how to trade forex

FOREX 101:
a beginner's
GUIDE

Ian
how to trade forex

FOREX 101:
a beginner's
GUIDE

Ian

The aim of trading Forex is to make a profit by speculating on currency price movements. As a Forex trader, you will be the one making the speculations.

For example, is the euro losing or increasing value at the moment? Would an election in the U.S. make the value of the dollar rise or fall? There are so many factors on which you can base your predictions.

THE FOUR FACES OF FOREX

WHICH TRADER AM I?

Find your trading style and get an idea of how other people trade. If you’re not sure which type of trader you are, give one a try and see how you get on – you’ll soon discover what one fits your style.

Liam

THE forex SCALPER

Known for holding smaller trades for short timeframes – sometimes for a matter of seconds. Scalpers are technical analysts but rapid and financially ruthless during peak trading times – committing a large proportion of their day to trading.

Sophie

THE DAY TRADER

Known for taking each day as it comes, Day Traders open their eyes with the opening of the markets and close their book with the final bell. They are also unlikely to hold a trade overnight until the following morning to avoid any additional risk. Perfect for those who live for the now, but not by the nanosecond.

Ian

THE SWING TRADER

Known for looking to long-term investments over a quick return, Swing Traders keep their trades for weeks, months, and even years. They are not distracted by pricing fluctuations; they like to spend time understanding market fundamentals to keep their eye on the end goal to ensure they buy at ‘swing lows’ and sell at ‘swing highs’ (or vice versa if going short).

Nikki

THE NEWs TRADER

Known for being ready to act at a moment’s notice, News Traders eat the global news for breakfast, lunch and dinner to feed their trading strategies. Reactive and proactive, they monitor breaking headlines and current events to have a clear view on what could impact and affect the currency markets. The more informed they are, the faster they can act.

WHERE DO I START?

The most important investment you will ever make is learning as much as possible. There are two main ways of getting the information you need to build your opinion:

1.

Technical
analysis

The study of past prices and patterns to determine future price movements.

Technical analysis is watching the price activity and other data over time, to try and predict future price movements.

 

Technical indicators for Forex include:

 

Simple Moving Average (SMA) – help you get an idea of price trends and are common indicators of changes in price behaviour.

 

Retail Strength Index (RSI) – determine a market’s accelerating or decelerating direction and evaluate whether a currency is overbought or oversold, potentially signalling an imminent reversal.

videos

Find out more by watching

our short videos on:

2.

Fundamental
analysis

The study of the factors that drive valuation such as economic and political trends and activity.

Fundamental analysis involves studying economic indicators and government policies to determine the intrinsic value of a currency. Once determined, you can make a trade based on whether you think a currency is undervalued or overvalued.
education

View our learning resources

to find out more about:

news analysis video
News Analysis Video Chinese

FOR EXTRA
KNOWLEDGE

Preparation always pays off. Being constantly switched on to the world’s news and events, and how they can influence the currency market prices will help you to spot the best opportunities to buy and sell. The more you read, research and review the more ahead of the markets you can be.

STAY UP TO SPEED WITH
OUR DAILY TRADING
NEWSLETTER

CURRENCY PAIRS

MAJORS, MINORS OR MAYBE EXOTICS

All Forex transactions involve the purchasing and selling of two currencies called currency pairs – a base currency and a quote currency.

 

When an order is placed for a currency pair, the first listed currency (base currency) is bought while the second (quote currency) is sold.

 

The EUR/USD currency pair is considered the most liquid currency pair in the world. The USD/JPY is the second most popular currency pair in the world.

popular pairs

Major Pairs

Minor Pairs

Exotic Pairs

conforming

THE FOUR MUSTS EVERY FOREX TRADER MUST DO

1. Understand the markets for both currencies

Have an understanding of both currencies you are trading as part of the currency pair.

2. Know their style and strategy and be structured

This will help you to take emotion out of your trades and predetermine your entry and exit strategies. This approach to trading keeps trades consistent and emotions out of the deal.

3. Stop, evaluate
and listen

Learn from each trade, what worked and what didn’t. Always listen to what your book, the experts and the market is telling you, never your heart.

4. Find the best broker in the business

You want a reliable trading platform, offering the latest technology, and the best in customer service to give you the best trading experience.

CHARTING YOUR SUCCESS

THE CHART OF FOREX QUOTES

A forex quote is the price of one currency in terms of another currency in the pair. Both currencies will generate a price and you will also be able to see the spread or difference between the two prices.

 

There are three charts that you can view these positions on:

candlesticks

Candlestick Charts

This chart is used most often as it gives traders the most informed view of the market. Each candle wick shows the range of high to low.

 

Each candle body shows if the closing price was higher or lower than the opening price. If the candle is filled it also tells you that the currency pair closed lower than it opened (vice versa, when unfilled).

bar chart

BAR Charts

This chart is helpful to review contraction, expansion and the overall price ranges.

 

Each bar displays the opening, closing, high and low of the currency pair’s prices. The lowest paid price is at the bottom and the highest at the top, all shown within a specified time period. The horizontal lines on the sides show the opening and closing prices.

charts

LINE Charts

This chart is great for Forex beginners as the line connects one closing price to the next to show the general price movement of a currency pair.

 

Following the line going up or down it makes patterns easy to identify and the market clearer to read.

BEFORE YOU FOREX

video

STICK TO THE RULES

Never trade emotionally. There will be ups and downs; wins and losses. Stick to your plan.

video

HAVE
A PLAN

Set your limit on how much you’re willing to invest (and risk). Know when you’re going to enter the market and when you’re going to leave.

video

SET YOUR
SAFE ZONE

Managing your risk parameters will ultimately help you manage your success.

TUTORIALS

Our video tutorials will help you get to grips with the fundamentals of both MetaTrader 4 & 5.

Latest Resources

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TRAIN UP. TRADE UP

Open an account today and show your money
what you’re made of.

train up trade up

TRAIN UP.
TRADE UP

Open an account today and show
your money what you’re made of.
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