This is like a Brief INTRODUCTION TO FOREX TRADING for Newbies
In this post I tried to break things down to the point that even a day old baby will almost understand it(laughs, you know that’s a joke right? But you get my point…
WHAT IS FOREX?
Forex is just a short form for FOREIGNERS EXCHANGE.
It’s the global market that allows the exchange of one currency for another.
If you’ve ever traveled to another country, you usually had to find a currency exchange booth at the airport, and then exchange the money you have in your wallet into the currency of the country you are visiting.
You go up to the counter and notice a screen displaying different exchange rates for different currencies.
You find “Japanese yen” and think to yourself, “WOW! My one dollar is worth 100 yen?! And I have ten dollars! I’m going to be rich!!!”
When you do this, you’ve essentially participated in the forex market!
You’ve exchanged one currency for another.
(Curled from Babypips)
Forex is one of the largest financial markets in the world.
With a total daily Liquidity of about $5.3 Trillion dollars.
In proper layman’s terms forex would mean to BUY OR SELL CURRENCIES GLOBALLY.
The best way to profit would be to buy a country’s currency when it’s about to rise
Sell it when it’s about to fall or decrease in value.
WHO IS A FOREX BROKER?
Forex Brokers are Firms that gives you access to the FOREX MARKET.
They provide you as a retail trader access to the financial market by providing a trading account for you where you can deposit and cash out your capital and profit.
They give traders what we call Leverage.
They also provide support functions to traders.
There are various Brokers in the Forex Market.
We have examples like
LiteForex and so on.
Use google to check out babypips website. It gives a very comprehensive explanation on Forex.
NB:Trading Forex is a skill. You’d need to invest your resources(time and money) just like you do to learn any other skill or trade especially if you want to be very good and skilled at it.
There’s plenty of learning to do!
TRADING TIMES AND TRADING SESSIONS
- SYDNEY SESSION
- TOKYO SESSION
- LONDON SESSION
- FRANKFURT SESSION
- NEW YORK SESSION
The session names are derived from the major cities in which most of the transactions are done.
Sydney Session represents Australia and other countries around that time zone
Tokyo session sometimes called ASIAN Session represents Japan and some of the Asian countries.
SOME TERMINOLOGIES USED IN FOREX
Just Like every Field of study or profession, there are certain terms you would have to get accustomed to.
Likewise in the Field of Forex, you would need to learn about the Terminologies so as to be able to communicate with the Market, Analysts and also with your fellow Traders.
The Buyers are referred to as Bulls
The Sellers are referred to as Bears
A Market is said to be Ranging, if it does not have any particular direction.
It’s neither moving upwards nor downwards.
A Market that has a direction.
It’s either moving upwards or downwards.
So you can hear people say a market is Trending upwards or the market is Trending downwards.
You may also hear people tell you that the Market is just Ranging.
They are indirectly telling you that the the market has not found any direction yet.
To go LONG
This means to BUY.
To go SHORT
This means to SELL.
If a Trader tells you that he wants to Long on a Currency pair,
He means he wants to buy the pair.
While if they tell you that they Short a Currency pair, it means that they Sold the pair.
Soon you would get to see that all what we are doing in Forex is Buying and Selling.
This is a market that is going upwards
This is a market that is going downwards.
When someone tells you that a currency pair or a commodity is Bullish
it’s telling you that its going Up( TIME TO BUY)
One that is Bearish is going down(TIME TO SELL)
WHAT CURRENCIES ARE TRADED IN FOREX?
Indices(eg: NAS 100, GER30 etc)
WHAT DO YOU NEED TO START TRADING FOREX?
Training(forex education) preferably by all means get a coach or enrol in a forex trading academy or institution.
This will cover for trading strategy, training, money management, trading psychology, etc.
Investment fee for training or coaching carried depending on the academy or coach you’re dealing with.
But no matter what, NEVER DELVE IN BLINDLY, YOU MAY NOT SURVIVE THE HIT!
No amount is much. However, the more your capital the more you may make IF you know what you’re doing.
Well you may start out trading with anything from $100-$1,000
But on a more pro level, it requires much more than that.
CAVEAT: You have to be tough but and you must be PATIENT. Don’t expect to turn $100 into $1000 in one month.
That’s greedy, it kills in forex.
A smart phone and internet connection or a laptop,
An app called MT4
(get it on play store)
Plenty of patience and discipline
YOU DON’T HAVE TO QUIT YOUR JOB/BUSINESS to succeed in forex. You can do it as a side business to raise money to support your family, vision, projects etc while you carry on with your job.
Most of the main things about style of trading and how to stay profitable will be handled by the academy or coach you sign up with.
Every trader has their different style and rules so there is no one size fits all.
Hope you understand?
You may ask your QUESTIONS if any.
Hope this helped?
Make a comment if you learnt something useful about the basics of Forex trading and also make a Comment to get a mentor.