80.5% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.
Our team of experts have been trading the financial markets for over a decade and gained invaluable insight into the forex market trends. The knowledge that they have acquired will be conveyed in the lessons of this course.
Educating yourself about the markets is the first step to becoming a successful trader.
Why Trade Forex?
Forex Trading can be very rewarding, providing you with Financial and Personal Freedom.
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What is Happening in the Forex World?
FOREX TRADING ONLINE
Understanding the Forex Market and Making a Profit
What is Forex Trading?
The Foreign Exchange Market (also known as currency market or currency trading) is a decentralized global market used for the trading and speculating of the world’s currencies. The average daily turnover in this currency market has reached over $8 trillion.
The Forex market is open five (5) days a week and for twenty-four (24) hours during each of those days. New York, Hong Kong, London, Singapore, Sydney, Frankfurt, Zurich and Tokyo are the most prominent world trading centers.
Who Trades Forex?
Although there are many people who trade Forex around the world, some do it for specific purposes while others do it for pure speculation and profit.
The Federal Reserve is the primary market movers and the most important traders to watch for.
Here is the general list of everyone in the market ranked in order of importance.
Central Banks: Central banks of nations are the pivotal player in the foreign currency exchange. In an attempt to control money supply, inflation, and interest rates, these ‘banks’ hold substantial positions in the market.
A central bank’s position can cause an increase/decrease in the value of their country’s currency. The US Federal Reserve (the “Fed”) is one of the most important central banks in the world. When the chairman of the Fed speaks, watch how the market swings and changes violently based on this speech.
In the advanced course we will further learn how and why central banks intervene in the market to manipulate currencies.
Banks: The top ten currency traders are large international banks. This is primarily due to the interbank market for the foreign currency exchange. Within this network, the spreads between bid and ask prices are less than it is for those further down the chain.
The banks’ better spread is directly related to the large volume in which they trade. The banks can trade on behalf of clients, but most of the volume is due to trading on their own account by their own proprietary traders.
The top banks around the world usually act as the trading desk for the central banks monetary polices.
Hedge Funds: Usually aggressively managed investment portfolios with a goal of high returns, account for billions of dollars worth of trades daily. Their aggressiveness translates into aggressive speculative positions being taken in the market.
Commercial Companies: Companies seeking to diversify currency holdings in order to facilitate trade and pay for goods and services. In comparison to the large banks, companies trade in smaller amounts. However, large multinationals can still have a big effect on the market when large positions are taken.
Individual Traders: You and I are a growing part of the currency exchange market. Individual traders are also known as Retail Traders. We can participate in the forex trading indirectly either through banks or brokers.
Brokers and Dealers are the two main types of Forex brokers providing us with the opportunity to speculate on the market. Brokers are simply agents working on our behalf that try to find the best price for us in the market for a currency pair.
In exchange for this service, they charge a small commission fee.
Dealers on the other hand, create the market for us. They quote a price that they are willing to accept exchange at. Their fee is hidden in the spread between the buy and sell price of the currency pair.
Why Choose the Forex Market?
Here are some of the main advantages of the Forex Trading Market over other Markets:
There is extreme liquidity in the currency market. With daily volumes exceeding 5 trillion dollars, getting in and out of positions is relatively eas.
Unlike the stock markets, the Forex market is open 24 hours a day during the week. Trading starts at around 5PM EST on Sunday and ends around 4PM EST on Friday
It is very easily accessible. Trading can be done online through a broker with very limited initial funding required.
Instead of trying to follow an immeasurable amount of stocks worldwide, there are in turn only a few currency pairs.
Forex generally has lower transaction costs and fees than that of trading stocks and commodities.
There is an equal opportunity for traders to profit in both rising and falling markets. The volatility of the market allows for profits to be made very readily
Is Currency Trading Risky?
While these advantages are important, it is ever more crucial to be aware of and remember the risks involved with currency trading. Your savings/investment can be lost all too quickly if you are not careful.
Our advice to you would be to start slowly, invest a small amount which you can afford to lose and, most importantly pick a strategy and stick to it.
Don’t just trade on a whim, or because you like a currency pair and because you think it will go up!
Remember, with great reward comes great risk.
Forex Trading strategies can be used to mitigate some of this risk. So make sure to learn the strategies we recommend, chose your preferred one and try to stick to it as much as possible.
Forex Trading Online
Like all the other corporations and business entities around the globe, Forex has also been growing and developing over time. Today, trading of currencies has become simpler and easier because of online forex currency trading.
Buying and selling currencies by currency trading can even be a home based business. All you need is an internet connection and a computer or tablet. Trading is done through an online broker platform without the need to commute to one of the city centres.
Forex Trading Platforms and Brokers
Opening a currency trading account is a very important step in becoming a successful forex trader. Some people new to forex trading assume that all brokers are the same and open an account with the first one that they find. This is a mistake… There are many points to consider before you sign up with a forex broker.
Forex brokers may be based in any country in the world. Some countries have tight financial laws while others do not. It is important to check whether the broker you are considering is regulated under the laws of their country, and what those laws actually mean for you. Is the company a member of any regulatory bodies and if so, do they offer you any protection? What would happen to the money in your currency trading account if the company collapsed?
2. Account size
Brokers tend to market their services at a certain level in terms of account size. Some only offer standard accounts with a minimum of $10,000 investment or more. However, more and more brokers these days are targeting their services at the smaller time home investor. In a few cases the minimum investment is less than $100.
The important factor here is to go with a broker who wants clients like you. Do not invest more than you can afford just to get in with a high level broker. There is always a risk that you will lose whatever is in the account. It is better to go with a broker who tailors their services to suit clients at your level.
You will want to use a demo account in the first stages of trading so check that this is available and that it works in the same way as the live account.
You will also want to check the charting services that are available. What you need will depend on your trading system, but you can expect brokers to provide candlestick charts as well as the option of bar and line charts, and several indiators including the Stochastic, Bollinger Bands and MACD.
Leverage varies with different brokers. The most common levels are 100 times or 200 times, meaning that to control a position size of $10,000 you would commit $100 (100 times leverage) or $50 (200 times). Occasionally, 400 times leverage is offered.
High leverage means a greater potential return but also greater risk. If you have a very small balance you may be willing to risk losing it for the chance of greater returns if you are successful, but otherwise it is usually better to keep the leverage relatively low.
In some cases, brokers will offer different levels of leverage to different clients, depending on their balance and other factors such as their trading history.
Your money is accessible via the broker’s website so it is important that they have high levels of security.
This can be hard to assess so you may want to check for user experiences in forex forums or ask questions of the broker through their support center. Also, of course, make your password as secure as possible by including upper and lower case letters plus numbers and symbols.
There are many forex brokers available and the number is growing. The choice can be confusing, but it is important. If you take account of all of these factors, you will be in a good position to find the best broker for your currency trading account.
Using A Demo Forex Account
When you first start to learn how to trade forex one of the best pieces of advice is to get yourself a demo forex account.
Why Use A Demo Forex Account?
To be perfectly honest whenever you are learning something new it is always best to practice on something where you can do little damage to yourself or your forex trading account balance that’s why you need a demo forex account.
As a direct example, golfers, even professional golfers, have a practice swing before playing a stroke or go on a putting green or driving range before playing in a tournament in order to sharpen up their technique before a big game or just to generally practice their skills.
It is the same when you use a demo forex account, it will give you the opportunity of trying out new techniques or trading strategies without losing any of the money from your trading account.
Is a Demo Forex Account Free?
The other great thing is that the forex demo account comes free when you open up a demo forex account.
Another important aspect is that you get used to the trading platform. I use a metatrader 4 platform for all my trading charts and the charting package that comes with a MT4 account is second to none.
The technical analysis tools that are provided really do help you with your trading.
I have several different accounts and also different spread betting accounts that let me have a free metatrader platform to use as part of the deal for placing my currency trades or spread bets with these brokers.
There is nothing like the feeling of using hard cash for your forex trades or spread bets but as I said above you need to practice before you can effectively and profitably trade forex. Demo trading is an absolute must in my opinion, even if you are following alongside an experienced forex trader who may even be coaching you along or feeding you signals of when to place trades.
There are many types of demo forex accounts out there and two of the best are Smart Live Markets and FXDD.
How Do You Open A Demo Forex Account?
This is very simple to do and you can either sign up online or by phone. I prefer online as I will be trading online and I would want to get a feel for how easy and intuitive the platform is before committing myself to risking money.
There is obviously some paperwork to complete or virtual paperwork at any rate.
The forex broker will want to know that you understand the risks, especially the risks associated with leverage, which is where you can be liable for more money that is in your account and when this happens it is called a margin call.
Unless you have already have a metatrader 4 platform installed on your computer you will then have to download one from the forex broker’s website.
You then have to place your funds with the currency broker that you have decided to trade with and then you are free to trade.
Using a demo forex account is a great way to get into forex trading and is also a great platform for trying out new trading ideas and trading strategies too.
Is There a Perfect Forex Trading System?
Most traders looking out for a new forex currency trading system are searching for the holy grail.
That is, the one perfect system that will make money, if not every single time, then at least 90% of the time. Reports in advertisements of systems that have an amazingly high success rate support the belief that such a perfect or near perfect forex trading system exists. And yet when the average trader starts using these systems, suddenly the success rate is not so high after all.
The perfect system, like the legendary holy grail, cannot be found.It is easy to become disillusioned when systems turn to dust before our e
yes again and again. However, all we have to do is get real and there is every chance of finding a good, workable system rising out of that dust. We just have to lower our expectations and understand that any system will have variable results.
This is partly because of the inconsistencies of the market and partly because of the inconsistencies of human traders.All we need is a system that returns a profit. It does not have to be a big profit, it will add up. It does not have to be always successful, either.
We must just set our risk low enough that even the worst possible series of losses will not wipe us out, and then statistics will take over.The best forex currency trading system is one that is offered and used by somebody who is actually making money with it themselves.
Anybody who has a personal contact with a successful forex trader has a huge advantage here because they can probably point you in the right direction. But keep in mind that they will not necessarily be able to just hand over their success to you on a plate. Often, a trader has taken years or even decades working on their mindset to make them able to use a particular system successfully.
They probably also have a large account balance which gives them a wider choice of broker and more flexibility over lot sizes and leverage.If you are buying a forex currency trading system online, be sure to choose something simple.
Many people make the mistake of thinking that a successful system will be complex and difficult. This is not true. What is difficult in forex trading is implementing the system. This requires a cool head and a good understanding of the tools of technical analysis.
The simpler a system is, the more likely it is that a new trader will be able to implement it well without making mistakes.In fact, it is probably true to say that a beginner is better off with a simple system that does not make money, than a complicated one that does.
Since he can use a demo account, he will not lose any real money. He can learn all the techniques of trading and build his confidence and trading discipline without ever being tempted to go live. In fact, probably the best advice a beginner can receive is to start with the simplest forex currency trading system that he can find.