News is available almost instantly to anyone, and countries report their economic growth and inflation rates at times scheduled many weeks upfront. The only real difference is experience — banks employ experienced traders to trade the market and make them a profit. The good news is that experience is something that anyone can gain, provided you spend enough time on your trading platform learning about the market. There are eight major currencies in the world: the US dollar USD , euro EUR , the British pound GBP , the Swiss franc CHF , the Canadian dollar CAD , the Australian dollar AUD , the New Zealand dollar NZD , and the Japanese yen JPY.

The codes inside the brackets are the abbreviated forms of the currencies. The currencies also have their nicknames: greenback USD , the single currency EUR , sterling GBP , Swissy CHF , Loonie CAD , Aussie AUD , and the Kiwi NZD. Beside the major currencies mentioned above, there are also dozens of other currencies which are not as heavily-traded as the major.

Trading these currencies should be left to the more experienced traders, as they can move a lot in very short periods of time and usually involve higher transaction costs than major currencies. Just like stock traders, Forex traders try to buy a currency cheap and sell it later at a higher price.

US dollar is currently trading at 1. If after a few hours or days the exchange rate reaches 1. The only difference in calculating pips comes with pairs that involve the Japanese yen. In these pairs, one pip is usually the second decimal of the exchange rate. The market is analysed according to two major analytical disciplines: technical analysis and fundamental analysis.

Without proper market analysis, trading would resemble gambling. Technical analysis involves the analysis of price charts and is based on the assumption that history tends to repeat itself. In other words, a certain price pattern that worked great in the past should work equally good in the future. While technical analysis is not a perfect science, it has a proven track record and there are many Forex traders out there that trade solely based on technical analysis. Unlike fundamental analysis, technical analysis provides exact entry and exit points for a trade.

Fundamental analysis involves the measurement of the fair value of a currency. To do so, fundamental analysts measure the economic growth of a country, its inflation rates, unemployment rates, and other macro data which might have an impact on the supply and demand forces on a currency.

Fundamental analysis is usually longer term based compared to technical analysis, as it takes a certain period of time for the fundamental forces to change exchange rates and create a trend. All you need is a computer with internet access, a trading platform installed on your computer, and a brokerage account. You can basically use any modern computer or laptop that has internet access. A trading platform is provided by your broker after you open a brokerage account.

One of the most popular trading platforms is the MetaTrader platform, so make sure that your broker offers that platform as it also involves great online support from millions of traders worldwide. There are two versions of MetaTrader — MetaTrader 4 and MetaTrader 5. In our guide on Forex currency trading for dummies, we explained the most important aspects of Forex trading to give you a jump-start on the market. Currencies are traded in pairs and the exchange rate reflects the price of the first currency base currency expressed in terms of the second currency counter-currency.

If you think that the exchange rate will rise, you should buy the pair; and if you think the exchange rate will fall, you should sell the pair.

To determine whether an exchange rate will rise or fall, Forex traders mostly rely on two analytical disciplines — technical analysis and fundamental analysis. Your broker will also provide you with a trading platform to analyse the market and place trades. Most Forex brokers also offer mobile trading apps which can be downloaded to your smartphone and provide market access anytime, no matter where you are. With some experience, you can become a profitable Forex trader.

Welcome to the world of Forex trading! A new exciting website with services that better suit your location has recently launched!

Home page Getting started Articles about Forex Trading strategies Forex trading for dummies: the complete guide. What is Forex? Suppose you decided to buy this pair at a 1. This would make it so that you would be receiving about ~ Euros in your trading account. If having done so, then you would be looking at a profit of around 95 Euros, due to the differences in pricing.

A different scenario would have been the case if the price dropped, and you would have received less money back, corrected accordingly with the price fall. This is trading at its essence, and everything else is simply something that you will learn on your way as you go. The thing is, although it all mainly comes down to the exchange rate at hand, the rate itself is actually dependent upon two separate factors — the ask prices and bid prices.

Almost invariably, the bid price will be lower than the ask price. Considering this, the bid price will almost always be lower. A question we commonly encounter by a lot of traders is how the brokers themselves make money. After all, building, promoting, and maintaining a Forex website is quite an expensive affair for the brokers, not to mention all the various expenses such as taxes, the compensation fund fees, liquidity reserves, and much more.

All of this is quite a lot of money, and for a broker to procure all of this, quite substantial sources of income are required. This is one of the main reasons as to why there is always a difference between the ask prices and the bid prices, as they represent one of the main avenues of profit for the brokers.

Ask and bid prices are very important to take into account. The example that we brought above was a very simplified one. In reality, during your day-to-day trading, the ask and bid prices will be one of the most important things to consider at all times. While the rate is 1. This is due to the spreads, which is the way the brokers make a profit. The spreads are closely tied to pips, which are also one of the most important things to be aware of for any trader. A pip is what would be the difference between the prices, no matter if they ask prices or bid prices.

Essentially, the pip is a unit of measurement that expresses the changes between two values. In general, a pip is usually the last decimal of a price number. Even after reading this, you are expected to conduct your own research, which should be of much more of a deeper and extensive nature. In fact, this should be the case for pretty much everything Forex-related that you do. Whenever you learn a new concept, make it a habit to research it to as much of a degree as possible.

This way, you will be well on your way to success! Alright, so we now know the basic details about currency trading in Forex, and what are some of its most important components that make up the whole process.

In general, the most common form of Forex trading is considered to be spot trading. Spot trading is a form of trading where you trade on the actual physical assets, rather than simply their difference, as is the case during CFDs Contracts For Difference. In terms of spot trading in the context of currency trading, you would sell your actual, physical currency, and buy the other currency that you want.

This is generally considered to be a more profitable trading method, but of course, it has larger costs and risks associated with it too. As for the CFDs, which also happen to be quite a popular way of trading, things are quite a bit different. You would be going into an agreement with a second party for a set time, and be waiting for the asset going up or down.

Depending on the outcome, you will be paid — or you will be paid — accordingly. If the price goes down and your CFD deprecates, then you will be the one paying. There are many other different forms of trading that resemble the way CFDs work. In case you make the correct call, you would be paid a set amount, as opposed to being paid the difference, as is the case with CFDs.

While CFDs indeed have the potential to bring you a lot of profits, they are quite risky, which is a discouraging factor for many. For people like this, index trading may be an excellent solution. Another popular method of trading are forwards. Of course, this is an oversimplified way of putting it, but the general idea is there. The preceding info, as you may have noticed, was of quite an entry-level natured.

It was merely information that should be known by pretty much all the beginner traders and is not something that would be often discussed by high-level traders that have experience. With that being said, we believe, that there are a couple of important concepts that need to be discussed before one can be considered ready for Forex trading.

One such concept is leverage, which, in many cases, is a matter of great interest for the traders that are interested in making large sums of profit, especially with smaller capital to start with. One thing that many people commonly complain about is the fact that making a huge amount of profit is not possible in Forex without investing huge amounts of capital in the first place. If you are of this opinion, then leverage and margin in Forex trading may be of great interest to you.

Leverage can essentially be looked at as a loan, for lack of better word. This would give you the ability to be in charge of a position that is five times greater in value, thus giving you access to a huge amount of profit. As an example, for the usage of leverage, one has to comply with the relevant margin rules. Additionally, the most important fact to underline here is that using leverage poses some serious risk.

Just like it increases the possible profits that you can make, so does it increase possible losses. This means, that you stand a legitimate risk of losing all the money you possess in your account.

In the past, many people would be going bankrupt, and would actually be indebted to the brokers. This was such a huge issue, that governments and regulators decided to come up with a specific rule that would prevent this from happening. This rule was the negative balance protection rule, which needs to be followed by all the brokers that are regulated by established and respected regulators such as FCA and CySEC. The rule states that the trader can not lose more money than they actually have in their own account.

While it is beloved by thousands upon thousands of traders around the world due to the number of profits that it opens the doors to, it is hated by equally as many people, who, in their beginning stages, may have lost a large amount of money.

Due to this danger, many governments and regulators have now imposed some restrictions on the usage of leverage, and sometimes these restrictions are quite severe and serious. This, of course, will vary heavily depending on the country, as in some areas, there is leverage as high as or even more, while in some countries like Japan, leverage can be as low as Leverage ranges in specific countries will also vary depending on the assets themselves.

Usually, these limits of , , , etc, are the upper limits, reserved only for the least-volatile assets such as major currencies. As the volatility of the asset increases, so does the intensity and strength of the restrictions.

For cryptocurrencies, leverage can go down as low as , which is understandable, considering how volatile they are. One of the main appeals of Forex is its uninterrupted accessibility. Additionally, Many people love Forex precisely because of the fact that they can trade pretty much at any time.

Indeed, Forex is open 24 hours a day, and its only downtime is during the weekends, on Saturday and Sunday. These four zones would be the United States, Japan, The UK, and Australia; and specifically, the cities of New York, Tokyo, London, and Sydney. The hours of the trading day are then split in different time windows, all based on their respective region.

If you have already read the What is Forex? page, then you should know what Forex market is and what it is all about. If not, please read it now. There are five essential aspects of foreign currency market everyone should be aware of:. Forex fundamental analysis is a type of market analysis that is performed based only on actual events and macroeconomic data related to the traded currencies.

Fundamental analysis is used not only in Forex but can be a part of any financial planning or forecasting. The concepts that are part of fundamental analysis of currencies : overnight interest rates , central bank meetings and decisions, any macroeconomic news, global industrial, economic, political, and weather news.

Fundamental analysis is the most natural way of making FX market forecasts. In theory, it alone should work perfectly but in practice, it is often used in pair with technical analysis. Recommended e-books on Forex fundamental analysis:. Forex technical analysis is a type of market analysis that relies only on market data numbers - quotes, charts, simple and complex indicators, volume of supply and demand, past market data, etc.

The main idea behind technical analysis of currencies is the postulate of functional dependence of the future market technical data on the past market technical data. Same as with fundamental analysis, technical analysis is believed to be self-sufficient and you can use it alone to trade Forex successfully. In practice, both analysis methods are used. Recommended e-books on Forex technical analysis are:.

Even if you master every possible method of market analysis and will make very accurate predictions for future Forex market behavior, you will not make any money without a proper money management strategy.

Money management in Forex as well as in other financial markets is a complex set of rules that you develop to fit your own trading style and amount of capital you have for trading.

Money management plays very important role in getting profits out of Forex; do not underestimate it. To get more information on money management, you can read these books:. While learning a lot about market analysis and money management is an obvious and necessary step to become a successful FX trader, you also need to master your emotions to keep your trading performance under strict control of mind and intuition.

Controlling your emotions in Forex trading is often balancing between greed and fear. Almost any known psychological practices and techniques can help currency traders to follow their trading strategies rather than their spontaneous emotions. The problems you will have to deal with while being a professional Forex trader include:. Every Forex trader, like any other professional, needs tools to trade.

One of these tools, which is vital to be in the market, is a Forex broker and specifically for the Internet - an online Forex broker - a company which will provide real-time market information to traders and bring their orders to the Forex market. These are the questions to answer when choosing the right Forex broker:. For the beginning Forex traders, I recommend these four brokerage companies — I believe that they are among the best brokers to start with:. MT4 Forex Brokers MT5 Forex Brokers PayPal Brokers WebMoney Brokers Oil Trading Brokers Gold Trading Brokers Muslim-Friendly Brokers Web Browser Platform Brokers with CFD Trading ECN Brokers Skrill Brokers Neteller Brokers Bitcoin FX Brokers Cryptocurrency Forex Brokers PAMM Forex Brokers Brokers for US Traders Scalping Forex Brokers Low Spread Brokers Zero Spread Brokers Low Deposit Forex Brokers Micro Forex Brokers With Cent Accounts High Leverage Forex Brokers cTrader Forex Brokers NinjaTrader Forex Brokers UK Forex Brokers ASIC Regulated Forex Brokers Swiss Forex Brokers Canadian Forex Brokers Spread Betting Brokers New Forex Brokers Search Brokers Interviews with Brokers Forex Broker Reviews.

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Advertisements: EXNESS: low spreads - just excellent! Please disable AdBlock or whitelist EarnForex. Thank you! EarnForex Education. Forex Basics If you have already read the What is Forex? There are five essential aspects of foreign currency market everyone should be aware of: Fundamental Analysis Technical Analysis Money Management Trading Psychology Forex Brokerage Understanding and mastering these aspects of trading is crucial to get a proper start in Forex.

Fundamental Analysis Forex fundamental analysis is a type of market analysis that is performed based only on actual events and macroeconomic data related to the traded currencies. Recommended e-books on Forex fundamental analysis: Reminiscences of a Stock Operator What Moves the Currency Market?

Technical Analysis Forex technical analysis is a type of market analysis that relies only on market data numbers - quotes, charts, simple and complex indicators, volume of supply and demand, past market data, etc. Recommended e-books on Forex technical analysis are: Chart Patterns and Technical Indicators Candlesticks For Support And Resistance Trend Determination Money Management Even if you master every possible method of market analysis and will make very accurate predictions for future Forex market behavior, you will not make any money without a proper money management strategy.

To get more information on money management, you can read these books: Risk Control and Money Management Money Management A chapter from The Mathematics of Gambling Trading Psychology While learning a lot about market analysis and money management is an obvious and necessary step to become a successful FX trader, you also need to master your emotions to keep your trading performance under strict control of mind and intuition.

The problems you will have to deal with while being a professional Forex trader include: Greed Overtrading Lack of discipline Lack of confidence Blind following others' forecasts These are very professional books on psychology written specifically for financial traders: Calming the Mind So That Body Can Perform 25 Rules of Forex Trading Discipline The Miracle of Discipline Forex Brokerage Every Forex trader, like any other professional, needs tools to trade.

These are the questions to answer when choosing the right Forex broker: Is it a professional company, which you can trust? Does it provide you with stable and adequate data feed of rate quotes? Does it execute your orders fast and accurately? Are its spreads, commission, fees, swaps, and slippage reasonable?

For the beginning Forex traders, I recommend these four brokerage companies — I believe that they are among the best brokers to start with: RoboForex — one of the most popular and innovative brokers with MetaTrader platform and comfortable trading conditions for all kind of traders.

InstaForex — a reputable MetaTrader 4 broker; allows Islamic swap-free accounts and zero-spread accounts. It accepts multiple deposit and withdrawal methods, including WebMoney , Skrill , and Neteller.

It offers two trading platforms: MetaTrader 4 — a current standard in online Forex, and Streamster — a custom newbie-friendly platform with standalone application, web interface, and mobile app.

Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. Forex Brokers should especially offer educational materials to Beginner Traders in order to make sure they have all the information they need before jumping in to the Financial Market head first. Even if you master every possible method of market analysis and will make very accurate predictions for future Forex market behavior, you will not make any money without a proper money management strategy. These are also the market hours when the market is the most liquid, meaning that transaction costs will usually also be lower than when trading outside the NY-London overlap. To get more information on money management, you can read these books:. Forex trading, for all intents and purposes, is pretty much the biggest financial market in the world.

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