Forex Trading For Beginners – Simple Guide

Once you learn how to do forex trading then you will understand why this market is such a popular market. In this forex trading, you can choose many different currency pairs for trading from majors to exotics . You can also trade 24 hours a day. This guide will help to learn a forex trading for beginners, how to trade currency with FX trading and gives some steps and examples for trading.

What Is Forex Trading?

Forex trading is also known as currency or FX trading, these involved in currency price fluctuations on a given period of time. Using Forex trading, traders will buy or sell currencies against another. So, traders will gain from the exchange rates changes between a currency pair. This market contains largest volume of trading in the world and this market is very dynamic and highly liquid.

Forex Trading Basics

Other financial markets contains central exchange, but forex trading does not have a physical location or central exchange. It will be operated via global network of banks, individual traders and businesses, and it operates 24 hours a day. So, currency exchange rates will be changed in value against one another, then it offering multiple trading opportunities to invest on.

Steps To Forex Trading

1. Pick your currency pair – First you need to Choose which currency pairs to trade for your business. If you will have to make as a forex trader this decision is very important for trading. Many online websites also offer a wide variety selection of major, minor and exotic pairs of currency options to select from. New traders tend to start with choosing currencies which is familiar for your trading, you can find opportunities in currencies and trading before starting this process because many of the people have less exposure about this.
2. Determine the type of forex trade to perform – In Forex trading there are several ways to perform the process, it includes two types of betting such as CFDs or spread betting. CFD trading – By using CFD contracts with base currency units you can trade it with specific numbers. If you are interested in investing on Euro. On the other hand, you can also invest on US dollars. Spread betting – Using Fourth decimal Point, You trade currency pairs for every point movement, and it also a typical process.
3. Decide whether to buy or sell – After choosing your trade market, you have to take decision on the current trading price and the direction in which you think the market is going to move. Forex trading pairs are quoted as one or base currency versus another currency pairs therefore: The base currency will strengthen against the quote currency or the quote will decline versus the base currency, so it is better to buy the pair. Another ways that the base currency will weaken against the quote or the quote will appreciate the base currency, so you can sell them.  Each currency pair has two prices in forex trading. The first one is the sell price and the second is the buy price. The difference between the two quoted prices is the trading cost of your business.
4. Add orders – you can also add order in your trading, the order is an instruction to trade yourself automatically at a future period of time when the exchange rates meet your expectation as a particular pre-determined level. These will Stop loss and limited orders are used to make sure that profits are locked in and then losses are definitely minimized.
5. Monitor your trading position – First starting period of time, your profit and loss (P&L) fluctuates with each market price movement in forex trading. So, you need to monitor your P&L in real time is very important. By using this method, you can easily add or close trading positions when it is necessary.
6. Close your trading position – Closing a trade is similar to opening a position in trading. If you initially bought 5 units of currency pairs and you need to sell the same number of units upon closing in trading. When you close a trade after that your profits and losses are reflected in right away in your trading account. If you decided to close your position in trading or in that website, you just simply navigate to the ‘positions’ tab and select your position and click on ‘close’ button to navigate. Alternatively, you just make the opposite trade to the one you opened in trading.

Examples Of Forex Trading

Long trade – If the US job market starts to stall on trading, then you think the level of Non-farm payroll will get below the estimates of analysts and it expect the US Dollor to weaken the Euro. So, you decide to buy $10 stake pip movement. This cause US dollors to slump then you decide to close the position. You start at some trading price and sell them at some highest price, so the difference between those values will be the profit for your trade.

Short Trading – You need to use fourth decimal point to calculate the profit and loss in trading. If you assume that some USD chart looking for trading opportunities and you trade at high probability for the market to move lower. So you can get profit orders to your position, the risk for this trading will be managed by your own.

Placing Your First Trade

First you need to monitoring your trades – you need to monitor active and pending orders, the instruments which you are currently trading, your buy or selling order, price of the trading and commission and swap details of your trading, so that you can easily make money on trading.

You need to manage your tradings – there are many websites in UK for forex trading like FXTM and in those websites you need to manage your trades and modify or close an open position. By selecting “Modify Position” in website trading, you can adjust and stop the loss and take profits levels high and save your money for later uses. Through the same menu you also have the options to show the charts of your trade and you can also close all positions or view the position details.