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In today's digital age, those who are looking for ways to earn online will have more or less heard the name of forex trading. Forex trading is one of the many ways to earn online. Actually making money from forex trading is not as easy as it sounds. When a new trader starts forex trading, he must know or learn the basics of forex trading.
Importance of learning Forex trading
The main theme of our post today is Learn Forex Trading then Trade. Through today's post we will know what is forex trading, how forex works, what is required to do forex trading, learn forex trading, benefits of forex trading, risks of forex trading etc. So let's begin-
How Forex Trading Works
Forex trading does not take place on an exchange like commodities and stocks, rather it is an over-the-counter market where two parties trade directly through a broker. The Forex market is operated through a network of banks. 4 primary forex trading centers are
- New York
- London
- Sydney
- Tokyo
You can trade 24 hours from Monday to Friday. There are three types of forex market including spot forex market, future forex market and forward forex market.
Most forex traders do not trade by speculating on the price of the currency but rather they monitor the movements in the market and plan to take advantage of it. Forex traders regularly peddle the rise or fall of a currency pair's price in order to make a profit. For example, the exchange rate of the EUR/USD pair shows the value of the ratio between the euro and the US dollar. It arises from the relationship between demand and supply.
Forex Trading Tools
If you have a computer and an internet connection, you are already able to cover the most important basics of participating in forex trading. Now that you have the necessary knowledge of the forex market let's move on to how you can learn forex trading step by step.
Importance of forex trading education
A very important question is why should we learn Forex trading? In fact, is it possible to achieve anything without education? No, never possible. If you start trading without knowing well about forex trading, you may get some profit for a short period of time but you will not have that profit for long. Guaranteed, within few days your trading account balance will be zero.
So learn about forex before starting forex trading. Nowadays there are many mediums to learn using them learn first then trade. It is never possible to profit from forex market without education.
#01. By using Google
Currently there is no topic that is not available from Google. Forex trading is no exception. To know about forex trading, you can search on Google and get all the information from there. However, more information is available in English than Bengali and the information available in English is much more useful. If you have difficulty in understanding English then try to understand things well by using Google Translate.
#02. By using YouTube
YouTube is another popular way to learn Forex trading like Google. There are thousands of video tutorials on YouTube to learn Forex trading. You can easily learn Forex trading by watching video tutorials from YouTube. However, English content is more acceptable here. Besides, there are some good channels in Bengali language and you can get ideas from there.
#03. through books
There is no substitute for books for learning since ancient times. You can learn all about forex by reading books. Good forex trading books are mostly written in English and these books are not usually available in the district town library. So you can order online and collect from there.
#04. Through training center
In our country some individuals or organizations teach forex trading through online. You can take courses from them through online for fixed fee. Learned the necessary subjects well through the course. However, in taking online courses, select the person or organization to take the course after careful selection. Hope you got an idea about how to learn forex trading.
Steps to Forex Trading
Before starting the actual trading, you need to understand some techniques and topics first. This will serve as a basic tutorial of forex trading.
1. Choosing the right broker
Choosing the right broker is the most important step in forex trading because you cannot do online trading without a broker and choosing a wrong broker can lead to a really bad experience in your trading career.
Be sure to choose a broker that offers low service charges, an excellent user interface and above all a demo account. By trading with a demo account you will get to know the quality of service of your chosen broker house. Be able to understand whether the speed of their software, the use of staff, or whether the environment is investment friendly.
2. Know the essential terms
There are certain trading terms you need to know before starting forex trading. Below are some trading terms or phrases you should know.
– Exchange rate or exchange rate
The current market price of a currency pair is called the exchange rate.
- Auction post or auction post
This is the price at which FXCC (or another counter party) offers to buy a currency pair from a client. This is the price that the client will be quoted when wanting to sell a trade.
– Ask Prize
The currency or any type of instrument related in Forex, is offered for sale by FXCC. The ask or offer price is effectively the price a client will be quoted when looking to buy a position.
– Currency pairs or currency pairs
Currency pairs are always traded in pairs, eg, EUR/USD. 1st currency is the base currency, & 2nd currency is the quote currency. It shows how much of the quote currency is needed to buy the base currency.
– forecast
Forecasting is looking at the current chart position to predict which direction the market will go next whether the price will go up or down.
– Commission/Fees
The fee a broker like FXCC can charge per trade is the commission/fee.
– Market order
A market order is an order to buy or sell any type of trade based on the current price, so that the trade can be executed quickly.
– Limit order
A limit order is a price at which a trader can set a price to buy or sell a currency pair. It helps to plan trades at fixed prices and avoid buying at overpriced or selling at too cheap prices.
– Stop-loss order
With a stop-loss order, the trader can reduce the loss on a trade if the price moves in the opposite direction. The order is activated when the price of a currency pair reaches a certain price level The trader can place a stop-loss at the time of opening a trade or it can also be placed after the trade is opened. Stop-loss orders are one of the fundamental risk management tools.
– Leverage
Capital is a big factor for traders in the forex market. For the purpose of accumulating this capital, forex traders trade more money than the amount of capital they deposit in the broker house. Trading with this much money is called leverage. If the amount of leverage is high, it affects the market. Leverage multiplies the potential profit, but even with the profit, the risk increases significantly.
– Margin
Depositing money in a different account for use in currency trading is called margin. The money kept in margin helps to keep the broker houses financially viable. Moreover, margin plays a huge role in being able to meet the conditions and obligations of the trader.
– Pip
A pip is a basic unit of Forex trading. It indicates the price change of a currency pair. A pip is a unit of measure that measures the difference between two currencies. Consider, the value of EUR/USD currency pair changed from 1.2050 price to 1.2051 price. This means, in this currency pair. 0001 USD has increased i.e. its value has increased by 1 pip.
– The lot
Previously there was only a limited amount of trading in Forex. This specific amount is “Lot”. To put it more simply, the unit or amount of a currency pair you decide to buy/sell for Forex trading is called a lot.
– Vol
Volume is the amount of total trading activity in a particular currency pair. Sometimes it is also considered as the total number of contracts during the day.
– Going Long
“Going long” means buying a currency pair in the hope that the price of that currency pair will rise. The order is profitable when the price rises above the entry price.
– Standard account
Standard account is considered as ordinary account. This account is usually used to trade with larger dollar amounts. This type of account can trade up to 100000 dollars.
– Mini Lot Account
A mini lot account allows forex traders to trade mini-lots. That is, with this account you can trade up to 10000 dollars. Trading more than this amount of dollars is not possible with this type of account.
– Micro Lot Account
A micro lot account allows Forex traders to trade micro-lots. That is, up to one thousand dollars can be traded with this account. More than this dollar trade cannot be done with this account.
– Mirror trading
Mirror trading allows traders to automatically copy trades of other successful traders for a fixed fee.
– Slippage
The difference between the actual fill price and the expected fill price is called slippage. Slippage usually occurs when the market is highly volatile.
– Scalping
Scalping is a short-term trading style. The period between the opening and closing of a trade can vary from a few seconds to a few minutes.
The best platform for forex trading
The choice of platform is very subjective and it varies from trader to trader depending on their trading needs. Some well-known forex trading platforms include MetaTrader 4 and MetaTrader 5. Not all trading platforms are free though. Some platforms can be used by paying a monthly fee.
