Forex trading: A beginner's guide

The base currency is always equal to 1 unit, in this case you can sell 1 euro for 1.

There are three critical terms to learn: This is the single most important paragraph in this entire guide. 

The base currency is always equal to 1 unit, in this case you can sell 1 euro for 1.

Forex as Speculation 

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Step 1, understand how currencies are traded First, you have to understand how currencies are traded. There are three critical terms to learn: Each pair signifies two different currencies. A pip is the smallest increment of a pair. All forex markets of any liquidity have a spread of some sort, and oftentimes a broker will widen them slightly to make a profit. This is equivalent to a stock broker charging per-trade.

So in order to be profitable, you will need to recoup the spread. Step 2, practice The second key to Forex trading is practice, practice, practice. Set one up, and mess around-watch your money evaporate. This post is all about currency trading for beginners. Some of you may already know some of this information, but as we progress through the guide you might find new pointers and techniques you had no idea about!

Banks, governments and even entire countries participate in Forex investing, but you are probably hear as an individual trader looking to earn financial freedom through the markets. Let me tell you something right now, it is possible. But the issue is most new traders rush into the markets without having the correct knowledge.

They fall into this trap and end up losing a lot of money. It is also the most volatile market in the world but does go through periods of consolidation where for weeks at a time to the average individual no price changes will be happening, although on shorter chart periods there will still be movement and volatility these price movements are what professional fx traders profit from.

First there are different types of charts and graphs that show the same currency pairs but on different time frames. For example one chart may show the movement on 5 minute intervals. This means that one entire candle shows 5 minutes worth of data. This is called the 5 minute chart. Below is a screenshot from my account which shows each candle as 4 hours worth of data. Other common examples are the 15 min, 30 min, 1 hour, 4 hour, 8 hour, 1 day, weekly and monthly charts.

Although my personal favourite is the 4 hourly, we will talk about why later in this guide. Generally the type of trader you are will depend on the chart period that you study the most. The strategy you build will depend on a number of elements: How much time you have to trade.

As a general rule I like to only look between 15min and the daily with my primary focus on the 4 hour chart. Currencies or positions when you buy or sell a currency can be held for minutes all the way up to years and the frequency at which you trade is entirely dependent on what you are trying to accomplish both long and short term, and the strategy you have established.

For example; a Leverage can either be very profitable or very dangerous. But at the end of the day it only does 1 thing. That is speed up wherever you are going. If you were going to lose your entire account then leverage helps you achieve your results faster. If you were going to earn a substantial profit, leverage helps you get their faster. Even millions invested by banks cannot move prices very much. As a result the markets can provide both long and short term sources of profits.

Before you start investing in the currency markets however, there are a number of basics that you should know. As a general rule remember the following: It takes them a lot longer to enter and exit positions unless a massive piece of news comes out.

Understand Quotes, Currency Pairs and the PIP When you first consider starting to trade currencies, especially if you are a complete beginner, the quotes and graphs and mountains of data can look pretty daunting.

Every currency quote will be valued against another currency. Hence the price will always be displayed as: The base currency is always equal to 1 unit, in this case you can sell 1 euro for 1. There are a number of major currency pairs. These are the larger currencies that are traded against one another. Direct vs Indirect Quotes Currency pairs can either be quoted directly or indirectly.

A direct quote is simply where the domestic currency is quoted first. An indirect quote is simply where the domestic currency is the quoted figure. Generally it will be pretty obvious which currency is generally stronger. For example if you see 1. Barring any economic meltdowns this will not change. Next we are going to outline the metric by which success is measured in fx.

Instead they make their money by the spread on a currency. The spread is measured in points or PIPS. In the above example the 4th decimal point indicates the spread and the difference is 3 pips 52 to The pip itself is the smallest measurable fraction by which a currency can move.

Technically there is also another smaller movement called a tick. Spreads can vary for different currencies but most pips tend to be the 4th decimal place of a currency pair.

In the major currency pairs the spreads will be tighter, but in less traded currency pairs the spreads will be larger to mitigate the risk of the broker. All this really means is the following: If you are looking to make a high volume of trades, make sure you stick to the major pairs.

Otherwise you will be paying a premium spread on all trades think of it as a tax. Forex Markets Opening Times In the opening hour of the day the fx markets are incredibly active and the majority of large trades by big companies, governments, banks, financial corporations are done. This is not the ideal time to invest if you are a newbie to fx trading.

So 24 hours a day for 5 days per week. We just generally recommend being very conscious of when markets open and close, this is because this tends to be when markets and pairs will be the most volatile and as a result move the most in either direction, causing you to either incorrectly analyse the market or just forget and be surprised when you see large movements at specific times. The Forex Toolbox Currency investing is done online instantaneously or close enough anyway.

So its important to have the most efficient tools to allow you to get every advantage on the information and signals or systems you research. Saying that there are generally only 2 things you need: There are a couple more elements I recommend such as leverage, professional training, signals software and back-tested strategies but reading this post and getting our free ebook will give you all the information you need to get started.

One thing I would recommend: Surround yourself with like minded successful people and not nay Sayers. If I had listened to the naysayers I would not be where I am today. We are currently building one at EFT but it is only for advanced traders as of September But watch the space we are looking to build a newbie focused one in the near future! Now that the baseline information is out of the way its time to get into the real methods, techniques, systems and strategies we use to profit from the market.

If you are determined, serious,and hard working, you can surely be included in the group of winners. Generally, we find two kinds of candlestick patterns on price chart simple and complex. We can define the two kinds of candlestick pattern without any complexity. A simple candlestick pattern composed of only one candle, and a complex candlestick pattern is composed of more than one candles. In this post we are going to learn about big candle candlestick pattern.

The big candle candlestick pattern has a large difference between opening and closing price. The shadows of the candle are relatively small, shadow is the part of the candle beyond the opening and closing price. The big candle candlestick pattern has two types green and red, they are also called as bullish and bearish respectively.

However, you can see how the bullish and bearish big candles look like in the above illustration. Let's see how they act on the practical market chart. A big candle green or red is not alone sufficient to find entry or exit signal on candlestick charts, they have to be appeared at a support level, at the time of indicators' signals or after another important chart pattern formation or breakout.


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Watch video · Learn How To Trade Forex and Become Financially Free. Our Free 12, Word Guide Will Teach You Exactly How To Earn 5% Per Month & Become Financially Free In The Process. We Teach People From Absolute Beginners Into Full Time Profitable Currency Traders. Join The Movement Today By Reading This FREE Guide. Forex is one of the most volatile type of investment markets and one of the most exhilarating experiences in the world. Forex, in it’s nebulous form, is simply trading currencies-buying and selling, betting for and against the various currencies of nations.

About your Demo Account. A demo account is intended to familiarize you with the tools and features of our trading platforms and to facilitate the testing of trading strategies in a risk. What Is Forex Trading? Are you interested in trading currencies instead of shares? Take a look at this guide where I’ll cover what you need to know about forex trading.

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