- August 18, 2022
- Posted by: TheBillionaireArmy
- Category: Forex
Forex is a short form of ”Foreign Exchange” Where international currencies are exchanged. It is largest currency market all over the globe. It is a de-centralized market and all the transactions are performed through a network of computers unlike traditional stock exchange where a central exchange is involved. So, in this blog, we will learn how to trade Forex with simple and easy steps.
How Fast is the Forex Market?
Forex market is fastest and operates 24 hours a day, 5 days a week from Monday to Friday. What’s more interesting is, you can trade in Forex anytime because it operates according to the time zones of major financial hubs like Sydney, Tokyo, New York and London. This means, you can select the time zone which suits you.
Forex market has a daily trading volume of around 5 trillion dollars and 80% of all Forex trades occur in dollar. In 2019, dominance of US dollar was even higher and 88% of Forex Trades were in US dollar. This means, if you know how the price of US dollar moves up and down, you can predict 88% of the price movements.
How Forex Market Works?
Long ago, when merchants from different areas of the world started travelling, they would trade in different goods like exchanging pots with spices, animals with precious metals and so on. With the innovation of technology and increasing tourism, people needed to exchange currencies more often. For example, if you want to spend your holidays in USA, you would have to convert your local currency into US dollar in order to buy goods and services of your host country. Initially, people would have to go to the foreign exchanges in order to convert one currency into another. But now, with the help of electronically conducted transactions, it has become easier for individuals to trade with different currencies.
How Can I Make Money From Forex Trading?
In order to make money from Forex Trading and be a consistently profitable trader, you need to know mainly two things.
- Basic knowledge and principles of Forex Trading and how the market generally moves.
- News and updates that affect the rates of different currencies like unemployment news, CPI report, GDP report and NFP Data.
Here are some unique features of Forex Market that make it easy for almost everybody!
Like any other internet innovation, Forex offers number of different features which determine its high demand and exponential growth. Here are some features of Forex market that enables traders to make money and take advantage of.
1. High Liquidity
High liquidity means you can trade a large volume of any currency without large variations in its exchange price. This high liquidity of Forex market makes it safer as the prices don’t change drastically over a short period of time. Also, a large trade volume means a higher volatility which when combined with high liquidity of Forex market, gives its traders many opportunities to make money in a short period of time.
Unlike stocks, trading Forex is easier and convenient where you can open a Forex account with a minimum of 25$. With XM however, minimum deposit is even lower, you can open a forex account with XM in just 5$.
Leverage in Forex means you can lend some money from your broker and trade in higher volume. For example, if you’ve an actual balance of only $5, you can take leverage from your broker and trade with a higher volume. That means, you will be taking profit from a larger investment. In Forex, you can take a leverage of 1:500 and even higher. FBS broker even offers a leverage of 1:3000 which means you can trade with a volume of 15000 USD with an actual investment of just 5 USD. Likewise in XM, you can trade with 4440 USD with an actual amount of only 5$.
This however needs your dedication and skills to predict right price directions. You can learn the basics of Forex market through my series of blogs as well as YouTube Videos.
If you enjoyed the information I shared with you, leave your comment below and let me know your thoughts about trading Forex!
5 Easy Steps To Start Forex Trading:
Now you know the basics of Forex Trading, it’s time to actually enter the market and see how it works. Without practice and experiment, you can’t expect Forex Trading to be your full-time profession. Let’s look at the steps!
1. Choose your Forex Broker
First thing you is open your Forex account with a reliable Broker. It is not possible to trade Forex without a broker. There are many brokers online so you need to do your own research before trusting a broker.
2. Create your Forex Account For free
While creating your first Forex account with any broker, there are two options.
•Demo account- this allows you to learn interface of trading platforms, trade with virtual money and apply functions. Virtual money is the amount credited in your demo account with which you can buy and sell assets but can’t withdraw it.
•Live account- this is the actual account where you also need to deposit some money in order to place orders. Minimum deposit can be as low as $5.
3. Select Your Currency Pair to Trade
Trading Forex depends on your knowledge of a certain currency. Most of the traders choose to trade in major currency pairs like USD/EUR. There is a great opportunity to take profit in such pairs if you know the economic factors that affect the rates of different currencies. Keep yourself updated with the news and information to predict right price direction.
4. Follow your strategy
Before placing your order, don’t forget to check the trend line and news updates. If major news is going in favor of your selected pair, you should ”long” or sell. If there’s a crash going on in market, you may ”sell or short” the selected currency pair. But remember, your technical analysis will only work if you practice your skills on a demo account.
5. Exit your trade at right moment
Exiting your trades at the right time whether in loss or profit is important to take profit and stop loss. But don’t be over-whelmed by your profit or loss. Whatever the outcome is, don’t handle it emotionally and place your next order neutrally- not under fear of losing money or greed of taking more profit.
This was all about starting Forex with any broker (after educating yourself on selecting the right broker). I hope you enjoyed this blog. If you have any questions, don’t hesitate to drop your comments below.