What is Forex Trading and how does it work?
 |
| FOREX TRADING |
- We'll see now:
- What is Forex?
- What is Forex trading?
- How to trade Forex
- How to invest in Forex
- Tips for Forex trading
What is the Forex market?
The Foreign Exchange market, also known as Forex is a global and decentralized market where currencies are traded. Each of these currencies has a conversion rate, called the exchange rate. For example, if the EUR / USD has an exchange rate of 1.10, it means that 1 euro equals 1.10 US dollars. Forex is one of the most liquid markets, where the daily volume of transactions is 5 trillion dollars a day.
It is mainly used to facilitate operations and investments between countries.
The Forex market is open 24 hours a day except the weekend, opening in Sydney on Monday mornings and closing in New York on Friday afternoons.
Are you a beginner and want to know more about the Forex market? Then do not hesitate to read our Beginner's Guide to Forex Trading.
If on the contrary you already know the basics of Forex, keep reading!
Impact of technology in the Forex market
3 Reasons forex market boom was thanks to:
- Accelerated economic growth
- Technological advances
- Internet
One of the greatest achievements of the digital era is the virtualization of money. If the printed money allowed to transfer credit between people through a simple ticket, information technology or the Internet made this process as simple as pressing a button or touching a screen.
In the nineties, this technology was recognized as a great opportunity and companies were created that allowed access to the currency market and leveraged accounts.
These companies became known as Forex brokers and it is thanks to them that currently anyone who has only 10 euros in their pocket and an online platform can test their skills in the market.
Keep training with our free online courses! The more formed you are, the better you will understand this market.
COURSE OF TRADING FOREX HERE!
What is Forex trading?
To answer this question we will break down and define the two terms:The term Trading is the activity through which one product is exchanged for another. You can trade with a multitude of instruments: forex, commodities, indices, stocks, cryptocurrencies, etc.
The term Forex refers to the market in which some currencies are exchanged for others, as well as other types of financial instruments.
Therefore, what is forex trading? Forex trading is an activity, or even a profession, through which currency pairs are bought and sold to speculate on the rise or fall in the price of these pairs.
This activity is open to anyone who has a computer and internet access. Forex trading is a type of daily and international trading. States, companies, even individuals, like you, operate in currency every day.
This Trading is done through computer networks between traders around the world. This is the main reason that the Forex market or currency market is the largest and most liquid market in the world, the most accessible and as a result also the one considered most dangerous.
Best currencies to trade in Forex
- The U.S. dollar
- The Euro
- The Pound Sterling
- The Japanese Yen
- the Swiss Franc
Which make up the group of major Forex currency pairs:
- EUR / USD
- GBP / USD
- USD / JPY
- USD / CHF
See how the US dollar is included in all pairs.
Compound pairs of major currencies that do not include the US dollar are called cross pairs.
Some examples are:
- EUR / GBP
- GBP / JPY
- CHF / GBP
There are 3 other currencies that can be commonly found when trading in Forex:
- The New Zealand Dollar
- The Canadian Dollar
- The Australian Dollar
If you join them with the US dollar, you will have a group known as minor pairs:
- NZD / USD
- CAD / USD
- AUD / USD
How Forex works
The general logic is simple. Everyone who begins to carry out the activity of trading has in mind the following question: how to make money in Forex. The trader or operator of this market buys something when he thinks it will increase in value, or sells it when he thinks it will decrease in value.
For example, imagine that the euro today is worth 1.2345 euros. Once the market is analyzed, the trader thinks that this value will increase in the next 24 hours. Open a buy operation today and wait. The next day the euro is worth 1,2395 euros and the trader closes the order, ensuring a profit of 50 pips.
How much money does this represent?
It will depend on the volume of money that the trader has invested in that particular operation. The profit could be as much as 5000 euros, as well as 50 000 euros.
However, delving into the previous example, we see that things are a bit more complicated. Let's start from the beginning.
Steps to Forex Trading
How to do Forex trading?
- After comparing several brokers and their types of trading accounts, the trader opens a trading account and makes a deposit in it.
- Now, you have several financial instruments at your disposal to start doing Forex Trading online. The next thing the trader must do before starting to operate is to train on the instrument or market on which he wishes to operate.
- Acting in a hurry is not recommended, although it could be interesting for certain trading styles or market situations. But for this, the trader must have experience.
- The analysis is key and can cover as many aspects as the trader deems convenient, but the most basic would be:
- exact conditions to enter the market with an order
- Money Management
- estimated time of assumption of an operation
- volatility forecast for the period in question
- proximity of relevant economic facts
- and - most importantly - the conditions to exit the operation.
All this should be analyzed before any operation. Once again, analysis is the key to trading in the Forex. Analyzing things is good for both the trader's emotional aspect and the balance of his account.
The ability to find, analyze, synthesize and apply the information is what provides success in Forex. Performing these actions is what makes the difference between success and failure in online trading.
After all these analyzes or preparations, the operation itself is carried out by a simple mouse click, using specially developed software, which is commonly known as a trading terminal or trading platform. Clicking is the least important part of the negotiation, the important thing is done before.
Understand the context of the Forex market
To know how Forex trading works, you must first understand the operation of this market, and therefore, ask yourself the following questions:
- What do I know about the basic principles of price formation of each asset in the world?
- What is the underlying structure of the trading industry?
- What is the nature of international economic interactions?
- What are the "fundamental principles" and "technical analysis" of the market?
- What are the psychological peculiarities of being a trader?
- What really happens when a trader presses a button?
Offer and demand
In economics, Offer and demand is a model that explains the formation of prices in a free competition market. Merchandise prices are established at a point where the quantity demanded by the consumer is balanced with the quantity supplied by the producer.
The constant change in supply and demand of currency pairs is what the Forex charts represent. The philosophy of the price balance is key to understanding how Forex Trading works, since all economic events in the world are relevant to the market but only they influence the Offer and Demand of the asset.
Draw a mind map of the industry before you get lost
When you think about how the Forex market works, imagine an ever-changing ocean. There are many fish in that ocean, from large to small, depending on their purchasing power.
There are also decisions about monetary policies and trading that cause big waves, unbalancing the prices of most assets. There are medium-sized fish - private investors, companies with coverage needs and private banks, and then there are small participants - financial brokers, smaller banks and low capitalization investors.
Most of the market participants mentioned above have direct interbank access to Forex, which is the market where all the magic of currency exchange occurs. They can enter it simply because it is over a certain threshold of funds. This means that they can operate among themselves without having to go through intermediaries.
The smaller participants, who are interpreted as the financial ocean plankton, try to survive long enough to grow more as a Forex retail trader, which, of course, includes you.
The buying power of an occasional trader is generally so small compared to the big fish that a Forex broker or a bank needs to provide you with a leveraged trading account and market access through the trading servers.
Understanding how the Forex market works, as well as one's position on the scale of things, will inspire the necessary caution when it comes to Trading.
I want to invest in Forex!
"Our advice, operate with a trusted broker"
Forex is the foreign exchange. Currencies, unlike other stock assets, are economic tools as well as economic indicators. Generally speaking, if countries were companies, currencies would be their stock.
Policies in central banks are the biggest adjusters of the capital supply, which makes decisions about their monetary policies a primary factor in influencing Forex Trading and how it works.
The most obvious and simple example would be the interest rates established by the national bank of each country in the world. Like the US dollar, the euro, the pound sterling and the Japanese yen, they are the world's most traded currencies.
The Federal Reserve, the European Central Bank, the Bank of England and the Bank of Japan are, respectively, the "big fish" of the ocean.
Understanding how this can affect the economy will help you understand how the Forex market works.
"Attentive to interest rates"
When interest rates rise, something that only national banks can do, it is more expensive for market participants to borrow that currency from the central bank. Momentarily, this causes a shortage in the supply of the currency and drives its upward price.
What is good, right? Who does not want a solid national currency?
Well, it's really not like that. In the short term, this means that there will be less capital to develop business relationships, less national income and, finally, a slower economic growth rate. However, it also slows inflation and the inevitable rise in debt - which in the long term is good.
Alternatively, when interest rates are cut, all market participants can borrow more capital. Momentarily, a surplus is created in the capital supply and the price of the currency falls. In the short term, this means an expansion in companies, increased by national expenses and the growth of the economy.
Does it sound really good?
Well, again, not really. The more money borrowed, the more capital is owed. In the long term, the credit accumulated in the bank falls on everyone's heads as if a great storm created a financial crisis. This is called the economic macro cycle.
This process is common in all capitalist economies. National banks are continually trying to balance scales by raising and lowering interest rates. It is what is called the micro economic cycle.
These economic cycles are similar to the cycles of climate change - slow, unstoppable and very dangerous for market participants who cannot see when they arrive.
Analysis is the key to Forex Trading
The analysis is not only the key to success in trading, but it makes Forex trading really work.
The two main types of market analysis are fundamental analysis and technical analysis:
The fundamental analysis
As we have seen in the previous paragraph, the fundamental analysis is an evolved form of financial audit, only at national level, or sometimes worldwide. This is the oldest way of forecasting by observing various elements of the economy, that is, its current state in the cycle, relevant events, future forecasts and the possible impact on the market.
The fundamental analyzes interpret:
The GDP of a Country
- Unemployment Rates
- Interest Rates
- Export Quantities
- Wars
- Elections
- Natural Disasters
- Economic Advances ...
Technical analysis
It is a more modern form of market analysis that only deals with two variables - time and price. Both are strictly quantifiable, accounted for by the market and are both undeniable facts. That is why, for many, Forex trading works best when studying charts instead of making economic inquiries.
Whether you are drawing support and resistance lines, identifying key levels, applying technical indicators or comparing candle formations - you are trying to discover how Forex trading works without really observing the causes of supply and demand.
Technical analyzes can be used for long-term and short-term trading purposes. It is the only thing available for fast-style traders such as scalpers, who achieve their benefits from daily Forex volatility instead of following a trend.
The strength of the technical approach is in the analysis of the quantifiable information with precision since it has been accounted for by the market. The disadvantage is that it is affecting the fair market at that time. To rely on the results of a technical analysis, one must keep in mind the notion that price formations in the past could affect price formations in the future, which many fundamentalists consider ridiculous.
In summary, fundamental analyzes are economic detectives with elements that predict the future, while technical analysts are visual archaeologists of time and price, while combining it with statistics.
Fortune favors the prepared
The lack of preparation is the biggest reason why many trader candidates fail before even discovering how Forex trading works.
Numerous books have been written about the psychology of the trader and how to avoid the pitfalls that the mind of the trader can get to play. Again, the problem is the approach and it is easy to get confused when everything is new.
Some Forex brokers, due to the nature of their business, often opt for Forex as a pseudo-scientific game attraction, which is basically like throwing a coin with an improved methodology.
As a result of this marketing, beginners with little or no training, hope to create fortunes with only 10 dollars and a few decisive clicks. They enter the market full of hopes and the market spits them out, disappointed and empty-handed.
Most Forex traders lose money and your broker's business model is well adjusted to this trend. This is neither good nor bad - this is the reason why the market exists. Every time you close with benefits, someone on the other side is closing with a loss.
Returning to our point about being prepared, nothing will prepare you better than a demo trading - a risk-free mode of trading in real-time conditions to get a better market feel. It is highly recommended that you immerse yourself first in a demo trading and only after entering live trading. The results will speak for themselves.
Forex Trading through CFDs.
CFDs are the product that has transformed the financial market into what it is today.
In the old days of Charles Dow there was no such trading. Only investment. Buying shares of a company with potential was the only possibility investors had. In the event that these shares rise in value, they could be sold and a profit would be made. However, in case they started to depreciate, probably, even if they wanted to sell, nobody would want to buy them.
The CFDs give traders another possibility, since it is not only possible to invest and make a profit when the trend of the instrument is upward but also when the trend is bearish. Our article on CFDs explains it in detail.
To help with your training we will define some of the basic terms of Forex Trading with CFDs
Forex Trading Terminology with CFDs
To solve the question of how Forex works we need to be clear about some key concepts:
Forex or Currency Market
It is a decentralized global market to exchange currencies. In fact, the Forex market is a combination of the spot, forward and futures markets.
The "spot market" is the part that occupies the largest volume in Forex, since it handles the prices of currencies and immediate exchanges (spot refers to "on the spot"). The other two markets are not as well known for retail traders, although they are worth mentioning.
Both the "forward market" and the "futures market" deal with the transactions that will take place on a given date, perhaps one or eight months in the future. The forward market is used to carry out personalized transactions, while the "futures market" deals with standard contracts.
Currency pair
It is a key concept within the fundamentals to operate in Forex. To make it simpler and within the context of the Forex market, imagine that currency pairs are a single financial instrument.
For example, the EUR / USD.
The first currency of this pair, the euro, is known as - base currency.
The second currency, in this case the US dollar, is called - quoted currency.
A Forex quote is the comparison between the values of the base currency and the quoted currency.
When looking at the EUR / USD pair or any other quote on your trading terminal, you will see two numbers:
the sale price (bid)
the purchase price (ask)
Which are shown in this way: EUR / USD 1,10973 / 1,0978.
This quote implies that:
You can buy 1 euro with 1.0978 US dollars, the purchase price.
You can sell 1 euro for 1,10973 US dollars, the sale price.
Imagine you want to buy euros and sell US dollars. By pressing the buy button, your broker borrows a portion of the funds from your Trading account as transaction insurance.
After a while you close the order, assuming that the market moved in the direction you expected, that is, the euro increased in value compared to the dollar or the latter depreciated compared to the euro. At this point, your broker sells you the euros that were appreciated in exchange for dollars that are now worth less.
There are two things you should keep in mind:
first, traders sell currencies that they don't really own
second, in each transaction a purchase and a sale are carried out; The two sides of the coin. For that reason it is a currency exchange.
These are the fundamentals to operate in Forex in relation to the mechanical part.
Pip or point:
It is the minimum unit of change in the price and simultaneously one of the most popular terms within the fundamentals to operate in Forex. When the sale price of the EUR / USD pair goes from 1.1234 to 1.1235, it means that it moved 1 pip.
Pips are the simple way for operators to calculate losses or gains, since their value depends on the volume of the operation.
Operation Volume
It is the size of a position within the market and is measured in batches. When the volume of the transaction corresponds to 1 lot (100 000 units of the base currency), 1 pip equals 10 units of the quoted currency. For example, when trading with 1 lot of the EUR / USD pair, 1 pip equals 10 USD.
Spread
The spreades the difference between buying and selling prices. As you read earlier, a quote is the comparison between these two prices. The purchase price will always be higher than the sale price, which means that financial trading is about synchronization as well as prices.
The spread is the reason why there is always a small negative balance when placing an order. One of the basics of Forex is that prices have to move for the trader to make a profit.
These fundamentals of Forex have a lot to do with liquidity and a little with volatility. On a Sunday night (in the GMT time zone) when the Forex market starts the week, the spread is generally higher due to the small number of participants. This is known as an underactive market.
As the volumes of operations and the number of participants increase, for example in an afternoon in the middle of the week, the spread decreases.
Spreads can also increase when prices vary considerably, for example, during the publication of important economic data.
Margin
Simply put, it is the amount of money that the trader invests in a position. A Forex retail trader is not likely to have the margin to operate in the market directly, since the minimum limit is 100,000 currency units. For this reason, leverage on the margin or deposit of retail operators is used.
In an example without leverage, if a trader wants to open a position of 1000 euros and the exchange rate of EUR / USD is 1,250, how much money does the trader operate with? with 1250 dollars
If the trader has 2000 dollars in his account, these 1250 dollars will be taken from his account, this is known as margin. This margin is retained until the position is closed.
Note: the free margin is the result of subtracting 2000-1250 = 750
Leverage
It is another essential term to understand the basics of Forex. Leverage is a money multiplier. For example, a 1: 100 leverage can turn a 100-euro account into one that controls 10,000 euros of a currency pair, which makes even the smallest price fluctuations profitable. However, keep in mind that leverage is an opportunity that also brings its risks, since the amount of available margin is directly related to changes in currency prices. Therefore, if the market moves against you, it will affect in real time the margin available in your account and if you do not have enough funds, the broker will liquidate your position, since it will not be able to keep it open.
Based on our previous example, if now the leverage of the trader is 1: 100. This implies that the trader contributes 100 times less, so the margin of the same operation would be $ 12.5
Free margin
It is the difference between the account balance and the sum of the margins of the open positions.
Margin level
It is (equity / margin) * 100. When the level is 100% it means that equity and margin are equal. So the trader has no free margin to operate (open more trades). This is called margin call
We assume an account with a balance of 10,000 euros, with a margin of 1000 euros. If this position accumulates 9000 euros of losses then your margin is equal to your balance, that is 1000. This is called margin call
Stop out
Finally, we have the Stop Out which is the minimum margin level from which the broker begins to close your open positions. In the case of Admiral Markets, this level is 50% for retail customers and 30% for professional customers.
Trading account
Account offered by the broker when trader to operate
Trading Platform
Software offered by the broker to the trader so that he can access the market and operate
Purchase order
When a purchase order is placed in the EUR / USD pair, a portion of the trader account funds is used to buy the base currency of the pair - in this case the EUR - and sell the quoted currency of the pair - USD .
The broker performs this transaction called placing a purchase order. The order is placed either with the broker (creator of the market) or communicating it directly to the interbank Forex market (ECN execution), which is where the big market participants are located. When the benefit satisfies the trader, he will close the order and the broker will carry out the opposite transaction, that is, he will sell euros and buy dollars
Source: EURUSD, Chart H1, MT5 Admiral Markets. Data range: from August 19, 2019 to August 29, 2019. Performed on September 13, 2019. Keep in mind that past performance is not a reliable indicator of future results.
Sale order
The reverse process, this is called operating short, the trader will first open a sales order. The reason is that the trader once analyzed the market considers that the price of the instrument is down, so first place a sales order, to accumulate the profit you want, close the position with a purchase order.
Source: EURUSD, Chart H1, MT5 Admiral Markets. Data range: from March 5, 2019 to March 14, 2019. Done on September 13, 2019. Keep in mind that past performance is not a reliable indicator of future results.
Why invest in Forex
Next, we will examine the different reasons why in less than 20 years, the Forex market has become one of the most fashionable markets. These reasons make Forex trading a great choice for both beginner and more experienced traders.
Ease of access
Unlike other markets where you have to deposit large amounts of money, in the Forex market you can trade with a very low deposit. You don't even have to make deposits of thousands of dollars, since you can start trading in Forex with only 200 euros.
Yes, you read that right. Currently you do not need to allocate most of your savings to trade, as you can simply deposit 200 euros and test your skills.
Is this why Forex trading is so special?
Not really. The ease of access makes Forex trading popular, but it is the other features that definitely indicate why this activity is so widespread.
Volatility
The mechanics behind trading are very simple: you acquire an asset at a favorable price and then sell it. How do we relate the concept of volatility to the market? Well, the more volatile the market, the more opportunities there will be to acquire and sell assets.
That is, if the market does not move, it makes no sense to cling to your assets. The volatility of the Forex market is great, since you can expect to see regular movements of between 50 and 100 pips in each of the main pairs on almost any day of the week. This means a potential profit or loss of between 500 and 1000 dollars if you operate with a lot (or 100,000 units of currency) and the quoted currency is the US dollar.
Offer and demand
When trading in Forex you can expect an almost immediate demand for any currency, regardless of its volume.
Of course, this only applies to normal market conditions, as sometimes the so-called "black swans" or "black swan" that complicate operations due to considerable price changes. The good news is that these kinds of events are very strange.
As long as there are normal market conditions, you can rest assured that your orders will be executed in a matter of seconds, since there is great liquidity of supply and demand in this market.
For this reason, the Forex market is considered as the most liquid in the world.
Technological advances
Technological progress is a great feature of Forex trading and it is what makes it so special.
Why is the Forex market so advanced in the technological aspect?
The amount of Forex brokers is very high and the competition in the market is severe. This makes the Forex market so competitive and this forces brokers to provide the best possible conditions to their clients.
While brokers have to suffer various costs to lower their margins, different trading platforms help them get a larger market share to increase their income.
For this, some brokers prefer to invest in the development of their own trading platforms, while Admiral Markets offers the most up-to-date version of the most common trading software, our MetaTrader4 Supreme Edition.
In addition to providing this leading Forex market trading platform, Admiral Markets also allows its customers to operate through MetaTrader 4 applications for iOS and Android devices.
Similarly, with Admiral Markets you can install a basic version of the MetaTrader 4 application on your laptop or desktop with Mac OS. Undoubtedly, this is very comfortable for Mac users, since they don't have to get complicated with applications like Wine and Wine Bottler.
When you try Forex trading, you will see that the developments in the software are a clear reason why this market is excellent for trading.
Developed community
As Forex trading emerged and grew with the development of the Internet, so did retail traders who sought additional information to excel in their trading potential.
This led to the birth of a large number of forums on Forex Trading that have a considerable number of active collaborators, being able to find information about this market in almost any language. Since the market operates 24 hours a day and 5 days a week, there are Forex traders from around the world.
In addition to the aforementioned forums, Forex traders can find various means and different new ways to communicate. Although there is a great variety of groups on Facebook about Forex trading, this market has evolved into something bigger, since there are many social networks designed especially for traders.
Is this why Forex is so social?
Not really. There's still more. Forex trading has evolved beyond pure communication to take action. Forex is a very interesting market because it gave rise to what is known as social trading.
Margin trading
As we have already explained, trading with CFDs makes it possible to operate with margin and leverage. This differentiates Trading with Forex CFDs from other markets in which you must have considerable capital to perform transactions with high volumes.
Possibility to learn with demo accounts
If you want to try this market and see if Forex trading is right for you, you have the possibility to learn with completely free demo accounts.
To do this you can open a fictitious money trading account and start practicing in a few minutes. These kinds of accounts do not require deposits or any other commitment from you. All you have to do is register to open a demo account at Admiral Markets and you will instantly receive in your email the data to log in to your account.
The conditions in the demo account are similar to those of the real accounts, so you can improve your skills by operating with virtual money without making any deposits. For this reason it is very easy to start in Forex
Risks involved
Keep in mind that Forex trading involves a high risk that may be equal to or greater than other financial markets. Forex trading is carried out with margin and the Forex market is very volatile.
Due to these factors, a relatively small price fluctuation can cause considerable gains or losses. This makes this market quite risky, especially when operators try to achieve too optimistic results in a short time. You must make sure you understand all the risks before you start trading in Forex.
Regulation in the Forex market
There is strict control over Forex trading and many brokers are regulated by more than one regulatory authority. This implies that although it is a decentralized market, this is still a safe market to operate. However, this point applies only to truly regulated brokers.
20 Forex Trading Tips
1. Choose your broker wisely
Choosing the right broker is half the battle. Take your time to review the recommendations and opinions. Make sure the broker you choose is reliable and adapts to your investment profile.
Remember, there are a lot of fake brokers that will only give complications. Choose an authorized broker with a good license.
2. Create your own strategy
No Top 20 list of currencies is complete if they do not mention strategies. One of the most common mistakes that beginner traders make is not creating an action plan. Having a clear final goal in mind will help with your trading discipline.
3. Learn step by step
As with each new practical learning activity, trading requires that you start with the basics and move slowly until you understand the playing field. Start by investing small sums of money and keep in mind that the slow but steady is the one who wins the race.
4. Control your emotions
The best way to invest in Forex is not to let your emotions take over you. It can be very difficult sometimes, especially after experiencing a losing streak. But maintaining a rational level will help you stay so you can make competent decisions.
Every time you let your emotions get away from you, you expose yourself to unnecessary risks.
5. Less stress
This is one of the Forex tips that sounds very obvious - because it really is.
But guess that? Trading under stress usually leads to irrational decisions and in real trading it will cost you money.
Therefore, identify the source of your tension and try to eliminate it or at least limit its influence. Take a deep breath and focus on something else.
Each person has their own way of overcoming stress - some listen to classical music, while others exercise. Listen to your mind and learn what works best for you.
6. The practice leads to perfection
Of all the Forex tricks and tips for beginners, this is the most important. You will never succeed in anything on your first attempt. Only constant trading practices can produce consistently superior results.
But you probably don't want to lose money while learning the basics, right? Luckily, trading in a demo account costs nothing.
7. Psychology is key
Each trader is a psychologist in the background. When you are planning your next move, you have to analyze market movements and your own psychology.
Does it show signs of confirmation bias?
Did you do an operation out of frustration?
What made you choose that particular currency pair?
Mastering your psychology will protect you from many losses, along the development path in your trading.
8. Without risk there is no success
Not even Forex trading tips and tricks can guarantee success. When you decide to become a trader, you must have already accepted the possibility of failure.
In case you didn't do it - here's a reality bathroom. There are no trades that obtain profitability 100% of the time. Be realistic about your methods and goals.
9. Patience is a virtue
When it comes to trading, the old saying is not just a cliché. True success is never instantaneous. It is the result of consistent work and planning.
Many beginner traders seek an easy and fast way to make a profit. Don't bother, it doesn't exist.
10. Continuing education
Every day you operate, there is a new lesson to learn. So watch the Forex market and keep all our tips in mind. Start analyzing the news, trends, financial processes and do not neglect the fundamentals of Forex.
Most importantly, study, then practice ... and study a little more. Studying will require a lot of time and effort, but in the end the results are visible.
You can visit our free education area for more Forex tips:
Check out our webinars
Start your trading journey with Forex education for beginners
Learn more about the basics of Forex for everyone
11. Take breaks
An important point to follow daily is to take some time away from your computer, especially during stressful trading sessions. When you have several windows open on your computer and multiple data to analyze, you can naturally feel pressured.
In this case, it is better to take a break and shop around. Give yourself some time to organize your head. When you return to your desk, you will be calmer and more focused.
12. Trends are good for you
Another important point in the Forex market is to learn about trends. The ability to detect trends is valuable.
While we don't recommend jumping on the trend train all the time, discarding the trend completely is a recipe for disaster. Trends can show what's coming, so you can adjust your trading instead of reacting when it's too late.
13. Look for competitive conditions
It is important to choose first-class service conditions and obtain good spreads.
14. Plan ahead
Currency trading is not a bet - it is a strategic game. Calculate your next movement carefully before acting.
You can start formulating a plan by asking yourself some questions:
Have I thought about the possibility that you can lose?
What is my plan B for different scenarios?
To succeed in Forex trading, you have to expect the unexpected.
15. Know the graphics
You will be operating in many different markets and you will have to quickly understand the information you analyze for each operation. There are numerous tools to make trading easier, but nothing is more time efficient than graphics.
The graphics give you quick access to numerically heavy data with a simple glance, so you don't have to scroll through it.
We recommend that you learn more about Forex charts and how to use them:
most used Forex patterns
how to read forex charts
best Forex graphics software
16. Don't run out of opportunities
Arrogance is good, but there is a limit to everything. If you operate too much, you are probably hurting your chances of success.
Why?
Overoperating usually leads to less focus and careless trades.
As you develop your trading plan, indicate the maximum number of operations you will perform per day or week.
17. Greed leads to risks
Greed can make you take unnecessary risks too. Set the maximum loss and the desired benefit in your trading plan. When you reach that level, stop.
When it comes to fund management, this is one of the most important Forex tips and tricks to follow.
18. Use Stop-Loss
We also want to mention valuable tools, such as the highly valued stop loss.
Not establishing a stop loss is basically an excuse to keep a bad position open (because you are waiting for the situation to improve). But bad situations rarely improve, and neither does their capital if you don't know fast.
A properly placed stop loss eliminates the risk of losing all your money in a single trade. Stop-loss is especially beneficial, when you don't have the ability to close positions manually.
19. Analyze your operations
Another daily Forex advice to follow is to keep a diary of your trading activity. This will help you monitor your performance and find patterns in your trading.
Basically, it is easier to learn from past mistakes when they are written down. Keeping a diary also improves your discipline. Be sure to write down everything and be honest about it, since you have to be your own biggest critic.
20. Experiment
One of the essential tips for Forex trading is to flexibly adjust your strategy. Be willing to try new things and improve your trading. The Forex market is constantly evolving.
Our MetaTrader 4 Supreme Edition (MT4SE) is free for all demo accounts and in real life to improve your trading experience
With MT4SE, trading is done by hand with a mini terminal, trade terminal, tick chart trader, indicator package, indicator package, trading simulator, and mini chart.
Learn to invest in Forex
Don't let Forex currency trading scare you. Instead, try to remember that success in Forex is based on good training and a lot of practice (without risk).
The good news is that we are with you!
