Introduction to Forex
Here you’ll find all you need to know to start taking advantage of online trading!
|Have you been looking for:|
|A better way to invest your money?|
|New ways to make big money fast?|
|High returns on investment?|
|A dynamic, fascinating market?|
If you answered yes to any of these questions then you’re in the right place: Welcome to the Forex Market!
Forexguru9ja introduction center was created with one purpose: to make you a successful trader. Whether you’re a beginner, a seasoned trader, dabbling at a hobby, or a round the clock trader, we can help you achieve your goals.
The Forex market is by far the largest trading market in the world! Forex traders include banks, commercial firms and people like us – private traders who want to take advantage of these markets for themselves without the hassle and fees of the banks. To begin trading you need to choose a broker, open an account and deposit the amount of money you choose to trade with. You’ll then get access to a trading platform where you can execute all your trading activity.
Every day the forex market offers endless opportunities to make significant profits because of the continuous movements in foreign currencies.
High volatility, liquidity and leverage make this market a golden egg for those who know how to exploit it. If you are a newcomer to trading, feeling clueless, or lack the confidence to start: don’t sweat it. Anyone can trade. That’s the beauty of the Forex market. Its power is in its simplicity. It may seem complicated but it doesn’t need to be. The truth is that Forex can be simple, you just need to invest in understanding how it works, and start using the right tools to help you trade well.
To really take advantage of online trading, you need to use the knowledge and wisdom of other successful traders. This exactly what we do at FX Leaders: we are a group of successful traders, helping new traders like yourself to take advantage of the Forex market. Follow our strategies, get our market insights and alerts, and learn from our knowledge and experience – and you’ll be on your way to success.
A world full of opportunities
The foreign exchange market (Forex) is the largest and most traded market in the world. Banks, commercial companies, brokers and private traders all use it as a short and long term investment channel. Traders use online trading platforms, offered by brokers to execute their trades. In order to start trading all you need to do is open an account and deposit the amount of capital you wish to trade.
What happens in the Forex market is directly related to the economic, financial and political news from around the world. Every day it offers endless opportunities for high profits, as a result of the non-stop movements of the different currencies.
If you have been looking for an efficient and smart way to invest your money instead of letting it rest and lose value you are in the right place. Forex lets you leverage your investments as you wish to. If you’re looking to combine attractive investment opportunities with the most dynamic, interesting market there is today, then look no further!
So what exactly is Forex
Let’s make it simple: imagine you’re flying on a business trip from NY to Munich. After arriving at the terminal, you swap dollars for euros and just like that you execute a Forex transaction. A few days later, on your way back to NY, you exchange the remaining euros for dollars, but at a slightly different rate then the one you got the first time. In your second transaction you executed an opposite action to the first and so closed a circle of buying and selling a pair of currencies.
That’s how Forex trading works! Simple, right?
Forex is the buying and selling of currencies. Forex transactions always include two currencies — one is purchased while the other is sold. For example, in a Forex transaction, euros (EUR) may be purchased while US dollars (USD) are sold; or Great British pounds (GBP) purchased while Japanese yen (JPY) are sold. The two currencies involved in a transaction are considered a currency pair (e.g., EUR/USD or GBP/JPY) and each pair has an exchange rate.
Imagine the 2 currencies as a couple of heavy weight boxers, fighting an endless struggle. When one of them is ahead, the other is always behind, so first one, then the other, weakens and then gets stronger again; and on it goes forever. Each currency is indicated by a 3 letter symbol (the first 2 letters are the country it represents and the third comes from its name). For example, USD indicates the U.S. Dollar. The most traded currencies in the market are the USdollar (USD), the euro (EUR), pound (GBP), yen (JPY) and the Swiss franc (CHF).
The goal of Forex trading is similar to the goal of stock trading: “buy low and sell high.”
Currency exchange rates fluctuate throughout the day, providing traders with the potential to profit from these movements.
Advantages of Forex
|There are many advantages to trading Forex:|
|Markets stay open 24 hours a day, 5 days a week, all over the world!|
|No commissions nor taxes on opening and closing accounts.|
|Be the master of your own fate: execute trades for yourself, when you want.|
|Start trading with almost any amount (25 dollars and up!). The market is accessible to anyone.|
|No force in the world is strong enough to manipulate the Forex market: it’s just too big!|
|Never get stuck in a trade: there are always buyers and sellers so you can always close a trade you’re done with.|
|Limitless profit potential even on small investments! Thanks to leverage it’s possible to make huge returns in Forex.|
Trading sessions and hours
There are 4 global centers for Forex trading, which follows the sun from east to west; from Sydney (Australia) to Tokyo (Japan) then London (Great Britain) and finally New York (USA).
The best times to trade are when markets are frantic. During these times, volatility is higher, trends are stronger and more money is changing hands. We call these hours “Volume Hours”. The busiest session is the European, London session. Money movement is the highest. Busiest trading hours each day are 13:00-15:00 GMT (during these hours both London and NY sessions are open), and 8:00-9:00 GMT (both London and Tokyo sessions are open). Most action takes place when 2 sessions are open simultaneously and in particular London/NY. The closing hours of the London session are usually very busy and characterized by strong and powerful trends.
How to Trade Forex
More than 5 trillion dollars are traded on the foreign exchange market every day! This makes foreign exchange trading, also known as Forex trading, one of the best places to invest and a great place to make money. Large initial investments are not always necessary in order to succeed in Forex trading and nothing compares to the excitement of making a right call and earning a bulk of money on the market. This article will discuss how to trade Forex online.
There are three main components that you must go over in order to learn how to trade Forex:
1. Learn the Basics of Forex Trading
The basis of Forex online trading is selling one type of currency in exchange for another currency. The currency that you are selling is called the ‘Base Currency’ and the currency you are buying is called the ‘Quote Currency’. The amount of quote currency that you will get for the sell depends on the constantly changing exchange rate, and learning to understand the movement of this exchange rate is the key to learning how to trade Forex. Another important term is a ‘Long Position’. A ‘Long Position’ simply means that you are buying the base currency and selling the quote currency. On the contrary, a ‘Short Position’ means that you are selling the base currency and buying the quote currency.
So how do we decide which currency pair to trade?
An endless amount of factors influence the movement of the price of every currency pair. In order to learn how to trade Forex we must understand a least a few of these factors and how they might affect the price.
One of these factors is the state of the country’s economy. When an economy weakens, the value of its currency also weakens in respect to other currencies on the market. Political events may also influence the price change. An upcoming election may increase or decrease the faith of people in the economic future of a certain country therefore influencing the strength of that currency. Follow recent economic reports to get a glimpse into a certain currency pair and make a smart decision based on facts.
*** Note that the total traded is 200%, due to the fact that in the FX market, you trade currency pairs
The final part of the basics is learning how to calculate our earnings and losses. Changes in price are measures using pips. One pip is one ten-thousands of a unit. For example, if the original price was 5.6930 and the price dropped by 10 pips then the new price will be 5.6920. In order to convert the pip change to an actual profit or loss, multiply the pip change by the current exchange rate and you get the increase or decrease in your account’s value
2. Open an Online Account
To trade Forex online you must have an active online account. Many brokerages offer online accounts and joining the right one is very important. Look into several alternatives before making a decision while taking into consideration these key factors:
- Experience– In trading Forex online, experience is very important and choosing a company without the proper experience is a big risk. Consider companies with an operating experience of 5 years or more to be safe.
- Regulation– Most countries provide government supervision and the best brokerages abide to this supervision willingly. Check who oversees the company’s work and make sure that it is an honest and serious body. Some well known supervision bodies are:
France: Autorité des Marchés Financiers (AMF)
Switzerland: Swiss Federal Banking Commission (SFBC)
Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFIN)
United Kingdom: Financial Services Authority (FSA)
Australia: Australian Securities and Investment Commission (ASIC)
United States: National Futures Association (NFA)
- Reviews – A great way to learn what others think about a certain brokerage is to read its reviews. Some companies publish fake reviews for themselves so keep that in mind and try to distinguish between genuine and fake reviews.
- Website– Compare the websites between different brokerages. A professional brokerage will have an active website with no dead end links and will provide a professional look and feel.
Once you have chosen a brokerage which meets your needs, start filling in the paperwork. You can choose between a personal account and a managed account which is an account that is managed by your Forex broker automatically. Check the fees before closing a deal as the fees of transferring money from your bank can be quite high and other fees can cut into your profits.
The final step is to activate your account via a link that your broker will send you by e-mail. Upon completing this step you are ready to start trading Forex online.
3. Trade Forex Online
It’s time to start analyzing the market in preparation for making a first trade. There are three types of analysis that help us make a decision:
- Fundamental analysisis an analysis of the current events and economic developments that may affects the price of a certain currency pair. Learning about current events and about a certain country’s economical status is the key to this type of analysis.
- Technical analysisis an analysis type which requires a good understanding of charts and graphs. The proper charts can usually be received from your broker or via certain Forex trading platforms. Using these charts, we analyze the previous price movements and use them to predict the future price movements.
- Sentimental analysisis a more intuitive type of analysis. It involves guessing, based on intuition what the price will do. Over time, experienced traders acquire the intuition to know which trades are likely to be profitable and which are not.
The amount of money that you can invest in each trade depends on your broker’s protocols but remember, if you invest smart you can invest a small amount of money and still earn big. The general practice is not to invest more than 2 percent of your account on a single trade.
Your Forex broker will also allow you to limit a certain trade to a certain price.
Market orders are orders that are to be carried out immediately, at the current price. Limit orders are orders that instruct your broker to enter a trade only if the price reaches a certain level which you have chosen. Stop orders instruct your broker when to close a position. When the price reaches your stop order price the trade will automatically close.
Remember, trading Forex online is not an exact science and a few ups and downs are to be expected. Make sure to complete a professional analysis of the market, make up a strategy in advanced and stick to it no matter what. If you follow these key instructions you will eventually start to see that your profits outweigh your losses more and more as time goes by.