Forex Trading For Beginners – Get to know the Forex market » Voice of Nigeria
Forex Trading For Beginners: Forex trading is the buying or selling of different currencies. These currencies are traded in pairs, such as EUR/USD, where one currency’s appreciation or depreciation against another is profitable. or subsequent loss
Forex trading is the process of buying and selling different currencies in order to make a profit. They are dealt with currency pairs (e.g. EUR/USD), where profits or losses are based on the movement of one currency against another.
Get to know the Forex market
Forex is the largest financial market in the world. Trades globally 24 hours a day, 5 days a week. The turnover reached $6.6 trillion in 2019. The major players in this Forex market are banks, corporations as well as retail traders. These players trade currencies that they expect to move in their intended direction in order to make a profit.
Get to know Forex trading
All currencies have a three-letter code. As the example shown below. Getting to know these currency codes is the first step for getting started with currency trading.
- GBP – British pound
- USD – US dollar
- EUR – euro
These currencies are then classified as pairs. along with the prices shown
The most commonly traded currency pairs are known as major currency pairs. All pairs have a USD currency, such as GBP/USD, EUR/USD and USD/JPY.
Minor currency pairs It is a currency pair that contains stable currencies from countries with strong economies but does not include the USD, for example GBP/JPY, EUR/GBP and EUR/CHF.
Exotic currency pairs are pairs made up of one highly popular currency. Paired with less popular currencies such as those of emerging economies, for example USD/RUB, USD/HUF and EUR/TRY.
Is Forex suitable for beginners?
Beginners can start by trading currency pairs with low volatility. together with strategies to limit risks After you understand all the basics. The first step is to choose the currency pair you want to trade. We recommend that you start by trading major currency pairs. Unless you have specialized knowledge or information about other currencies. Sticking to major currency pairs is a good start. Due to its high stability it is easier to analyze. compared to other currency pairs
The next step is to identify the currency that you think will increase or decrease in value against other currencies. Factors that affect the value of currencies include inflation. interest rate national debt level and political stability There are several ways to analyze these data. From watching financial news to following advice from expert traders or analysts.
What are forex quotes?
forex quotes tell you the current price for buying a certain currency. compared to the value of other currencies which will be displayed as a bid/ask price for that currency pair
For example, the price of EUR/USD is 1.17, meaning you need $1.17 (quote currency) to buy 1 euro (base currency). movement of any currency After you buy it will make you profit or loss.
How can we know the spread of a currency pair?
The forex spread is another factor you need to consider. Usually you will always see two prices for a particular currency. These price figures are:
- bid price – This is the price at which you can sell the base currency.
- ask figure – this is the price you pay to buy the base currency.
After subtracting these two numerical values, by taking the numerical value greater than subtracted with a smaller numerical value. You will get the spread of this currency pair. Spreads vary depending on factors such as market conditions and the currency pair you are trading. Usually the major currency pairs have tighter spreads. This makes it a little easier to take profits if the price moves within a narrow range.
If we go back to the EUR/USD example, the bid price is 1.1700 and the ask price is 1.1750. This pair has a spread of 50 pips, which means that the price must move more than 50 pips. to be able to make a profit
What are pips?
In Forex trading, the term “pip” refers to the smallest unit of price movement. It will be the last decimal point of the bid price. It is sometimes referred to by traders as a “point”. If the price of the EUR/USD pair rises from 1.1700 to 1.1701, that is an increase of 1 pips or 1 point.
What is a lot and how do we calculate the risk?
A lot is the specified number of trading units of a particular currency. by trading You can specify how much you want to buy or sell a particular currency in lots. Here are the most common trading volume units:
- Standard lot = 100,000 units
- Mini lots = 10,000 units
- Macro lot = 1000 units
- Nano lots = 100 units
The lot pattern directly affects the risk. The bigger the unit you buy, the more The higher the return and the higher the risk. Also, keep in mind that leverage is involved in Forex trading. This means that you do not have to pay the full value of all the money you buy. But you will pay only part of it. Although the final profit and loss will be based on the full lot you ordered.
before every trade You should determine the risk or the maximum loss you can take per trade It is calculated as a percentage of your trading account balance. And should always take into account the volatility of the currency pair you choose to trade with.
What are the principles of Forex trading?
First, the trader has to choose the currency pair to trade. Then choose whether to speculate on the “buy” side or on the “sell” side, where you choose the buy side. If you think the base currency will increase in value But if you think the base currency will fall in value. choose the selling side
As in the EUR/USD example, you would go “buy” if you think the euro (EUR) will rise against the dollar (USD), and “sell” if you believe that the dollar (EUR) will rise against the dollar (USD). The euro will fall in value. Trading forex is like trading any other financial product. The key is to buy or sell to the right side at the right time.
How to place a Forex order
when you press send command Buy or sell orders will take effect immediately at the price you specify. However, it’s a good idea to use stop and limit orders to ensure you buy and sell at the right time.
Stop order – This is an order type that you use to buy or sell at the price you set. Or better yet, for example, place an order when the price reaches a predetermined point. or below, to sell when the price reaches a predetermined point or higher
limit order – This is an order that specifies the highest or lowest price you want to buy or sell. This is the order you will use when you want to buy at a price higher than the current price. Or do you want to sell at a price lower than the current price?
While limit orders are best used when taking profits, stop orders can be used to limit losses.
Advantages and Considerations of Forex Trading
Forex trading is easy to get started. And with the leverage involved it means you can make big profits. In addition, with the large market size This makes it possible to have high liquidity, especially in major currency pairs. Basic information is easy to find. There is also a wealth of information that you can use to make informed trading decisions.
for which you should consider with the ability to trade easily Causing many people to rush into the market and start trading without being ready. The leverage involved means that traders can suffer huge losses if they trade without enough information. Including not understanding the risks that they are facing
So how to start trading Forex?
The process of signing up or opening a trading account with the forex trading platform and selecting the commodity to trade is very simple. After you fund your trading account. You have to choose the currency pair you are interested in and type of trading. Here are some suggestions for you.
This is a great way to build a community of traders on a particular platform. New members can educate or trade with experts and celebrities in the trading industry. This allows all members to share their knowledge and profits, making social trading the easiest way for beginners to start Forex trading.
diligently seeking knowledge
Understanding how the market works and staying up to date with the news. It is the path to becoming a successful trader. This is why you must keep learning more. the more knowledge you have The more confident you are.
The importance of customer service
A good forex trading platform is simple. But there must be good customer support. This means that if you encounter problems The broker will be able to quickly resolve the problem for you.
Frequently Asked Questions in Forex Trading
What currency pairs should we trade?
for beginners It is best to start by trading on major currency pairs. or familiar currency pairs Or has already analyzed well before trading
Benefits of following professionals and celebrities through social trading
This is how to trade like an expert. or gain knowledge from their trading a simple way In the beginning that helps you feel more at ease. however You should have enough knowledge before you start trading.
Forex trading is for experts only. Or anyone can participate?
It’s not difficult for a beginner to start trading Forex, but it’s important that you understand the basics before you start any trade.
*This article is for informational purposes only. not intended for VOICEOFNIGERIA is not authorized to provide investment advice. NO COMMENTS IN THE MATERIAL SHOULD BE CONSIDERED ADVICE FROM INFINOX OR THE ITS AUTHOR’S CONTENT THAT ANY PARTICULAR INVESTMENT STRATEGIES, TRANSACTIONS OR INVESTMENTS ARE SUITABLE FOR ANY INDIVIDUAL INDIVIDUAL PERSON ONLY.
