About Forex Trading Basic Concepts

About Forex Trading Basic Concepts
Learning how to trade in a new market is like learning a new language. It’s easier if you have a good vocabulary and understand some basic concepts and related concepts. So let’s start with the basics of Forex trading before you learn how to use the trading station. For more information on the forex market, download the Forex Guide for FXBY Newbies.

Lets Learn about Forex

Forex is a common abbreviation for “foreign currency”. This usually describes the buying and selling of currencies in the foreign exchange market, especially by investors and speculators. The well-known phrase “buy low and sell high” definitely applies to the foreign exchange trade. The forex trader buys currencies that do not appreciate and sell currencies, just as a stock trader buys shares because he values ​​and sells overvalued stocks.

Since you always compare one currency to another, forex is expressed in a currency pair that may seem confusing at first glance, but actually it is quite simple: For example, EUR / USD at 1.4022 shows how much EUR 1 in USD is expressed.

Talk about a lot
Much is a small trade size available. Several broker accounts have a default size of 1,000 currency units. However, account holders can enter orders of different sizes, provided they are 1,000, such as 2,000, 3,000, 15,000, 112,000, and so on.

What is a PIP?
Pips is the only unit in which winnings and losses are valued for most currency pairs except for pairs between the Japanese and expressed in four decimal places. The fourth place after stopping (one hundred percent of the currency unit) is usually the so-called “pip”. Each point that moves in the quote is 1 movement point. For example, when EUR / USD rises by 1.4022-1.4027, EUR / USD has risen by 5 pips.

As mentioned above, all transactions are performed by borrowing. This allows you to use the lever. With a leverage of 30: 1 you can exchange 1,000 euros in the market by depositing only 5 euros as a deposit. This means that even the smallest currency movements can be exploited by checking in more money in the market than on your account. Beside that we must be aware that  leverage will be increase our losses if we not really understand about it. Forex trading with a leverage effect may not be suitable for all types of investors

The Reason : Why You Should Choose a Forex Trading Business

Why You Should Choose a Forex Trading Business ? Why operate forex?
As we know, Online currency trading has become very popular in the last 10 years because it offers the trader various benefits:

Forex Never Sleeps / 24 Hours Business
Trade continues around the world at different working hours in different parts of the world. Therefore, the major currencies can be processed 24 hours a day at any time. In addition, there is no preparation time and there is something going on at any time of the day or night.

For a Long or Short Time
Unlike many other financial markets, where it may be difficult to short sell, which is “short”, there are no restrictions on the foreign exchange market. If you believe that a coin is chargeable, buy it. If you think it will come down, sell it. This means that there is no foreign exchange market (commonly known as the “bear market”) in the foreign exchange market and the foreign exchange market that you can (or will) lose in any situation.

Low trading costs
Most foreign exchange accounts are characterized by low and competitive commission rates and competitive spreads. You work directly at the prices quoted by our liquidity providers with no hidden mark-up

Liquidity without equality
Since Forex is a market of $ 5,000 billion a day and most of the trade is concentrated in relatively few currencies, many people are constantly behaving. This means that it is very easy to “go in” (ie buy) and “go out” (ie to sell) at any time and for important quantities.

Financial quota available
Given the low liquidity of the foreign exchange market, there are also very large traders who use the financing of 30 to 1 leverage. This allows you to use the smallest movements of the market. Of course, leverage is a double-edged sword that not only increases revenue.

International exhibition
As the world becomes more global, investors seek opportunities wherever possible. If you have a broader interest in investing (or selling) in a country, Forex is a practical way, but avoid the quirks and complications that local laws can have on stocks and budgets that are presented in unfamiliar languages.

Learn About Forex Trading Strategy

Forex Trading Strategy
Forex trading strategies are of two types, namely manual methods and automated trading methods to generate trading signals. In a manual system, a trader must sit in front of a computer screen, look for signals from the trade and interpret whether he must buy or sell. The automated system keeps traders busy developing algorithms that find trading signals and carry out their own transactions. The last system takes human emotions from the equation and can improve performance.

And you are, as Traders must be careful when buying a standard forex trading strategy because it is difficult to verify their track record and many successful trading systems are kept confidential.

How To Create a Forex Trading Strategy
Many forex traders start by developing trading strategies by starting something simple. For example, they might notice that certain currency pairs tend to recover from a certain level of support or resistance. They can then decide to add other elements that increase the accuracy of this trading signal from time to time. For example, they may require prices to return from a certain level of support with a certain percentage or number of pips.

There are various components to an effective forex trading strategy:

Choose a market:
traders must decide which currency pair they are trading and become experts in reading the currency pair.

Positioning:
Traders must determine how much each position should be for the amount of risk taken in each individual transaction.
Access point:
traders must develop rules for entering long or short positions in certain currency pairs.
Principle:
traders must develop rules to tell them when to leave a long or short position and when they have to get out of a losing position.

Trading strategy:
Traders must set rules for buying and selling currency pairs, including choosing the right execution technique.
Traders must consider developing a trading system in programs such as MetaTrader which makes it easy to follow the rules automatically. In addition, this application allows traders to backtest trading strategies to see how they performed in the past.

When We must change strategy?
The forex trading strategy will be great result when traders follow the rules. But like everything else, certain strategies may not always be a one-size approach for all, so what works today doesn’t have to work tomorrow. If the strategy turns out to be unprofitable and does not produce the desired results, traders can consider the following before changing the game plan:

Adjust risk management with a trading style:
if the risk versus reward ratio is not suitable, this might be a reason to change strategy.

Developing market conditions:

trading strategies can depend on certain market trends, so if they change, certain strategies can be obsolete.

This can indicate the need to make adjustments or adjustments.

Understanding:

if you are as trader doesn’t fully understand about the strategy, it will be useless.
If the problem occurs or the trader does not know the rules, the effectiveness of the strategy is nothing.

Tutorial Forex : How to Read a Forex Chart

How to read a Forex Chart
Forex traders have developed several methods to identify the price direction of a currency exchange. Traders who rely on fundamental analysis methods use research to identify how the demand and supply of a currency are influenced by interest rates, economic growth, employment rate, inflation and the risk arising from the political situation . On the contrary, traders rely on technical analysis using graphic methodologies and analytical indicators to identify the correct trends and price levels to enter or exit the market.
That said, however, it is absolutely important that, whatever your specific orientation, you learn to read forex charts …

OPEN A FOREX GRAPH
To begin, we press the “create chart” button located at the top of the Trading Station screen. Having done this we have to choose a currency pair, choose the period and define the date range.

Reading Forex Charts
The period is the time scale interval that is updated on the graph. For example, if the period is 1 day each point on the chart represents a full trading day; if you choose 5 minutes each point contains the data collected in 5 minutes. The date range is the amount of data needed to populate the chart. If, for example, you want to see the trend for a year, you have to choose a year as the interval.

USING CANDLESTICK CHARTS
The type of graphics default is that called “candles”. This type of chart is used very frequently on Forex. A bar (representative element of a chronological interval, can be one minute as a month, or any other time interval), or candle, in a candlestick chart shows the minimum, maximum, open and close in the interval of selected time. The body of the candle stands between the opening and the closing, while the line (called “wick” or “wake”) is between the minimum and the maximum.

If the closure of the spark plug N is greater than the opening of the spark plug N, the body of the spark plug is in blue. If, on the contrary, the closure of the N is smaller than the opening of the N the body will be red. The candles simply make it easier to see if the trading period tends to rise or fall.

ADD AN INDICATOR
Examining a candlestick chart can already give some useful information to make a trading decision, but many traders add to this basic chart one (or more) technical indicators to further support the decision. These tools are useful for the trader, as they help him to track price trends and predict future price trends. The FXCM trading station is equipped with over thirty of the most widespread indicators, already preloaded. There are then over 600 indicators among the most widespread or specialized that can be downloaded via the web. To load one, simply create a chart, then press the right button to choose “add a marker”.

DRAW A TRENDLINE
Prices may have a tendency to grow (called “bullish”), to remain constant (called “lateral”) or to decrease (called “bearish”). A “trendline” helps the trader to visualize the direction in which the trend moves (as a rule the trend lines represent resistances and DYNAMIC supports). Until there is evidence of a break in a trend, the trader can logically expect that the trend will continue. The trend lines are drawn with the “add line” tool. Usually the trend lines are traced by connecting two or more maxima (dynamic resistance line) or two or more minima, (dynamic support line).

 

Forex Trading Robot, Why Trader Need It

Forex Trading Robot Definition
As we know, Forex trading robots are computer programs based on a series of forex trading signals that help determine whether a currency pair must be bought or sold at a certain point in time. Forex robots are designed to eliminate psychological elements from trade, which can be detrimental. While the trading system can be purchased online, traders must be careful when buying it and check EA or Forex Robot before they buy it.

This Forex trading robots as automated software programs that generate trading signals. Most of these robots are made with MetaTrader, using MQL script languages, with which traders can generate trading signals or order and manage transactions.

Forex  robots are available for purchases over the internet, but traders must be careful when buying such trading systems. Companies will often appear at night to sell the trading system with a money back guarantee before disappearing a few weeks later. These companies can take successful transactions or adjust curves to produce good results when re-testing a system, but not a legitimate system for assessing risks and opportunities.

There is no such thing as a “holy cup” for the trading system, because if someone develops a flawless system of producing money, they will not share it with the general public. This is the reason why institutional investors and hedge funds keep their black box trading programs locked.

Develop your own Forex Trading Robot
Forex traders may want to consider developing their own automated trading system rather than taking risks on third-party forex trading robots.

The best way to get started is to open a demo account at a forex trading broker that supports MetaTrader and then start experimenting with developing MQL scripts. After a system is developed that performs well when backed up, traders must implement this program on paper trading to test the effectiveness of the system in the environment. Programs that fail can be adjusted, while successful programs can be staged with increasing amounts of real capital.

In general, many traders try to develop an automated trading system based on existing technical trading rules. Some such systems are more successful than others. An example is a trader who sees zits and has a specific strategy for determining stop-loss and take-profit points. These rules can easily be changed to function automatically instead of being run manually. Traders must monitor this system to ensure that they work as expected and adjust if necessary