Table of Contents
- 1 Free Forex Training & Tutorials – PDF download
- 2 Define your trading schedule.
- 3 Define your own trading style.
- 4 Choose a reliable broker.
- 5 Equip yourself.
- 6 Open your account(s).
- 7 The steps to trade | How to actually open trades.
- 8 Pairs.
- 9 Direction.
- 10 Making profits: How to decide if you will buy or sell a pair.
Free Forex Training & Tutorials – PDF download
In order to be successful in the Forex market, you need 1 of 2 things. 1.) To be a genius investor or 2.) To follow the right people, guides, training and tutorials. As I’m not a genius I learnt through the second method and decided to write this guide to help any aspiring forex traders to get started.
Define your trading schedule.
FX trading (mainly research) takes a considerable amount of your time (and money) in the beginning. You can be a part or full-time trader, depending on your current occupation and knowledge. The Forex market is open 24 hours a day and you can trade (almost) instantly with most online brokers.
Define your own trading style.
Even before you learn to trade, it’s important to set your goals according to your schedule. If you can trade for 5-10 hours a week don’t try to start with a 100% monthly ROI, as your risk is simply too high. Aim for small mini profits and build from there.
Forex trading consists of opening a series of independent trades that can remain open from minutes to months, decide which methods you will choose to target (and learn) as the methods of research and implementation are completely different.
Choose a reliable broker.
Probably my most important piece of advice on this ENTIRE BLOG. A broker (or platform) is going to be your main point of call to the forex market, and can also be the difference between a successful trading career and a broke individual.
If you haven’t done it yet, check out our list of the top 5 forex brokers.
Once you create an account with a broker and deposit you will be able to trade in the forex market using their tools. For this service, the broker will charge a fee, which is a tiny percentage of your funds, based on the amount of capital you use to open a trade. You shouldn’t even consider these fees in your calculations, because they’re so low when compared to the potential profits, than they can be rounded to zero in the long term. An example of competitive broker with low fees is eToro, which charges a variable fee of $0.01 or less daily for a trade of $40.
You should, however, take a look at the monthly growth of your account, with all profits minus collected fees and calculate if your broker is screwing you or not. Find a good broker that provides detailed reports of your monthly profit.
You need a reasonably powerful computer and/or a mobile device with Android or iPhone OS to access the Forex market. Some brokers offer you free software to install on your computer, like Oanda, while others offer you a web-browser-based platform, like eToro. Both of them offer mobile apps too. Mobile devices don’t really need to be powerful, just about any entry level phone will do, but a good, reliable device is suggested.
Open your account(s).
Go to your broker’s website and create an account. It’s a good idea to have your personal and banking documents at hand, which should be sent to the broker for verification purposes (a scan is usually fine). The Forex market is highly regulated by governments, and this protects your account and funds (more about that here).
Make your first deposit to fund your account using your credit card or other accepted means. Brokers usually accept bank wires, Skrill, WebMoney, paypal and other popular payment systems. Make sure to keep your account information, such as username and passwords, in a safe place. After setting up your account, let’s go:
The steps to trade | How to actually open trades.
The Forex market is massive 5 trillion dollars is traded EVERY DAY! That’s just an insane number to process, so before we go into technically opening a trade with you broker, let’s understand what a trade means. A Forex trade is “to use a portion of the funds of your account to purchase a small amount of a foreign currency”. Then, wait for that currency’s price to increase and finally, sell that currency at a higher price (hopefully). The final result is a small profit in your account. After repeating this process a number of times during a period of time, the accumulated profits are potentially higher than any other investing instrument has ever offered, making the Forex market one of the most lucrative business opportunities. But do remember trades can go down just as fast as they went up. So be careful guys!
To make things more interesting, your broker’s technology will provide you access to a large variety of currencies to buy and sell other than the base currency of your account. This means, if your account is in dollars, you will be able to make trades that involve both the euro and the Japanese yen. (We also have a learn forex trading in 30 days pdf guide if interested.)
A pair is expressed as three characters of a currency’s name, involving to currencies separated by a slash. EUR/USD, which is the most traded pair, is the price of the euro related to the US dollar.
All trades consist of buying or selling a specific pair. For example, if you believe next week the euro’s price will increase in relation to the dollar, you should buy the EUR/USD. If you believe the euro’s price will decrease, you should sell the EUR/USD. After a time of waiting for the price to change, you should close the transaction, and the profit will be added to your account. As stated before, you can make trades with virtually any pair; therefore you can buy and sell pairs such as:
EUR/JPY – Euro/Japanese yen
GBP/JPY- Pound Sterling/Japanese Yen
EUR/CHF – Euro/Swiss Franc
This is how pairs will look on your broker’s platform:
Making profits: How to decide if you will buy or sell a pair.
The most crucial aspect of Forex trading, is to make the right choice. To buy or sell. In order to make that decision successfully, you should follow these steps, and remember closing a trade too early is as bad as losing money on a trade! And avoiding a trade you were going to make that ends up going down can be as good as making a profitable trade!
- Manage your capital wisely. Professional traders usually use a small amount, about 1% of their capital per trade. The Forex market is leveraged, which means your broker will automatically lend you funds to increase the potential profits of your trading. Regardless of the leverage your broker offers you, you should use 1% to 2% of your capital to open one single trade, anything more than 5% and you are just gambling not investing! Profits should come by an accumulation of the profit of several trades. Don’t try to make one very profitable trade that involves all your funds, because any little movement against you would consume all your initial deposit.
- Use the correct forecast. The best way to make the right choice before trading is to analyze the economic conditions of the pair: read the news involving both countries, such as their central bank’s policy changes and macroeconomic data releases, but please don’t think this is all you need to do. Research is the number 1 most important task in a Forex trade. Once you learn HOW to analyse the news and predict the future price movement, you’ll be practising what is normally called fundamental analysis. A good way to start is to find an economic calendar using Google, which will show you the daily economic events worldwide with their time, forecast, and final result, for free.
- Learn technical analysis. Effective technical analysis tools are varied, such as Elliott Waves, Fibonacci analysis, Support and resistance, and chart patterns. There are many websites and books available on these subjects, which provide in-depth information on all these analytical tools. A Google search will take you to many websites that explain the use of these tools, but I would suggest investing in a few books.
- Take some time to familiarise yourself with your selected platform before trading. The broker will offer you software that shows you the charts of every pair’s price, plus dozens of technical analysis indicators. The most popular software, offered by many brokers, is Metatrader, which is also compatible with Robots, also referred to as expert advisors or EA, which are pieces of software that automatically generate profits and are a very good idea to make a profit before you even start your learning curve as market analyst.
- Open a few “test” trades – But avoid clicking the final OK button in the last moment. Play around with adding or removing technical indicators from the software’s chart, and predicting the price by fundamental and/or technical analysis. You can even open a demo account and trade with virtual money until you feel your strategy is profitable.
- Record your profits. Sounds like an obvious one, but many people forget to track effectively. Make a monthly report of your profits using your broker’s data. Set short, mid and long term goals and compare you real performance to the goals set, and then correct your trading accordingly.
- Social Trading. It can take years to master fundamental and technical analysis, but to be honest, they’re the only way to make a profit without any external help or information. However, there are a variety of ways to stand on the shoulders of experienced traders and make large profits before you actually learn to trade profitably. A very good way is to automate your trading trough social trading technology. Social trading is technology offered by some brokers such as eToro or Avatrade, which allows you to make large profits by automatically copying to your account the trades of experimented traders. By using social trading, by the time you make your first self-analysed trade you’ll already have a huge amount of accumulated profits.
- Forex signals. After making a profit by using social trading, you should practice opening your own trades. Forex signal providers are companies or softwares that offer you automated or manual ways to receive trade instructions from profitable, reputed experts.
As you can see, Forex trading offers huge potential to motivated investors. To get this guide in PDF format visit: http://www.web2pdfconvert.com/