Forex is one of the most actively traded markets in the world, with an average daily trading volume of $5 trillion. Before you start this, you will need to know about forex, including what it is, how to start forex trading, and how to leverage in forex works.
What is Forex?
Forex is also known as foreign exchange or FX trading. It is the conversion of one currency into another currency. The best forex broker is FOREX.com or CedarFX.
Many people want to make money in the forex market, but few people become successful traders. Now a day forex trading has become easier than ever before because you can trade online via the internet.
What is Forex Trading?
Forex trading is the buying and selling of foreign currency. In the Forex market, you can sell the currency of one country and buy the currency of another country.
For example, the currency of America or the USA is the dollar, the currency of Britain or the UK is the pound. In the Forex market, you can buy dollars by selling dollars or by selling pounds. Apart from dollars or pounds, there are other currencies that you can buy and sell in the Forex market.
What is the Forex Market?
The Forex market is where currencies are traded. Currencies are the most important because they allow us to goods and services locally and across borders. International currencies need to be exchanged to conduct foreign trade.
How to Trade Forex?
Forex trade is not hard to see why it is such a popular market among traders. You can see here is a huge number of different currency pairs to trade 24 hours a day. You need to learn how to trade forex using CFDs or a forex broker, and how the forex market works. Here are some simple steps to help you get started:
- Decide how you did like to trade forex
- Learn how the forex market works
- Open a Forex account
- Build a trading plan
- Choose your forex trading platform
- Open, monitor, and close your first position
1. Decide how you’d like to trade forex
Forex trading takes place between major banks and financial institutions, which buy and sell amounts of currency every single day. There are two main ways to get involved, one is forex CFDs and another is trading forex via a broker.
What is a forex CFD?
A Contact for difference (CFD) is a financial derivative product that pays the difference in settlement price between the opening and closing of a trade. Contact for difference enables you to speculate on the rising or falling prices of the fast-moving global financial market. You can forex trade using CFDs.
Forex trading via a broker
Forex trading via a broker is sometimes via a bank, it works in a broadly similar way to CFD trading. When you trade forex via a broker, you won’t have access to other markets.
2. Learn how the forex market works
Forex is bought and sold via a network of banks. This is called an over-the-counter or OTC market. Those banks act as market makers- offering a bid price to buy a particular currency pair, and a quoted price to sell a forex pair.
3. Open an Account
If you want to forex trade via CFDs, you need an account with a leveraged trading provider. You can open an account in a few minutes and there is no obligation to add funds until you want to place a forex trade.
4. Build a trading plan
Building a trading plan is most important if you are new to the markets. It helps take the emotion out of your decision-making, it provides some structure for when you open and close your positions.
5. Choose your trading platform
The right trading platform can help you with a smart and faster way to trade forex. You can trade via this trading platform in :
- Your web browser
- One of the mobile apps
- Advanced third-party platforms like MT4
6. Open, monitor, and close your first position
Once you have chosen your trading platform, you can start trading. You need to just open the deal ticket for your chosen market, and you will see both a buy and a selling price is listed. You can also able to decide the size of your position and add any stops and limits that will close your trade.
How to buy and sell dollars or other currencies
In order to trade Forex, you need to open an account with a Forex broker and deposit in it. An account can be easily opened online in 2 minutes. You can instantly deposit into your account with various online currencies like PayPal, Alert Pay, Liberty Reserve, etc., and start trading Forex.
However, most people make deposits with Forex brokers through banks. In that case, after opening the account, you will get the details of your broker’s bank account number and bank deposit.
Once the deposit in your account is complete you will be able to start trading. Forex trading is done through online software. You can download this software for free from your broker’s website.
After installing the software and signing in with the username and password provided by the broker, charts and price lists of different pairs will be loaded and you will be able to open/close your trade.
How to make money from the Forex market
The currencies of different countries are always changing. You will see in the newspapers that sometimes the dollar is getting stronger against the money, and sometimes the money is getting stronger against the dollar. This is against most of the world’s currencies.
So, if you buy dollars, you can sell dollars and buy euros if the euro goes up against the dollar. Again, if the euro is strong against the dollar, you can get more dollars by selling the euro.
Maybe you had $100 which you sold and bought for 80 euros. He later sold the euro for 120. That way you can make money. We can make a profit only if the share price increases (buy) in the stock market.
In the forex market, whether the currency is strong or weak, we have the opportunity to make a profit, which is the biggest advantage of the forex market.
What you need to trade Forex
A computer with an internet connection and a small amount of capital at the initial stage can be as little as $ 10. Because almost all brokers will give you a lot of leverage which you can use to trade a lot more.
You can now trade from your Smartphone phone if you want but we will tell you to always trade or trade plan from PC. And never worry about starting Forex trading from the phone. The phone will help you to see the market movement on the way.
After all, all you need is willpower, patience, and humanity to make a profit. If you can bring these three qualities into you then you can be a good trader.
Again, to be a skilled trader you need to understand the Forex market well.
Advantages of Forex trading
Earlier, only the rich or the banks had the opportunity to trade in the Forex market. But now with the change of time, due to the emergence and increasing competition of various Forex brokers, anyone can trade in the Forex market from any country in the world.
It is possible to start forex trading with only 1 dollar. Almost all brokers will allow you to trade for free demos, that is, with virtual money. So first you can prepare yourself by trading demos for free and you can start real trade by depositing the success by trading demos.
The scope of the Forex market is very large and it is not possible to manipulate this market. The New York Stock Market largest stock market in the world and the size of the Forex market is 25 times larger than that. Remember, the value of the dollar or euro is not determined by the government of any country.
The value of the currencies of different countries varies according to the economic conditions and financial events of different countries. Dollars or euros will be bought and sold in all countries of the world at the same price at which you buy dollars or euros.
Large leverage or loan facility is available for trading in the Forex market, so you can make a good profit with very little market movement.
Scalping is a very popular term in Forex. This means open trade for a very short time. It is possible to make a good profit with very little change in the Forex market. Many people open a trade for 10 or 15 seconds and exit the trade with a profit.
The Forex market is open 24 hours a day, 5 days a week from Monday to Friday. And so, whether you are a trader or an employee, you can trade at your convenience in the Forex market.
You can do Forex trading from home, there is no need to go out. And so you can give a lot of time to the family.
To trade in the Forex market you have to do everything online and it is very easy to deposit or withdraw from the account starting from the account opening.
If you can trade well, many will be encouraged to deposit with you and in that case, you can manage their trade and you will get a share of their profit.
After all, a successful and efficient Forex trader can make a lot of money from this market.
To be a skilled and successful trader, you need to study a lot about the Forex market, to qualify yourself for this market. Anyone can make a lot of money from the Forex market without knowing anything.
The forex market is as challenging as the stock market. It is possible to be successful in the beginning without knowing that the stock market is also many. But in order to survive in the long run, there is no alternative but to become an expert.
In other words, there is no such thing as a recession in the forex market. Because in the stock market you can only buy, in the forex market you can buy or sell both.
Remember, When the stock market is going down and down, in forex, one currency is always up!
What is Bid / Ask?
2 prices are shown in all Forex quotations. Bid and Ask. In almost all cases the bid price is lower than the asking price.
The bid is a price at which the broker wants to buy the base currency instead of the Kyoto currency. That is, the bid is the best price to sell.
Ask is the price at which the broker wants to sell the base currency instead of the Kyoto currency. That is, Asking is the best price to buy.
The difference between the bid and ask is known as the spread.
The bid price above the EUR / USD quotation is 1.3456 and the asking price is 1.3458.
That is, the spread here is 2 pips.
If you click Cell, you will sell at 1.3456. And if you click to buy, you will buy at 1.3458.
First, you have to decide whether you will buy or sell.
If you want to buy (buy the base currency and sell the quote currency), it means you want the base currency price to rise and you will sell it at a higher price. In the language of traders, it is called long (long) or taking a long position. Remember, long = buy.
If you want to sell (sell the base currency and buy the quote currency), it means you want the base currency to go down and you will buy it at a lower price. In the language of traders, it is called short or taking a short position. Remember, short = sell (short = sell)