Step By Step Forex Trading Guide For Beginners
The number of traders and investors who are generating a good sum of money through trading the forex market inspires beginners who are looking for ways to earn make money to follow the same path.
If you are one of the people who want to learn how to trade the forex market, you must remember that the success in trading is not determined by luck.
If you are serious about making money out of trading in the forex market, you must remember that luck is not the thing that matters here.
In this guide, I will explain step by step things you need to understand to succeed.
First, before you start trading and risking your money you must fully comprehend the forex market, everything about forex trading basics and practice what you learn on a free forex charting platform.
What Is Forex Trading And How Does It Work?
10 Reasons Why You Want To Trade Forex
- Trading is one of the most rewarding ways to make money online – we cannot think of any profession as rewarding as trading.
- You are your own boss – you do not have to answer to anyone else and you decide when and why you do what you do.
- There are many different strategies you can use to become a great trader – there is not only one-way to make money on trading.
- It's your choice how many hours per week you need to trade – you can trade either part-time or full-time.
- You can trade from wherever and whenever you want – you are in control.
- You do not need a lot of money to get started – if you want to start trading forex, you can start with as little as $10-$1000 in your trading account with regulated forex brokers.
- You do not have to deal with face-to-face contact and depend on others – your success is on you.
- Low transaction costs – think of how much the transaction cost is when you sell and buy houses; many real estate agents take 5 %, that is $5.000 on a one $100.000 deal. In trading, using a good broker with low transaction cost, you can pay less than $1 per transaction.
- You are instantaneous paid when you convert trades for cash – where else can you make money that fast?
- You can work in your nightwear – no need to dress up if you do not want to.
How To Start Forex Trading From Home?
Okay, now you know what the forex market is and 10 reasons why you want to trade forex...
What's next?
Perhaps, you can't wait to become a forex trader and start making consistent profits.
To start your journey in the forex market, one of the things you must learn is how to do market analysis.
The forex market analysis comes in three types: technical analysis, fundamental analysis, and sentiment analysis. Mostly, traders and investors ask what the best among the three.
I'm a strong believer that you try which one works best for you.
I prefer technical analysis because it fits my personality, but fundamental analysis might fit your personality better so try which analysis method works best for you.
Best Forex Market Analysis Methods
1. Technical Analysis
The theory behind technical analysis is that an individual can determine the potential price movement and current trading conditions through looking at the historical price movements.
To perform this type of analysis you need live forex charts, so try one of these free forex analysis softwares you can use to do technical analysis.
Since the forex market is a 24-hour market, participants can gauge price activity in the movement through the aid of the huge amount of data available.
Hence, this increases the forecast’s statistically significant. This makes it an ideal market for the traders who use charts, indicators, trends, and other technical tools.
Forex trading for dummies - range or trend – one of the biggest goals that technical traders have is to determine whether the given pair will trading sideways, remain range-bound or will trend in a particular direction.
Usually, to determine such characteristics, traders draw support and resistance levels that link historical levels that have stopped price from heading higher or lower.
These levels of resistance and support are utilized by technical traders in order to determine whether the lack or trend or the given trend will continue.
Reading candlestick charts is one of the best methods to use for technical analysis.
2. Fundamental Analysis
Fundamental analysis refers to how you look at the forex market through analyzing social, economic, and political factors that may affect the asset’s supply and demand.
Utilizing supply and demands to predict where the price direction is easy. What makes it hard is analyzing all the factors affecting the supply and demand.
You can also analyze supply and demand by technical analysis analyzing charts.
The concept of fundamental analysis is that, if a nation’s future or current economic stance is good, their currency will likely strengthen.
More foreign investors and businesses will invest in a country with a better economy, which then results in the need to buy the currency of that nation to acquire those assets.
3. Sentiment Analysis
The sentiments analysis focuses on determining and measuring the general psychological state of each and every market participant.
This analysis attempts to determine what percentage of the market participants are bearish or bullish.
After identifying the majority sentiment, the sentiment analyst will usually take up the position on the other side of the assumption that the mass is wrong.
Simply put, sentiment analysis determines how the market is feeling.
Which Is The Best Forex Market Analysis Method?
Each of the three is important. Technical analysis, fundamental analysis, and sentiment analysis work hand-in-hand-in-hand to aid traders to come up with a good forex trade.
When learning to trade forex, I recommend you start with technical analysis.
There are many forex trading for beginners books you can read to accelerate your skills.
All the historical price action are there, all you need is to put those analytical skills to test.
The importance of these three is the significance of the three legs of a three-legged stool. One weak leg can affect the ability of the three-legged stool to carry your weight. Hence, it is important not to overlook any of the three analyses because each one affects your trading.
Forex Market Hours
Forex market hours refers to the hours during which the participants of the forex market are able to exchange, sell, buy and speculate on the currencies.
The FX market is open 24 hours a day except on weekends. But since this market operates in numerous different time zones, you can access it almost any time.
At large, forex market hours depend on when trading is open in every participating country. When one major FX market closes, another one will open.
For example, forex market hours move around the world as this – the trading is available in NY (New York) between 1pm-10pm GMT; then Sydney will come online at 10 pm GM; Tokyo will open at 00:00 am and then closes at 9 am GMT.
To complete the look, at 8:00 am, London opens and then closes at 5:00 pm GMT.
This allows brokers and traders worldwide, with the participation of the major banks from different continents, to trade 24 hours a day.
It's vital to know which the most active forex trading periods are considering the fact that the market is open 24 hours a day.
If you like to trade currency pairs such as GBP/USD, EUR/USD, or USD/CHF, more activity can be expected between 8 am to 12 am when both United States and Europe are active.
Other trading hours you need to be aware are the release times of official economic news as well as government reports.
It is worth finding out about economic indicators that are published in different countries since these correspond with the most active forex trading moments.
Remember that an increased activity indicates bigger opportunities when it comes to currency prices.
For day traders, watch out for the hours between London market’s opening and US market’s closing as these are the most productive hours.
The peak time is when London and US market overlaps between 1 pm GMT to 4 pm GMT.
What we have included here are just some of many things you need to learn about the forex market.
You need to continuously educate yourself to guarantee successful trading.
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I'm a family guy in my late 20's who learned how to trade the markets in a simple yet effective way. During university I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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