Skip to main content

How to play the Forex market - Forex for beginners

How to play the Forex market? 


Many people who are looking for an additional or new source of income often literally collide with the Forex currency market. Often deceived by people promoting brokerage accounts they just pay a deposit and ... they all lose!

Such a state of affairs is inevitable if you start trading currencies without any preparation. It is said that 95% of Forex traders lose money. Only the best are in these 5% and they are risk management specialists. If you want to make money in this market you really have to learn a lot.

I do not persuade you to become a trader. I do not want to hurt you if you feel that it can be something you can be good at. I just want to tell you to be careful and pass some basic concepts you need to know if you want to think of Forex at all.

Forex Broker


Broker - When meeting this concept, you have to be aware that it is an agent who executes your buying and selling orders. For example, EUR / USD 1,3123 / 1,3125 means we can buy 1 euro after $ 1,3125, that is, at the selling price.

The difference between these amounts is called Spread. In this case it is 0.0002, which is 2 pips. For each transaction, the Broker pays a fee which may or may not be negotiated depending on the amount of the transaction. Mostly, the fee is charged for each transaction and is included in the price range.

Spread Forex


Spread - this is the difference between the Bid price and the Ask price, which is the price at which we buy and sell the Broker currency. There is also a market liquidity meter - the lower the spread, the higher the liquidity. Spread depending on the currency pair and Broker's overhead may vary widely.

For example, for the EUR / USD currency pair, the fork usually does not exceed 0.0004, but for less liquid currency pairs it can be up to a dozen times larger. USD / PLN pair is an example where you can expect a higher spread.

Forex Pips


Pips - do you remember how we pass the exchange rate for a currency pair? Let's get back to our example - EUR / USD 1.3123 / 1.3125, the spread is 0.0002, that is just 2 posts. So pips is just the smallest unit of price. It comes from the English "price interest point" and is always the smallest unit for a given currency pair.

If our odds increase from 1.3123 to 1.2130 it has just increased by 7 pips and we got 5 pips because we bought at Bid price. In pips we can measure course changes but it does not reflect the value of profit or loss because it does not include the amount and quantity of currency we bought or sold.

Flight, Deposit Forex


Flight, Deposit - Flight is the unit that determines the volume of the order. If we talk about currency pairs, then 1 Flight corresponds to 100,000 units of the base currency (the first one in pairs). Of course, we do not have to immediately trade 1 flight, almost all brokers allow for transactions of 0.1 lot, which is also called mini flight.

More and more brokers also allow you to trade for 0.01 flight.

Thanks to this deposit of $ 1,000 is enough to start the game. Most brokers offer demo accounts, so before you start trading for real money you can thoroughly test everything.

Forex Leverage


Leverage - This is a tool that allows you to buy a currency that goes well beyond your deposit. Because exchange rate fluctuations can be very small, you can control a position of much higher value through leverage.

The standard leverage for mini accounts on brokerage platforms is 200: 1. This means that by depositing in the form of a $ 50 deposit you can buy 10 000 euros. Thanks for example, for example $ 100 you can open a position for 20 000 euros. Then the odds of even a few pips gain you a profit.

If you did not leverage you would have to turn a huge capital to make a real difference in the odds. Remember that the larger the lever, the more you lose in the event of a lost transaction.

The above concepts are an absolute minimum that will allow you to understand more advanced publications. Before you invest real money you need to know the subject well and try out different demo platforms. Often, the process of learning the currency trading takes several years before profitable and safe transactions begin.

There are also sites like Zulutrade that allow you to set up an account and select some professional players whose real-time transactions will be made in your account. Thanks to this, you can earn on Forex without having experience, but here also be careful. Such services also allow you to set up a demo account and see if we can match signal providers to bring us steady and stable returns.

Comments

Popular posts from this blog

Forex binary options

Forex binary options - what are binary options and how can they be monetized?
Binary options are a seemingly very complicated name especially if we indicate that binary options are also called by some exotic options. Why? Investing in binary options is very easy, but technically, the binary option calculation process is very complex and hence the "exotic" of binary options. But let's start from the beginning ...