Trading for beginners

Where to start trading on the Forex market?

Forex is one of the largest world markets. At the same time, the bulk of its participants are private traders who profit from changes in exchange rates. Simply put, the universal principle of trading “buy cheaper, sell more expensive” also works here. Everyone can become a Forex trader. Neither the level of education, nor the degree of employment, nor well-being are practically irrelevant here.

There are many subtleties in currency trading, but there are no insurmountable obstacles. Let’s look at some general principles of trading in the financial markets, and then move on to the decision of buying and selling, as well as how to limit possible losses.

When trading Forex, you need to constantly learn, improve your knowledge and, most difficult, be able to make decisions by analyzing your successes and mistakes, even if you work with a broker.

We are going through training
on Forex trading for beginners

As already mentioned, in order to start trading on Forex, no economic education is required. However, a beginner who does not know anything about the currency trading market is doomed to failure. Therefore, before you start playing Forex, you need to figure out what’s what.

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Read special literature

Many books on how to get started on Forex have been released. Many of them were written by practitioners – successful traders who once, like you, started from scratch. In addition, there are many articles and blogs on the Internet about the game on the Forex for beginners. This will give you a general idea of how the international currency market works, what analysis and strategies are, how much to start trading on Forex, and how to increase your chances of success.

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Attend several seminars and workshops

Seminars are regularly held in any major city. Very often, brokerage companies themselves organize such training meetings with successful traders and analysts – participation in them is often free. If for some reason you cannot get training at such a seminar – it does not matter, the same brokerage companies conduct webinars – online seminars, the effectiveness of which is no lower.

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Open demo account

Both of the above methods of learning to play Forex will give you a good theoretical base, but practical skills are needed for success. A demo account, like a regular trading account, can be opened through a brokerage company. As a rule, the opening service is absolutely free. This account is absolutely no different from the real one: you also trade currencies, monitor the market, enter into transactions, earn or lose money. The only difference is that this money is virtual, that is, you won’t earn any real money, but you won’t lose anything if you fail.

A demo account is something like a trading simulator, although there are no artificially created situations there, everything is real. It allows you to fill your hand, get acquainted with all the features of the program for Forex trading, learn how to navigate in the real currency market, try out trading strategies. In addition, with the help of a demo account you can earn on start-up capital. Large brokers regularly hold contests on demo accounts – the winner who has earned the most money receives real funds that are transferred to a real trading account.

Trading Rules

9 rules how to become a great trader

1. Knowledge is power

In addition to knowing the basic trading procedures, daily traders should be aware of the latest news and events in the stock market that affect stocks - Fed interest rate plans, economic prospects, etc. Make a list of the desired stocks that you want to trade and keep up to date with selected companies and major markets. Scan business news and visit reliable financial sites.

2. Set aside funds

Evaluate how much capital you are willing to risk in each transaction. Many successful traders risk less than 1% to 2% of their trade account. If you have a trading account for $ 40,000 and you are ready to risk 0.5% of your capital in each transaction, the maximum loss per transaction is $ 200 (0.005 x $ 40,000). Set aside an excessive amount of funds that you can trade in and which you are ready to lose.

3. Allow enough time for trading

Trading takes your time. That is why it is called day trading. You should give up most of your day. In order to economize. The process requires the market to track markets and identify opportunities. Moving fast is the key. The markets, in turn, reserve the right to use all the risks that will be used in this case.

4. Start small

As a beginner, focus on one or two promotions during the session. Tracking and finding features is easier to keepit up with a few promotions. Recently, it has become more common to trade fractional stocks, so you can specify specific smaller amounts in dollars that you want to invest.

5. Avoid Too Cheap Stocks

You are probably looking for offers and low prices. These stocks are often bleak. Many stocks traded below $ 5 per share are excluded from the list of major stock exchanges (OTC). If you have real opportunities and some research has not been done, stay away from them.

6. Time for deal

Many orders placed by investors and traders begin to be executed in the morning as soon as markets open, which contributes to price volatility. An experienced player can recognize patterns and choose the right situation to make a profit. But for beginners, it may be better to just read the market without taking any steps for the first 15-20 minutes.

7. Reduce losses with limit orders

Decide what type of orders you will use to enter and exit trades. Will you use market orders or limit orders? When you place a market order, it is executed at the best price available at the moment - so there is no guarantee of price. Decide for yourself what type of shares you want to use, do not change your decision depending on the pricing policy. Always stick to your strategy.

8. Be realistic about profit

A strategy does not have to win all the time in order to be profitable. Many traders win from 50% to 60% of their trades. However, they raise more on their victories than they lose on failures. Make sure that the risk for each transaction is limited to a certain percentage of the account, and that the entry and exit methods are clearly defined and written down.

9. Keep calm

At times, stock markets test your nerves. As a professional trader, you must learn to restrain greed, hope and fear. Decisions should be based on logic, not emotions.

Forex Trading Styles and Strategies

There are several trading strategies you can use when it comes to forex trading. It is known that some of them are more effective than others.

You must study these various strategies well to find out which one is best for you. Here are some of the most popular strategies you can choose:

Daily Trading Strategy: Transactions established using this strategy are usually closed before the day ends. This may prevent you from taking damage from any negative events that may happen overnight.

Trend Strategy: As a trader of such a strategy, you must follow the trend to determine the direction of price movement.

Swing Trading Strategy: This strategy is usually used for transactions that last for a period of one day to a week.

There are also various trading styles, which depend on the period and time of holding each transaction. This includes intraday trading, position trading, swing trading, trend trading, technical trading and fundamental trading.

Risks and tips that every trader should know

There are various types of risks that you should be aware of as a forex trader. Here are some of them.

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Leverage risk: leverage can be either profitable or risky. The higher your leverage, the higher your profit. Despite this, you should also keep in mind that your losses can also increase with an increase in your leverage.
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Interest rate risk: the moment the interest rate in the country rises, the currency strengthens. The increase in strength can be explained by the influx of investments in the assets of this country, since with a stronger currency, higher returns may be more likely. But if the interest rate falls, the currency will weaken, which can lead to more investors abandoning their investments.
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Operational risk: this risk is an exchange rate risk that may be related to time differences between different countries. This can happen somewhere between the beginning and the end of the contract. There is a possibility that within 24 hours the exchange rates may change even before the transaction. During trading hours, currencies can be traded at different prices at different times. The risk of transition increases with the increase in the time difference between the conclusion and execution of the contract.

Understand the language

Strong command of the most frequently used Forex language will greatly simplify your entry into the market. Here are some words and phrases that you will hear again and again:

Base currency

The currency you are holding. If you are from the United States, your base currency is most likely the US dollar.

Quotation Currency

The currency you intend to purchase.

Bid Price

The price that your broker would like to “offer” or “buy” the base currency that you hold.

Ask Price

The price that your broker “asks” you in exchange for the purchase of your chosen quote currency. The offer price is always higher than the offer price.

Spread

Difference between the offer price and the sale price. This is just a broker's commission.

Pip

The smallest measurable cost of currency movement. The word “point” is an abbreviation for “percentage at a point”, and one point is 1 / 100th of 1% of your currency. For example, if the value of the US dollar increases by one point, it means that it has increased in price by $ 0.0001.

World Economy Analysis

Making money from currency trading is an accurate prediction of the movement of the global economy.

To be a profitable trader, you must convert your base currency to a quote currency configured to increase value, and then convert the quote currency back to your base currency when the value reaches a peak.

Examine the trading positions, GDP, and political climate of the countries in which you are interested in buying foreign currency, and you will get a great “advantage” in what currency quotes are worth your investment and in which countries economic growth is projected.

Make your first deal withTraderKing

Once you have decided on the quote currency that you are going to buy, it is time to place an order for your first transaction. Your brokerage firm probably provides online trading software that allows you to place an order to buy or sell currency.

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