees before making a deal, because the fees for transferring money from your bank can be quite high, and other fees can reduce your profits. The last step is to activate your account via a link that your broker will email you. After completing this step, you are ready to start trading Forex online.
3. Trade Forex on the grid
It’s time to start analyzing the market in preparation for the first trade. There are three types of analysis that help us make a decision:
- A fundamental analysis is an analysis of current events and economic trends that may affect the price of a particular currency pair. Learning about current events and about the economic status of a particular country is crucial for this type of analysis.
- Technical analysis is a type of analysis that requires a good understanding of charts and graphs. Relevant charts can usually be obtained from your broker or through specific Forex trading platform accounts . Using these charts, we analyze previous price movements and use them to predict future price movements.
- Sentimental analysis is a more intuitive type of analysis. It involves guessing based on intuition of what the price will do. Over time, experienced traders gain the intuition to know which trades are likely to be profitable and which are not.
The amount of money you can invest in each trade depends on your broker’s protocols, but keep in mind that if you invest wisely, you can invest a small amount of money and still make big money. It is common practice not to invest more than 2 percent of your account in one store. Your Forex Brokerit will also allow you to limit a particular trade to a certain price. Market orders are orders that need to be executed immediately at the current price. Restricted orders are orders that instruct your broker to enter a trade only if the price reaches a certain level you have chosen. Stop commands instruct your broker when to close a position. When the price reaches your order stop price, the store will close automatically. Remember, trading Forex over the internet is not an exact science and several ups and downs are expected. Be sure to complete a professional market analysis, develop a strategy in advance, and stick to it no matter what. If you follow these key instructions, over time you will begin to realize that your profits outweigh your losses over time. Further reading: