How to learn to trade with forex
Currency prices keep fluctuating against each otherconstantly, offering multiple trading opportunities on a regular basis. This article is a stepwise guide to conduct OTC (over-the-counter) foreign exchange market trading
Choose a currency pair
Decide which currency pair you want to trade. There are plenty of currency pairs to choose from, therefore picking a trading opportunity that’s right for you is crucial.
Certain technical and fundamental research tools can help you acquire spot currency trading opportunities that suit your trading style. It is recommended that you take your time to analyse the amount of price volatility associated with the currency pair you are engaged with, to help manage your risk.
Settle on a specific FX trade type
There are three ways to trade forex ꟷ with City Index Spread Betting, CFD or Forex Trading (each with its particular stake size)
Decide to buy or sell
Once you have picked a stock market, you need to be aware of the current price it is trading at. This can be done by bringing up a trade ticket in the platform, wherein all forex is quoted in terms of one currency versus another. Individual currency pairs have a ‘base’ and ‘quote’ currency, where the base currency is the currency depicted on the left of the currency pair and the quote currency is placed on the right. In simple terms,when trading foreign currencies, you must:
BUY a currency pair that you feel may strengthen against the quote currency, or the quote currency may weaken against the base currency.
SELL a currency pair if you think that the base currency will weaken its value against the quote currency, or the quote currency will strengthen against the former.
Add up orders
An order refers to an instruction to automatically trade at a point in the future when prices have reached a specific level that is predetermined. You can utilise the options stop and limit orders to make sure that you lock in any profits and minimise your risk at the same time. All this when your respective profit or loss risk targets are accomplished.
Monitor and close your trade
Once open, a trade’s profit and loss keep fluctuating with each move in the market price.
Market prices can be tracked, and you can observe unrealised profit or loss update in real-time. Additionally, you can choose to attach orders to open positions and collect new trades or even close existing ones from your computer or app on digital gadgets.
Closing your trade
When you feel ready to close your trade, you simply need to act the opposite of opening trade. On closing the trade, the net open profit and loss margin can be realised and immediately reflected in your account cash balance.
Gain an in-depth understanding of forex trading by applying to a trading course in London.