Forex trading is one of the most talked about and yet obscure industries. We hear about people making millions with the help of Forex, but being a Forex beginner is not an easy fit as you need to learn everything by yourself. Here is a step-by-step guide on how to trade Forex that will help you!
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1. Open your trading platform
There are several popular Forex trading platforms to choose from and you should always perform some research before settling on one of them. Make sure you allocate plenty of time to investigate the platform of your choice and understand how it works before making any moves.
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2. Choose your currency pair
Forex, or foreign exchange, is the platform for exchanging foreign currencies. Every day, the rates between currencies fluctuate, and that is exactly what allows Forex traders to make money. Currency is traded in pairs, for example, USD/EUR. That is why your second step in becoming a Forex trader is choosing the currency pair based on your experience, knowledge of price volatility, and instinct.
3. Study the trends
After choosing your currency pair, you need to view its chart to see how the pair has been performing lately. You can choose different time frames to see how the currency pair behaves in different situations. As a beginner, you should stick with a currency pair that shows some stability in one direction or another. Most platforms also allow you to use various technical indicators to see and predict the trends more effectively.
4. Place your order
When you are only studying Forex, you will only make mock currency orders, but then you will need to use real money, so make sure your decisions are sensible and based not only on your intuition, but also on your knowledge. Most Forex traders start with purchasing one mini-lot, which is 10,000 units of the selected currency.
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5. Set stop loss and take profit levels
Stop loss and take profit are two of the most important parameters for an aspiring Forex trader. Stop loss allows you to limit your losses if the market doesn’t go in the anticipated direction, and take profit allows you to exit the trade in profit after the market does the ancipated move. Then you need to confirm your order. Make sure you get a confirmation ticket number, as it will be necessary in case there is a dispute between you and the broker after the trade is completed.
6. Wait until the trade is finished
Once you have placed your order and confirmed it, there isn’t much you can do. A good strategy may be to exit Forex completely to avoid the temptation of constantly monitoring the market movements and stressing yourself over the anticipated result. If you’ve set up your trade the right way, the chances of you getting disappointed by its results are minimal.
7. Review the completed trade
As a novice Forex trader, you need to closely watch the results of each trade and analyze what you could have done differently to achieve a different result. Ideally, your trade will end in a profit, but even if it doesn’t, it’s a completely normal situation – not every Forex trade brings profit to the person behind it. That is why you also need to learn to minimize your risks.
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