Forex Trading for Beginners – Guide for 2020

Forex Trading for Beginners – 2020 Complete Guide.

Forex trading for beginners can be difficult. In general, this is due to unrealistic but common expectations among newcomers to this market. The first question that comes to everyone’s mind is: how to learn Forex from scratch. Don’t worry, in this article is our definitive Forex manual for beginners. Forex trading for beginners in this article you will get to know about all the thing which require to be successful in forex trading.

Forex Trading for Beginners

Forex Trading for Beginners

in this article you can understand the basic thing for forex trading, and I will also suggest you some good platform from where you can start your forex trading. Forex trading for beginners will give you complete idea about trading and indicators

Trading terminology made easy for starter. Forex trading for beginners

Spot Forex

This form of Forex trading involves buying and selling the real currency. For example, you can buy a certain amount of pound sterling and exchange it for euros, and then once the value of the pound increases, you can exchange your euros for pounds again, receiving more money compared to what you originally spent on the purchase. spot forex trading is very good for beginners.

CFDs

The term CFD stands for “Contract for Difference”. It is a contract used to represent the movement in the prices of financial instruments. In Forex terms, this means that instead of buying and selling large amounts of currency, you can take advantage of price movements without having to own the asset itself. Along with Forex, CFDs are also available in stocks, indices, bonds, commodities, and crypto currencies. In all cases, they allow you to trade in the price movements of these instruments without having to buy them. CFD is very good instrument of forex trading.

Spread

The spread is the difference between the purchase price and the sale price of a currency pair. For the most popular currency pairs, the spread is often low, sometimes even less than a pip! For pairs that don’t trade as often, the spread tends to be much higher. Below is the example of Spread

Forex Trading for Beginners

Forex Trading for Beginners

Before a Forex trade becomes profitable, the value of the currency pair must exceed the spread. As we know from this article spread price is the difference between the buying price and sale price, spread is very good technique to apply to make profit in forex trading.

Margin

Margin is the money that is retained in the trading account when opening a trade. However, because the average Retail Forex Trader lacks the necessary margin to trade at a volume high enough to make a good profit, many Forex brokers offer their clients access to leverage. Margin we require for trading or we have to keep in our trading account for trading.

Leverage

This concept is a must for beginner Forex traders. The leverage is the capital provided by a Forex broker to increase the volume of trades its customers can make.

Example:

  1. The face value of a contract or lot equals 100,000 units of the base currency. In the case of EUR/USD, it would be 100,000 euros.
  2. If you use a 1:10 leverage rate and have 1,000 euros in your trading account, you can trade a currency pair with a $10,000 position size.
  3. If the trade is successful, leverage will maximize your profits by a factor of 10. However, keep in mind that leverage also multiplies your losses to the same degree.

So always try to keep some amount in your account so it will not go down so whenever you go for trading you will get good leverage for trading.

Forex trading Learning for Beginners

Price and Quote

When you trade Forex, you will see Ask and Bid prices.

  1. The ask price is the price at which you can buy the currency.
  2. The bid price is the price at which you can sell it.

One of the things you should keep in mind when you want to learn Forex from scratch is that you can trade both long and short, but you have to be aware of the risks involved in dealing with a complex product.

Long trade

Buying a currency with the expectation that its value will increase and make a profit on the difference between the purchase and sale price.

Forex Trading for Beginners

Forex Trading for Beginners

Whenever you will go for long trade definitely you will get profit, because of price differentiations so I would like to suggest always try to go for long trade or save your brokerage with long trade.

Short trade

You sell a currency with the expectation that its value will decrease and you can buy back at a lower value, benefiting from the difference.

Forex Trading for Beginners

Forex Trading for Beginners

The price at which the currency pair trades is based on the current exchange rate of the currencies in the pair, or the amount of the second currency that you would get in exchange for a unit of the first currency (for example, if you could exchange 1 EUR for 1.68 USD, the purchase and sale price your broker gives will be on either side of this number).

Trading platform for beginners

In addition to choosing a broker, you should also study the currency trading software and platforms they offer. The trading platform is the central element of your trading and your main work tool. When evaluating a trading platform, and even more so if you are a beginner in Forex, make sure that it includes the following elements: Click here for best trading platform which i personally use for forex trading in this platform you will get everything

Trust

Do you trust your trading platform to offer you the results you expect? Being able to trust the accuracy of the quoted prices, the speed of data transfer and the fast execution of orders is essential to be able to trade Forex successfully. Even more so, if you plan to use very short-term strategies, such as scalping.

The information must be available in real-time and the platform must be available at all times when the Forex market is open. This ensures that you can take advantage of any opportunity that presents itself.

Security

Will your funds and personal information be protected? A reputable Forex broker and a good Forex trading platform will take steps to ensure the security of your information, along with the ability to back up all key account information.

It will also segregate your funds from its own funds. If a broker cannot demonstrate the steps they will take to protect your account balance, it is better to find another broker.

Independent account management

Any Forex trading platform should allow you to manage your trades and your account independently, without having to ask your broker to take action on your behalf. This ensures that you can act as soon as the market moves, capitalize on opportunities as they arise and control any open position.

Analysis

Does the platform provide embedded analysis, or does it offer the tools for independent fundamental or technical analysis? Many Forex traders trade using technical indicators, and can trade much more effectively if they can access this information within the trading platform, rather than having to leave the platform to find it. This should include charts that are updated in real-time and access to up-to-date market data and news.

Forex Trading for Beginners

Forex Trading for Beginners

One of the benefits of Forex trading is the ability to open a position and set an automatic stop loss and profit levels, at which the trade will be closed. The most sophisticated platforms should have the functionality to carry out trading strategies on your behalf, once you have defined the parameters for these strategies.

Risks every beginner should know

There are different types of risks that you should be aware of as a Forex trader. Here are some of them.

  • Leverage Risk: Leverage in trading can have both a positive or negative impact on your trading. The higher your leverage, the larger your benefits or losses.
  • Interest Rate Risk: The moment that a country’s interest rate rises, the currency could strengthen. The boost in strength can be attributed to an influx of investments in that country’s money markets since with a stronger currency, higher returns could be likely. But if the interest rate falls, the currency may weaken, which may result in more investors withdrawing their investments.
  • Transaction Risk: This risk is an exchange rate risk that can be associated with the time differences between the different countries. It can take place sometime between the beginning and end of a contract. There is a chance that during the 24-hours, exchange rates will change even before settling a trade. The transaction risk increases the greater the time difference between entering and settling a contract. Forex trading for beginners is design for beginners.

Three simple Forex trading strategies ( Forex trading for beginners )

Below is an explanation of three Forex trading strategies for beginners:

Breakout

This long-term strategy uses breaks as trading signals. Markets sometimes swing between support and resistance bands. This is known as consolidation. A breakout is when the market moves beyond the limits of its consolidation, to new highs or lows. When a new trend occurs, a breakout must occur first. Therefore, breaks are considered as possible signs that a new trend has started. But the problem is that not all breakouts result in new trends. Using a stop loss can prevent you from losing money.

Forex Trading for Beginners

Forex Trading for Beginners

Moving average cross ( Forex trading for beginners )

Another Forex strategy uses the simple moving average (SMA). Moving averages are a lagging indicator that use more historical price data than most strategies and moves more slowly than the current market price.

Forex Trading for Beginners

Forex Trading for Beginners

Moving average is the basic indicator to identify the trend of the stock or any currency. This article Forex trading for beginners will give you basic knowledge about trading.

In the graph above, the 25-day moving average is the orange line. As you can see, this line follows the actual price very closely. The 200-day moving average is the green line.

When the short-term moving average moves above the long-term moving average, it means that the most recent prices are higher than the oldest prices. This suggests an upward trend and could be a buy signal. Conversely, when the short-term moving average moves below the long-term moving average, it suggests a downward trend and could be a sell signal. This article Forex trading for beginners will give you basic knowledge about trading.

I hope you learn lots of thing in Forex Trading for Beginners article or if you want to know about the Automated forex trading then read this article What is Automated forex trading

 

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