There are dozens of currencies, which you may trade on the international market Forex. However, the most popular ones are the American dollar, euro, and Japanese yen.
The less widespread currencies are the Canadian and New Zealand dollar, franc, and British Pound. Currency pairs consist of these money units, which are used to trade on the exchange. The most common one is the euro/dollar. In this case, the euro is called the base currency, and the dollar is the quote currency. When making transactions you’ll have two prices: buying and selling prices. The difference between them is called a spread.
Beginner’s step-by-step instructions
Before starting Forex trading, beginners should have a look at the basic concepts of the exchange. It is also important to take a number of steps, which will help you later. So, a step-by-step algorithm for a beginner trader looks like this:
Choosing a reliable broker
Not only the quality and success of your trading but also the safety of your funds depend on the broker. When choosing a company pay attention not only to offered terms but also try to study the feedback of real clients.
Yet another vital point is the time of the company's existence. The best thing is when the age of a company is +5 years. The longer a company exists, the greater confidence in it.
It’s worth paying attention to what privileges the broker provides: access to training materials, lectures, videos, etc. It makes little sense to start trading in Forex without having a solid base.
Registering on the company’s site
When a broker is chosen, it’s necessary to pass the registration procedure. In most cases, all the companies have a similar procedure. It’s required to enter your personal data: indicate your email address, phone, and pass verification.
When filling in the registration form you need to enter updated and accurate information. Otherwise, you may have trouble when withdrawing your income.
Installing a trading terminal
This is the software without which it is impossible to start trading currencies. You need to download and install it. It is best to do this on the official website of the broker. Trading terminals can be installed both on a computer and on mobile devices. Some brokers provide Internet services, which enable you not to avoid downloading the terminal, and work directly in the browser. However, many people point out that downloaded software work much faster.
Starting: launching the terminal and opening an account
When the software is installed, registration is required. This is a simple procedure that does not take much time. Next, the beginner needs to open an account. It is best to start trading with a demo version. This will help you avoid mistakes, save your deposit, and find your feet.
Selecting a currency pair
As was stated above, most often people start trading with the euro/dollar pair. Experienced traders can use rarer currencies, however, this comes with certain risks. When choosing a pair, it is important to take into account the political and economic situation within a country, as well as many other parameters. The ability to analyze the situation will be helpful here.
Selecting a strategy
Forex trading will not work without a strategy. It will allow you to avoid losses or constantly breaking even. It is best to find and study several strategies, choosing the one that fits you best. After that, you should completely immerse yourself in its study. Focus on the system and make a clear plan for further steps. Beginners are best to stick to proven plans, while experienced traders are quite capable of developing their own solutions.
Replenishing account with real money
After training on a demo account, you can start real trading. To do this, you need to replenish the account for a specific amount. Each broker has its own deposit amount. You should not invest large amounts immediately at the initial stage, since the first experience of a beginner is often unsuccessful. The optimal deposit amount is $250-300.
Before you start real Forex trading, you need to gain theoretical knowledge, learn the basics of analysis. It is best if the beginner can find a good mentor who will point out the mistakes he makes. The success and profitability of trading depend on the quality of a trader's training, his skills and experience. If possible, do not give up the practice on a demo account.
How to open a transaction?
After downloading and installing the terminal, the most crucial moment for any beginner comes - opening a deal. Basically, it's a fairly simple process. Most often, brokers use the MetaTrader platform, so let's take it as an example. Although other trading terminals have a fairly similar principle for opening deals.
• Selecting a currency pair. After authorization, you select a currency pair that will be used as a trading instrument. The most commonly used pair is the euro/dollar. More than 50% of transactions on the stock exchange are made with it. However, no one forbids choosing other pairs, including exotic currencies.
• Opening an order. After the currency pair is selected, a window with a quotes chart will open in front of the beginner. Now you need to wait for the right moment and open a deal. This can be done in different ways, for example, by pressing the F9 key or a special button in the dialog box. It all depends on the capabilities of the terminal.
• Setting a position. Before you start trading, you need to make position settings. There are required and optional settings.
After opening the window, you need to enter data in the indicated lines:
- "Symbol". This line indicates in which currencies you plan to trade.
- "Amount". Calculated in lots. You should specify the size of the transaction. If you are a beginner, you should start with a minimal amount so as not to lose your entire deposit.
- "Stop Loss". This line contains a stop order to prevent possible losses. This allows you to close the deal before you lose a large share of the deposit. This field is optional.
- "Type". It can be a position with immediate execution or pending order, which will open only when the price reaches the value you need.
After filling in all the required fields, you click the "Sell" or "Bye" button, depending on what action you are performing with the currency: selling or buying. After pressing the button, the broker receives a signal and opens a position.
Closing a deal
The first option is when a deal closes as soon as the indicators set by the trader in the settings are reached. The second case is when closing is carried out manually. To do this, click on the trade operation and click the “close” button in the window that appears.
Forex trading entails certain risks. Numerous nuances and subtleties must be considered. It is also important to understand that it is almost impossible to succeed in trading without knowledge. To trade currencies, you need to be able to see and analyze the situation. Always stick to the trading plan and do not drift off the course, avoid strong emotions and adrenaline rush. Remember that trading is a full and quite hard job.