Trading on the market is not only an exciting hobby it can turn into a lucrative career. Whether you are interested in dabbling in Forex or are ready to commit to online trading full-time, you don’t want to miss the tips in my beginners’ guide.
Let’s get started.
The foreign exchange market. It is unique in that it is a global and decentralized market that allows traders from all over the world to trade currencies. The foreign exchange then refers to foreign currencies traded against one another in pairs.
Traditional pairs are the USD/CAD as well as EUR/USD. When trading in Forex, pairs matter as you will be speculating on how each currency will fluctuate. Let’s look at an example:
- Base Currency – EUR
- Quote Currency – USD
This is the most traded currency pair on the market as the spread tends to be very favorable. The spread is the difference between the ask and bid price. You make money on the difference in price points or pips.
Similar to any market investment you want to look for the low and high. In Forex, however, you can make money on either end. This is called choosing your position.
- Long – you bought currency with the expectation that it will go up
- Short – sold a currency with the expectation that it will decrease
Remember the currency pairs we talked about earlier? This is where they come in to play. Understanding how your currency works and how they are affected by the market, you can expect a certain pattern. Major pairs make up the majority of the market but you can also trade in exotic pairs as well.
Exotic pairs come from smaller or emerging markets. These are the riskiest form of trade since these markets are extremely volatile. Consider that political unrest and socio-economic factors can drastically affect an economy overnight.
It is advisable to use platforms when beginning Forex. Although platforms are helpful for everyone. The best forex trading platform UK, such as FX Jet, will offer a platform as well as a variety of accounts and payment options.
Like all market trading charts help you review your trade patterns so you can understand where your trade is going and make educated choices based on those charts. The best forex trading platform UK should have the following types of charts available:
The Japanese Candlestick – This chart is very popular and useful since it conveys a lot of information. It displays, high, low, opening, and closing prices. The candlesticks have three points of interest, the open, close, and the wicks. Wicks shows the high to low range. If it closed high, the candlestick will appear filled, empty than it closed low.
Other popular charts are the Bar and Line. The line is by far the simplest and so it is great for beginners. It shows the price movement of a currency pair. The bar chart shows a trading range with the horizontal ticks on the left showing open and close.
To begin forex trading find a qualified company with a broker that can help you learn the ropes about forex. A forex broker similar to a real estate broker acts as an intermediary that can provide various options based on the chart data. The best forex trading platform UK will also offer specialized brokers to help you as you learn how to trade forex.