Many people want to get into Forex trading and make quick profits, but only a few even know how to start. While trading Forex online has now become easier than ever because of powerful platforms like Blueberry Markets, it can still feel incredibly overwhelming to get started with it.
Here is the ultimate step by step guide on how to start Forex trading for beginners. But before you dig into the details, make sure you take a look at our What is Forex trading, to get a better and more in-depth idea about Forex trading as a concept.
In Forex trading, you are basically exchanging the value of one currency with another currency. So you buy one currency while selling another currency, all at the same time. That is why you always trade the currencies in pairs.
The first currency in the currency pair is called the base currency and the second one is called the quote currency. The price of the Forex pair is defined as how much one single unit of the base currency is worth the quote currency.
To keep things in order, most Forex trading platforms split the currency pairs into the following categories:
Major pairs: These include seven currencies which make up for 80 percent of the total global forex trading, including EUR/USD, GBP/USD, USD/JPY, USD/CAD, and AUD/USD, USD/CHF
Minor pairs: These mainly include lesser traded currency pairs with major currencies except for USD, like EUR/CHF, EUR/GBP, and AUD/USD.
Exotics: These include major currencies against currencies from emerging or smaller economies like EUR/CZK, GBP/MXN, and USD/PLN
Regional Pairs: These pairs are often classified by regions like AUD/NZD and EUR/CZK
Most new traders follow the same Forex trading strategies of picking up one or two major pairs to focus on, but you can also start off with minor currencies
The next step to learn how to trade Forex for beginners is to decide how exactly you want to trade currencies. In addition to choosing the currencies, you can also choose a different market for trading every currency pair. There are two main types of Forex markets that you can consider:
The spot market provides you with the live price of the forex pair and allows you to trade on the spot. This is often the best way to start.
The forward market lets you agree to settle your trade on a set date or range of dates in the future
Now that you know which currency you are trading and how you are trading, you need to decide whether you want to buy or sell the currency to trade Forex.
You should buy a currency pair if you think that the base currency will eventually get stronger against the quote currency, or you think the quote currency will eventually go weak against the base currency. You start profiting as the currency pair value rises but you will start incurring losses if the currency pair falls beyond your open level.
You should sell the currency pair that you have if you believe the value of the pair will decrease, as in -- the base currency will go weak against the quote currency or the quote currency will get stronger against the base currency. Since this is a short position you will be taking, profits will increase as the currency pair’s price starts to fall but you will incur losses if the pair price starts to increase above your open level.
Note: Pay attention to spread in Forex trading. Spread is defined as the difference between the buy and sell prices of the Forex currency pair. When you trade Forex, you will see two prices listed for each currency pair -- the first is the sell price or the bid, and the second is the buy price of the ask. Spread is the difference between each two which covers the trading cost.
|AUDCAD||0.93176 ↓||0.93182 ↓||0.6|
|AUDCHF||0.69105 ↓||0.69120 ↓||1.5|
|AUDJPY||82.93200 ↑||82.93600 ↑||0.4|
|AUDNZD||1.07921 ↓||1.07927 ↓||0.6|
|AUDUSD||0.75259 ↑||0.75262 ↑||0.3|
|CADCHF||0.74164 ↓||0.74179 ↓||1.5|
|CADJPY||89.00400 ↑||89.00800 ↑||0.4|
|AUS200||7392.78000 ↑||7393.58000 ↑||8.0|
|EUSTX50||4156.93000 ↓||4158.13000 ↓||12.0|
|FRA40||6672.53000 ↑||6674.23000 ↑||17.0|
|GER30||15714.96000 ↓||15719.26000 ↓||43.0|
|JPN225||29004.71000 ↓||29010.71000 ↓||60.0|
|NDX100||14194.79000 ↑||14195.95000 ↑||11.6|
|XAUUSD||1783.88000 ↑||1783.98000 ↑||1.0|
|XAUUSD||1783.88000 ↑||1783.98000 ↑||1.0|
Risk management is important for Forex trading and it is one of the key elements that you should understand when learning how to start Forex trading.
There are two types of orders that you can use for risk management:
Stop loss order: With this order, you give an instruction to close the trade at a price which is worse than than the current market level in order to minimize the losses that you might incur
Take profit order (Limit order): This is an instruction to close the trade at a price which is better than the current market level in order to lock your price targets.
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