Forex Trading – Foreign Exchange Beginners Guide

by Nov 21, 2018

You are Future Forex Market Trader

Welcome to
Forex Trading for Beginners”

Forex Trading Thoughts

As a Forex beginner you have so many questions and you do not know where to start.

You are searching for a tutorial that will introduce you step by step into Forex trading as a beginner. Tutorial that will explain in a simple way what is Forex trading and teach you basic terms used in trading.

You are frustrated with technical terms that you have not used before and you are not able to clearly explain them to yourself. How to start trading on the Forex as a beginner is even more hard because you do not know where to start.

I have compiled most asked question’s that a Forex beginner ask when he starts trading on the Forex market. I have answered them to help you start because I want you to become profitable trader so you can make some money.

This article is for you, as a beginner in Forex trading, where you will get insight what Forex market is, what are the basic terms used in trading so you can start trading.

If you are a beginner it means that you:

  • do not know what is Forex market
  • do not know how to trade on the Forex market
  • want to learn Forex trading
  • do not know which broker is good one
  • want to learn Metatrader 4 trading platform
    • download and install on PC or smartphone
    • open demo or live account
    • read charts and currency pair price
    • open a trade
    • draw support and resistance line
  • are curios what is
    • pip
    • spread
    • leverage
    • margin
    • lot
    • trend
    • resistance/support
  • ask yourself which trading session is on the Forex market
  • ask yourself when is a good time to trade

I will cover all possible aspects on Forex trading for beginners and teach you all above from the list.

You need to follow steps in this article because I will guide you step by step. If you do not follow, it can happen that you miss something.

When you finish reading you will have enough knowledge to start trading by your own. If you already have some knowledge on Forex trading then feel free to jump over some steps.

If you want to recall on some topic or read it again so you understand it better, you can get back to this guide.

Repetition is the Mother of Knowledge

Forex Trading For Beginners – Introduction

Here are few lines for you which you need to remember as an introduction before continuing further through tutorial for Forex trading for beginners.

They say you can earn a lot of money on Forex. You could hear that over 90% of traders lose their money. Forex trading is hard to learn, easy to give up, gives you high returns and maybe you can leave your daily job and have passive income.

These are one of many words you will read around internet and all of them are true. But be careful because there are always two sides of the story, good one and the bad one.

Should you start as a Forex trading beginner in a Forex market, that is something you should decide. You should decide on which side you want to be when someone talks about Forex trading.

I am for Forex trading side and I hope you are also. What do you say?

FREE 5 Day Email Course

Email course is for beginners who do not know to much about Forex trading but wants to know

 

  1. what is Forex
  2. what is trading and where to start
  3. what is Metatrader 4
  4. how to setup charts on Metatrader 4
  5. how to open and close order in Metatrader 4

After you are done you will know how to use FREE trading platform to activate order by selecting currency pair on the Forex market and make money.

  1. Trading platform?
  2. Activate order?
  3. Select currency pair?
  4. Make money?

To much strange words? Get them clear and start trading!

What is Forex Trading For Beginners

There are two levels of Forex trading market. One is interbank market for large banks who makes hedging and trade for their clients. Second one is OTC(Over-The-Counter) market where we, small individuals, come in and trade Forex through broker and online platforms.

It is called OTC(Over-The-Counter) where trade is done via dealer network and it is decentralized system. Dealer network is broker house with which you have account open.

Decentralized means that there is no central place in the world where all transactions are processed and it is not physical exchange like stock exchange, NYSE or Nasdaq.

Place where Forex trading is held in today jargon is a website platform, desktop platform or mobile app on which Forex traders make a trade. Technology like computers, smartphones and tablets makes it possible to trade Forex from anywhere in the world.

Wide specter of choices is what makes Forex trading highly desired platform for making money.

What Does Forex Mean

But before moving forward on the terms you want to know I need to cover some area about Forex so you understand what Forex means.

As I said earlier Forex aka Foreign Exchange Market, is the market where many companies, banks and people are exchanging their money. That means they are exchanging one currency for another.

You know that you need to bring money with you if you are traveling to France. If you are from the U.S. then you need to have Euro currency to pay expenses while traveling through France.

To make that happen you need to go into exchange and make conversion from U.S. dollars into Euro.

The article “what does Forex means” explains what Forex is,  how did the Forex word become word for Foreign Exchange Market and what is Forex meaning in English.

What is Forex Industry

As explained, Forex is a market where currencies are exchanged. While money is exchanged between many participants and I am talking about the largest sum of money you could think of, the Forex market is also called the Forex industry.

Industry is a branch where many companies find their interest to make money. Are those banks or private funds or common people like you and me, it is the industry where the money is made.

Because it is so large all those participants are regulated in some way with laws in each country where the money is exchanged.

For more details I have made an article about Forex industry that will show you what is:

  • Forex industry
  • what are Forex industry rules
  • what are Forex industry trends
  • Forex industry services
  • size of the Forex industry
  • worth of Forex industry
  • Forex industry news and
  • Forex industry Scams

What is Forex Market

Now it is time to start reading more about Forex market where you can find your place and make money.

First lets take a look who are the participants on the market so you can easily follow next part of the article.

  • Major banks
  • Electronic Brokering Services(EBS)
  • Medium size and small banks
  • Retail market makers
  • Retail ECNs
  • Hedge funds and commercial companies
  • Retail traders

On the upper side of the Forex trading market you see large banks who holds most currencies.

On the next level we have hedge funds, retail market makers and retails ECNs who make transactions through commercial banks. Because all mentioned participants are on the second level they have worse rates compared to top level banks. If you want to have best rates you see where you should be, on the top level.

On the bottom are we, small retail traders who trade over retail market makers, also known as Forex broker. While we are at the end we pay higher rates when trading currencies on the market but those rates are acceptable. Many brokers are fighting for customers and everyone is looking to lower the rates in order to attract new traders.

Market as any market allows any seller or buyer to make a purchase. Through that purchase you can buy or sell something.

Will you make money by selling or buying, it is up to you. While common market where you buy groceries is a market where you usually spend money, Forex market is the market where you can make money. And, of course, lose money if you make wrong decisions.

How do you make money and how do you enter into the Forex market is easy thing to do. Maybe you are not familiar with steps needed to enter into the Forex market but now you will learn a little more about Forex market.

You need to understand how the market functions and who are the participants on the Forex market.

Forex Trading For Beginners – When Does Forex Trading Market Open

Forex trading market opens on Sunday at 5 PM and close on Friday at 4 PM EST(Eastern Standard Time).

Eastern Standard Time is equal to UTC – 5 hours. UTC stands for Coordinated Universal Time.

In simplified language UTC is measured as time in London and EST is easily to calculate. For Forex market this means that it is open from Sunday 10 PM and close on Friday at 9 PM London time.

Even that market opens in early morning it does not mean that traders are trading in high volume. This does not happen because people are sleeping or they are not at work place.

On the Forex market there is four major market trading sessions you should watch.

Those are:

  • Sydney
  • Tokyo
  • London
  • New York

These four market is the largest one, London market among them as the biggest one because on this markets highest volume is traded.

Forex trading market open and close time in four trading cities, Sydney, Tokyo, London and New York

Another point you should remember that highest liquidity is when 2 of these four market is open at the same time. This overlap brings large amount of traders, trading volume increases and liquidity is high.

What is Forex Currency Exchange

When you decide to exchange one currency for another currency you go to the exchange office. That office is small retail exchange office that cooperates with banks.

Banks are major exchange offices where you go to make exchange between currencies. They have many different currencies in their reserves so it is not a problem to find very exotic currency to exchange with.

If you decide to exchange your currency for any other currency you will need to sell your currency and to buy desired currency.

At which rate you will make exchange is the rate that is currently listed in the exchange office. While each exchange office have different rates you will search the best rates you can find. You should find the one that gives you the best ratio so you do not lose money while converting currencies.

If you need help with understanding how currency exchange works and how to read exchange rates listed in the exchange office I suggest you visit next article where is explained Forex currency exchange.

Exchange office
Forex trading pair

What are Forex Currency Pairs

If you exchange your currency in the exchange office you have your domestic currency which you will use to pay for when buying new currency.

In the exchange office you have seen currencies listed with exchange rates at which you can buy or sell certain currency.

In Forex, where you as a trader buy or sell currency, you have currency pair which consists of two currencies. That currency pair is called Forex currency pair or trading pair.

Everything in Forex is about pairs. In order to understand why Forex is all about Forex currency pairs you need to know which Forex currency pairs exist and how they are segmented.

There are Forex currency pairs that are traded more than some less known currencies. Here you can take U.S. dollar and Euro as an example.

Those two currencies are well known and when you compare them to Croatian Kuna, you will understand what I mean.

U.S. dollar and Euro are world currencies so they are called major currencies. Croatian kuna is not world know currency so it is called minor currency.

When you make Forex currency pair from two currencies you can get major and minor currency pair. Without going to deep into explaining about currency pairs I suggest that you read article about Forex currency pairs. There you will find out how currency pairs are made, how to read them, how they are traded, how to read value of a currency pair and which type of Forex currency pair exist.

Most Important Currency

Currency on the Forex trading market that is most traded is U.S. dollar with around 85% of all transactions. Euro is second with around 40% and Yen is third with around 19%.

Total percentage sum is not 100% because in trading pair there are two currencies. Each currency has 100% and sum of the two currencies gives us 200%.

As you can see U.S. dollar is the largest currency traded on foreign exchange market. This is because every bank has U.S. dollar in their reserves and they pay attention what is happening with USD.

Why is U.S. dollar so Important?

It is because U.S. economy is the largest one in the world. U.S. currency is reserve currency of the world and dollar is used as medium of exchange for some commodities as oil.

Oil is sold in U.S. dollar so you can see on TV that oil barrel is defined in U.S. dollar and if someone wants to buy oil he needs to have U.S. dollar in his pocket.

What are Forex Basics

When you start reading about what is Forex, you will encounter some Forex basic terms that will be to strange or to complex to understand.

At the beginning it could be to complex to understand Forex basics because they are not used in your common life. If you are in financial sector then maybe you have heard some terms that are used in Forex.

In this section I will introduce you to Forex basic terms you will use when ever you start trading on the Forex market.

Forex basics consists of the money you pay to your broker because broker offers you access to the Forex market. Money you pay to your broker can be variable amount or fixed amount. I do not want to scare you but you need to know that the amount broker charges you is small amount.

Second Forex basic thing you need to know is money you can borrow from your broker in order to make more money with small amount you invest. That money is virtual money which you cannot withdraw but you can use to increase possibility to make more than you could with your invested money.

When you borrow money from your broker to make more money, your broker take some money aside just as a protection if your trading decision do not go in the right direction. Broker also use that money as an entrance to large Interbank market where all exchange is held.

There are possibilities to make a lot of money with very little change in the price of a currency pair. The amount of money is defined by the trade input you select at the beginning of the trade. You can define that small change in the price of Forex currency pair gives you $1, $10 or $100.

What are Support and Resistance Levels in Forex

Forex trading requires certain knowledge and skills to be profitable. Those skills includes knowledge about support and resistance levels in Forex.

Those are level where the price make a bounce, stops at or reverse at. What the price do depends on many things.

Support level will be when the price falls down and reaches level where it stalls. That means the price have hit obstacle that prevents price moving more down.

Resistance level will be when the price rises up and reaches level where it stops. That means the price have hit obstacle that prevents price moving more up.

You can learn more about support and resistance by reading articles but the best knowledge you will get while practicing.

While drawing support and resistance lines on the chart you will see what is important thing to watch to draw them best as you can. Through time you will see which patterns occur in drawing support and resistance line which will increase your quality of drawing.

I have made examples with charts to explain to you more in details what are support and resistance lines and how to draw them. You will learn what to watch in the past that influence on the current support and resistance level.

Take a look into article about How To Draw Support and Resistance Trading Line.

Support and resistance

What is a Trend Line 

While support and resistance levels are horizontal lines that represent level where the price could bounce or reverse those levels can be dynamic lines.

What that means is that support and resistance level can move through time or it can form a range between two price levels.

When the price moves in time it can form channel in which price is making highs and lows.

When the price makes two highs or two lows we can connect those places and get a channel. Place on highs or lows that are connected with angled line will make support or resistance level.

If the channel is rising then we will have dynamic resistance levels on highs and if the channel is falling down we will have dynamic support levels on lows.

The lines that make a channel are called trend lines. I have prepared charts to explain you more in detail how to perfectly draw trend line in Forex so feel free to check it out.

Uptrend line

Volatility in Forex 

When the price of the currency pair is changing throughout the day it can change in one second or it can change once a while. There are different reasons why the price change and I will not get into the fundamental part what is causing price to change but I will explain what means when the price change.

Every change in the price is the opportunity for you make money. While Forex is the market on which you can make money by buying or selling currency pairs you need change in the price if you want to make money.

Above I have explained that change in the price is a Pip. Smallest change in the price can give you $1, $10 or $100 so it is important that you have change in the price often as it is possible.

When the price of the currency pair do not change you cannot make money on the Forex market. Frequency of price change in the Forex is called Volatility.

Volatility in Forex is how often does the price of the currency pair changes in one period of time. For example, how often does the price change in 1 minute time frame.

If the price changes 50 times in one minute we can say that the currency price is volatile. When the currency pair is volatile it means you can expect that you can make money with buying or selling.

Volatility in Forex also means that there are many traders in the market. The reason is frequently change in the price which means many traders are selling and buying the currency pair.

Volatility is one of the biggest reasons why it is so attractive to many participants. You can expect when you enter into the trade you will be able to get out in any time because there will be trader ready to trade.

What is Spot Forex

Forex spot refers to the price of the currency at the time you see it on the trading platform.You can visualize it like “price at the spot”.

You will encounter someone says that settlement for spot market takes 2 days for most currencies. Settlement means that currencies change their owner. 2 days is referred to brokers and financial institutions not for us small individuals who trade over broker.

Because of brokers, who are market makers, settlement for us traders does not last two days because brokers take both sides of the trade. This way, our trades and our account balance is updated instantly when we open and close order.

On the Forex spot market currency pair is traded immediately by current market price. There is no waiting time for exchange price until contract expires. Trade is executed in milliseconds and trading is very simple and fast.

Reading the article what is Spot Forex you can learn more about order execution type and about Forex Futures and Option market.

Forex Spot Market Exchange

What is the Size of The Forex Trading Market

Stock market is liquid and NYSE is the biggest one with few billions U.S. dollar daily turnover. Forex market is larger with 5 trillions U.S.dollar trading volume which is about 1000 times more.

Size of the stock and Forex market can fluctuate because market does not have every day same amount of volume traded. Difference between stock and Forex market can vary between 200 times up to around 1000 times.

On the picture below you can see how much is daily average turnover on Forex market comparing to the biggest stock market, NYSE and Nasdaq.

Forex trading and stock trading market size comparison

Forex trading and stock trading market size comparison

What makes Forex trading market so highly liquid is trading volume on daily basis. Volume is made by traders transactions which are mostly based on speculation on daily trading and that kind of trading is called intraday trading. The trading done this way makes around 90% of total trading volume.

You could ask yourself if there is something for me, can I benefit from this large market. Yes, you can.

If you have traded already on another market then you can understand what means when the market is liquid.

If not, then you will find out shortly.

What is Forex Trading Market Liquidity

While it is so huge and have large liquidity, Forex trading market is much better for traders. You can make a trade, buy or sell, whenever you want. You will not have any problems with opening or closing order because someone will always be ready to trade with you.

Forex market average daily turnover

Forex market average daily turnover

Problems that can happen on smaller markets is that sometimes you cannot buy or sell currency. Market is slow, spread is large and entering into that trade is risky or it is not worth of trading.

If you enter a trade you never know when you will be able to exit. This happens when there is no buyer or seller.

On big markets, volatility is high which means trading pair price is jumping up and down, traders buy and sell currencies. Volatility is highly appreciated for day traders who like to make many trades during a day.

This is one of the reasons why traders love Forex trading market so much.

Forex Trading For Beginners – What is Forex Trading

Forex trading is currency exchanging on the Forex market. Currency is traded because someone needs to exchange their currency for another currency. Another currency is called foreign currency and those who exchange currencies mostly are the banks.

Currency on the currency exchange market have its price and price depends on the country health. This means if economy is good, price of the currency will rise. In trading pair, exchange rate of base currency against quote currency is reflection of those two economies.

Trading Currency Pair

Trading means you trade currency pair where base currency is currency you are buying or selling against quoted currency. When you buy currency in currency pair , let say EUR/USD, it also means you are betting that the Euro economy will get better through time compared to US economy.

Forex trading pair

Forex trading pair

In Forex trading you choose what you will do with trading pair. Will you sell or buy, it is up to you. Whatever you decide you can earn money with that trade and also lose money if trade goes against you.

Mostly people start trading on Forex market as a side job for passive income for their home budget. Some of them after a certain period switches to trading as a daily job.

Those who succeed in trading and switches from side job to daily job as a trader are the ones that have proven trading strategy and money management which is confirmed by steady income on their Forex account.

Read more: How to be Profitable Part-Time Trader With 9 to 5 Job

I can say that trading in Forex market can bring happiness when market is moving your way but also bring sadness when it is moving in wrong direction. Same thing happens to your Forex account. It is rising when market is moving your way but also melting when going against you.

Bid and Ask Price

Trading pair consists of two prices, called bid and ask price.

Bid is a price at which broker is willing to buy base currency. It means that the bid is the best available price you can get for selling it on the market.

Ask is a price at which broker is willing to sell base currency. It means that the ask is the best available price you can get for buying it on the market.

Difference between bid and ask price is spread. Spread is calculated in pip where pip represents smallest change in the trading pair price.

 

Pip spread calculation

What is a Pip in Forex

In Forex market you make money by deciding will you buy or sell Forex currency pair. When you decide will you buy or sell then the next step is to wait until the price make a movement.

If the price moves up or down you will make money. Each move of the price, up or down, is change in the price of a currency pair.

In the EUR/USD currency pair example I will set one price.

EUR/USD = 1.1234.

 When the price change to lower value, for example to 1.1233, it means EUR is valued at 1.1233 USD dollars.

Small change in the price which is 0.0001 is 100 times less than a cent. If you want to see change in the price by 1 cent the price should change from 1.1234 to 1.1134. That is difference of 0.0100.

The change in the price 0.0001 is called change by the pip. Pip is small unit of the currency pair price. In our example we have change by 0.0001 which is equal to change in the price by 1 pip.

If the price change from 1.1234 to 1.1236 we will have change by 2 pips. Same analogy is when the price change from 1.1234 to 1.1232. It is change by the 2 pips.

There is a lot more what you can learn about a pip so I suggest you go to the article about what is a pip in Forex where you will learn more details. Those details will teach you how to calculate value of one pip when the price change.

When the price change you can make $1 or $100 just with small change. How is that possible is explained in the article about the pip.

Pip-and-Pipette

How Can I Become Better

Forex trading is a skill which you can learn with invested effort by reading, practicing, reading again and practicing again.  Without practicing you will not become any better. Trading is a skill like any other skill you learn through your life.

Any skill you learn in your life is a skill that required from you to be persistent and to repeat same actions many times. After you have sharpen your skill you have become better in what you are doing with that skill.

You learn how to walk by crawling, falling on you ass, again crawling and falling again. But after certain period you start to walk with less crawling and with less falling. 

This is the same way you have to do in Forex trading but you need to put more effort and never give up. Do not let bad trades turn you away from Forex. You should do it opposite, become better trader by analyzing what you have done wrong and not to repeat same mistake again.

Read more:  Learn Forex Trading – Be Better Trader

Forex Trading For Beginners – Forex Trading Broker

To start trading on the market with real money you need to have access to the Forex market. Broker is the one that allows you to participate on the Forex market. You need to register and open trading account with a broker and then download trading platform from the broker website.

Choosing good Forex trading broker is not an easy task and it can take time until you find good one. To whom you will trust and give your heavily earned money needs extensive research.

You want that your invested money is secured so you do not waste any additional time watching is something goning to happen to your money.

Forex Broker Regulation

Reputable Forex broker will have certificate from regulatory agency at least in the country where he is located. Some have additional certification in other countries which gives them more credibility.

There are brokers without any regulation who work on their own discretion and they pose a risk to your invested and heavily earned money. This means if you open account with them they can, if they want, close your account without notice and all your funds are gone.

Some traders have said that their broker have open a trade without their knowledge and lose all money on the trading account. After that, trader could not reach them to get back his invested money.

Regulatory agency watch out that broker business practice is honest and according the law. Agencies pay attention to ensure that your funds are secured and you are protected from fraudulent practice. You can read that some of your invested money up to some amount is secured by regulatory agency if broker go bankrupt.

How to Check is Broker Licensed?

Watch does he have licence from various regulatory bodies. Here is a list of several regulatory body in different countries:

  • Financial Services Authority (FSA) in the UK
  • National Futures Association (NFA) in the USA
  • Ontario Securities Commission (OSC) in Canada
  • Australian Securities and Investment Commission (ASIC) in Australia
  • Financial Services Authority (FSA) in Seychelles
  • Malta Financial Services Authority (MFSA) in Malta
  • Estonian Financial Supervision Authority in Estonia

It is always good to choose one of the best brokers and who have win some of the awards which gives them higher credibility.

Invest your time to explore brokers and find the best broker for you. 

Read more – Forex Broker – Find the Best One

Forex Trading For Beginners – Forex Trading Market Legitimacy

If Forex trading is not legit then no one would trade on this market. You can see Forex brokers advertising on the web or maybe in your city. Without legal background they could not show themselves to the audience.

In some countries Forex trading is not allowed for some reason so before you start making a plan to open a trading account with a broker, check are there any restrictions on Forex trading from your government.

How to Earn Money on the Forex Trading Market

To simplify the process of earning money by trading on the Forex market I will use two currencies as an example, Euro and U.S. dollar.

By trading on the Forex market you a trading currency pairs. That means Euro and U.S. dollar are connected in a pair. When I connect these two currencies I get Euro/U.S. dollar.

The combination of Euro and U.S. dollar in Forex market is written as EUR/USD which is short version of Euro/U.S. dollar.

Now, the currency pair EUR/USD have a price which is written as EUR/USD = 1.1200. The price 1.1200 is the same as if I write like this –> 1xEuro = 1.1200 U.S. dollars.

That means that 1 Euro is worth of 1.1200 U.S. dollars.

Your job as a Forex trader is to predict will the value of 1 Euro fall or rise in price. If the price of Euro rise you will get 1 Euro = 1.1205 U.S. dollars. That is equal to EUR/USD = 1.1205.

To make money by trading on the Forex market you need to predict correct direction of the price. Will the price rise or fall down.

When you make a decision, for example you say that the price will go up, you need to open buy order. Buy order should be open when you want to make money if the price is rising.

When you think that the price will fall down you need to open sell order. Sell order should be open when you want to make money if the price is falling.

So, basically, Forex trading is buying and selling of currency pair. Meaning, you are predicting where the price of currency pair will go and by predicting correct direction you make money. If you do not predict correct direction you will lose money.

To start trading you need to to know how to open buy and sell order.

Which Forex Order Types Exists

If you want to start making money in Forex you need to know how to open and close a trade. Trade is when you decide will you buy or sell currency pair based on your strategy.

If you decide to buy a currency pair and the price goes up, you will make money. If you decide to sell a currency pair and the price goes down, you will make money.

There will be times when you think that current price will come in the future to the certain level and you want to have ready order to open when that level is reached. Those are orders in the future that are open based on certain criteria.

That kind of Forex order types are possible and can be very helpful. It means that you do not need to sit in front of your computer and wait until the price reaches that level.

You can prepare order in the trading terminal and leave your computer. When the price reach that level the order will open.

If you set level when the order must close to take the profit or when the order must close if you have made wrong prediction, that is also possible.

Forex Trading For Beginners – Open Forex Trading Account

To trade on the Forex market you need to have money and trading account on which you will deposit that money.

To open a trading account you need to have a broker. When you have selected a good broker you need to register and open trading account with that broker.

To open trading account you need to enter your e-mail address and password for your account. Some brokers will ask you to do few more steps before creating account like uploading documents for verification. Before you can get approval of trading account broker needs to verify your identity with the data you have provided when registering account.

After you have created account you will receive login information to your Forex trading account. Login data contains your trader account, password and server information.

With these login data you need to connect on MT4 platform. Open Forex trading platform and input your login data and find trading server.

To help you with this process you can read next post where I have put images as an example to help you open account.

Read more: Forex Trading Account – How to Open Trading Account

Forex Trading For Beginners – Is Forex Trading Profitable

Trading can be lucrative and can bring huge income. You can find many stories on the internet about how trader earn so much money that he give up on daily job and then focus only on trading.

This story, for some of them, is true but for majority of traders it is not. Traders mostly lose money on Forex market and you can read lots of information talking about that more than 90% of traders loses money.

Majority lose money because of lack of experience, bad money management and psychological status of their mind. If you are already a trader you have experience with greed and fear. These emotional states influence traders in a bad way in specific situations.

If you want to be profitable in the long run you need to have few things prepared. You need to have trading strategy that will tell you when and how to trade. How do you control the risk on each trade is monitored over risk management strategy.

So, having two strategies, trading and risk management, you will increase a chance of being profitable. To those those two strategies you need to be disciplined and patient so you can execute trading strategies without being affected by emotions like fear and greed.

Knowing that you can lose money does not seems as a good choice to start trading on the Forex market. But there are many reasons why Forex market is a good opportunity for any beginner in trading. Check the reasons why should you trade on Forex and start trading today.

Read more: Should You Trade on Forex – 9 Reasons for – YES

Forex Trading For Beginners – How to Invest in Forex

Investing in Forex is easy and a first way how to invest in Forex trading is over broker. To do that you need to have a trading account with a broker. When you have a trading account you can use tools that broker provides you to deposit money on your account.

With money on your trading account next step is to download trading platform on which you will use your trading account and start trading.

After account is open, platform is downloaded and money deposited you can say that you have invested in Forex. With money deposited you can start trading on the Forex trading market.

If you do not feel comfortable trading on your own you can find a trader that can trade for you. There are several ways how to find a trader that can trade for you and one way is to ask your broker do they have account type that is managed by someone else.

It is possible to invest through other channels except directly trading through trading platform or by having some else trading for you. This is done through investing in some ETF(exchange-traded funds) or mutual funds that provides exposure to foreign exchange market.

Like any other investment, investing in the foreign exchange market involves risk so pay attention so you do not make beginner trading mistakes.

Read more: Beginner Trading Mistake – Stop Doing in Order to Succeed in Forex

Forex Trading For Beginners – What is Difference Between Forex and Stock Market

What is Forex trading market advantage comparing to stock trading market? Is there big difference between them?

Yes, there are several differences and advantages that Forex market has compared to stock exchange.

Forex and Stock Market Size

Forex trading market is a large currency exchange market comparing to stock market in volume traded. Stock market have thousands of companies listed on the exchange comparing to Forex market which have dozens of currencies.

In case of a trader, Forex market is easier to follow because of small amount of trading pairs. Stock market is hard to trade while it is not easy to pick a good company to trade on the exchange in a pool of thousands companies.

Forex market have few major pairs which are traded by majority of traders and thus it is easier for you to watch those pairs and make a trade.

Working Hours

Forex market have 24/5 hour market where stock market is open only during a day from 08:00-16:00h (this is different from city to city but we can put them in this frame).

Forex working hours gives you opportunity to decide at which time of the day you want to trade. Day or night, Asian or European time, London or New York session.

You can decide, connect on the trading platform and open a trade based on your trading strategy.

Low Commissions and Fees

Forex broker can charge commission or fee related to trading. Most of them do not charge this type of costs to trader.

Mostly, only cost that trader has is bid-ask spread on trading pair which can be different depending which pair is traded and is there any factors that impact currency in trading pair.

Compared to any other market, Forex has low trading costs for trader.

Influencing the Market

You have heard that on the stock market one of brokerage firms have give their analysis and recommendation to buy or sell a stock. Yes, you have heard that. I have many times.

If brokerage firm is well known in stock market then traders can be influenced with this analysis and start to buy the stock.

In Forex market this is less likely because analysis from one broker, not matter how large he is, could not have impact on the market in a way like on the stock market.

This way Forex does not have market manipulation as a stock market does.

Demo Forex Trading For Beginners

As a Forex beginner one of the best things you can get at the start is demo account. Demo account for trading with real market conditions but only with small difference.

That difference is the money. On the demo account you are trading with virtual money and whatever happens to that money you do not lose anything. If you lose all what you have at the start you can simply reset trading account balance and start over.

If you do not have demo account you would need to invest real money and start trading. While you do not have any experience in trading you would lose all what you have invested.

All brokers now offers demo account for their customers because they know how important is to learn how to trade on demo account.

In the start you will ask your self how long should you stay on demo and learn how to trade. How much time you need to invest in demo trading depends on your trading results.

If you are not profitable on demo account you can be sure that you will not be profitable on real account. Being profitable on the demo account is not enough without having profitable strategy.

Profitable strategy is written strategy with steps you are following all the time and strategy that has been tested in the market.

 

Read more: How Long Demo Trade Before Going Live

The only reason why you should not go immediately on real account is because you will lose your money. Simple as that.

Try to resist going on live account until you are profitable on demo account. Be sure that you will lose money if you go on real account before being profitable on demo account. The only reason is that trading on real account is harder than on demo account.

Why is harder trading on live account compared to demo account? As said above, demo account have virtual money and what happens to that money you do not feel any connection to it. As it has easily appeared on your trading account it can easily disappear from your trading account.

But when you start trading with your money which you worked hard for then losing that money will be hard to accept. You will start to look not losing to much and you will make mistakes that many traders do.

When you start trading pay attention on one trading pair because it will be easier for you to understand first steps and you will not wonder around.

Also, choose major pair while they have smaller spread and higher volatility.

Trading on the demo account you will create good habits that will help you in a long run. Demo account will give you chance to master different market conditions where you will test your emotions during trading.

Forex Trading for Beginners – Painful Tricky Question About Demo Account

When you start working on the demo account you will experience a lot of problems that are common when you start trading as a beginner.

Many beginners experience problems like resetting amount of money on the trading account or how to reset password.

When you start trading everything will be strange and to much to comprehend at the start and it is normal that you will have many problems or questions.

As you make mistakes and you find solution you will become better and you will reduce number of problems you cannot solve.

Until you become experienced to help you solve problems I have collected usual questions and answered them.

Read more: How To – Forex Demo Account Painful Tricky Question

Forex Trading for Beginners – How to Download and Install Metatrader 4 on PC and Smartphone

Before you start trading as a beginner you need trading platform on which you will have account that allows you to open orders.

Most used trading platform for the trading on the Forex market is Metatrader 4. There are more trading platforms like Metatrader 5 which is newer version of Metatrader 4 but for now as a beginner you can start with Metatrader 4.

You can download trading platform for free from Metaquotes website or you can download it from a broker website.

If you want to use Metaquotes trading platform you do not need to register account in order to download it. If you want to use trading plaform from a broker then you will need to register trading account.

If you just want to taste how trading looks like then it is the best that you download free version on your PC or smartphone. In a few minutes you can be ready to trade on the Forex market.

Here are the instructions how to download Metatrader from Metaquotes website.

Read more: How to download and install Metatrader 4 on PC and Smartphone

Forex Trading for Beginners – What is Metatrader 4 and How to Use Metatrader4

When you have Metatrader 4 trading platform on your PC or mobile phone you need to set up  trading platform.

That means, you need to set up charts which will show you currency pairs for trading and to allow you easily read where the price could go. You need to set up windows that you will use mostly in your trading. Some of the tools are not necessary so you can remove them to free up space for charts.

As a beginner in Forex trading you start without any knowledge how to read and to set up charts for trading. Charts are important tool and you I can say one of the most important among all tools you have available.

Chart shows you where the price was in the past, where it is now and allows you to make a prediction where it will go.

Other tools you could use are lines that are drawn on the chart, bars that shows the price of the currency pair and colors of the candles that can help you easily read the current market status.

To help you set up Metatrader and to clarify some of the most important windows in the trading platform I have made an article about how to use Metatrader4..

Read more: How to use Metatrader4

Forex Trading for Beginners – How to Set up Charts on Metatrader 4

Charts are the most important tool you use in trading on the Forex market. If you do not set them properly you will make your trading much harder than it has to be.

Clean charts with proper tools will help you understand market movements much clearer and help you start trading much faster.

Each chart have settings that you can set up by your preferences. Do you want to have red or blue chart with black background, it is possible to make that happen. Will that be a good choice to read the charts, well I think not.

There are three types of the chart:

  • candlesticks chart
  • bar chart
  • line chart

Most used chart type is candlesticks chart where each candle represents market behaviour which can be translated as a human act on the market.

In order to help you set up charts properly so you have good trading experience I have made instructions how to set up charts on Metatrader 4.

Read more: How to Set up Charts on Metatrader 4

Forex Trading – Become Millionaire

Forex trading is not easy and you should not approach to trading as a easy way of making a lot of money.

When you start trading you need to understand that you will lose money, more or less. There is no trader on the Forex market that did not lose some money and majority is losing all what they invest.

High percent of the traders lose their money because they do not pay attention on money management and they do not use proper tools like stop loss to minimize loss on each trade. They do not have trading plan, do not have discipline, they have bad trading technique and emotions like greed affect them.

Invest What You Can Afford to Lose

If you do not have money to invest and which you can afford to lose, do not enter into trading with borrowed money. You should invest only if you can afford to lose all what you have invested because there is potential that you will lose all, especially as a beginner.

At the start invest small amount and through time if you trade very well you can decide to invest more. With small investment, $50-$100 you will not make much in trading but it can be starting point.

If you want to earn more you will need to invest more. With more investment you will be able to open order where small movement will give you more profit.

Have in mind that lack of discipline, which is crucial in Forex trading, will not bring you happiness and large account. You will not get rich very fast and as all jobs this one requires strength, mental strength, discipline and hard work.

Forex trading requires hard work with which you will get experience. Experience will sharpen your skills in trading, your eye will become more focused and it will recognize good patterns to trade.

Read more: How Much Money do You Need to Start Forex Trading

Read more: Why Forex Traders Fail? The Root Cause?

Read more: Do I Need 1000 Pips to Get Rich

Read more: How to Stay Consistent Forex Trader

Read more: How to Be Successful Forex Trader When so Many Fail

Read more: What Really Turned My Trading Around

Read more: Is Trading Forex a Scam – Lost All Your Money?

Read more: Can I Get Rich by Forex Trading With $100 Dollars

FREE 5 Day Email Course

Email course is for beginners who do not know to much about Forex trading but wants to know

 

  1. what is Forex
  2. what is trading and where to start
  3. what is Metatrader 4
  4. how to setup charts on Metatrader 4
  5. how to open and close order in Metatrader 4

After you are done you will know how to use FREE trading platform to activate order by selecting currency pair on the Forex market and make money.

  1. Trading platform?
  2. Activate order?
  3. Select currency pair?
  4. Make money?

To much strange words? Get them clear and start trading!

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