What is Forex Trading?
The foreign currency market is the most liquid market in the world with an average daily trading volume of $5 trillion and a yearly trading volume of around $2409 trillion. Online Forex trading is often the market of choice for those new to trading, for many reasons. Among other advantages, forex is an easier market to trade than others. It is also the one that can be most easily learned and trained.
Are you a complete beginner in forex? Do you want to learn how to get started? Would you like to know everything about forex?
In this guide, we explain everything about forex. We will thus present its operation, the techniques to be used, the risks and advantages. We will also see how to get started in forex via a tutorial and the best brokers.
How to learn to trade forex?
A forex trader who wants to get into forex trading must first get a trading account. This will allow you to place your forex orders. Find a step-by-step tutorial below to take this first step without complications.
How does currency markets work?
The foreign exchange market is in permanent operation, via a rolling system: the first session opens in Australia, then the market continues in Asia, before opening in Europe and then in the United States, so that the globe is covered in totality and that Forex is never inactive.
This is a Bid and Ask market, and currency pairs are traded based on their exchange rate at a time. The most traded currency is still the US dollar, followed by of the Euro and the Yen. A distinction is made between Fixed currencies, the rate of which is defined only by a State (and often indexed to a strong currency such as the Dollar or the Euro) and so-called Floating currencies, which depend only on fluctuations in the exchange market.
Forex is a universe that has its own lexicon, and in the same way that it is important to know the different styles of trading, it is necessary to know what Quote means (the rate of one currency against another), what is leverage or what are the different types of executable Forex orders.
It is an interbank market that has grown significantly with the rise of the Internet, which has opened it up to as many people as possible. However, the Autorité des Marchés Financiers regularly warns potential investors against the abuse of certain unauthorized platforms or against frequent losses, which affect nearly 90% of individual investors. However, Forex is attractive for other reasons that we develop in the rest of this presentation of the trading market.
How does forex trading work?
The structure of the financial market includes several main segments, among which the most famous are the foreign exchange markets and stock markets. Foreign currencies are bought/sold on the foreign exchange market, and shares of large companies are predominantly traded on the stock market. The popularity of these markets is due to the fact that an ordinary person can enter them. With the proper knowledge and free capital, significant profits can be made from these markets, which is what people called traders to use.
The foreign exchange trading market or Forex works on the principle of exchanging one currency for another. In 1944, the Bretton Woods system was born and the governments of different countries agreed that their national currencies could be freely exchanged among themselves. Initially, the exchange rate of these currencies was fixed, but in 1976 a system of floating rates appeared. Due to this, the value of one currency, expressed in another, began to change in a fairly wide range, which opened up the possibility of obtaining speculative profits. Many have realized that it is enough just to buy some currency, wait until it rises in price and sell it at a more favorable rate.
This is how the Forex market was born. Initially, it was attended by only large participants in the form of banks, financial companies and government agencies. Soon, private individuals also gained access here, who were able to buy and sell foreign currencies through intermediary brokers. The convenience of working with a broker is that you can start working in the Forex market with minimum capital. Some brokers allow you to start trading even with borrowed funds.
best forex trading app for iOS and Android: Top 5 trading apps review
How to do Foreign exchange trading?
A forex broker that allows you to trade Forex with An open account from the site. These sites will give you a lot of opportunities for deregulation. The forex market is maintained at five hours a week, except Saturday and Sunday. As a result, you can trade your benefits at any time of these five days. However, trading is not the only currency that is traded on foreign exchange trading.
There are many types of trades here in AR. Like Retail traders, Gerald, silver, etc. However, they are not as popular as many currency traders are famous. Those of you who want to forex trading will be read from the beginning to the end on this website, do the reviews, and then practice a few days later. You can be trading on Forex.
What is a forex broker?
The forex broker acts as an intermediary between you and the banking system. If you don’t know what the term interbank is, it is a term for the networks of banks that trade with each other.
The Forex Broker offers you the best rate available in the banks among several banks offering different quotes.
Open a forex trading account
The process of getting a trading account with a reliable and certified Forex broker like NSFX is a bit like setting up a bank account. It requires paperwork and several steps, such as verifying your identity and phone number. This verification process may take a few days.
Forex brokers offer you demo forex accounts to try out the trading process without risk and to be ready to start trading with your real money. This option is very important for beginners in this field.
How to Choose the Best Forex Trading Strategies: Advice for make profits
Forex brokers offer you leverage
The use of leverage with a forex account differs from one company to another and may range between 10: 1 to 100: 1. If the leverage is 10: 1, this means that for every $ 5 in your account, you will have $ 50 available to trade with.
Financial leverage has advantages and disadvantages as well, by using it you can achieve high profits and you can also increase your loss. The law requires licensed Forex brokers such as NSFX to disclose this. Usually, we provide the trader with the finer details so that everything is clear and fine. Mostly, new traders are very enthusiastic and this enthusiasm makes them start trading quickly and open large pages, which may lead to risks that they may not take. So, you should be careful with every step you take.
Your account balances
When you start trading with the Forex Broker, you will notice that two balances appear in your account. The first balance is your actual balance that you can use to open new deals, but it does not include open trading deals. The second balance is the total balance that you will get if you close all open trades. The second balance is called the net balance.
Spread of supply and demand
When you open a trading account with a certified Forex broker, they pass it on to the market on your behalf. During this stage, he provides you with a price for the currency pair that is slightly different from the price he can get.
You will see it displayed as follows: 1.3605 / EUR / USD 1.3600, the first number is the one that the broker will offer you if you want to sell a specific currency pair, the brother number means what the broker will get if you want to buy the pair. The difference is 0.005, i.e. five pips, which is the broker’s commission. The percentage may change based on market supply and demand.
Learn to be the best and avoid losing
Forex is a landmine in the industry. It is inconsistent, unpredictable, volatile and risky. Know the risks of trading.
At first, currency rates may be unclear to beginners. You may not know how to create a strategy or plan to avoid risky situations and heavy losses.
Forex is a fairly new area for many investors. News that affects the share price may have a drastically different effect on a currency’s price. Also, learn how to price currencies and invest in them in an often-uncomfortable relative environment when a new investor comes to Forex for the first time.
To avoid the lack of experience and knowledge that many have due to the uniqueness of the forex market, NSFX has established departments dedicated to forex education to help new traders reach the level that qualifies them to succeed in the forex market. The daily destination for many traders is the Forex Educational Academy.
Check the reputation of the forex broker
There are Forex brokers who facilitate communication with banks that buy and sell currencies. They have a set of rules that they must follow and certain processes are required.
When choosing a broker to trade with, first verify that it is a reliable broker such as NSFX and make sure of its credibility and that it is a regulated company. This information can be verified through their website and to verify this information provided through its monitoring website.
Understanding Currency Pairs
There are two things to know about currency pairs.
The first is that as the name suggests, they always go in pairs. It makes sense: if you want to get a quote, you have to compare one currency to another currency. which is the current exchange rate between two currencies, such as pounds sterling and Australian dollars.
$ 1 will always be $ 1 for you. But in itself, that has no real value. In the United States, your Euro is worth nothing (you cannot buy anything with it), unless you exchange it for US Dollars: this is its true value. In fact, your Euro is not worth € 1, but is worth $ X in the United States.
It’s the same in forex.
And depending on the moment, with this Euro, you can buy more or less US Dollars (reminder: quotes change constantly).
From this comparison was born the quotation of the Eur / Usd pair.
The second thing to know is that on the forex spot these pairs are always traded in the same order.
For example, the Usd / Jpy pair will always have the US Dollar first and the Yen second. Never the other way around (the Jpy / Usd pair does not exist).
It’s like that. It’s a convention. And all forex investors in the world have access to the same currency pairs as you and therefore the same charts.
In Forex, currencies are always quoted in pairs: a base currency and a quoted currency. The base currency plays a vital role in foreign exchange transactions. It is besides that which determines the rise and fall of Forex prices. Thus, it has a direct impact on the gains and losses of traders. In addition, the buy price of the base currency and its sell price also determine the spread.
The notions of base currency and counter currency come up repeatedly in Forex quotes. They can be confusing especially for inexperienced traders. It is therefore important to understand what a base currency is in a quote and its importance in Forex transactions.
A quote is always made up of two currencies. The base currency is the first one mentioned. Per example, in the USD / JPY quote, the USD is the first currency mentioned, thus, it represents the base currency. In reality, it is the currency that one buys or sells against another called a quoted currency. Its value is always 1. Still taking the example of the USD / JPY pair, if it is quoted 125.3, the USD being the base currency, this means that 1 USD is worth 125.3 Japanese Yen. The value of the base currency is always greater than that of the quoted currency. Due to its stability, but also its status as the quintessential commercial currency, the US dollar is generally quoted as the base currency. So, we have the pairs USD / JPY, USD / CAD and USD / CHF. Instead, it will be listed as the counter currency in EURO / USD, GBP / USD and AUD / USD pairs. Whether the base currency is the US dollar or another currency, it plays a vital role in Forex transactions.
The base currency is very important in Forex transactions. Indeed, for a currency purchase transaction, it is the purchased currency and for a sell transaction, it is the currency that is sold. In addition, it is who determines the quotation. Thus, a quote is up when the base currency appreciates while the quoted currency depreciates. On the other hand, a declining quotation means that the base currency has lost its value. It is therefore understood that the base currency influences in one way or another the gains and losses in Forex.
The real challenge in Forex is to anticipate and predict trends in currency prices. Here again, the base currency is decisive. Since it is this which determines the rise or fall of the quotation, being able to anticipate its evolution is undoubtedly the key to success in Forex. To this end, the trader must make a judicious choice of the currency pair on which he wants to speculate, then using analysis tools, one must forecast the price trends. A good anticipation of the evolution of the base currency is practically a guarantee of gain. Conversely, a bad forecast can be disastrous and lead to losses. It is moreover rightly that it is advised against the novice traders to speculate on the exotic currencies because of their instability which makes difficult the forecast of the evolution of their price. In addition, the base currency is involved in determining the spread.
In Forex, the spread is the difference between the buy price of the base currency and its sell price. For example, if the EURO / USD pair is quoted 1.4035 / 1.4039, the buy price of the euro is 1.4035 and its sell price 1.4039. The spread will therefore be equal to 1.4039-1.4035 or 4 pips. The PIP represents the broker’s commission.
Ultimately, we can remember that the base currency is of capital importance in Forex in the sense that it determines the rise or fall of prices. In addition, it has a definite influence on the gains and losses of traders.
What are the most traded currency pairs on the forex market?
Forex is the market in which currencies are traded, it is an over-the-counter market: there is no central stock exchange or central clearing house body. These are the set of banks where prices are constantly given for the relevant currency pairs. The exchange of major currencies takes place from Sunday evening 11:15 pm to Friday evening 11 pm. The biggest trading centers are in London, New York, Sydney and Tokyo. In principle, more liquid currency pairs are less volatile.
1. EUR / USD
The Euro / US dollar is the most traded currency pair. Almost a quarter of all currency trading takes place in this pair. The euro is the youngest currency among the major pairs. Significant incentives have caused the euro to fall sharply against the dollar in recent years. The provisional low point formed in early 2017 and is around 1.034. In October 2000, the euro even plunged to a level of 0.823 dollars.
2. USD / JPY
In second position, we find the US dollar against the Japanese yen with no less than 18% of total trade on the currency market. For the equity markets, this is the important currency pair to keep an eye on. The Japanese yen is often seen as a safe haven in times of uncertainty. A rising yen is often synonymous with falling in equity markets.
3. GBP / USD
In third place is the pound sterling / US dollar currency pair. It represents 9% of all currency transactions. The GBP / USD pair is often referred to as a “cable” by traders. This name refers to the time when a telegram (cable) was used to transmit the exchange rate between London and New York.
4. AUD / USD
This is the Australian dollar / US dollar pair. In fourth place, we find the Aussie, with a 6.8% volume share. Aussie refers to the AUD / USD pair. This pair is strongly linked to the evolution of commodity prices as many mining companies are located in Australia. Note that Australia is the second-largest gold producer in the world.
5. 5.USD / CAD
The “Loonie” pair completes the top 5. This is the US dollar / Canadian dollar pair. The US dollar remains involved in 87% (of the 200%) of pair trades. This 200% is explained by the fact that a currency pair is made up of two components.
You will notice that the top 6 consists of pairs that are all tied to the US dollar. The US dollar is involved in 87% (of the 200%) of pair transactions. This 200% is explained by the fact that a currency pair is made up of two components.
6. USD / CHF
The pair “Swissy”, the US dollar against the Swiss franc represents about 3% of the total volume. After the dollar, the Swiss franc was the best performing currency in 2015, against the dollar, the franc lost only 0.13% of its value.
7. EUR / JPY
The Euro / Japanese Yen pair is the first pair without the US dollar in the top 10. This currency pair is 3% of the total volume of the currency market. Following strong incentives from the European Central Bank and the Bank of Japan, this currency pair is currently heavily dependent on influences from both central banks.
8. EUR / GBP
In eighth place, we find the euro/pound pair with a volume of 2%. The pound has been getting a lot of talks lately because of the UK’s withdrawal from the European Union. At the moment, the pound sterling is under high pressure for this Brexit.
The Euro / Swiss Franc pair has had a busy year, with a move never seen before in the major currency pairs. In 2011, the Swiss National Bank decided to introduce a minimum exchange rate of CHF 1.20 to limit a sharp rise in the currency. However, the price did not stop approaching this cap of 1.20 CHF and on January 15, 2015, the Swiss National Bank decided to no longer continue to cap this price. The EUR / CHF price fell below 0.80 in a few minutes, which corresponds to a drop of 30%.
10. NZD / USD
With a volume of 1%, the New Zealand dollar / US dollar currency pair completes the top 10.
All of the currency pairs in this top 10 consist of the US dollar or the euro.
The market and your emotions
When you make buy and sell decisions through your trading platform, with your forex broker or binary options brokers, your mind can face countless emotions, this is a very natural thing for you. as a human being, it is important to maintain and control these emotions when exposing yourself in the financial markets. Evacuating stress during trading sessions as well as all other emotions will be a beneficial thing that will improve your trading and your chances of success in the Forex market in the long term. We can distinguish some emotions that are most frequently felt in currency traders, we will list them below and see how it is possible to avoid them in the financial markets.
- The fear
Fear is the common enemy of novice traders, it is a relatively important emotion and which takes place in the minds of traders, it is important to master it in order to keep your trading strategy operational in the market. Fear is one of the first limits you are supposed to face when you start to speculate in the currency market. In order to control this emotion, it is necessary to get used to the market conditions and therefore to practice trading on a demo account beforehand until no fear is felt, once this barrier will be crossed and there will be no more fear on your part, then you can practice trading with real money without being afraid of losing money.
This feeling of desire also takes hold of many forex traders, they start by making some money in the market, and then they want more and more, when the money comes and goes into your trading account your desire. to do even more can occur, it is absolutely essential to control this desire and to moderate oneself under penalty of taking a position in the market in a random, unplanned and risky way, and on the contrary of generating significant financial losses that can harm your survival and that of your portfolio in the Forex market.
It usually occurs after you have positioned yourself in the market and made a bad trade resulting in a loss when you were persuaded to emerge as a winner in the market at the end of it. In this situation, the trader feels robbed and in need of taking revenge on the market, the fact is that it is impossible to control the market, this is also one of the myths about Forex. It turns out that sometimes some losses cannot be avoided, for this reason, it is necessary to accept losing trades and only speculate in the Forex market with the money that you are truly willing to risk.
After having accumulated consecutive streaks of gains, stopping and settling for the gains can be a difficult thing, not having to stop and wanting to continue making money to feel this good being can lead to losses. financial inevitable, the trader must absolutely know how to overcome his excitement and not forget the realities of the market.
Trading robots, a solution to emotions!
Trading in the Forex market is an investment activity that offers the possibility of making quick, regular, and long-term profits, but if a trader gets caught up in his own emotions his experience in the market risks to be relatively short and brings it to ruin. For traders who have trouble controlling their emotions, know that it is possible to make money with forex trading robots, these automated programs that practice trading for you and do not feel any emotion, unlike a human being.
What are the advantages of FOREX trading?
The success that forex has enjoyed over the past few years is not surprising. Indeed, the foreign exchange market has many advantages for traders which makes it very attractive.
· A market that never sleeps
Unlike other financial places, forex is open 24 hours a day, from Sunday evening to Friday evening. For the trader, this means he can trade whenever he wants. With this, it becomes very easy to combine trading activity and professional life.
· A free market
Generally, forex brokers do not charge fees on trading operations. There are also no brokerage fees, custody fees, or account management fees. Brokers are remunerated through the spread, which is the difference between the selling price and the buying price of a currency. Note, however, that some brokers charge commissions on transaction volumes.
· A market free from manipulation
As forex is the largest market in the world with over $ 4 trillion traded daily, it becomes difficult to manipulate. The only economic players capable of influencing are central banks and trading floor traders. It will therefore be necessary to follow these well to know the future trends of forex.
· A market where you win on both rises and falls
The principle of forex is based on investing in the rise or fall of a currency. In other words, since currencies are bought and sold in pairs, you have the option of going on both sides and thus bet on the rise or fall of a currency.
When trading stocks, we see that an analysis can be questioned by a great business leader or the signing of a contract and this directly impacts the stock we are looking at. On the foreign exchange market, there is a precise schedule of announcements likely to cause turmoil in the course of currencies. So easy to avoid unpleasant surprises.
MT4 & MT5 Webtrader Platforms
Still known as MT4, MetaTrader 4 was created in 2005 by MetaQuotes and is a computer trading program highly regarded by CFD, Forex, cryptocurrency and commodity traders.
This free trading platform is used by hundreds of thousands of investors who benefit from having access to stock market prices.
This professional trading software offers its users over 50 Forex indicators, analysis tools and oscillators.
Types of orders
- Sell stop
- Buy stop
- Sell limit
- Buy limit
- Reliable trading platform
- Automatic trading
- Flexible analysis software
- Advanced graphical analysis tools
- Easy to use
MetaTrader 5 or MT5 is a powerful trading platform that allows you to speculate on several types of markets: CFDs, Futures, Futures, Forex, Stock Indices and many more.
The trading software offers nearly 100 quotes charts and more than 80 technical indicators. It also integrates the use of the copy trading function and automatic trading robots.
Types of orders
- Pending orders
- Market orders
- Follower stops
- MQL5 programming language
- Professional graphical analysis
- Mobile device trading
- Flexible trading program
- Copy trading and trading signals
Understanding Forex Charts
Forex chart patterns are price action patterns on charts that have an above average trailing probability in a particular direction. These trading models offer important clues to price action traders who use technical chart analysis in their Forex trading decision process.
What is a chart template?
If the forex market is a jungle, charts are the ultimate leads that lead investors to trading opportunities. When trading financial assets in the forex trading market, profits (or losses) are made from price movements.
Price changes are usually represented using candlesticks, and after a series of periods, candlestick patterns form on a chart, telling the story of the price action of the underlying asset.
Chart models are powerful tools for performing technical analysis because they represent the raw price action and help traders sense the mood and sentiment of the market.
They essentially allow traders to ride the wave of the market and, when properly understood and interpreted, can help select lucrative trading opportunities with minimal risk exposure.
Graphical models provide a reliable way to track price changes in the market. They help traders identify prevailing market conditions (existing trends as well as key support and resistance levels).
Graphical diagrams also help to anticipate possible changes in market conditions and provide an objective means of taking advantage of business opportunities as they arise. Although they provide compelling trading signals, it is important to exercise strict risk management when trading chart patterns as they are not 100% reliable.
Thus, chart pattern trading signals should be traded with definitive price targets and stop-loss orders at all times to limit risk exposure and improve profit opportunities. It is also prudent to combine chart patterns with other analytical techniques, such as technical indicators and candlestick patterns, to qualify the trading signals generated. This will help alleviate the drawbacks of graphical schemes, such as false signals and subjectivity bias. Overall, the advantages of graphical diagrams far outweigh their disadvantages. Since there are many chart patterns that can form in the market, traders should seek to develop and improve their trading knowledge and skills so that they can accurately identify and fully exploit the trading opportunities offered by chart patterns. If properly understood, graphical diagrams have the potential to generate a constant stream of lucrative business opportunities in any market, at all times.