Forex is a multi-billion industry on which tens of thousands of people trade on a daily basis. However, what sets a few apart from the rest is that they know how to start forex trading and make a lot of money. On the other hand, beginners don’t really need to shy away since there are a lot of tips that can help them learn about how to trade in this ever-changing market. With that being said, the forex trading guide below will provide beginners in the Forex market with a few useful tips to start their journey, hopefully, towards a bright and financially secure future.
Forex Trading for Beginners
What Is Forex Trading?
Before giving out any tips, people should first of all know what is forex trading. Forex is a type of trading that is generally done through a market maker or a broker. Individuals can thus choose a currency pair they’ll expect to change in value and then place a trade accordingly. For instance, if someone bought 1000 EUR in January 2005, this would’ve cost them around twelve hundred dollars. Throughout that year though, the EUR vs. USD value increased and by the end of 2005, 1000 EUR was equal to thirteen hundred dollars. This means that if the trader chose to end the trade at that point, his earnings amounted to 100 dollars.
Many people choose to open up mini accounts when they’re still learning how to do forex trading, but that doesn’t bode well with the big players. As a result, the broker will generally take the opposite side of the individual’s trades. To make people better understand what this means, idealistically it’s like playing at the kid’s pool where they can get wet, but since it’s not connected to the big pool, they won’t be able to make too many laps in it.
While how to start forex trading may be a question that makes a lot of people blink fast in excitement and in cognizance, trading in this market is not as hard as it sounds. Every time someone trades Forex, they’re buying and also selling currency at the same time. As a result, they’re always quoted in pairs. As a result, the quoted price will represent the amount of quote currency the trader can purchase with a single unit of the base currency. For instance, if the currency pair of EUR/USD was quoted at 1.3700, then that means one can purchase 1 EUR for 1.37 dollars.
What is Leverage?
Depending on the market people choose to trade in, they can get a leverage of up to 1:200. This means that by just investing a small amount of money, people will be able to take much greater positions on the market. To offer an example in this regard, with 1000 dollars, a trader can purchase contracts valued at 200.000 dollars and because of that, his chances for making profits are massively increased.
Depending on the trader’s interface, Forex charts can have vary a lot in terms of looks, yet there are indeed certain common parts in every Forex chart. The majority of charts will show info such as:
- Most recent or closing price.
- Lowest price.
- Highest price.
- Opening price.
Those who are still learning how to forex trade may find them a bit difficult to understand in the beginning, but that should not be a problem in the long-term. Using them people can check everything they did on their account in the past ten years and up until the last-minute. By doing so, they can easily understand market trends and use that info to their advantage.
As a beginner wanting to know how to learn forex trading, it’s best if one can use specialized Forex trading software. There are many software packages to consider out there and each one has their own benefits. The program analyzes the currency price charts and using criteria set by the user, it can find a currency pair that can generate profit and then makes the trade automatically. The software though can do so much more and that is why if they want to make Forex trading as simple as possible, people should go with a popular one.
So at the end of the day, what is forex trading all about? Well, Forex trading is all about timing, knowing all about the current and past marketing trends, knowing exactly when to trade and also be aware of the currency that can offer the most profits.