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#1 02-02-2020 22:26:05

johnedward
Admin & Trader
From: Paris - France
Registered: 21-12-2009
Posts: 2855
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Complete guide: How to learn to trade the forex market

Complete guide: How to learn to trade the forex market


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Whether you want to start trading for the very first time or already have some trading experience, you're probably interested in trading the forex, one of the most popular markets. But what is forex trading and how does one trade currencies? These are legit questions that you may have, so with this in mind we've put together the following crash course on the basics.

What is the forex?

Forex is a sort of acronym for the Foreign Exchange market. It is also sometimes abbreviated as FX. It is therefore the market in which various countries' national currencies are traded.

Currency trading is done via currency pairs. They are:

Arrow The major currency pairs,
Arrow Minor pairs,
Arrow Exotic pairs.

The major currency pairs are those that contain the US dollar, or USD: EUR/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, AUD/USD and NZD/USD.

Conversely, minor currency pairs are the other pairs: EUR/GBP, EUR/CHF, EUR/CAD, EUR/AUD, EUR/NZD, EUR/JPY, GBP/JPY, CHF/JPY, CAD/JPY, AUD/JPY, NZD/JPY, GBP/CHF, GBP/AUD and GBP/CAD.

Lastly, exotic currency pairs are those which contain both a major currency and a currency of an emerging or less important country (like Hong Kong, Singapore or countries outside the EU) . These are: EUR/TRY, USD/SEK, USD/NOK, USD/DKK, USD/ZAR, USD/HKD and USD/SGD.

How does the forex operate?

To fully understand it, you must first understand how it works. We have seen that currencies are traded in pairs. In these pairs, the first currency (left) is called the base currency and the second (right) the quote currency, or counterpart currency. The quote currency indicates its value for 1 unit of the base currency.

The Forex price is both:

Arrow The selling price
Arrow The buy price

The selling price is the amount requested by a forex broker when purchasing a unit. The buy price is the price at which you can then resell a unit. Note that forex traders never buy or sell actual physical currency: one only speculates on the appreciation or depreciation of the value of the various currencies and pockets the difference.

For example, in the EUR/USD pair, the euro (EUR) represents the base currency and the dollar (USD) the quotation currency. If we have EUR/USD = 1.1000, then that means that the EUR/USD is trading at 1.1000 and therefore that 1 euro is worth 1.10 dollars.

More broadly, the forex trading relies on 3 different players:

Arrow Institutions: Central banks and States,
Arrow Traders: investment funds, professionals and individual home or office-based traders,
Arrow Investment Service Providers (ISPs): banks and stock brokers.

Note that it is through these that individuals can access forex trading; the stock broker must therefore be chosen with care and in particular be regulated by a regulatory authority such as the AMF (France) or the FCA (UK).

How does one trade the Forex?

To understand how to trade, you must keep in mind that trading is based on anticipation. You buy a currency pair hoping that its price will go up. You sell a currency pair when you think that its price will fall.

Forex trading is accessible to individuals via CFDs, a financial instrument that allows you to invest in an asset to the upside or downside. You therefore don't actually posses the currencies of the pairs you buy; you only collect the difference between the buy price and the selling price of your positions. This is what makes it possible to also speculate on the drop of currency prices.

In practice, forex trading consists of various different types of orders:

Arrow The market buy order, which allows you to buy a currency pair at the current market price,
Arrow The market sell order, which allows you to sell a currency pair at the current market price,
Arrow The Stop Loss order, which automatically closes a losing position at a predetermined level,
Arrow The Take Profit order, which closes a winning position and automatically takes profits at a specific price once it is reached,
Arrow The Buy Limit pending order, which automatically purchases a currency pair at a price lower than the current price if it is reached,
Arrow The Buy Stop pending order, which automatically purchases a currency pair at a price higher than the current price if it is reached,
Arrow The Sell ​​Limit pending order, which automatically sells a currency pair at a price higher than the current price if it is reached,
Arrow The Sell Stop pending order, which automatically sells a currency pair at a price lower than the current price if it is reached.

Forex trading often falls into 3 categories of trading strategies: swing trading, day trading and scalping. If you are not a full time currency trader and have little time to devote to trading, swing trading will be the best option. On the other hand, if you are looking to make online trading your main activity, then you can opt for day trading or scalping. It involves trading many trades per day. Each trade can last as quickly as just a few minutes or even a few seconds (in times of high volatility).

How do I learn how to trade the forex?

There's all kinds of training on the internet to learn everything about forex trading: forex training courses, trading videos, forex trading strategy tutorials, etc. There are paid and free forex trading courses for newbies, etc.

Learning to trade the forex is therefore very accessible today. Whatever type of currency trading course you go for, it should combine both training with practice on a demo account. This type of account allows you to learn how to trade currencies in real market conditions, but with fake money, so that no risks to your capital are involved.

Why trade currencies?

If you are still hesitant to become a forex trader, here are the 5 main benefits you will enjoy:

Arrow Forex is open 24 hours a day, 5 days a week,
Arrow It's the most liquid market out there (trillions of dollars are traded each and every day),
Arrow It involves the lowest brokerage fees of the financial world,
Arrow It allows you to trade from home,
Arrow Currency trading offers you great freedom in your trading hours.

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#2 13-05-2020 10:49:03

Scarlett rose
Member
Registered: 12-04-2020
Posts: 10

Re: Complete guide: How to learn to trade the forex market

This is a perfect detailed mentioned by the writer, other than this one can log in to Demo account for deeper and practical knowledge of forex trading.

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