See Also: When is the Best Time to Trade Forex? Now that forex trading is available online, traders can directly access the market from practically anywhere in the world 24 hours a day, five days a week. This means you can easily trade forex at the commuter before you go to work or even from the comfort of your home before you go to bed.

In order to trade forex, you need to use a computer, laptop, or smartphone that's connected to the internet. You also need to install trading software which you can get from the broker that you've registered with. The broker would give you access to the market through the trading software. Therefore, the first step of forex trading is to sign up with a certain broker , then install the trading software that the broker supports.

If you want to trade forex but are still hesitant to invest with real money, you can simply open a demo account. Almost all brokers offer a free demo account in their service, so you can use this opportunity to practice forex trading without spending any money. To expand your skills further, you can also search for free learning materials on the internet. Forex trading is basically the act of buying and selling foreign currencies, so every transaction must involve two different currencies.

The common rule is to put the stronger currency upfront. Currently, there are eight major currencies that are commonly traded in the forex market, namely:. Every USD pair is called the major pair , while the combination of any major currency that excludes the US dollar forms a cross-currency pair.

Because it consists of major currencies, cross currency pairs are among the most commonly traded currency pairs in the world. See Also: Best Forex Brokers to Trade Cross Currency Pairs. On the other hand, we also have exotic currency pairs which involve a major currency usually USD and a currency from a developing market. Exotic pairs are rarely used in the forex market due to their high risk, volatility, and trading fees.

Since the currencies are always traded in pairs, it means that when we buy one currency, we automatically sell the other currency. Take a look at the illustration below. Based on the example above, EUR is called the base currency, whereas USD is the quote currency. It means that if we open a buy position, the exchange rate would tell us how much quote currency we need to pay in exchange for the base currency.

To put it simply, if we want to buy 1 EUR, we would have to pay 1. Meanwhile, if we open a sell position, the exchange rate would tell us how much quote currency we'll get by selling one unit of the base currency. In other words, we will get 1. See Also: Currency Pairs Characteristics 1 : The Four Major Pairs. Forex trading is all about understanding the market condition and making a prediction whether the price of a certain currency will rise or fall.

Traders would then execute that prediction by opening a trading position. In forex trading, there are two kinds of positions that you can choose, namely:. Opening a buy position means we want to generate profit from the rising price of a certain currency.

So if you want to buy, you need to make sure that the base currency value will increase. The idea is to basically buy at a low price, then close the position at a higher price. In contrast, opening a sell position means we want to generate profit from the falling price of a certain currency. So if you want to sell, you need to make sure that the base currency will decrease in value. The idea is to basically open at a high price, then close the position once the value of the base currency is lower than the entry level.

See Also: How to Spot a Downtrend Before It Happens. With that being said, forex traders can actually make a profit if they're in the right position to catch the rise or fall of a currency pair. Have you ever gone to a money changer to exchange foreign currencies?

Then you must be familiar with the term "buying rate" and "selling rate". The same concept is also used in forex trading, but the terms used are "bid" and "ask". The bid price is usually lower than the ask price. To fully understand them, let's look at the example that we used before.

The bid price is the price that a forex broker is willing to buy the base currency and sell the quote currency for. This is the price that we use when we want to sell a currency pair. In contrast, the ask price is the price that a forex broker is willing to sell the base currency and buy the quote currency for.

So, referring to the example above, we have the option to sell Euro at 1. More importantly, the difference between the bid and ask prices is called a spread. This is typically given as the fee that traders pay to a broker in return for providing access to the market and the trading platform.

See Also: 6 Reasons Why MetaTrader is a Leading Platform. A pip stands for "percentage in points" and represents the smallest price change. We can also say that pip is a unit of measurement that shows the price changes between two different currencies. In forex trading, pips typically represent the fourth number after the decimal point 0.

However, some pairs like Japanese yen pairs only use two decimal points. Along with the technological development in the finance sector, more brokers are starting to provide trading services that could monitor the prices to even smaller fractions. Therefore, some brokers no longer use two or four-digit pricing but move on to the five-digit pricing or three-digit in the case of JPY pairs. This is called "fractional pips", "pipettes", or "points".

So, how to calculate profit with pips? Since exchange rates differ for each currency, then we should also use different ways to calculate the pip value for each pair. Here's an easy example. It means that a change of 1 pip means a change of 0. So, the dollar value per pip per unit traded:. It may look complicated, but don't worry about it because you won't have to calculate everything by yourself.

Instead, you can let the platform do the work or use online pip calculators to check the price. Apart from regular trading, you can also choose to do margin trading. In a nutshell, margin trading allows traders to open a position with much smaller capital. The idea is that the trader borrows some money from a brokerage company and uses that money to trade. So, you basically put a small amount of money as collateral margin , take out a loan, use the lent money to trade, and then repay the loan at a later date.

Interestingly, there's no need to pay interest for the lent money because forex trading is non-physical. In fact, the broker doesn't have to hand over the physical money to its traders. It would be enough for traders to pay the trading fees in the form of spreads and commissions. See Also: Trading Commission Based on Forex Broker Types.

The following day, the value rises to 1. If we decide to buy Euro, then we'll get 1. Now, 1 Euro certainly sounds worthless as you probably imagined forex traders to generate millions.

But the reason why the profit here is so low is because the trader invested only Euro to begin with. Had the trader invested, let's say, 10, Euro, the gains would have been Euro. That being said, the higher the capital we invest in forex trading, the higher the profit. While this logic certainly makes sense, it's not necessarily favorable for small traders who can only afford to invest in small amounts.

This is where the concept of leverage comes in. In forex trading, leverage refers to the borrowed money offered by the broker to help amplify our trades. Small traders in particular need this kind of "push" to increase their position size and earn a significant profit.

Leverage is usually written in the form of a ratio, like or This shows how much money you'll borrow relative to your initial capital. The profit you'll get is also higher. Meanwhile, the initial Euro that you give to the broker is called the "margin". In other words, margin is the amount of money that you need to put as collateral in exchange for the money you borrow.

Margin is usually shown in the form of a percentage relative to the funds that you use to open a trading position. Based on the margin amount, we can calculate how much our maximum leverage is.

Based on the previous explanation, you may think that margin and leverage are always good for traders. Unfortunately, this isn't entirely correct. I prefer to call it a double-edged sword because while it can help traders generate more profit, it can also make them lose money more quickly.

Online Forex Broker - Traditionally, a broker was always required at the other end of the phone to place an order with. With today's internet technology this is no longer required. By signing up with an online Forex broker, traders are able to do this themselves. Simply, go onto our Forex brokers page and find the right broker that suits you - whether you need a demo or a live trading account.

Forex Training Forex Brokers Forex economic calendar Contact Us About Us. Forex Training Part 1 Forex trading basics Forex brokers software. Forex Training Part 3 Forex technical indicators Forex brokers training.

Forex Training Part 2 Forex market trends and movement Candlestick patterns in Forex. Forex Training Part 4 Money management. Requirements for Forex trading Change the video settings to p HD The Forex training video above is aimed at new traders.

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If you just started your journey as a forex trader, you may be wondering about how to properly trade in order to earn profit. Many people might think that to earn money in forex trading, you simply have to buy at the lowest price possible and then sell it at the highest price possible. Unfortunately, in reality, it's not that simple. To get the hang of forex trading and make constant profits, you need to understand the basic rules of forex trading, which we have summarized below.

The forex market can be divided into four major trading sessions: the Sydney Australia session, the Tokyo Asia session, the London Europe session, and the New York America session.

Due to the different time zones, these sessions will overlap with each other every day, making the forex market opens almost all the time. See Also: When is the Best Time to Trade Forex? Now that forex trading is available online, traders can directly access the market from practically anywhere in the world 24 hours a day, five days a week. This means you can easily trade forex at the commuter before you go to work or even from the comfort of your home before you go to bed.

In order to trade forex, you need to use a computer, laptop, or smartphone that's connected to the internet. You also need to install trading software which you can get from the broker that you've registered with. The broker would give you access to the market through the trading software.

Therefore, the first step of forex trading is to sign up with a certain broker , then install the trading software that the broker supports. If you want to trade forex but are still hesitant to invest with real money, you can simply open a demo account. Almost all brokers offer a free demo account in their service, so you can use this opportunity to practice forex trading without spending any money.

To expand your skills further, you can also search for free learning materials on the internet. Forex trading is basically the act of buying and selling foreign currencies, so every transaction must involve two different currencies. The common rule is to put the stronger currency upfront. Currently, there are eight major currencies that are commonly traded in the forex market, namely:.

Every USD pair is called the major pair , while the combination of any major currency that excludes the US dollar forms a cross-currency pair.

Because it consists of major currencies, cross currency pairs are among the most commonly traded currency pairs in the world. See Also: Best Forex Brokers to Trade Cross Currency Pairs. On the other hand, we also have exotic currency pairs which involve a major currency usually USD and a currency from a developing market. Exotic pairs are rarely used in the forex market due to their high risk, volatility, and trading fees.

Since the currencies are always traded in pairs, it means that when we buy one currency, we automatically sell the other currency. Take a look at the illustration below. Based on the example above, EUR is called the base currency, whereas USD is the quote currency. It means that if we open a buy position, the exchange rate would tell us how much quote currency we need to pay in exchange for the base currency. To put it simply, if we want to buy 1 EUR, we would have to pay 1.

Meanwhile, if we open a sell position, the exchange rate would tell us how much quote currency we'll get by selling one unit of the base currency. In other words, we will get 1. See Also: Currency Pairs Characteristics 1 : The Four Major Pairs. Forex trading is all about understanding the market condition and making a prediction whether the price of a certain currency will rise or fall. Traders would then execute that prediction by opening a trading position.

In forex trading, there are two kinds of positions that you can choose, namely:. Opening a buy position means we want to generate profit from the rising price of a certain currency. So if you want to buy, you need to make sure that the base currency value will increase. The idea is to basically buy at a low price, then close the position at a higher price. In contrast, opening a sell position means we want to generate profit from the falling price of a certain currency.

So if you want to sell, you need to make sure that the base currency will decrease in value. The idea is to basically open at a high price, then close the position once the value of the base currency is lower than the entry level.

See Also: How to Spot a Downtrend Before It Happens. With that being said, forex traders can actually make a profit if they're in the right position to catch the rise or fall of a currency pair. Have you ever gone to a money changer to exchange foreign currencies? Then you must be familiar with the term "buying rate" and "selling rate". The same concept is also used in forex trading, but the terms used are "bid" and "ask".

The bid price is usually lower than the ask price. To fully understand them, let's look at the example that we used before. The bid price is the price that a forex broker is willing to buy the base currency and sell the quote currency for. This is the price that we use when we want to sell a currency pair. In contrast, the ask price is the price that a forex broker is willing to sell the base currency and buy the quote currency for.

So, referring to the example above, we have the option to sell Euro at 1. More importantly, the difference between the bid and ask prices is called a spread. This is typically given as the fee that traders pay to a broker in return for providing access to the market and the trading platform. See Also: 6 Reasons Why MetaTrader is a Leading Platform.

A pip stands for "percentage in points" and represents the smallest price change. We can also say that pip is a unit of measurement that shows the price changes between two different currencies. In forex trading, pips typically represent the fourth number after the decimal point 0. However, some pairs like Japanese yen pairs only use two decimal points. Along with the technological development in the finance sector, more brokers are starting to provide trading services that could monitor the prices to even smaller fractions.

Therefore, some brokers no longer use two or four-digit pricing but move on to the five-digit pricing or three-digit in the case of JPY pairs.

This is called "fractional pips", "pipettes", or "points". So, how to calculate profit with pips? Since exchange rates differ for each currency, then we should also use different ways to calculate the pip value for each pair.

Here's an easy example. It means that a change of 1 pip means a change of 0. So, the dollar value per pip per unit traded:. It may look complicated, but don't worry about it because you won't have to calculate everything by yourself. Instead, you can let the platform do the work or use online pip calculators to check the price.

Apart from regular trading, you can also choose to do margin trading. In a nutshell, margin trading allows traders to open a position with much smaller capital. The idea is that the trader borrows some money from a brokerage company and uses that money to trade.

So, you basically put a small amount of money as collateral margin , take out a loan, use the lent money to trade, and then repay the loan at a later date. Interestingly, there's no need to pay interest for the lent money because forex trading is non-physical. In fact, the broker doesn't have to hand over the physical money to its traders. It would be enough for traders to pay the trading fees in the form of spreads and commissions.

See Also: Trading Commission Based on Forex Broker Types. The following day, the value rises to 1. If we decide to buy Euro, then we'll get 1. Now, 1 Euro certainly sounds worthless as you probably imagined forex traders to generate millions. But the reason why the profit here is so low is because the trader invested only Euro to begin with. Had the trader invested, let's say, 10, Euro, the gains would have been Euro. That being said, the higher the capital we invest in forex trading, the higher the profit.

While this logic certainly makes sense, it's not necessarily favorable for small traders who can only afford to invest in small amounts. This is where the concept of leverage comes in. In forex trading, leverage refers to the borrowed money offered by the broker to help amplify our trades.

Small traders in particular need this kind of "push" to increase their position size and earn a significant profit. Leverage is usually written in the form of a ratio, like or This shows how much money you'll borrow relative to your initial capital. The profit you'll get is also higher.

Meanwhile, the initial Euro that you give to the broker is called the "margin". In other words, margin is the amount of money that you need to put as collateral in exchange for the money you borrow. Margin is usually shown in the form of a percentage relative to the funds that you use to open a trading position.

Based on the margin amount, we can calculate how much our maximum leverage is. Based on the previous explanation, you may think that margin and leverage are always good for traders.

Unfortunately, this isn't entirely correct. I prefer to call it a double-edged sword because while it can help traders generate more profit, it can also make them lose money more quickly. However, if this didn't happen and the value went even lower, the trader would've lost his money.

So, to lower the risk, it is recommended to use medium leverage of around or

Forex Training Part 3 Forex technical indicators Forex brokers training. Location : Australia, Ireland, United States, United Kingdom, Hungary, Singapore and United States Established : Spread : Fixed Leverage : Have you ever gone to a money changer to exchange foreign currencies? More for You. Currently, there are eight major currencies that are commonly traded in the forex market, namely:.

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