So all you have to do is to take this FREE knowledge and start your online currency trading journey! TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits? The best times for trading Currencies online? Learn how to read charts? Tips and warnings when using leverage?

Learn whats the difference between Fundamental and Technical Analysis? Respectively, a trader buys the currency standing second. Seem complicated? This means that you can buy 1 euro for 1. The difference between the Bid price and the Ask price is called spread. The spread is actually the commission of the broker. The Spreads in Forex trading are actually very small compared to currency spreads at banks.

A pip is the smallest price movement of a traded currency. It is very important that you understand what a pip is in the Forex trading because you will be using pips in calculating your profits and losses.. For most currencies a pip is 0. When a currency moves from a value of 1. There is an exception for quotations for Japanese Yen against other currencies. For currencies in relation to Japanese Yen a pip is 0.

A lot is the minimal traded amount for each currency transaction. For regular accounts one lot equals , units of the base currency. However you can also open mini and micro accounts that allow trading in smaller lots. Understanding the Pip Spread - The spread is closely associated with the pip and has a major importance for you as a trader. As mentioned above, It is the difference between the selling and the buying price of a currency pair. It is the difference in the bid and ask price.

The ask is the price at which you buy and the bid is the price at which you sell. In this case the spread is 3 pips. The pip spread is your cost of doing business here. In the case above it means you sustain a paper loss equal to 3 pips at the moment you enter the trade.

Your contract has to appreciate by 3 pips before you break even. The lower the pip spread the easier is it for you to profit. Generally the more active and bigger the market, the lower the pip spread. Smaller and more exotic markets tend to have a higher spread. Smaller accounts will generally have higher spreads than bigger regular accounts.

From the profitability point of view it is important to find a broker offering a lower pip spread, however the low spread is not everything. More important is to choose a reputable and reliable broker. Most brokers will allow leverage. This can heighten profits and losses and should be used wisely. How to Control Losses with "Stop Loss" Stop loss is a widely used order aiming mainly at limiting the possible losses in case of negative market movements. Stop loss is used only with open positions.

When the market conditions are not favorable for a trader and the price has reached the level of the "Stop loss", the deal is closed automatically. Therefore, Stop loss helps the trader to control losses and in case of failures to keep safe at least part of his deposit. If a trader does not use Stop loss orders, the position is closed by the broker when the sum of losses is equal to the sum of the deposit.

There are 3 types of Stop loss orders: fixed Stop loss, sliding Stop loss and combined Stop loss. Fixed Stop losses are set while opening positions. They cannot be changed until the deal is closed. Sliding stop losses, on the other hand, can be modified any time depending on the price movement. Another name for sliding Stop loss is Trailing stop, that can be modified either manually or automatically based on the traders' settings.

There are many discussions on whether it is necessary to use Stop losses or not. Some traders believe that Stop loss is essential in trading, emphasizing the ability of Stop losses to prevent the loss of the whole deposit.

If the price is rapidly moving in a direction which does not correspond to the forecast, a deal that has not been closed in time can result in a significant loss. The opponents of Stop loss believe that this order can limit not only losses, but profits as well.

In this case the position is closed prematurely with a loss while it could develop into a profit later on. As a rule, the decision on whether to use Stop loss or not depends on the individual strategy and preferences of a particular trader.

Trailing stop is an order which its major function is to act as an automatic maintenance of an open position with continually shifting of the stop loss level depending on the price movement. A trader may open a bullish position and sets the gap from the current price to trailing stop in pips. When the price goes upwards, the trailing stop follows it automatically sticking to the set gap. In case that the price goes down, then the trailing stop quote remains on the spot.

In this way, a trader using a trailing stop has an opportunity to derive maximal profit at an ascending price with no regard to the set Take Profit value. Furthermore, a trailing stop is a loss limiter. Here is an example: a trader opens a buy position at the price of 1. In case that the price starts to move upwards and exceeds the mark of 1. If the price turns down, the price does not change its position.

As to a sell position opening, trailing stop behaves quite in the opposite. The trader sets it a few pips higher. At a price descending motion the trailing stop shifts according to the set size. With the up-going price, the trailing stop does not move. While applying a trailing stop in Forex operations a trader will have to remove stop loss orders manually in line with increases in the trade profit.

Trailing stop sets a stop loss level automatically at the value the trader needs. A trailing stop is mainly used by traders who run trend trading, but can't follow the price moves continually. Trailing stop usage is also feasible at intraday trades, when quick reaction to price change is required. Please note that trailing stops work only when the trading terminal is open.

Once the terminal is switched off the stop loss is fixed at its current spot. How to Use Forex for Hedging Hedging denotes safety and security. Hedging means the protection of a client's funds from unfavorable currency rate fluctuations. Account funds are fixed at their current price through conducting trades on Forex.

Thus, hedging helps to ease exposure to currency rate changes risks, which helps to prevent the risk of currency rate fluctuations.

As a matter of fact, hedging presupposes using one instrument in order to lower the risk related to unfavorable market factors impact on the price of another one directly associated with it. Hedging can also be considered as a type of investment allowing to minimize price movements risks in the market. The hedging cost should be valued with regard to the possible losses in the event of not hedging.

Here's a hedging example: a trader, who imports in a foreign currency, opens a buy trade with the currency of his trading account in advance, and when the real time of the currency purchase arrives to his bank, he closes the position.

And a trader, who exports in a foreign currency, opens a sell trade with the currency on his trading account beforehand, and at a the real moment of this currency purchase in his bank, he closes it. Advantages of Forex Over Other Investment Assets 1. Simple to comprehend and master - In a Forex trade we deal with just a pair of currencies 2. Low Minimum Investment - The Forex market requires less capital to start trading than most other markets.

The initial investment could go very low, depending on the leverage offered by the broker. This is a great advantage since Forex traders are able to keep their risk investment to the lowest level. Online Forex brokers offer "mini" and "micro" trading accounts with low minimum account deposit. We're not saying you should open an account with the bare minimum, but it does make Forex trading much more accessible to the average individual who doesn't have a lot of start-up trading capital.

Trading starts when the markets open in Australia on Sunday evening, and ends after markets close in New York on Friday. High Liquidity - Liquidity is the ability of an asset to be converted into cash quickly and without any price discount.

In Forex this means we can move large amounts of money into and out of foreign currency with minimal price movement. Low Transaction Cost - In Forex, typically the cost of a transaction is built into the price.

It is called the spread. The spread is the difference between the buying and selling price. Leverage - Forex Brokers allow traders to trade the market using leverage. Leverage is the ability to trade more money on the market than what is actually in the trader's account.

Profit Potential from Rising and Falling Prices - The Forex market has no restrictions for directional trading. This means, if you think a currency pair is going to increase in value; you can buy it, or go long. Similarly, if you think it could decrease in value you can sell it, or go short..

No one can corner the market - The foreign exchange market is so huge and has so many participants that no single entity can control the market price for an extended period of time.

Such a huge amount of a daily volume allows for an excellent price stability in most market conditions. This means you likely will never have to worry about slippage as you would when trading stocks or commodities. The price you see quoted on your trading screen is the price you get. Market transparency and Instant execution - Market transparency is much greater in Forex than in stocks or commodities, this means it is easier to analyze the inner workings of the market and figure out what is driving it.

Instantaneous order execution is another great advantage Forex has over other markets. Retail Forex trading is generally done over the internet on all electronic platforms. The Forex market has no central exchange and was designed to be this way to facilitate large banks and allow for instant execution of transactions, this means no delays for you and extreme ease of execution. Price movements are highly predictable in the Forex market - Due to its highly speculative nature Forex price movements tend to over shoot and then correct back to the mean.

This means there are a number of repetitive patterns that are easily recognizable to the trader who is trained in price action analysis. Forex currency pairs generally spend more time in very strong up or down trends than other markets, this is also a huge advantage because it is generally much easier to trade a strongly trending market than a chaotic and consolidating market.

Now, if you were holding a futures position over night it is entirely possible that your stop got gapped around, in which case you would get filled at the next best price, which often will be extremely damaging to your trading account. Direct participation, difficult to manipulate or influence - Forex trading operates in a decentralized online electronic market for its participants: Banks, FCMs, hedge funds, governments, retail currency conversion houses and high worth net individuals.

Investors can interact directly with the market maker for pricing on a currency pair. Access is quicker and costs are lower than in other markets. Large market liquidity makes it very difficult for any one participant to manipulate or influence it. Easier market analysis - Countries are more often stable than companies making it easier to predict their economic direction.

Primary factors affecting demand and supply for Forex investment are interest rates and economic indicators such as GDP, trade balances and foreign investment. This and other economic data released regularly determines demand and supply for currency pairs.

Technology frontiers and investing - Technology enables the retail investor the ability to make better investment decisions through ready access to economic and political news events, to technical charting software and electronic trading platforms.

They also have transparent and safe access to their investment funds in segregated accounts so that the safety of their funds is guaranteed.

Limited Risk - Despite the common perception about Forex being risky, it is easy to limit and reduce the risk if a trader chooses the right strategy. In addition it should be mentioned that stops are much easier to control as well, that is why newbies have good chances to succeed even while doing their first steps as Forex investors and traders. No fees or middlemen - There are no commissions when trading on the Forex market.

The retail brokers in this market are compensated through the bid-ask spread. Businessmen can also spot currency trading which eliminates the middlemen and allows each person to trade directly with the market that is responsible for pricing on a certain currency pair. Not only does this expedite the process, it gives each trader more options and versatility. The Basic Forex Trading Strategy The basic Forex strategy that is used by many traders of all experience levels, is Trend Following.

This strategy is widely followed because of its simplicity to identify and trade and many times, strong trends can bail you out of an imperfect set of buy and sell rules. Before we delve into the basics of Trend Following, it is important to first explain why trend trading is a popular strategy used by many new and experienced traders.

Do you have the perfect Forex trading strategy? I have not found it. To me, a perfect strategy is the one that wins all of the time and has minimal trade drawdown.

Therefore, learning how to trade in an imperfect world is very important. Trend following is a simple way to cover up some strategy imperfections by identifying the strongest trends in the market. When you trade in the direction of the trend, the rest of your trading approach can fall right into place. This doesn't mean that all your trades will be winners. It does mean that you don't have to be exact in your entries and exits once you find a strong trend to trade.

Now how do you know when a trend starts and when it is going to end? Since this is a beginners guide I will not elaborate on the various techniques that traders use to identify trends as this is beyond the scope of this book. I will however touch on several techniques in later chapters but note that these will be just in an introduction level without going too much deeper.

Any trader either a newbie or a pro should develop his own style of trading. There are several trading styles that you can adopt. You will choose your style based on your personality and financial capacities. Many traders make the mistake of adopting a trading style that is unnatural for them.

A trader may adopt one of the following two main trading styles: Day Trading and Intraweek trading. Let's discuss each of them; Day Trading Day trading on Forex means that one or few trades are conducted within one trading day. As a rule, the time intervals between the opening or the closing of trades may take from several minutes up to several hours.

Despite some difficulties of day-trading, this type of trading is very popular among the newcomers as well as among experienced traders. Day trading allows for the opportunity to make a profit in a short time with a small amount of funds. In order to achieve favorable results in an intraday trading it is essential that you make the right forecast as to the price movement, as there are many external factors that cause high volatility in the currency market.

So to make your day trading beneficial you have to track the market situation, collate facts and make conclusions about the price behavior of currencies, it is also important to be able to react fast so that you will find entry and exit points quickly at the opening or the closing of trades.

Combining knowledge of technical analysis to be discussed in a later chapter with patience and observance a trader has good chances to earn well with a relatively low risk. Trade on your rational plan, not on your emotions or your "gut" if you want to be successful. Emotional decisions hardly ever turn out well. Instead, you should aim to be objective when making decisions.

This will ensure you make the best decisions possible. While the Forex Market runs around the clock and is always open, there are strategies in timing that you need to be aware of while trading on Forex. Understanding Forex hours will help you maximize your strategies by trading when there is high potential for winning a profit. Don't allow a few successful trades to inflate your ego causing you to over-trade.

A few successes does not mean that you will never lose. Too many novice traders taste victory and decide to go all in and then they lose big.

If you run into consecutive losses like that, just step away for a day or two and return and remind yourself that you are never guaranteed success in trading even if it has happened to you before.

When participating in forex trading, you must decide whether to go short, go long, or do nothing. With a rising market, go long. With a falling market, go short. With a market that is not moving, you should stay out of the market until it moves one way or the other.

A great forex trading tip is to always remain careful and not get reckless when trading. If you're not confident and your opinions aren't backed by advisors you trust, then it's a good idea not to trade. Only trade when you feel that you are well informed of both the positive and negative consequences of a deal.

A great forex trading tip is to remain humble and be able to put things in perspective. You can't expect to win every single time. With a mindset like that you won't last very long as a trader.

Accept failures as they come and don't overreact when you don't win. Because trades happen at a much faster pace with day-trading, there is a distinct possibility that you could lose your entire account over the course of one day. So always enter into each new trading day warily and ready to pull out if you have to.

A useful tip for anyone new to the forex world is to analyze actual performance carefully and regularly. It is important to become familiar with price trends, trading methods and other fundamentals, but it is equally crucial to use one's actual transactional experience to learn from mistakes as well as from victories.

By maintaining detailed trading records it will be possible to refine an overall strategy to achieve optimum success. Don't assume that all the forex market tips you read online are absolute truths. Some information will work better for some traders than others; if you use the wrong methods, you could end up losing money.

edu no longer supports Internet Explorer. To browse Academia. edu and the wider internet faster and more securely, please take a few seconds to upgrade your browser. Foreign exchange, popularly known as 'Forex' or 'FX', is the trade of a single currency for another at a decided trade price on the over-the-counter OTC marketplace. wilson putra. this is something you have looking for when making serious decision about Dollar investment stuff.

Log in with Facebook Log in with Google. Remember me on this computer. Enter the email address you signed up with and we'll email you a reset link. Need an account? Click here to sign up. Download Free PDF. Forex for Beginners: How to Make Money in Forex Trading Currency Trading Strategies. Rajiswaran Muniandi. Continue Reading Download Free PDF.

Related Papers. How To Trade Dollar. Download Free PDF View PDF. All rights reserved. Table of Contents 1. Making Money in Forex Trading 2. What is Forex Trading 3. How to Control Losses with "Stop Loss" 4. How to Use Forex for Hedging 5. Advantages of Forex Over Other Investment Assets 6.

The Basic Forex Trading Strategy 7. Forex Trading Risk Management 8. What You Need to Succeed in Forex 9. Technical Analysis As a Tool for Forex Trading Success Developing a Forex Strategy and Entry and Exit Signals Thousands of people, all over the world, are trading Forex and making tons of money. Why not you? All you need to start trading Forex is a computer and an Internet connection.

You can do it from the comfort of your home, in your spare time without leaving your day job. And you don't need a large sum of money to start, you can trade initially with a minimal sum, or better off, you can start practicing with a demo account without the need to deposit any money. Once you consider to start Forex trading, one of the first things you need to do is choose a broker, choosing a reliable broker is the single most critical factor to Forex success. There are dozens of online brokers out there but your best bet is to go with one of the leaders.

Here are 2 online brokers that are reputable and are most suitable for beginners and pros alike: 1. Forex Inc - The best broker for US residents If the link doesn't work, copy and paste the following URL into a browser: www. eToro - accepts worldwide traders except US residents If the link doesn't work, copy and paste the following URL into a browser: www.

Now I would strongly encourage you to go and visit these broker's sites right now even if you are not yet decided whether you want to go into Forex trading.

because each provides tons of free education materials, videos and best of all a demo account that allows you to practice Forex trading for free without the need to deposit any money.

Simply go to each of these brokers, register for a free demo account and start "trading" - by actually practicing and experiencing it firsthand you'll be able to decide whether Forex trading is for you. In any case, before starting to trade for real, it is advisable that you practice with a demo account.

Once you build some skill and feel more comfortable with the system you can start trading gradually for real money. Now which of the two brokers you should choose? while both are reputable and reliable they do have some differences. For starter if you are a US resident you should choose Forex Inc, as eToro does not accept US residents. Here is a summary of the specific advantages of each of them.

Choose based on your personal preferences: Forex Inc www. It has several different account levels that make it easy for anyone to open an account. Forex Inc is an excellent broker suitable for beginners and pros alike. eToro www. You can also communicate with other traders including the top traders. What is Forex Trading Foreign exchange, popularly known as 'Forex' or 'FX', is the trade of a single currency for another at a decided trade price on the over-the-counter OTC marketplace.

In essence, Forex currency trading is the act of simultaneously purchasing one foreign currency whilst selling another, mainly for the purpose of speculation. Foreign currency values increase appreciate and drop depreciate towards one another as a result of variety of factors such as economics and geopolitics. The normal objective of FX traders is to make money from these types of changes in the value of one foreign currency against another by actively speculating on which way foreign exchange rates are likely to turn in the future.

In contrast to the majority of financial markets, the OTC over-the-counter currency markets does not have any physical place or main exchange and trades hours every day via a worldwide system of companies, financial institutions and individuals. Because of this, currency rates are continuously rising and falling in value towards one another, providing numerous trading choices. One of the important elements regarding Forex's popularity is the fact that currency trading markets usually are available hours a day from Sunday evening right through to Friday night.

Buying and selling follows the clock, beginning on Monday morning in Wellington, New Zealand, moving on to Asian trade spearheaded from Tokyo and Singapore, ahead of going to London and concluding on Friday evening in New York. The fact that prices are available to deal hours daily makes certain that price gapping whenever a price leaps from one level to another with no trading between is less and makes sure that traders could take a position each time they desire, irrespective of time, even though in reality there are particular 'lull' occasions when volumes tend to be below their daily average which could widen market spreads.

Forex is a leveraged or margined item, which means that you are simply required to put in a small percentage of the full value of your position to set a foreign exchange trade. Because of this, the chance of profit, or loss, from your primary money outlay is considerably greater than in conventional trading. Currencies are designated by three letter symbols. The first currency is the base currency and the second currency is the quote currency.

The price, or rate, that is quoted is the amount of the second currency required to purchase one unit of the first currency. As we see, the US dollar is represented in all currency pairs, thus, if a currency pair contains the US dollar, this pair is considered a major currency pair. Pairs which do not include the US dollar are called cross currency pairs, or cross rates. One of the most interesting movements in the Forex market involving the British pound took place in the September 16, That day is known as Black Wednesday with the British Pound posting its biggest fall.

the US dollar currency pairs. The general reasons for this "sterling crisis" are said to be the participation of Great Britain in the European currency system with fixed exchange rate corridors; recently passed parliamentary elections; a reduction in the British industrial output; the Bank of England efforts to hold the parity rate for the Deutschemark, as well as a dramatic outflow of investors. At the same time, due to a profitability slant, the German currency market became more attractive than the British one.

All in all, the speculators were rushing to sell pounds for Deutschemarks and for US dollars. As a result, the pound returned to a floating exchange rate. Another intriguing currency pair is the US dollar vs. It is traded most actively during sessions in Asia. From the mid 80's the Yen ratings started rising actively versus the US Dollar. In the early 90's a prosperous economic development turned into a standstill in Japan, the unemployment increased; earnings and wages slid as well as the living standards of the Japanese population.

And from the beginning of the year , this caused bankruptcies of numerous financial organizations in Japan. As a consequence, the quotes on the Tokyo Stock Exchange collapsed, a Yen devaluation took place, thereafter, a new wave of bankruptcies among manufacturing companies began. The above started an Asian crisis in the years that led a Yen crash. It resulted in a tumble of the Yen-US dollar pair from Yens for one US dollar to The global economic crisis touched almost all fields of human activities.

Forex currency market was no exception. Though, Forex participants central banks, commercial banks, investment banks, brokers and dealers, pension funds, insurance companies and transnational companies were in a difficult position, the Forex market continues to function successfully, it is a stable and profitable as never before. The financial crisis of has led to drastic changes in the world's currencies values.

During the crisis, the Yen strengthened most of all against all other currencies. Neither the US dollar, nor the euro, but the Yen proved to be the most reliable currency instrument for traders. One of the reasons for such strengthening can be attributed to the fact that traders needed to find a sanctuary amid a monetary chaos.

Ask and Bid When traders want to place an order on the Forex market they should be aware of the currency pair as well as the price of this pair. A Forex market price of a currency pair is denoted by two symbols, Ask and Bid, which have specific digital notations.

Consequently, a trader sells the currency standing second. Bid price is the lowest price in the quotation of the currency pair, at which a trader sells the currency standing first in the abbreviation of the currency pair. Respectively, a trader buys the currency standing second.

Seem complicated? This means that you can buy 1 euro for 1.

All in all, the speculators were rushing to sell pounds for Deutschemarks and for US dollars. Share now 🙅🏻 When NOT to Trade Forex? If it helped you, it can help them as well. The fact that prices are available to deal hours daily makes certain that price gapping whenever a price leaps from one level to another with no trading between is less and makes sure that traders could take a position each time they desire, irrespective of time, even though in reality there are particular 'lull' occasions when volumes tend to be below their daily average which could widen market spreads. More- when they started out.

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