- What is Forex Trading?
- Why Forex Trading is used?
- How to do trade in Forex Market?
What? Why? How?
What is Forex?
Forex means [ "For = Foreign" + "Ex = Exchange" ] Foreign Exchange.
It is also known as Currency Market, Money Market also. In this Market, traders can exchange the currency lots. For Trading in Forex, Forex Brokers provides huge margin money up to 3000% for trading. so that Traders can trade easily. because the Lot Size in the Currency Market is quite large. we have discussed lot sizes in detail here.
Forex Market is a De-Centralised Trading Market. In which group of Banks, Brokers, Financial Institutions trades with help of Currency Exchange Registers. So that there will be a chance of a little currency exchange rate difference in different platforms at the same time. but this is a very nominal difference.
Currency Exchange Rate can be following Types
- Fixed Currency Exchange Rate
- Floating Currency Exchange Rate
- Mixed Currency Exchange Rate
Why Forex Trading is used?
Forex Trading is the essential milestone in International Import-Export currency conversion for businesses and individuals consumers.
For Example, Suppose you are a website developer in India and you have worked for a USA client. This USA client sends you a payment of $6000 US-Dollars($) through his bank situated in the USA. then USA Bank transfer this USD payment to India Local Bank and India Local Bank converts this USD into INR with a currency rate of USDINR.
Thus, Banks are the major players in the Forex Market who performs Trades of Huge Amount of Buy and Sell. Approximately 2500 Big Banks participate in Forex Market on daily basis.
Forex Market performs trades of 06 trillion per day. which is more than the sum of stock market trading of entire worlds.
How to do trade in Forex Market?
- Who Trades in Forex Market?
- Which assets are required for Trading in Forex?
- What are the Basic Terminologies of the Forex Market?
- How to place my first Trade in Forex Market?
- How to Get Profit from Forex Trading?
Who Trades in Forex Market?
- Public and Private Sector Banks - These Banks convert the transaction of their clients in the Forex Market and they also perform Trading on the Basis of "Deep Dip". Banks perform trades with large volumes and they have the power to manipulate the short-term change in the current market trend. So Banks put their trades in small bunches to achieve more profitability.
- Financial Institutions and Forex Brokers - These Companies either Financial Institutions or Forex Brokers also perform Trades for direct profits and hedge their assets. In the case of Forex Brokers, they hedge their position for managing the risk of losses due to margin levels given to their registered Forex Traders.
- Retail Consumer Traders - Common Traders, comes under this category. Retail Consumers trades with the help of Forex Brokers. These Traders perform trades only for making profits from Forex Market. They try to analyze Forex Market using different Trading Strategies, Trading Indicators, Forex News, etc.
Which assets are required for Trading in Forex?
- Money - Yes, Money is the Most Important for Trading. You need at least $100 for Trading in Forex. Because if you Start real Trading below $100, you feel depressed while hitting stop-loss or booking loss in Account. (In case, you want to do practice only you can open a "Cent" or "Micro" Account with your Forex Broker. which requires only a $10 investment.)
- Forex Trading Account - You need a Forex Trading Account for Trading in Forex Market. which can be open easily with any Forex Broker by giving Identity Proof. Forex Broker provides you both Real (For Trading) and Demo(For Practice) Account.
- Computer or Mobile - For Placing Buy or Sell orders in Forex Market, you have to arrange a computer, laptop, or mobile. because you can put your trades in Forex Market using the Software or App named as "MetaTrader" or Official Website or App of your Forex Broker.
- Internet Service - Forex Trading requires a decent Internet Connection Speed. Because Forex Market movement is fast. You may get the nearest Trade price for the desired Order (Buy or Sell) if Internet Speed is Good. Slow Internet Speed makes the loss of Some "PIPS". which make the difference up to $100 profit or loss in large lot sizes.
- Bank Account - You must have a bank account for deposit and withdrawal money into Forex Trading Account. Kindly try to open different Bank Account for Forex Trading because It will be easier to file Income Tax and Legal formalities and your daily work will not affect in case of a bank account freeze by the bank due to a higher amount of transactions.
- Learning Resource - You need some learning resources for Improving your Trading Styles, evaluation of Stop-Losses, etc. It can be Free or Paid. As a Free Option, you can use YouTube, Websites, and Udemy also. For Paid Mentorship, you can use Forex Masters as per your Interest and Budget. It is better to give some money to Trainer rather than Forex Market losing Trades. So You must practice under some Experience Trader who can be your Friend, Family Member, or Mentor (Trading Guru).
What are the basic terminologies of the Forex Market?
- Fuel - Petrol/Diesel
- Wipers, etc.
- ASK - Price available for Buy Order.
- BID - Price Available for Sell Order.
- Spread - Difference of ASK and BID Price.
- Lot Size - Bundle of Currency [1 Standard lot = 100,000 units]
- Stop-Loss (SL) - Price level for Exit from Current Trade with Loss booking.
- Take Profit (TP) - Price level for Exit from Current Trad with Profit booking.
- Bulls - Traders, who want to increase the price by Buying.
- Bears - Traders, who want to decrease the price by Selling.
- Bullish Market - Bulls has dominance in the Current Market.
- Bearish Market - Bears has dominance in the Current Market.
- Trend - Pase of Market in a certain direction.
- Charts - Detail in 2D Canvas for Price changes as per the Time and Date.
- Timeframe - Timeframe is the value at which Chart X-axis (Time) is divided.
- PIP - "Percentage in Point", is the smallest price change in Currency.
- Leverage - Margin percentage/ratio offer by Forex Broker for Trading in Forex Market.
- Support - Price level, which is preventing the further decrement in price.
- Resistance - Price level, which is preventing the further increment in price.
- Line Chart - (Used By Elliott wave Experts Mostly)
- Bar Chart -
- Candlestick Chart - (Recommended to Use)
- Up-Trend - The market is moving in the direction of Increasing Price levels.
- Down-Trend - The market is moving in the direction of Decreasing Price levels.
- Sideways-Trend - The market does not have any clear Trend.
- 1 Minute
- 5 Minute
- 15 Minute
- 1 Hour
- 4 Hour
How to place my first Trade in Forex Market?
- MetaTrader Software (Recommended for Serious Traders)
- MetaTrader App (For Beginners and Experts Traders)
- Web Terminal provided by Forex Broker
- App Platform provided by Forex Broker
- MetaTrader4 (MT4) - released in year 2005 and continues updating. still in use.
- MetaTrader5 (MT5) - released in the year 2010 and most widely used.
- Windows XP/ Windows 7/ Windows 8/ Windows 8.1/ Windows 10
- Display Resolution - 1024 X 768
- Internet Speed - 40kpbs or more
Open Demo Account First for Start Trading in Forex. It is recommended.
- Market Order - Buy or Sell at Current Market price. here we have used this.
- Pending Order - Pending Order, executes only for Buying or Selling if certain price level-triggered as per the Trade defined (Professional Traders mostly use this).
Note:- You must use Stop Loss if you want to become a successful trader.
How to Get Profit from Forex Trading?
- There is No Trading Strategy that can 100% Guaranty for profit-booking. It could be 70% or 90% etc. But Not 100%.
- Experience Traders only Trades with 01 or 02 Currency Pairs as well as Some Precious Metals like XAUUSD and Top Indexes. They do not try to go here and there. Because they believe, if they stuck together with the Same Currency Pair for a long time. they can easily read the reason for the Up and Down Movement of Currency and book some good profits from these moves.
- Experience Traders only Trades with Currency Pairs or Commodities with High Volatility.
- Experience Traders also tries to minimize the "Spread" by choosing the correct Forex Account Type. because It is one-time practice and you can feel the difference in the profit figures.
- Experience Traders only Trades with 01 or 02 Trading Strategies. they don't change the trading strategies frequently if the current strategy is profitable. They only do experiments with Demo Accounts for testing New Trading strategies.
- Experience Traders choose the Optimal Lot Size as per the Equity Balance and Risk Percentage.
- Experience Traders always put stop loss levels in the system. They do not feed the Stop Loss in Mind. Putting the Stop Loss in System helps you in the reduction of depression because you know how much money you could lose in this Trade.
- Experience Traders use Trailing Stop Loss levels for Booking Profits. They constantly shift the Stoploss in the positive direction of Trades. whereas new traders shift the Stop Loss in the negative direction of Trade.
- Experience Traders always try to protect their capital first. Profit-making is always the second priority.
- Experience Traders plots the critical levels on the chart.
- Most of the Experience Traders do not trade in a sideways market. (there are some exceptional trading strategies for example - Bollinger Bands 5 min Scalping with 1, 2, 4 deviations)
- Experienced Trades withdrawal their profits on a regular basis.
- Highly Experience Traders does not Trade on "Technical Indicators". They only Trade by observing Price levels. because "Technical Indicator" is derived from History Price.
⭐ Is Forex Trading Legal in India?
🤠 Is really more than 10 years of trading experience required for trading in Forex?
💥 Do not start Copy Trading
💎 How to set up Stop Loss in Forex Trading?
💍 How to set up Take Profit (TP) in Forex Trading?
🎭 Profit in Demo Account But Loss in Real Forex Account
👓 Can I Become a Successful Forex Trader?
🤑 [Truth] Forex Trading is Pure Gambling
🤔 Is Spread plays a major role in net profit booking in Forex Trading?
🚩 Roadmap for start trading in Forex