How To Trade In Forex Step By Step

How to trade in forex step by step

How to trade in forex step by step

Forex Trading Guide

Trading foreign exchange on the currency market can be an exciting hobby aside from being a potential source of income and you can trade Forex online in many ways. However, before you go diving deep into the Forex market, there are basic things you need to learn especially when you don’t have enough prior knowledge about trading.

You need a Step-by-Step Forex Trading Guide: Beginners Guide to Forex Trading.

 

Step #1- Step Determine the Currency You Want to Trade

In making your choices, you have to make some predictions on the economy.

If you believe that the U.S.

How to trade in forex step by step

economy is going down, and this is, of course, bad for the U.S. dollar, then it is sensible that you may want to see dollars in exchange for a currency of a country whose economy is strong.

 

See the Country’s Trading Position

If a country produces many goods that are in demand all over the world, then that country is likely to export these goods to increase their economy.

This trading edge will likewise boost the value of its currency.

 

Step #2 – Learn to Calculate Profits

The measurement used to measure the change in value between the two currencies is what traders referred to as a “pip”.

Professional Forex Trading Course Lesson 1 By Adam Khoo

Generally, 1 pip = 0.0001 of a change in value. So if a certain trade in USD or EUR moves from 1.325 to 1.326, then your currency value has increased by 10 pips.

By multiplying the number of pips that your account has changed, you will know how much is the increase or decrease in value of your account.

 

Step #3 – Make a Research

In choosing your brokerage, you have to look for a brokerage that has been in the industry for ten years or more.

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Experience is significant as it indicates that the company knows what it’s up to and clients are assured that they are being taken care of.

Check and ensure that the brokerage is regulated by a regulating body.

So if the brokerage voluntarily submits to government regulations, then you are assured of the company’s honesty and transparency.

 

Step #4 – See What the Brokerage Offers

If it also trades securities and stocks, then you should know that the broker has a great client base and wider market reach.

 

Step #5 – Check Transaction Cost for Every Trade

You must check on broker’s fees and charges.

How to trade in forex step by step

Likewise, know how much will be the bank service charge for transferring money to your forex account.

Also be aware of the essentials, including a good customer support, transparency, and easy transactions.

Steer clear of brokers with bad online reputations.

 

Step #6 – Request Information About How to Open an Account

In opening an account, you can either choose a persona or a managed account.

Step 1: Understand the Lingo

If you want to execute your own trades, then you choose a personal account, but if you don’t have time to go about it, then let your broker execute trades in your behalf.

 

Step #7 – Fill out the Registration Form

You may ask for the paperwork via mail or you can download it from the brokerage website. Make sure that you check on the transferring cost of cash from your bank to your brokerage account as these fees are sure to cut your profits.

 

Step #8 – Activate your Account

The broker can either send you an email with the activation link.

How to trade in forex step by step

Click on the link and follow instructions to get started with trading.

Step #9 – Get Started with Trading

There are different methods for analyzing the market.

  • Technical Analysis – This involves checking on charts or historical data to have a basis for your prediction of how the currency will move based on past events. Your broker will provide you with these charts.
  • Fundamental Analysis – This involves taking a look at the economic fundamentals of the country bearing the currency you’re trading as a basis for your decision.

 

  • Sentiment Analysis – This is somehow subjective as you will be analyzing market mood to figure if it’s bullish or bearish.

    How to trade in forex step by step

    Though this is not always dependable, you can make a good guess which can influence your trades.

 

Step #10 – Determine Your Margin

You can invest a number of funds and still make big trades depending on your more broker’s policies.

To illustrate, if you want to trade 100,000 units at a margin of one percent, your broker will ask you a $1,000 cash security.

Your gains and losses will affect your account – either increase or decrease its value.

In this case, it’s a good rule that you invest only two percent of your funds in a particular pair.

There are different kinds of order.

    1. Market Orders – Through this, you are instructing your broker to buy/use your holdings at the current market price
    2. Limit Orders – This instructs your broker to execute the trade at a certain price.
    3. Stop Orders – This is an option to buy currency above the current market price as you are anticipating an increase in its value or to sell the currency below the current to cut losses.

Now, that you have a basic understanding of how to start venturing into Forex Trading, this Step-by-Step Forex Trading Guide to Forex Trading will guide you through your trading journey.

Read also: Forex trading Frequent ask questions.

Forex essentials in 15 trades pdf