Forex or FX is an abbreviation for “Foreign Exchange Rate”, which means trading different foreign currencies against each other. Forex is one of the largest financial markets in the world for trading different currencies. Promotes international trade and investment through foreign exchange transactions. According to the Bank for International Settlements (BIS), the daily turnover of the forex market is estimated at about $6.6 trillion.
There are many actors in the forex market. Some trade for profit, others trade cautiously to avoid trading risks, and many trade to meet their foreign exchange needs to pay their utility bills and goods. The main participants in trading are commercial banks, so currencies are valued according to the banking market, in addition to commercial and central banks and multinational companies, there are risk-loving investors who are always ready to engage in various types of speculation. Among them, we find traditional retail traders and individuals who trade daily/weekly to make the most money. Many of them follow economic and political news, statistical publications and speeches of influential people to decipher the future direction of currency rates. Others rely on technical indicators with little regard for what is happening in the financial world. You can also become a merchant and join the business class.
The forex market is decentralized. In other words, there is no specific geographic location in which investors trade currencies. Forex traders rely on the Internet to find out the prices of different currency pairs from different brokers. Financial centers around the world – London, New York, Tokyo, Hong Kong and Singapore – are centers of trade between a wide range of different types of buyers and sellers. To be able to enter the forex market, you have to go to a reliable forex broker like FBS.
Forex trading is usually done through brokers. Brokers are companies that provide individuals with access to the market where all trading takes place. In other words, the broker offers you a special program that allows you to quote currency conversion rates and place orders for buying and selling currencies with just a few clicks. When you decide to stop trading, the broker closes the trade at the market price and adds a profit to your balance or deducts the amount of your loss. It only takes a few minutes to open an account with the forex broker of your choice to start trading. commercial profession. In return for their services, the merchant pays the broker a commission or spread.
Forex Trading Steps
Unlike most financial markets, the Over-the-Counter (OTC) foreign exchange market has no physical location or central exchange and is traded 24 hours a day through a global network of companies, banks and individuals. This means that the currencies are constantly fluctuating against each other, which provides many trading opportunities.
At FBS, you can speculate on the future direction of currencies by buying or selling depending on whether you think the value of the currency will rise or fall. The video below shows how to trade the EUR/USD currency pair using CFDs.
1. Choose a currency pair
Select the currency pair you want to trade. With over 65 currency pairs to choose from, it is important to choose the right trading opportunity for you.
Fundamental and fundamental research tools from FBS can help you identify currency trading opportunities according to your trading style. We recommend that you take some time to understand the degree of price volatility associated with a currency pair to help manage risk.
2. Choose the type of forex trading
There are several ways to trade forex with FBS, each with a different bet size:
In spread betting, you trade pounds for each point of movement
When trading CFDs, you are trading the amount of CFDs in the base currency (the one on the left). For example, if you are trading GBP/USD, your bet will be in pounds, while in USD/JPY your bet will be in USD.
When trading forex, you are buying a lot of the base currency (the currency on the left).
For example, if you are trading GBP/USD, your bid will be in Egyptian Pounds, while in USD/JPY your bid will be in USD (minimum contract size is 1000).
3. Decide to buy or sell
Once you have identified the market, you will need to know the current price it is trading at, which you can do by bringing a trading card to the platform. All foreign currencies are priced in terms of one currency for another. Each currency pair has a “Base” currency and a “Bid” currency. The base currency is the currency to the left of the currency pair and the currency displayed to the right. Simply put, by trading forex, you can:
Buy a currency pair if you think the base currency will rise against the quote currency or the quote currency will weaken against the base currency.
Your profit will grow with each increase in the exchange rate.
For every point the exchange rate drops below the open level, you incur a net loss.
Sell a currency pair if you think the value of the base currency will decrease against the quote currency, or the quote currency will rise against the base currency.
Your profit will increase with each drop in the exchange rate.
For every grade point above the open level, you will incur a net loss.
4. Add commands
An order is an instruction to automatically trade at some point in the future when prices reach a certain level you previously specified. You can use stop orders to help lock in any gains and mitigate risk once your profit or loss targets are met.
Although not mandatory, due to volatility in the foreign exchange markets, the use and understanding of risk management tools, as well as stop loss orders, is essential.
A stop loss order is an order to close a position at a price below the current market level and, as the name implies, is used to reduce losses. There are two types of stop loss orders – standard and guaranteed.
Once the standard stop loss order is activated, it closes the trade at the best available price. There is a risk that the closing price will differ from the order level if there is a gap in the market prices.
However, a guaranteed stop loss, for which a small premium is charged, ensures that your trades are closed at the stop loss level you set, regardless of any market gaps.
A limit order is an order to close a position at a price better than the current market level and is used to help establish price targets.
Standard stop-loss and limit orders are available and can be executed on a trading ticket when you first place a trade, and you can attach orders to existing open positions.
5. Keep track of your trade and close it
After opening an account, your profit and loss on your trade will now fluctuate with every movement in the market price.
You can track market prices, monitor real-time unrealized profit/loss updates, attach orders to open positions and add new trades or close existing ones from your computer, smartphone or tablet app.
6. Close your trades
When you are ready to close your trade, simply reverse the open trade. Suppose you buy 3 CFDs to open, and sell 3 CFDs to close. When you close a position, your net open profit and loss will be realized and immediately reflected in your cash account balance.
Choose a forex broker
When choosing a broker, pay attention to the company’s reputation, age, and regulation. FBS has been providing quality services to its clients since 2009 and is known worldwide as one of the pioneers in the forex market. Its global success did not solve its main objective – serving customers and fulfilling their needs one by one. FBS Customer Service is ready to help you 24/7. In addition, it is important to know the trading conditions offered by the broker. In particular, compare execution speed, spreads, conversions and commissions. FBS boasts split-second order execution, spreads from 0 pips, 100% deposit bonus, free deposit insurance and many other benefits it offers to its traders. Our goal is to provide you with the best in the forex world!
This tutorial was created to introduce you to the basics of forex trading and explain the basics of currency trading in a simple way. This will be your first step towards becoming a successful forex trader. Please review the following guides to develop your trading skills.