6 Simple Steps to Start your Forex Trading
With little money and patience, you can trade forex. Know the 6 simple steps to start your forex trading at Tradehall, an online broker.
However, the skill and patience are required to become a successful or profitable trader require limiting losses while identifying good trade setups with a positive risk: reward set up.
So, let us discover the requirements to start forex trading.
Step 1: Connect the device to the internet
Firstly, you will need reliable internet access with minimal service interruptions to trade with an online trader.
Apart from that, you will also need to get a smartphone, tablet, or computer to use the trading platform.
If your internet goes down while you are trading, that can lead to undesirable losses if the market is against you.
Step 2: Find a suitable forex broker online
You can open an account with an online forex broker wherever you live. Just look for what meets your needs as a trader and what will accept you as a client.
At the very least, the broker you choose should keep your money separate and operate in a well-regulated environment.
It must be under the supervision of a reputable regulator, such as the Canada FINTRAC or the US Commodity Futures Trading Commission (CFTC).
Step 3: Open and support a trading account
Once you have decided on a broker, you can deposit money into a trading account.
Most online forex traders accept a variety of account support methods, including bank transfer, bank card payments, or transfers from electronic payment providers such as PayPal.
Step 4: Get a pre-trade platform
You will need to download or get access to the online forex trading platform supported by your trader.
Many forex trading platforms offer a portable trading platform or support a popular third-party platform such as MetaTrader4 and 5 (MT4/5) from any trading platform.
Step 5: Start demo trading
After completing all the previous steps, you can open a demo account to check broker platforms and services before going live.
Demo accounts also help to test trading strategies and trade without risk.
Besides that, you can watch tutorial videos on technical analysis and read technical analysis articles.
More often, you cannot rely on those videos and articles to trade correctly, but they will offer you a variety of views on the market.
Next, you can proceed to an online broker platform of your choice and watch their tutorial videos.
Then, choose any mentor who has a teaching method to your liking, then search for his/her Youtube channel or social media channels.
There are a number of best forex trading courses in the market for your selection.
For instance, watch all the videos on his/her Youtube channels day by day, while looking at the MT5 chart by the side to help with your observation on the market.
Continue demo trade to perfect your trading style. Meanwhile, you can also head to a forex forum to discuss the market with other traders and read their topics.
There are many big forums, such as Babypips, DailyFX, MT5 Forum, etc. with thousands of topics that can offer you valuable information.
Try to find a forex strategy and a money management plan that you find the most logical and can go with what you have learned so far.
Step 6: Go live trade
Select a currency pair
In trading forex, you are exchanging the value of one currency for another. This means you will always buy one currency while selling another at the same time.
Therefore, you will always trade currencies in a pair. Most new traders will start out by trading the most commonly offered pairs of major currencies.
Analyze the market
Research and analysis should be the basics of your trading attempts. Without them, you are trading on emotion. This does not usually end well.
When you first start researching, you will find a whole wealth of forex resources, which may seem overwhelming at first.
Nevertheless, as you research a particular currency pair, you will find valuable resources that stand out from the rest.
You should regularly look at current and historical charts, monitor the news for economic announcements, check indicators and perform other technical and fundamental analyses.
Read the quote
You will notice that two prices are shown for currency pairs. For example, a quote for EUR/USD may look like this.
The first-rate (1.07173) is the price at which you can sell the currency pair. The second rate (1.07191) is the price at which you can buy the currency pair.
The difference between the first and the second rate is called the spread. This is the amount that a dealer charges for making the trade. Spreads will vary among dealers.
Forex Trading Steps
Decide on the specific currency pair you would like to trade. With over 65 currency pairs to choose from, picking a trading opportunity that is right for you is important.
Entering a buy position
The current price for EUR/USD is 1.33820/840. You believe that the euro is bullish, so you decide to enter a buy position for one lot of the EUR/USD.
It is because you are buying, your trade is entered at the price of 1.33840.
Now, let us say that later in the day, you look at your position. The EUR/USD is now at 1.34160 / 180. Your trade has gained 32 pips.
Note: The unit of measurement to express the change in value between two currencies is called a “pip.”
If EUR/USD moves from 1.1050 to 1.1051, that 0.0001 USD rise in value is one pip. A pip is usually the last decimal place of a price quote.
Therefore, you decide to close your position at the current sell price of 1.34160 and make a profit.
Entering a sell position
Say that you believe that the euro is bearish. You decide to enter a sell position for one lot of EUR/USD.
It is because you are selling, your trade is entered at the price of 1.33820.
You look at your position later in the day and discover that the EUR/USD is now at 1.34160/180. Your trade has lost 36 pips.
You decide to close your position at the current buy price of 1.34180 and accept your losses.
Monitor and close your trade
Once open, your trade’s profit and loss will now fluctuate with each move in the market price.
During your trade, use methods like
- Buy/Sell Stop Orders and Buy/Sell Limit Orders to optimize your trading.
You can track market prices, see your unrealized profit/loss update in real-time, attach orders to open positions.
Additionally, you can add new trades or close existing trades from your computer or app on your smartphone and tablet.
Closing your trade
If you are ready to close your trade, you just need to do the reverse to the opening trade. Supposing you bought 3 CFDs (Contract for Differences) to open, you would sell 3 CFDs to close.
By closing the trade, your net open profit and loss will be realized and immediately shown in your account cash balance.
Find out the available currency pairs on a forex trading platform and get ready to enter the fascinating journey of forex trading. Start forex trading with Tradehall.