2015-07-15 | 5002 Print PDF
As a newbie to the FOREX TRADING MARKET, you probably know nothing about forex trading, but have been hearing a lot about it and how people do make opportunities for themselves utilizing this medium of business. Trading foreign exchange on the currency market, also called trading forex, can be a great alternative source of investment income as its quite similar to what your banks and beaure de change do. The thrilling success in forex trading will make you want to start trading forex, and you must have searched the web for Forex trading tutorial that will help you analyse every step to take. You can make a lot of money without putting too much into your original investment, and predicting the direction of the market can be quite exciting. You can trade forex online in multiple ways. I will be glad walk you through the basis to achieve this dream of becoming a forex trader. But before we begin this how to trade forex online tutorial, we need to quickly brush on some common terms used in forex trading.
base currency: The type of currency you are spending, or getting rid of, is the base currency.
quote currency: The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another. The exchange rate tells you how much you have to spend in quote currency to purchase base currency.
long position: A long position means that you want to buy the base currency and sell the quote currency. For instance, you would want to sell U.S. dollars to purchase British pounds.
short position: A short position means that you want to buy quote currency and sell base currency. In other words, you would sell British pounds and purchase U.S. dollars.
bid price: The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market.
ask price: The ask price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market.
spread: A spread is the difference between the bid price and the ask price.
Make predictions about the economy. If you believe that the U.S. economy will continue to weaken, which is bad for the U.S. dollar, then you probably want to sell dollars in exchange for a currency from a country where the economy is strong. Look at a country's trading position. If a country has many goods that are in demand, then the country will likely export many goods to make money. This trading advantage will boost the country's economy, thus boosting the value of its currency. Consider politics. If a country is having an election, then the country's currency will appreciate if the winner of the election has a fiscally responsible agenda. eg you can take a que when GMB won the election and the Dollar to Naira depreciated Also, if the government of a country loosens regulations for economic growth, the currency is likely to increase in value. Read economic reports. Reports on a country's GDP, for instance, or reports about other economic factors like employment and inflation, will have an effect on the value of the country's currency. This are thresholds you can follow just like following the latest trends in music, fashion etc. You need to be a quick thinker and calculative.
A pip measures the change in value between two currencies. Usually, one pip equals 0.0001 of a change in value. For example, if your EUR/USD trade moves from 1.546 to 1.547, your currency value has increased by ten pips. Multiply the number of pips that your account has changed by the exchange rate. This calculation will tell you how much your account has increased or decreased in value. The next step will be to open a free account with a forex broker that can help you set up a free account to learn the basis from which you can enjoy, there are many forex trading platforms out there but will recommend you to try out instaforex in Nigeria.
Analyze the market. You can try several different methods:
Determine your margin. Depending on your broker's policies, you can invest a little bit of money but still make big trades.
Place your order. You can place different kinds of orders:
Watch your profit and loss. Above all, don't get emotional. The forex market is volatile, and you will see a lot of ups and downs. What matters is to continue doing your research and sticking with your strategy. Eventually you will see profits.
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