How to Trade Forex
Let’s start with the most basic questions. What is forex trading? Is it possible to earn money by trading forex, and where can we learn how to trade forex successfully? As a beginner in the forex market, you probably have lots of questions that you want answered. In this “how to trade forex for beginners” style article, we’ll answer all your questions, and get you started on the path to becoming a successful forex trader.
Forex trading is simply
The buying and selling of foreign currencies for the purpose of making money on fluctuating exchange rates. Foreign currencies and a well-functioning currency market are important for people all over the world, whether they know it or not, as currencies need to be exchanged in order to trade goods or services across borders. For example, if you live in Australia and want to buy a football shirt from England, you need to pay for it in British pounds, which first must be exchanged from your Australian dollars.
The forex market is therefore an important market that the entire global financial system depends on. It is also important that the market is liquid, meaning the ease at which a trader can buy or sell any given currency at any given time.
Without liquid markets, it would be impossible for banks to exchange currencies with each other, or for companies to make international transactions. This is where you come in – the retail trader. Retail traders around the world provide plenty of liquidity to the markets so that all the other participants are able to accomplish what they need to do, 24 hours a day.
Forex Trader Lingo
As a new forex trader, things can easily seem a bit overwhelming. Experienced traders like to toss around complicated words like leverage, spread, or short. To help you clear up the confusion and appear more educated when meeting these guys, let’s explain the meaning of some commonly used terms:
Long and short
Can be very confusing terms for anyone who is new to trading. In the world of finance, long basically means buying and short means selling a financial asset in an attempt to make a profit. If you are going long, you will make money when the asset goes up in price, and lose money when it goes down in price. If you are going short, you will make money if the asset goes down in price, and lose money if the asset goes up in price. It’s as simple as that!
Is another term that gets tossed around a lot by forex traders. Now, this one is important so there is a good reason traders are talking about it. The stop-loss is the price level where you have decided to get out of a trade that is moving against you. The order will automatically be sent to the market once the price crosses this level. This is key to proper risk management and preservation of capital in trading.
Is the difference between the price you are offered to buy an asset at and the price you are offered to sell it at. Forex brokers usually make their money on the difference between the buy and sell price.
Is sometime referred to as a “point in price.” It is basically the smallest possible price move in any given currency pair. Forex traders often measure their wins and losses in pips rather than percentages or dollar value.
Is basically borrowing money from your broker to increase your buying power in the market. In forex trading, leverage is always part of the game, and brokers will by default let you take much larger positions in the market than the cash in your trading account would otherwise suggest. Keep in mind that leverage is a double-edged sword; on one hand it’s great because it boosts your profits when you’re right, but on the other hand it also increases your losses when you’re wrong. Be careful and learn to manage your risk properly!
Unique characteristics of the forex market
The forex market has a set of unique characteristics that make it unlike any other financial market in the world. To be an informed trader, you should know what these are.
Discover Forex Day Trading Strategies
Trading Forex is risky without a quality education and applying comprehensive risk management techniques. So ensure you have the best start before day trading in volatile markets and learn professional strategies, simplified to work for you.
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What is the best Forex Day Trading System?
Day trading strategies are simply strategies where the execution and closure of the trading happens within a 24 hour period. These short term positions are executed by people who are able to spend a substantial amount of time in front of their computer screens trading, and have a solid understanding of technical indicators.
What is day trading?Day traders are looking to execute high frequency strategies while trading. For day traders it's all about making profit by trading often in a day, earning smaller portions trading each time which for successful day traders, adds up to higher profit margins in the long term.
Who is Day Trading Suitable for?Generally, day trading is reserved for people who are trading on the Forex market full-time, because it requires you to always have your finger on the pulse and your eyes on the charts.
At Learn to Trade
We equip you with four robust trading strategies that cover both end of day and day trading systems. A day trader will typically not have any open positions held overnight or over a few days. If this does happen, it’s referred to as swing trading. Most day trading professionals will use both approaches to currency trading.
What do you need if you want to become a day trader?In order to become a successful trader you need to develop a trading strategy and stick to it.When getting started in day trading you'll need to ensure you have a high speed internet connection.On top of this, you'll need at least two monitors, some day traders even have more. The multiple screens are helpful because they allow you to bring up the different charts and technical indicators that will tell you whether to buy or sell.You'll also need professional charting software to scan the market for the right trading opportunities and help you trade with ease.However, computers are perfect for crunching huge quantities of data, they are not able apply to offer discretion or judgment, that is still the forte of the trader. In order to become a successful trader you need to develop a trading strategy and stick to it.Take the first step today to achieving your financial freedom. Call us on (02) 8412 6000 and speak to one of our Forex trading education specialists and find out if our Learn Forex Course is right for you. Alternatively, you can attend one of our FREE forex trading workshops and find out more about the Forex market first before taking the next step. Register your interest and secure your place at our next workshop near you.
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Our Graduates Know Best:I had no idea what it was that I'd do, but I knew it was time to leave my comfort zone after the mass redundancy from the docks. After attending an Anthony Robbins seminar and seeing Greg Secker talk about forex trading and his company Learn To Trade, I was hooked. Probably the toughest, most emotional, stressful two years of my life when coupled with other things going on at the time. But today I woke up paid, with no alarms. I'm still alive and it's the only job that upsets me when it's Friday and makes me happy when it's Monday.A big thank you to James Mathews and the Learn To Trade team in north Sydney.Believe to achieve, achieve to succeed.