Forex Trading For Beginners

The day starts when traders wake up in Auckland/Wellington, then moves to Sydney, Singapore, Hong Kong, Tokyo, Frankfurt, London, and finally, New York, before trading starts all over again in New Zealand!

We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We're also a community of traders that support each other on our daily trading journey.

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Remember that the trading limit for each lot includes margin money used for leverage. This means the broker can provide you with capital in a predetermined ratio. For example, they may put up $50 for every $1 you put up for trading, meaning you will only need to use $10 from your funds to trade $500 in currency.

Forex markets are among the most liquid markets in the world. So, they can be less volatile than other markets, such as real estate. The volatility of a particular currency is a function of multiple factors, such as the politics and economics of its country. Therefore, events like economic instability in the form of a payment default or imbalance in trading relationships with another currency can result in significant volatility.

Forex trade regulation depends on the jurisdiction. Countries like the United States have sophisticated infrastructure and markets for forex trades. Forex trades are tightly regulated in the U.S. by the National Futures Association (NFA) and the Commodity Futures Trading Commission (CFTC). However, due to the heavy use of leverage in forex trades, developing countries like India and China have restrictions on the firms and capital to be used in forex trading. Europe is the largest market for forex trades. The Financial Conduct Authority (FCA) monitors and regulates forex trades in the United Kingdom.

Forex trading is the process of speculating on currency price movements, with the aim of making a profit. Many currency conversions on the forex market are for practical use, and not for creating profit. However, traders can speculate on forex market price movements, with the aim of capitalising on correctly forecasting these movements.

Example trades are a useful way to learn the process of forex trading. Our forex trading examples show the opening and closing of a trade position, and how to calculate the accompanied profit associated with the trade.

Forex trading strategies are usually differentiated by timeframe and market-specific variables. Strategies include trading market movements in minutes, or over several days. As a beginner you can test different forex strategies with a forex demo account and measure their relative success rate and suitability. You may also wish to try out and choose your preferred technical indicators for entry and exit points, and blend different aspects from several strategies. Some of the most common forex strategies include:

Forex trading is the process of speculating on currency prices to potentially make a profit. Currencies are traded in pairs, so by exchanging one currency for another, a trader is speculating on whether one currency will rise or fall in value against the other.

The value of a currency pair is influenced by trade flows, economic, political and geopolitical events which affect the supply and demand of forex. This creates daily volatility that may offer a forex trader new opportunities. Online trading platforms provided by global brokers like FXTM mean you can buy and sell currencies from your phone, laptop, tablet or PC.

Most online brokers will offer leverage to individual traders, which allows them to control a large forex position with a small deposit. It is important to remember that profits and losses are magnified when trading with leverage.

You can trade around the clock in different sessions across the globe, as the forex market is not traded through a central exchange like a stock market. This means you can jump on volatility, wherever it happens. High liquidity also enables you to execute your orders quickly and effortlessly.

FXTM offers hundreds of combinations of currency pairs to trade including the majors which are the most popular traded pairs in the forex market. These include the Euro against the US Dollar, the US Dollar against the Japanese Yen and the British Pound against the US Dollar.

On the forex market, trades in currencies are often worth millions, so small bid-ask price differences (i.e. several pips) can soon add up to a significant profit. Of course, such large trading volumes mean a small spread can also equate to significant losses.

While a bar chart is commonly used to identify the contraction and expansion of price ranges, a line chart is the simplest of all charts and mostly used by beginners. It simply shows a line drawn from one closing price to the next.

There are also many forex tools available to traders such as margin calculators, pip calculators, profit calculators, foreign exchange currency converters, economic data calendars and trading signals.

ForexTime Ltd (www.forextime.com/eu) with registration number HE 310361 and registration address at 35, Lamprou Konstantara, FXTM Tower, 4156, Kato Polemidia, Limassol, Cyprus is regulated by the Cyprus Securities and Exchange Commission with CIF license number 185/12.

Exinity Capital East Africa Ltd (www.forextime.com) with registration number PVT-ZQU6JE7 and registration address at West End Towers, Waiyaki Way, 6th Floor , P.O. Box 1896-00606, Nairobi, Republic of Kenya is regulated by the Capital Markets Authority of the Republic of Kenya with a Non-Dealing Online Foreign Exchange Broker with license number 135.

Exinity UK Limited (www.forextime.com/uk) with registration number 10599136 and registration address at 1 st. Katharine's Way London, England, E1W 1UN, UK is authorised and regulated by the Financial Conduct Authority with license number 777911.

Exinity Limited (www.forextime.com) with registration number C119470 C1/GBL and registration address at 5th Floor, NEX Tower, Rue du Savoir, Cybercity, 72201 Ebene, Republic of Mauritius is regulated by the Financial Services Commission of the Republic of Mauritius with an Investment Dealer License with license number C113012295, licensed by the Financial Sector Conduct Authority (FSCA) of South Africa, with FSP No. 50320 and is a licensed Over the Counter Derivative Provider.

Risk Warning: Online Forex/CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% of retail investor accounts lose money when trading Online Forex/CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. It is the responsibility of the Client to ascertain whether he/she is permitted to use the services of Exinity Capital East Africa Ltd based on the legal requirements in his/her country of residence. Please read FXTM's full Risk Disclosure.

Trading currency in the foreign exchange market (forex) is fairly easy today with three types of accounts designed for retail investors: standard lot, mini lots and micro lots. Beginners can get started with a micro account for as little as $50.

CROSS CURRENCY PAIR: A pair of currencies traded in forex that does not include the U.S. dollar. One foreign currency is traded for another without having to first exchange the currencies into American dollars.

CURRENCY PAIR: The quotation and pricing structure of the currencies traded in the forex market: the value of a currency is determined by its comparison to another currency. The first currency of a currency pair is called the "base currency", and the second currency is called the "quote currency". The currency pair shows how much of the quote currency is needed to purchase one unit of the base currency.

QUOTE CURRENCY: The second currency quoted in a currency pair in forex. In a direct quote, the quote currency is the foreign currency. In an indirect quote, the quote currency is the domestic currency. This is also known as the "secondary currency" or "counter currency".

Now that we've reviewed basic terminology, let's look at some of the differences between trading stocks vs. currencies. In currency trading you are always comparing one currency to another so forex is always quoted in pairs. Sometimes authors of currency research will refer to only one half of the currency pair. For example if an article is referring to the euro (EUR) trading at 1.3332 it's assumed the other currency is the U.S. dollar (USD).

The most common lot size is to trade in increments of 10,000 (mini). A lot size of 10,000 for the EUR/USD is worth $1.00 per lot. If you were trading 3 lots or 30,000, each pip is worth $3 in profit or loss. A full size lot, or standard lot, is 100,000 where each pip is worth $10, and a micro lot size is 1,000, were each pip is worth $0.10.

One of the nice things about trading currencies is there is no commissions. Looking at the quote image above, notice the small number of pips between the two quoted currencies: the difference in prices is 2.5.

This is known as the spread. The spread is how the broker makes their money and acts similar to the bid/ask in stock trading. Not all spreads are created equal. The spread differs between brokers and sometime the time of day can cause volume to be light and the spread to increase at some brokers.

At its simplest, forex trading is similar to the currency exchange you may do while traveling abroad: A trader buys one currency and sells another, and the exchange rate constantly fluctuates based on supply and demand.

A forex trader might buy U.S. dollars (and sell euros), for example, if she believes the dollar will strengthen in value and therefore be able to buy more euros in the future. Meanwhile, an American company with European operations could use the forex market as a hedge in the event the euro weakens, meaning the value of their income earned there falls. e24fc04721