Beginners Forex Education Forex Basics

So You’ve Made Your First Forex Trade…Now What?

Congratulations, you have just made your first ever forex trade, that is a fantastic milestone. Unfortunately, your work doesn’t stop there. Regardless of the outcome of that trade, there are a number of things that we need to do afterward in order to ensure that the trade counts as a good and successful trade, and ways that we can build on what we have just done. So let’s take a look at some of the things that you can do next after placing your first trade, these are not in order of importance or order of when you should do them, just things that you should be thinking about after that first trade has been placed.

Write It Down

The first thing that any trader should do after placing their first trade is to write everything about it down on awesome paper in a trading journal if you have one. This will include things like the opening price and time, the closing price and time, how long the trade was open for, the profit or loss of the trade, what analysis you did beforehand, which of your trading rules you followed, and any other relevant information that you can think of. It sounds like a lot, but it will be worth it, this sort of information will then allow you to analyse the trade that you made (our next point) which in turn allows you to ensure that you are making even better trades in the future. This is only possible though if you remember to write things down. It does take a little extra time, time that is definitely worth it, so don’t skip this step just to save yourself a few extra minutes.

Analyse It

You can do this regardless of whether you did our previous point of writing things down, however, it is far easier to do if you have all the relevant information written in front of you. We now need to analyse the trade that we made in order to work out whether it would be classed as a good trade or a bad trade. A good trade is one that followed all of our trading plans and rules, you can then probably guess that a bad trade is simply a trade that did not follow all of our rules, a trade placed outside of our strategy, regardless of the outcome. If we placed a bad trade we need to work out why, what part of the trade went against our pre-planned strategy? Work that out and you will find it far easier to avoid making the same sort of bad trades in the future. The result of the trade in regards to profit or loss is not important at this stage, what is important is that you get used to trading in line with your strategy and that you gain experience with placing trades with your platform and broker.

Remember Your Feelings

When we place our first trade, we will have a number of different emotions flowing through us which is completely natural in this situation. We will feel nervous beforehand, during the trade we may feel a lot of adrenaline, afterward, depending on the result we may feel a high or a low. It is important to remember these feelings, however, the reason why we are remembering them is not so that we can try and recreate them, it is to show us that we need to try and get them out of our trading. The nerves that you get at the start should go with time, but if you allow them to remain it can become increasingly hard to actually place trades, the same with the highs and lows, they can become addicting or even bring on other emotions that can affect our trading like greed or overconfidence. So remember those feelings, if you then, later on, feel them becoming quite strong, that is a good time to take a break and clear your mind.

Change Things

If we did our analysis properly, we will most likely have a few things to think about, did you follow your strategy? Did you place a good trade or a bad trade? These are things to think about. If things were not entirely perfect which they probably weren’t, then we can start to think about things that we need to change. When starting out there will most likely be a lot of different things that we need to change on our first, second, third, and more trades. They may be very few things, but each change that we make is an improvement that will ultimately improve our overall trading in the long run. Remember, these changes do not need to be big, any changes are also helpful, no matter how small they are.

Place Another

So we placed our first trade, after looking at that trade, analysing it, working out what we need to change, we can then think about placing our second trade. We need to take into account anything that we previously looked at, so if we needed to make a change, this is where we can implement it, of course, if it is a huge change, then it will be good to test it on a demo account, but for very small changes it will be ok in our live account. It should be slightly easier and quicker to place this second trade as we have done one before and the majority will be exactly the same. Place the trade and then do exactly the same again, write down what you do, the same information as before, so you can then analyse the second trade to ensure you are still in line and that any changes that were made are working well. Then do the same for the third, fourth, and any other subsequent trades that you make.

Your sift trade is a huge milestone, it is the start of your trading career, it can be daunting, it can be exciting and for many, it won’t go the way that you want but that is all part of trading. Analyse it, change it and keep working and writing down everything that you do. With each and every trade you will see small improvements until you get to your 100th where you will be a much better trader than you were for your first trade.


Forex Videos

Forex Tips For Newbie Traders!

cool tips for newbie traders

Thank you for joining this forex academy educational video. 

In this session, we will be looking at how to stack the odds in the favour of consistent winning trades with a cool tip for newbie traders.

The number of retail traders who lose all of their deposited trading funds within the first 6 months is scary.

In the United Kingdom, retail brokers are required to have a financial health warning on the front page of their website.  This is one that we picked at random from a well-known UK retail broker. 

CFD’s are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investors’ accounts lose money when trading CFDs with this provider.  You should consider how CFDs work and whether you can afford to take the high risk of losing your money.

Some brokers put the figure at over 80% but let’s not split hairs. This is still a worrying trend.  It must be worrying because governments have forced brokers to put the warning on these sites.

One of the biggest areas that new traders full down is because of a lack of knowledge about how the money markets, and where they lack consistency regarding the setting up and implementation of trades, and most of all; a total disregard for stop losses and their correct implementation and the setup of leverage which falls under risk management, perhaps the most important aspects of trading. 

One of the best ways to mitigate the risk of losing trades is to use a trading criteria checklist.

Here are some ideas about what you might put on that checklist.  The idea is that it is an assistant to help you in the early days on a trade by trade basis to make sure that you have everything in place to help to stack the odds of winning trades in your favor.

Before you do anything, you want to have adopted a trading style or plan and where you have consistently made money on a demo account before trying it with real money.


Is the market trending?

Does it have support and resistance?

Are all of your indicators confirming your trade entry?

Consider using a scrolling vertical line, which might help you cast your eyes down to all of the indicators rather than just focusing on price action and potentially missing something.

Set a tight stop loss for each trade, and don’t risk blowing your account balance on one single.  Trade spread the risk over several trades to give yourself a chance of making more money than you lose.

 You should aim for a minimum of a 2 to 1 risk to reward ratio.  That is to say, you want to win twice the amount that you are prepared to lose on each trade.  This will help to keep your account balance in a healthy state.

Decide your preferred time of day to trade.  Try not to trade at the end of a 1-hour time frame if you are an intraday trader.  These can often be the impetus or a change in the direction of trends, and you need to ascertain if this is the case on a trade by trade basis.  Try not to trade at the end of a one-time zone and the beginning of a new one because, often, you will find the different time zone traders have different sentiment with regard to a particular currency pair, and this may be the impetus for a change in direction.

Don’t tread over economic data releases, especially if these are marked as hi-impact, which can often cause extreme market volatility.  Wait until a trend has been identified after the release.

These are just a few ideas which you could put onto your trading criteria checklist.  Print one-off and keep it beside you and meticulously go through it every time before you pull the trigger on a trade.  Eventually, these things will become like second nature, but until they do treat the checklist like a friendly assistant.

 One of the biggest barriers to successful trading in the currency markets is a lack of consistency in one’s approach.  Something like this will go a long way to helping new traders to consistently make the right decisions on a trade by trade basis, and this will stack the odds in their favor.


Beginners Forex Education Forex Basics

Ask Yourself These 5 Questions Before Trading Forex

If you are thinking about making the jump and investing in a trading account, there are a lot of choices and a lot of decisions that you need to make. Your family, your friends, and people randomly over the internet will want to give you advice. They will want to point you in the direction of what they like and what they think is right. This can be helpful but it can also be detrimental. With so many different voices and opinions being thrown at you, it can make it hard to keep sight of what it is and the reasons as to why you want to trade in the first place. 

With this in mind, we have come up with some questions that you should be asking yourself. They will help you to really understand why it is that you are looking to trade and why you should or should not be doing it. You may not be able to answer them all or you may not be sure of the answer and that is fine. Use this as an opportunity to work them out, as this will then enable you to know whether trading forex is the right thing for you.

What is your end goal with trading?

When people look at trading, they often see the big numbers and the fortunes that could be made. If this is your end goal then you could be in for a little bit of a surprise. Things aren’t that simple and people very rarely see those larger numbers in their accounts. It is important that you have a more realistic end goal, something like being able to quit your job. This is achievable. A lot of people do it and it is certainly something worthy to aim for. Ensure that your goal is manageable and that you do not forget it, keep your eye on it to help you remain focused. People Will say that it is wrong or bad, but it is your goal, and if you believe in it, you should be able to achieve it. Just ensure that you actually have one as you are not simply trading blind, there will be times where it will be hard to motivate yourself.

How does the idea of trading make you feel?

Before thinking about this, have you actually traded before Either real or demo accounts? If you have then think about it when you were actually trading, if not, just think about how you would feel about trading with your own money. Many people like the idea of trading or the idea that they will be able to make money, but when it actually comes to trading or to actually risk some of your own money. If you feel nervous about putting your money on the line or taking a risk with it then trading may not quite be the right thing for you, or you will need to ensure that whichever strategy or trading style that you are going for suits your risk tolerance. You need to be able to accept a certain level of risk if you want to trade. Also, consider your thoughts and feelings towards learning, many people do not like to sit down and read a lot of information. If you can manage this then it’s a big plus. If you cannot then it could be a long journey ahead of you.

Do you have enough time to trade?

Trading takes time, a lot of time, if you were to think about your average week, excluding the weekends, how much time do you actually have free? You need to consider your other hobbies, your family, your social life, and of course work. 99% of people start trading as a side hobby, something to do after work or on their day off. It’s great that you are doing it alongside your work, but this will end up taking away pretty much all of your free time. There will also be some limits to what you can do, some strategies and trading styles require you to be in front of the computer for extended periods of time while others only a few minutes. So before you decide how you want to trade you will need to work out which style would better suit you.

Do you have enough capital to trade?

Trading takes money. While it has become increasingly accessible, with accounts being able to be opened from as little as $10, it does not mean that you will be able to be successful with that amount, let alone make enough to achieve the goals and targets you would have set for yourself. If you want to be successful and to use proper risk management techniques then you will need to ensure that you have enough money to support it. Your capital needs to be in line with your goals, so if you want to earn $10 a month, then a $100 account may be enough, but if you want to earn $1,000 per month then you will need at least a $10,000 account in order to do it safely. Trading can be an expensive game, and remember that any money that you put in is being put at risk, you are able to lose it all regardless of how good your money management is.

Do I have the determination and dedication for it?

Trading takes a lot of dedication and commitment to be successful. It is true that anyone can trade, anyone can enter into a trade, but it takes time and a lot of effort to fully understand why you are putting on trades and also which trades you should be taking. If you are someone that gets bored easily and likes to move onto the next thing, then trading may not be right for you. You need to go into trading with the idea and understanding that this is a long term thing, we are talking years or even a lifetime. You won’t be successful straight away, in fact, the majority of people who trade quit within the first year either due to losses or simply getting bored of it. Know that you will be here for the long haul, and if you are the sort of person with the personality that can deal with that, then it is a good start.

The start of your trading journey comes far before the first trade has been made. It comes far before you have even signed up with a broker and it has even begun before you have read your first educational article. You need to think about whether the prospect of being a trader is right for you right at the very start. If you are not sure or don’t think it is for you, there is nothing wrong with that, but you do not want to then still get involved, spend hours of your life learning and trying just to confirm that it is not right for you. Simply look for something that is instead. If you feel that it is right, then start learning, you are now embarking on a long and hard journey, but one that can reward you with pretty much everything you need to stick with it and continue to learn.

Forex Basics

Help! How Do I Start Trading Forex?

Are you looking for information on how to start trading currencies? Surely, you must have read numerous tips, but today we are giving you the most important 11 instructions to take into consideration on your path to becoming a professional trader.

1: Be honest and realistic

Naturally, we all want to earn a higher income, yet to make it happen continually, one does need to set his/her priorities straight. Prioritizing means that each trader must dedicate himself/herself to ongoing development through education, testing, and self-analysis. Additionally, be realistic about your expectations and see if it is plausible for your ideas and plans to come to fruition. Most commonly, traders expect to start trading and immediately get impressive returns when, in fact, everyone is limited to a specific percentage even with impressive skills.  

2: Work on your research skills

Forex is not really a marketplace where you can go and find information nor is there a book where you can look up the answers to your burning questions. You should start by discovering credible information sources on the internet, be they social media outlets or YouTube channels. See what type of learner you are because you may do better by enrolling in a course on forex trading.

3: Maintain individuality in all ways possible

Whether you are good at looking for definitions of forex-specific terms or you like to discuss matters you feel excited about with others, you must exercise independence from the very beginning. Try not to seek support from your friends, family, or other members within the forex community. Strive to grow your ability to assess your steps on your own and do not ask for understanding or approval externally. This will allow you to grow an invaluable mindset that will be of extreme importance once you start creating your system. 

4: Learn to let go

After you have read about the basics and are looking to apply the theory you have absorbed so far, the time has come for you to discard what is not serving you in terms of information, strategies, and tools to trade. Only keep what you have measured through thorough testing, having previously obtained tangible proofs that something produces good results. Also, learn to let go of any people who may have been assisting you on your path to becoming an independent trader because these individuals are only doing you a disservice after a certain point. 

5: Start a demo account

Most experts will tell you the same thing – do not proceed to real trading before you have seen how trading functions in a safe environment. Whatever you feel you may know or believe you have figured out should be assessed through your demo account. Get the impression of what it looks like to trade for real and use this opportunity with your eyes open, as a professional trader is often much scarier because real money is involved. 

6: Carry out testing properly

Testing is your best friend in that it will show you the areas that need improvement. Get yourself acquainted with backtesting and forward testing that will help you generate the ultimate version of the algorithm you will use to trade real money. Also, any scientific or quantitative assessment requires proper recording skills, so prepare yourself for detailed journaling of every entry and exit point, among other key items of data. Discipline in this respect is the only way for you not to set yourself up for some major disappointment with your algorithm.

7: Give yourself time

We are all anxious to see the fruits of our labor, but this must not by any means influence our growth. If you feel that you are under a lot of pressure, find exercises or techniques that could help you calm down. And, most importantly, do not assume that there is a way out from doing things step-by-step, as becoming good at forex is a gradual process. Any attempt to speed up the learning or testing part will most probably lead to a scenario that we unnecessarily see too often in the trading world. In the beginning, for example, you might need to readjust your schedule and see how you can absorb all the information without any disturbances. Later, when you feel satisfied with your results, you may even choose to forsake your day job. Nevertheless, whichever stage you are on, make sure that you are not needlessly adding pressure to your everyday life. 

8: Get to know yourself

As you are slowly gathering all information you may need and seeing how theory works in practice, give yourself the space to understand how you may be blocking your growth. Are you aware of your major triggers? Are you a perfectionist, never feeling truly happy with your results? Are you a massive controller, feeling compelled to tweak the settings here and there in the middle of the trade? Or, are you potentially scared of success, so you fail to recognize the moments where you can maximize your profit? Do a personality test and discover which traits or characteristics may turn out to be fortunate or detrimental to your trading to know where to divert your attention.

9: Exercise control in every step

Whatever your own set of blockages is, make sure that you get to it before your emotions get to you. Trading is all about knowledge, testing, and a sober mind, so your emotions must be kept under control. Likewise, any laziness in terms of being dedicated to taking notes on your trades or really being present when trading needs to be dealt with before you move on to trading with real money. Being in control also entails properly protecting your assets, so make sure that your trades will never go on and on without you even noticing that your stop losses are off for example.

10: Really devote yourself to growing your money management skills

Trading without money management is basically the same as betting because you are not protecting your trades (thus your finances) properly. You surely do not want to spend all your hard-earned money just like an all-in casino goer, wasting it all in one go. See how you can manage your trades more effectively and make the habit of using the tools and methods that will help you with that. Each trader is individually responsible for fostering and developing a profound understanding of how to handle and invest finances. Understand that without adopting a sustainable mindset, your winnings may eventually go to waste.

11: Expand your options

If your current financial status cannot help you to get the return that would make a difference in your life or let you switch to trading alone, you can be even more motivated to succeed. Do not get discouraged if your initial investment will not provide you with an amazing return, as you only need great demo trading results to be noticed by a prop company for example. If you manage to achieve a good return percentage and present your accomplishments to a certain institution or a hedge fund, you may easily get an offer to trade on their behalf.

As you can see, many of the requirements to start trading involve the development of soft skills, which go hand-in-hand with any technical knowledge. However, we cannot broaden our minds or improve our life standard without curiosity, which will remain to be one of your best allies from the very beginning to some more advanced trading stages. Besides, understand that trading starts the moment you create an account even though no real money is involved. Professional trading is just another term for trading real money for a living, and since we know how success varies individually, do your part the best you can and everything else will fall into place.

Beginners Forex Education Forex Basics

Best Books for Beginner-Level Forex Traders

Once you decide to gain an education in trading forex, the task can become overwhelming, as there is a lot of information out there. Although many forms of education have taken a more technological approach lately, traditional books are still very informative and should not be discounted when it comes to providing traders with useful knowledge. Those that prefer the more technological means of learning can also benefit from these books by purchasing kindle or audio versions. Below, we will highlight some of the best books for forex traders on their beginning journey. 

#1: Currency Trading for Dummies by Kathleen Brooks

The name of this particular book is quite telling, as it starts by focusing on the most basic concepts related to forex trading. This user-friendly guide doesn’t only explain what the forex market is and how it works, but it also guides trader’s through more complicated topics like risk-management while explaining things in a way that is easy to follow. You can buy the book on Amazon for $19.49 or purchase a kindle-based version if you’d prefer. Try checking other major bookstores for copies if you’d prefer to buy this book in person without waiting for shipping. 

#2: Forex Trading 2020: Beginner’s Guide by Norman Davidson

This book offers secrets, strategies, and covers the psychology behind trading. According to the book’s description, it teaches traders to make $10,000 per month in “no time” – but we would recommend taking that comment with a grain of salt, as you’d undoubtedly need a large starting deposit and more developed skills to meet this goal. Still, this book has received a 4.7-star rating with most readers finding the book to be a helpful insight into forex trading. The audiobook is free with a 30-day trial on Audible, or it can be purchased for $14.95 without the free trial. 

#3: Forex Trading for Beginners: The QuickStart Guide to Successfully Investing and Make Profits in the Foreign Exchange Market with Simple Strategies. A Step by Step Trading Plan to Control Your Emotions by Paul Cohen

The number 3 book on our list is a great option for those that are inspired right now, as it can be purchased at your nearest Walmart for only $17.38. While this choice is also targeted towards beginners, it also covers some ever-important psychological aspects related to trading forex. These psychological tips can really come in handy later on as traders start to feel the pressures of trading. 

#4: A Beginner’s Guide to Day Trading Online by Toni Turner

This is a more specialized option that appeals to aspiring day traders. Day traders generally place trades during the day and closing all of their trades out before the end of the day, rather than allowing trades to rollover to the next trading day. If this strategy goes along with your time schedule, then this book could be a great purchase. You can buy the kindle version on Amazon for $12.99 or purchase the paperback book for $10.99. 

#5: Trading Forex for Beginners 2020 by Martin Satoshi 

This advanced audio guide can be purchased on Audible for $14.95, or you can listen for free by signing up for a free trial through the website. This book is described as being an excellent place to start for those that are new to forex trading, and it also gives more advanced advice that can help you down the road. More than 100 users have given this audiobook a 5-star rating with positive comments.  

#6: Forex Trading Made Easy for Beginners: Software, Strategies and Signals: The Complete Guide on Forex Trading Using Price Action by Marlon Green

This book is one of the top results on Google and can be purchased for only $0.99 through the Google Play Store. It serves as an introductory book that delves into more complex methodologies later on. One downside to this option is that some users have commented that they didn’t find it particularly helpful, but the book is worth mentioning for the fact that it focuses on novice traders and can be purchased for less than a dollar. Since you can download the book on your phone, it would be a good read while sitting in a waiting room, waiting for dinner, or while relaxing at home.  


Beginners Forex Education Forex Basics

The Forex Trader’s Starter Kit

Everyone wants to get into trading these days but there is just so much to it, when you finally get in you will be bombarded with tons of information, far too much for you to work out what it means, let along learn any of it.

To make things a little easier, we have bright together some information and tips on what sort of things you should be focussing on to begin your trading journey, this should help you to get a grip with things a little quicker and to help avoid the information overload that you would otherwise suffer with.

Learn the Basics

Sounds simple enough, and pretty obvious to most, but what exactly are the basics? Learning what a buy order is, what a sell order is, what pips mean, what a stop loss is. These are things that you will be using in your everyday trading life, they are the bones of trading and something that you certainly need to learn early. Going through these basics will give you a good foundation that you can build the rest of your strategy on top of.

Without this knowledge you will not be able to succeed or to learn at a reasonable pace, it will help with working out what your profits will be or what your potential losses may be.

You can get this information from a number of different sources, there are loads of basic guides out over the internet, mentors are available and there are also both free and paid courses. What is important is that you get your information from a single source, to begin with, this will help you learn in a consistent manner. Once you have a decent understanding of what things mean, then you can try looking at some additional sources to see if there are any discrepancies. However, when looking at the basics, most places should be providing you with pretty much the same information.

Develop Your Own Strategy

It can be pretty easy to find a strategy online and then try to follow it, while it may be easy, it is unfortunately not a good way of going about it. Initially, it may work, but when things do not go the right way, you won’t actually know what is causing it to go wrong and as you do not fully understand the strategy or how it works, you will not know how to adjust it in order to meet the changing demands of the markets.

You can start creating your own personal strategy as soon as you gain some of the basic knowledge that we mentioned above. The trading plan and strategy take everything into consideration, your risk, your profits, the currencies to use, and more. It will tell you how to get into the markets and how to get out, it will be your rule book when trading.

Due to this, starting it early will help to cement these rules into your mind and will make them far easier to remember and to stick to, so be sure that you are ready to get your strategy started as soon as possible.

Finding a Broker

There are a lot of brokers out there and you will see a lot of people constantly promoting the one that they are currently using, so it is understandable that it can be quite confusing as to which one you should go with.

The best way of choosing a broker would be to get one that suits the strategy that you are now creating, so you need to match up the requirements of your strategy with the features of the broker If you have a strategy that is going to be taking small profits then you do not want a broker that it offering rather large spreads. So let’s look at what sort of things you should be looking out for to match with your strategy.

Leverage: It is great to have high leverage, but you want to avoid going too high, if you go too high, it can start to put your account at risk as it lets you place trades far larger than you should be, we would suggest not going any higher than 1:500. If your strategy does not need high leverage, then the lower the better.

Commission: Most brokers with low spreads will charge a commission, the range of these charges can have quite a big difference between brokers. You want to avoid those that are charging exceptionally high commissions as this will very quickly start to eat into your profits. Commissions of $6 per lot traded or lower would be what you want to aim for.

Spreads: The spread is the difference between the Ask and Bid price that the broker is offering. Normally lower means better, however, you need to compare them to any added commissions also, most traders are now going for ECN brokers which offer low spreads. If your strategy only aims to take a few pips each trade, then a broker with high spreads will not be very effective.

You should also be looking for various other things that aren’t necessarily related to the strategy that you are using. You want to look around at the various reviews of the broker, whether it is regulated or not. You should also offer a demo account, demo accounts are incredibly important and something that you will require from your broker, it allows you to test out your strategy, so getting a broker with one is paramount to your success.

Get a Demo Account

This goes along with what we mentioned above, you need to get yourself a demo account. You can use this account to test out your brand new strategy, it also allows you to get a feel of how the markets actually work. If you read and learn something new, you can use the demo account to test it out and to see exactly how it works in the real world.

The demo account is invaluable, be sure that you have one and use it as much as you can, it is a fantastic tool for learning.

There is of course a lot more that you can be doing, but those are some of the basic things that you can do and the ways that you can do them to get you started on the right foot.

Beginners Forex Education Forex Basics

The Ultimate Beginner’s Guide to Forex Trading

Forex stands for Foreign Exchange and it is also known by its short name FX. It is a process of trading various currencies all around the world. So why is Foreign Exchange so significant? The most obvious and probably most important reason behind its existence is that it keeps businesses as well as foreign trade going on, on a global scale. You participate in global foreign exchange market every time you convert let’s say Dollars (USD) to Pounds (GBP) on your trip to the UK, and same applies if you are a British citizen going on a vacation in Greece, but in that case, you will convert Pounds (GBP) to Euros (EUR).

Forex is a good place to earn money as it is a type of investment, and people all around the world are trading currencies daily. How much you can earn depends mostly on how much you invest, basically, like any type of investment. Profits can range from a couple of dollars to thousands and more every month. That is the obvious reason why some people are only trading on FOREX for a living. Where there is money there are always some risks and it is not uncommon for people to lose almost all of their money invested, but you have to have strong foundations to make it. You can’t build Empire State building on a shallow concrete slab. That is why you have to read a lot and inform yourself about Forex. You will probably learn about various trading strategies you can use which can minimize risk and maximize your profit.

Forex presents the market where you trade the currencies. Before we even start elaborating on the term of the Forex market, it is good to know that it doesn’t have its central place. There is no for example physical place such as building, where the trade is happening. Forex market consists of online trading and it can be done all across the world, where only Internet access is required. For instance, if you are working with cryptocurrencies, the only thing you need is access to the Internet so you can proceed with obtaining access to the Forex market. Bear in mind that you would have to check the timezones, depending on the country and currency you are working with. The forex market has its working schedule. It starts from Sunday at 5 pm EST until Friday at 4 pm EST. This market is constantly changing and moving, therefore it is expected to see the change in the price quotes of currencies throughout the whole day.

Forex Market Levels

Two levels create the Forex market. The first one is called the interbank market. In this case, banks are the ones that trade. The second one is called the over-the-counter market, or just shorter OTC and it is the place for the regular traders and their FX activities. The most important thing before you even start trading online is creating an account with the Forex broker. This is the person who can give you the platform that you can use for further trading. When we talk about currencies, it is the US dollar that is majorly traded. It is estimated that more than 80 percent of the trades are covered with the US dollar.

We also need to mention Euro and Japanese Yen as currencies that are also used in trades but not as much as the US dollar. This market is well known for being one of the most vibrant in the world where a lot of things are happening and changing each second. Most importantly, highly skilled traders can earn a lot, but on the other hand, there are investors whose profit soared in a short amount of time and then plunged even quicker. It requires dedication, concentration, and experience to embrace all necessary skills for trading in this market, but if you try a little bit harder, the expected profit can be guaranteed.

Being devoted to learn and study and expand the knowledge about this market has shown as the most important factor. People usually take this for granted and use this market as a gambling game that led them to the serious loss of money they invested. This is why the dedication and effort you make is crucial to get the profit. Analyzing the opportunities and reasonable predictions are also key factors that will make you a serious and good trader. By expanding your knowledge and experience, you will definitely be able to increase your profit.

As we mentioned earlier the most used currency in the Forex market is the US dollar. That leads us to the term currency pairs. The most important thing is that the paired currencies have to be liquid in the market. For example USD/JPY, EUR/USD, USD/CAD, AUD/USD, GBP/USD… present the major currency pairs. There are also currency pairs that are not often used even though they are liquid. They are known as minor currencies and their pairing is not very common such as GBP/JPY, EUR/GBP, EUR/CHF.

Furthermore, as a future Forex trader, it is essential to recognize and determine the base and quote currency which creates the currency pair. For example USD/JPY. The first currency in the pair (USD) is the base currency and presents bid price. The second one, which is in our case JPY is quote currency and stands for ask price.

It’s All About the Numbers

When it comes to currency trading you will note that the currency pair is always followed by a number. Let’s take an example from above, USD/JPY 108. In our case, the base currency is USD and is always equal to 1. Therefore, we have this proportion of 1 USD/JPY 108. This example shows that 1 USD and 108 JPY are equivalent. On the other hand, if we use JPY as the base currency according to the forex convention it will look like this JPY/USD 0.0092. Bear in mind not to swap two currencies and their values. Even though they at first glance seem different, dividing 1 with 0.0092 we will have 108 as the result, which means that the mathematical relation shouldn’t change.

A few more things need to be said regarding bid and ask price. The most basic way to describe ask and bid is that it is a two-way price quotation, the bid price being the maximum price a buyer is willing to pay and ask price being the minimum price seller is willing to take. As for Forex, profit is made when your broker asks for a price that is higher than he would be willing to bid, if, for example, you were the seller. Now that we know this, it is also important to know that that, let’s call it “area” between the bid price and ask price is known as the spread.

What do buying and selling currencies look like? First of all, there is always someone buying a pair of currencies and someone selling a pair. The process of making a profit by buying and selling goes like this: You buy US $3000 by selling 2000 euros. This means that you are predicting the value of the US dollar will increase against the euro. If you were right, then, another step needs to be taken to make a profit. You need to sell your US $3000 into euros. Now you will obtain more than 2000 euros. The process as you can see is quite simple.

As we mentioned earlier the spread is the difference between the bid and ask price. It is a bonus, or more specifically a commission you broker receives for the trade. So how do we know if we earned or lost money? It is quite simple, as we are using something called pip, and it stands for Percentage in Point. If you have a currency pair, and due to fluctuations in the market there is a change from 1200 to 1202, which means there is a 2 pip change. If you buy the EUR/USD currency pair, to profit, you want EUR to increase against USD. If you bought EUR for $1.7500 and you sell when the price reaches $1.7550, you made yourself a profit of 50 pips. On the other hand, if it lost value, it is a loss of 50 pips, and it would show as -50.

If you are asking yourself what should be your goal regarding pips, the answer is simple. It is a matter of your preference. Someone can be happy with 20 pips or 60 pips. Your main goal is to make a profit. It is true, though, that the longer you hold a currency pair, there will be more pip value changes. To help you achieve your goals and be a successful FX trader, you will use certain orders which you will give to your broker to buy or sell currency pair at their best price.

Order Types

The first order we will mention is Market order. It’s the most widespread type and is used to buy or sell the currency pair at the best possible price. An entry order is used to enter the market when the price reaches a certain target price. Since you can’t spend hours and hours looking at the fluctuations on the market, this type of order will help you save time.

A limit order is the type of order you can use to exit the market once you reach a certain profit. This way your broker will buy or sell a certain currency pair at a specified price. If you are taking a short position, it means you will have to set your limit order, somewhat lower than the market price, and vice versa, if you are taking a long position it would be good to set a limit order higher than the current market price.

Another type of order commonly used is Stop order, also known as Stop-loss order. It is used to minimize your losses. Once the price reaches a certain point, a trade will be closed to prevent more losses.

Importance of Leverage

Before we start elaborating on the importance of the leverage, we need to discuss the risk and reward ratio. It presents the result of a comparison between the risk involved in the trade and the profit that you are making from it. For instance, you can use the stop loss at 20 pips and then you place your in-profit at 40 pips. That means that your risk/reward ratio will look like this- 20:40. According to this example, you can earn 40 pips while risking 20 pips.

It is essential to analyze the opportunity, so the reward can overcome the risk. It would be even better if your reward can always overpower the risk, but it’s not something that happens every time. We all need to be aware that the prices on a market like this are fluctuating and things are rapidly changing, therefore the theory about high reward and low risk is not always viable. There are no specific rules that you should stick to. It is your strategy, knowledge, and ability to recognize opportunities that can lead you to profit.

In the previous paragraph, we have mentioned the term leverage. It is important to say, that people join the Forex market because it provides them with higher leverage, which is different from other financial instruments. This means that you can borrow a higher amount of money from your broker for your investments. Furthermore, borrowing the money from your broker and higher investments will provide you with the bigger potential to make a profit, because you will earn a precise percentage of your investment.

Forex provides you with high leverage, which allows you to trade a big amount of money even with the initial margin. That margin depends on your broker and the size of your position and it can go from 50:1 up to 200:1 in some cases. Again you will need to set-up a margin account with your broker. So, what do these leverages mean? If there is a 50:1 leverage, that means that the minimum margin requirement is only 2% or 1/50 of the total value of trade in a trading account that is available as cash. Usually, people rely on 1:50 and 1:100. The leverage 1:200 is used when it comes to positions of $50.000 and less.

To trade 100.000$ with a margin of 1% which is 100:1, you will have to put 1000$ on your margin account. Even if it looks a bit higher and goes along with risk, have in mind that foreign currencies do not change significantly on the day of trading. They usually drop less than 1% daily. The leverage can be exceptionally helpful when you’re a beginner in the Forex trade market. The most proficient traders reckon that $1000 of investment should be the minimum starting point. The thing is that not many traders are willing to risk that much, but the leverage can allow them to increase their trading power.

If you are concerned about trading foreign currencies without the leverage, we can tell you that some great traders in the market do not use leverage. The following example will illustrate how this can still work. For instance, you buy $2000 with the 1600 EUR. So, in the worst case, if the price of USD drops by 50%, you are not bad. In this case, you are still left with 800 EUR. On the other hand, if you use the leverage ratio 100:1, bear in mind that you will lose all of the money. Even if you earn something without using the leverage it cannot be anything significant. Only wise decisions can lead you to serious profit.

And Lot Sizes?

A lot presents the minimum that you can trade in the Forex market and is in correlation with the risk. If you are a trader, you will have to check and look for the most convenient lot size that matches your current trading account. Again, be aware that the market is very active and is rapidly changing. Therefore, if you don’t have any huge trade, a 100 pip movement won’t affect your account. On the contrary, a huge lot with the same pip movement (100 pip) will definitely result as a loss. It is significant to recognize which lot size is the most convenient for you.

The smallest lot that is on offer by a vast number of brokers is called a Micro lot. It equals 1000 units of a currency. So if we are taking into account, for example, EUR, that micro lot will be equivalent to 1000 EUR. A 2 pip, in this case, would be worth 20 cents. It is suggested if you are new to Forex trading, that you use this type of lots. If you have more capital to invest, then Mini lot would be a far better way to make a profit. Let’s say you have a dollar-based account and are trading a dollar-based currency pair. In this instance, 1 pip is equivalent to $1. Since the market fluctuates, and pips can skyrocket or plunge, profits or losses can be far greater.

A whole lot of traders only use micro and mini lots. The thing is, large accounts are using Standard lots as these can bring the most profit. If we use the dollar example from above, it would mean that 1 pip equals $10. If there is a 20 pip movement you would have an equivalent of $200. This shows great potential for both profits, and, unfortunately, losses. Like we already mentioned, Standard lots are only for larger accounts, and you would need to have a larger capital to be able to invest in these.