Let’s learn trading with IronFX
Starting out in forex trading does not have to be overwhelming and daunting. With the right amount of preparation, dedication and planning, any beginner trader can build a platform for potential success. As a beginner trader, it is vitally important that you commit your time to conducting research and learning about trading before entering the market. The better prepared you are, the more likely you are to succeed in what you aim to achieve. It is essential that you are familiar with the basics, before moving on to the more complex and advanced strategies and techniques.
Advertisement
Start Trading Forex in 5 Easy Steps
For beginners, trading can seem complex and potentially difficult to grasp. To become a successful trader, it is important that you possess a basic understanding of how forex trading works and know what it is you are trading on. Below we have set out 5 simple steps for you to follow before you start trading forex for the first time.
1/ Select a Currency Pair:
- When trading forex, you are exchanging the value of one currency for another, with currencies always being traded in pairs. The first listed currency of a currency pair is called the base currency, with the second one being the quote currency. If you buy a currency pair, you buy the base currency and indirectly sell the quoted currency. Meanwhile, if you are selling a currency pair, you are selling the base currency and buying the quote currency.
2/ Develop a Strategy:
- Every single forex trader who enters the market is going to have to put in place some form of trading strategy. The currency market can be extremely volatile and ever-changing, so nothing can be left to chance when you are pairing differing currencies together. Incorporate basic elements into your strategy, such as:
– Money and time management.
– Starting small.
– Maintaining consistency.
– Education.
– Timing.
- Choosing the right stock is crucial if you are to make a profit on small price movements. Whether you are a beginner or advanced trader, every trading strategy needs to consider three key components:
– Liquidity – enables you to quickly enter and exit trades at an attractive and stable price.
– Volatility – tells you the potential profit range.
– Volume – how many times the stock or asset has been traded within a set time.
3/ Analyse the Market:
- Do your research on the markets before you trade, so you can make rational and informed decisions. There is a wide range of information and resources available online and via your chosen broker. You can speculate on the movements of various currencies by making use of both the technical and fundamental analysis that is accessible to you. You should regularly look at current and historical charts and monitor the daily political and economic news, as this will help to give you an insight into historical patterns and potential future currency movements.
4/ Buy or Sell:
- Trading forex is all about increasing your profits and cutting losses when the market moves the other way. Traders look to make a profit by betting that a currency’s value will either appreciate or depreciate against another currency. It is important to note that, if everything goes as anticipated then you will profit from every increase in the exchange price. However, you must be aware that you will incur a loss when the opposite is the case and there is a drop in the exchange price.
5/ Orders:
- In the volatile world of forex trading, the understanding of how to use orders to hedge against currency fluctuations is vital. Here, order refers to stop and limit orders, which are methods of automatically trading in the future when prices reach a desired level that is pre-determined by the trader. For instance, you can manage risk and minimise loss by using a stop-loss order. Similarly, you can use a limit order to close a trade at a price that is greater than the current market level.
Join IronFX today and put the tips into practice!
Read Introduction to Technical Analysis
