If you’re thinking about trading the Forex market, there are some things that you need to consider learning before you actually start trading.
#1: Learn the Forex Trading Basics:
Knowing what is an exchange rate, a base currency, a long and a short position, the bid and ask price, the spread, among other terms, is crucial if you want to at least have a shot of succeeding in the Forex market.
#2: Read A Quote:
If you already watched CNBC or Bloomberg, you probably already know how to read a quote even of you never traded any financial instrument before. On a Forex quote, you’ll have the bid price on your left and the asking price on your right.
#3: Decide On The Currency You Want To Trade:
When you’re just starting to trade the Forex market, it’s better if you just trade one currency pair or two max. This will allow you to know everything that is going on in the countries, about the economies, what you can expect, what others expect, etc.
#4: Open Your Online Forex Brokerage Account:
When you head to this step, plan to be here for quite a while. One of the problems of the Forex market is the brokers. There are too many scams out there and it pays for you to be careful. So, instead of choosing the first Forex broker you see, make sure that you do a good research about the different brokers.
#5: Start Trading:
Now it’s finally time to start trading. So, the first thing you need to do is to analyze the market. In order to do this, you can use one of three different strategies:
– Technical Analysis: Implies looking at the past charts and patterns and try to predict what the currency pair is going to do now.
– Fundamental Analysis: Implies looking at the economic fundamentals of a country and base your trading decisions on them.
– Sentimental Analysis: This is the most difficult analysis you can o and it’s usually done best by more experienced traders and investors. This strategy implies that you try to figure out the mood of the market and define it as bullish or bearish.
#6: Place Your Order:
When it’s time to place your order, you need to know that, depending on what you want to achieve, you can choose from 3 different types of orders:
– Market Orders: You’ll simply be telling your broker that you want to buy or sell the currency pair now, at the current market price.
– Limit Orders: You’re telling your broker that you have a specific price for the order to be filled. If the price isn’t reached the order won0t be filled and you’ll retain the money on your trading account.
– Stop Orders: This is when you choose to buy a currency pair above the current market price because you’re anticipating that the price will rise.
Author: Editorial staff of 70trades reviews blog