How To Trade Forex

How To Trade Forex

Ever wonder how to trade forex? Many of online experts claim that Forex is the easiest path to become rich and to fulfil the dreams. How to trade forex is a question which only answered by few hardworking professionals.

You need to understand that trading Forex is not an easy job than any other financial instrument trading and it required the same level of skills as in any other market-based profession.

And you will be pleased to know that like other markets here in forex trading insiders make money at the expense of outsiders.

Moving Forward with how to trade forex

So, before the final decision to get in question your motivation and skills as well as your commitment to undertaking this attempt.

If you are ready then preparing yourself for the setback, uncertainty, and hardship. In efforts to get the answer of how to trade forex until now, we get that it’s not easy as the majority of new traders think about it and it will require a lot of efforts.

As it will remain hard to earn from millions of brilliant minds. Individual traders always remain to fail to make a trading system for themselves.

If you can develop a winning forex trading strategy and can limit your losses then you can fulfill your dreams from this market.

The reality is less than 5% of traders make money from this market consistently. Funds remain a real hurdle for individual traders as in their efforts to win a trade they fight with the institutional trader who trades with the plenty of funds.

Learning how to trade forex successfully is not a random endeavor, you need a structured approach for it which should be based on the planning, executing and reviewing.

Your success will depend on the successful implementation of this cycle. The successful implementation of this cycle can lead you towards consistency in profits.

How to Trade Forex? Getting in

We all are aware that most of the financial markets are OTC (over the counter) mean traded on the specific place. But the forex trading market has no physical address or location or central exchange.

It is 24 hours a day market and global business banks and individual traders like us are connected with each other through brokers.

Brokers are connected with each other and liquidity providers to facilitate the traders either they are individual traders or institutional traders. Many of Broker also provides education to traders on how to trade Forex.

The value of currencies continuously fluctuates against other currency which creates multiple opportunities for a trader to earn profits.

It is always traded in the pairs, where the firest currency is called the base currency and the second currency is called the quote currency.

How to trade Forex, Common Choice

There are two types of analysis which a trader or an expert make to enter into a trade the very first one is technical and the second one is fundamental. The most common choice for majority fo traders is technical analysis. Because it offers to trade in the short term and very short term and also it is possible to get hands on it without any professional help.

Forex Trading Steps

#1: Learn the basics of currency trading

If you really want the answer to the question “how to trade forex” then you must consider video portals as well. Because a lot of learning material in the shape of videos is available here free of cost. That audiovisual help you to make you understand better with the basics. It is not easy to learn the forex trading at your own but videos can help you a lot to understand what it really is. While in the hard form it’s all over the internet. In addition, you should attend seminars/webinars which are offered by most of the broker with the regular interval. And read books and trading generals little bit to in order to sharpen your skills.

Most commonly used Forex terms as under are also part of the answer to “how to trade forex”

  • Base currency: The first currency in the pair, Like if you are from United states your base currency is USD.
  • Quote currency: The second currency in the Pair
  • Bid price: The price that your broker would be willing to “bid” or “buy” the base currency you are holding.
  • Ask price: The price that your broker will “ask” you for in exchange for buying your quote currency of choice. The ask price is always higher than the bid price.
  • Spread: The difference between the bid price and the ask price. This is just the broker’s commission.
  • Pip: The smallest measurable value of currency movement. 
  • Long position: well this means you want to buy the base currency and sell the quote currency.
  • Short position: This means you want to sell the base currency and buy the quote currency.

Oder Types

  • Market Order: These orders are placed to buy or sell at current market price.
  • Pending Order: these orders are used to buy or sell at predefined price.
  • Buy Limit: It  is a pending order to buy below the current market price.
  • Buy Stop: It is a pending order to buy above the current market price.
  • Sell Limit: it is used to execute sell above the current market price.
  • Sell Stop: it is used to execute sell order below the current market price.
  • Stop Loss: it is associated with the open deal to close it at specific price in Loss.
  • Take Profit: it is associated with the open deal to close the it at the specific price on profit side.
How To Trade Forex

#2: Choose the Right Broker

In response to “How to trade Forex” we are on the level where we need to choose the right broker for our trading. The chosen broker will help you to make trades and will also provide you other services. If you work with a reputable broker that will add advantage in your trading and you will not lose money between ask and bid and between profiting your trades.

How To Trade Forex

In the response of how to trade Forex, I am not suggesting your a broker. Because the choice is different in every region. There are hundreds of brokerage firms and it’s really hard to do the job to find a broker which can suit your needs and will stay legit to you. Here are some tips that will definitely work for you.

Here are some tips that will definitely work for you.

  • Research different brokers.
  • Look for someone who is in this field for more than five years and can help you.
  • Also, confirm that the broker is regulated by a major regulatory authority, so your deposit will remain safe.
  • Also, consider the products list which a broker is offering.
  • Read reviews about broker.
  • Visit the broker site and ask for help and evaluate how quick they are.
  • Focus on the other essential like deposit fee and withdrawal fee and other associated charges.
  • Last but not least check for the transaction cost. Higher transaction cost will eat up your profits.

List of Top Regulatory Authorities 

  • United States: National Futures Association (NFA) and Commodity Futures Trading Commission (CFTC)
  • United Kingdom: Financial Conduct Authority (FCA)
  • Australia: Australian Securities and Investment Commission (ASIC)
  • Switzerland: Swiss Federal Banking Commission (SFBC)
  • Germany: Bundesanstalt für Finanzdienst leistungsaufsicht (BaFIN)
  • France: Autorité des Marchés Financiers (AMF)

 

#3: Organize the trading capital

In the efforts to get an answer for how to trade Forex from this step we are involved in the physical arrangement. The good thing here is you do not need a large amount to start trading you just can take a start with the minimum deposit. This is because of the margin trading feature offered by brokers especially the Forex brokers. However, it is a good idea to take a healthy start with at least 1000$ which can make you able to meet some of your expenses in return.

#4: Open a demo trading account and choose a strategy to trade.

With your preferred broker open a demo trading account and make your trading strategy to trade. This will helps you to know about the reliability of your trading strategy as well as about the execution and services of your broker.

#5: Open a Real trading account

Open a trading account with your preferred broker and if your broker is offering education section then try to get the answer of how to trade Forex in detail and step by step. Verify your account with the necessary documents and fund it to start trading. Until your account is being ready your can

#6: Plan your trade

In a trading plan, you will outline where you have to look for the opportunity. On what basis you will consider it valid to get in and your monitoring and exit rules. Before entering into a physical trade here in this step you decide how to make your trade from A to Z.

#7: Open, Monitor and Close Your First Trade

Here in this step, you have to choose a currency pair for your trading. Use your trading strategy and enter into a trading monitor that trade and close that.

I believe that this is the toughest part of the trading as one wrong trade can spoil the motivation and courage. Monitoring can be a tough job here as trade may float into the negative territory and that will test the patience of trader. Until now you understand the basics of how to trade Forex and take your first decision.

#8: Keep Track Record (Practically this is the last step in How to trade Forex)

The professional trader has a program or a manager who look after all of their activity. This facility is not available to retail traders so they need to be their own boss. They can do it while maintaining their trading journal. A trading journal is a notebook where you write down your trades, the reason for the trade and the outcome. I say the outcome very specifically and intentionally because it will be used in the future for evaluation purpose. You take your start from how to trade Forex but after some time when you need to evaluate than. A good and complete trading journal not only maintain the entry and exit with the outcome and also comments from the decision maker. That what convince him to get into this trade. Record everything

  • Record your entry price/level
  • Your exit price/level
  • And also record your original stop loss and take profit levels along with planned ones.
  • The position size which you open.
  • Comments on why you entered the trade what convince you to get in.
  • Your emotions during the trade, how do you feel
  • Your profit or loss, the end results.
  • A screenshot of the chart at the time of entry and exit. It is necessary to get evaluated.

Avoid Greed

It is human nature when he deals with the money he becomes emotional and an ordinary human being cannot do anything to control it. But a Forex trader does. There are proven techniques and way which one can adapt to avoid greed. Like trader need to make rules to engage in any trading activity and then follow that rules in true spirit can bring better results.

Keep Your Emotions in Control

It is always emotions which a margin trader compel to do wrong as he always remains with the extra margin. That he can invest so he takes the wrong decision compelled by his emotions. Use the following guidelines to avoid emotions in your trading

  • Always search for better material to get the answer of how to trade Forex and guidelines to control emotions in trading.
  • Do not marry your positions always cut non-performing positions and book profits where necessary.
  • Do not effect by any fear and sudden move.
  • Be in the Zone.
  • To trade find less volatile hour which is nearly after the close of US session.
  • Prefer to take a walk after every trade.
  • Do not look to profits and losses while you are in the trade stick to Take profit and stop loss.
  • Do not over trade. stop trading after three trades.

Remember that mastering the emotions can guarantee you the success.

Decide how much time you can commit to trading

how to trade forex

You can trade from any place but before starting your real trading experience. You need to decide how much you will give to your trading on a daily basis. Along with this, you have to decide either you will become a part-time trader or a full-time trader. When you are getting the answer of how to trade Forex here it is necessary to. Choose your trading session and stay specific in that. When you are preparing yourself for trading that will take more time. But when your setup is done there you can become comfortable. How to trade Forex is the only first question you look into it. You will need further learning so also decide the time for that.

The last Step in how to trade: Conclusion on How to Trade Forex

The answer to the “how to trade Forex” is fully explored. Well, this is the right path to trade the Forex and to become a Forex trader. Of course, losses will come into your way but that doesn’t mean you have to give up. Understand that losses are part of this business and you have to keep them on minimum. If you will become able to keep your losses minimum then you will also become able to withdraw your winnings into your pocket.

Now, this is the time to stop looking for how to trade Forex and take steps to get in. Forex traders have the facility to work from any place with a good internet connection. They are also blessed with the growth potential as this market offers endless opportunities. The trading environment and trading itself offer to enjoy the lifestyle that every human being wishes to have.

Other Resources

Swing trading strategies a complete guide/next step to how to trade Forex.

How to trade Forex with Price action trading strategy.

Learn how to trade Forex with continuation trading strategy.

How to trade Forex with indicators based trading strategy.

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