Forex trading is as simple as any other business or job. Just making the right move and managing the hazards and risks, at the right time makes the difference. If you’re a trader or have had the experience of trading on other markets or stocks then forex is a piece of cake for you If you don’t have any information, worry not we have forex trading courses only for you at your expense. It’s very important to manage foreign exchange risks.
Steps of setting up a trading account:
- Find a broker or a brokerage firm.
- Sign up with the broker
- Verify your documents
- Select your trading platform, account type, leverage, and deposit amount.
- Deposit your money in your account. The minimum deposit can be of $10.
- Connect your trading account with your trading platform.
How to open a real trading account with a broker:
- You will go to a broker who will assist you in making your account.
- The first thing would be the signup.
- You will be signed up through a brokerage firm. You have to enter your name, email address, contact number, and password.
- An activation email would be sent to you at your given email address.
- Through that link, you will verify your account through a brokerage firm.
- After the confirmation, you will update your documents by going to my profile and choosing the second icon.
- Then you’ve to make your account LIVE.
- Select account types for example standard, leverage for example 1:300, select your currency for example and save this information.
- Download the MetaTrader 5 app on your phone via play store / iCloud.
- Use the email sent to you in the signup of the account in the brokerage firm to log in to MetaTrader 5 so that both accounts could be connected.
- Make sure to select the “live account” before you log in to MetaTrader 5.
Currency Pairs:
The exchange of currency takes place in pairs as told above, it’s always one currency vs. the other. For example
USD/JPY
EUR/USD etc.
The reason for the currencies to exist in pairs is because of the constant buying and selling of them.
You buy one currency and sell the other one. Now the question that pops up is, how can one know what currency he/she is selling and buying one in return for?
Let’s review of base and quote currency for that.
Base and Quote Currency:
Just like everything, currencies also exist in pairs.
Let us explain the base and quote via an example.
EUR/USD
The one on the left side of the “/” is QUOTE (EUR). The one on the right of the “/” is BASE (USD).
The base currency is the reference element for the exchange rate of the currency pair. It always has a value of one. To make it further simpler for you the one you BUY is at the top while the one you SELL is under.In terms of forex trading,
BUYING= Amount of units you buy of the quote currency = 1 unit base currency.
SELLING = units of the quote currency you get = 1 unit of the base currency.
For example:
EUR/USD
0.98737 EUR=1 USD
To buy 1 USD you have to pay 0.98737 EUR.
USD/YEN
144.1 YEN=1 USD
So to buy 1 USD you have to pay 144.1 YEN.
Trading system:
- Learn how to read charts:
The right way to learn the charts is through price action. Once you understand the charts you will be able to contemplate why the market is going up or down. The factors that are inducing that effect on the market would be clear.
- Trade with a strategy or combinations of strategies
Apply those strategies that are proven to be effective and have been tested, if the time periods get tough you don’t panic and know which strategy would work.
- Choose a solid trading system
Trading isn’t all about strategies and planning instead It’s about having a strong trading system with minimum legal risks to keep it together and help you become a successful trader.
TIPS/TRICKS:
● Buy only if you believe the base currency would appreciate (rise).
● Sell if you know the base currency would depreciate (fall)
Long and Short:
Just like the two sides of the coin, there are always two sides to a market.
There could be two reasons for buying and selling currencies.
●Either you’re on your vacation and want to shop
●Or you want to make money and go on a vacation.
Depending on the situation, if you buy (the currency of the country you’re in) and sell (your national currency) currency just for goods, services, or clothes then let me tell you, you are at a loss. But if you have the base and quote currency saved up and you’re looking for the right time to sell it, then you’ve chosen a LONG POSITION.
.
| POSITION | SHORT | LONG |
| BASE CURRENCY | Sell | buy |
| QUOTE CURRENCY | buy | Sell |
The trader wants the base currency to lose its value so that it could be bought again at a lower price.
It is holding up the currencies to sell so that a profit could be made out of them.
Bid & Ask
Every forex quote has two prices
Bid
Ask
Most of the time the bid is less than the ask.
| BID | ASK |
| The price the trader pays to buy base currency for the exchange of quote currency. | The price that you want to sell your base currency for the exchange of quote currency. |
| The amount you can sell your currency for in the market. | The amount at which you can buy the currency from the market. |
| The buyer tells you his/her price. | You tell the price you want to sell at. |
Spread:
The gap between the bid and ask price is the spread.
Point in percentage
The value that helps to evaluate the profit and loss between two currencies is usually referred to as PIP in trading. Here is an example to further explain bid, ask and spread and pip.
For example
if you exchange EUR/USD for the given prices then; you’ve made an appreciation of 100 pips.
0.96902 EUR = 0.97926 USD
EUR/USD
Bid price: 0.98324
Ask Price: 0.98341
Spread: 0.00017
Pip: 1.7 (move 4 decimal places)
CONCLUSION:
Trading is not as difficult as it seems. We have made it easier for you to understand how to trade and how to open an account in a brokerage firm. It’s all about knowing what to do and the rest falls together.
We are here for you as your finance broker; we will make it easy for you to understand trading and its dilemmas. Register now on our website and get your hands on the live session of our trading courses provided by the best trading mentors.
