Introduction To Learn Forex Trading
As an introduction this tutorial and this website in general is designed in an easy and well organized format to facilitate and make it easy for beginner traders and those who want learn forex to do so in a manner that will make it easy for them to understand the forex concepts explained and come up with their own trading strategies that are effective when it come to trading the forex trading market.
This tutorial will try to cover an introduction to the forex market and traders can read through to get a basic idea of how to go about trading the FX trading market. Traders can also navigate to the learn forex lessons section to get a list of the learn forex tutorials that are covered on this web site.
The following information shows the various forex topics that are covered on this website on the forex learning section.
Introduction to Forex
These topics covers introduction to forex market by covering a definition of the market basics that traders need to know before starting out in forex.
In this topic the a trader will the basic terms used in the forex market, terms such as currency pairs, currency quotes, base currency, quote currency, lots, pips, spreads, margin, long position, short position, trading platforms & forex charts.
Forex Strategies
In forex traders must come up with a strategy to trade forex with. A strategy is a method or a trading system that has rules set out that the trader will use when trading the FX trading market. The rules will specify when a trader will open a trade, when a trader will close a trade & how much profit a trader wants to make from each trade and at what point they will close their trade if the trade moves in opposite direction.
Traders can find a list of the popular forex trading strategies on the forex trading section of this web site.
Forex Trading Analysis
These topics explain to traders the various methods used to analyze currency market move using indicators and technical analysis studies.
For example some of the popular technical analysis studies in forex are:
Support and Resistance Levels
Some traders also refer to these levels as support & resistance lines. The concepts of support and resistance levels refers to price zones where it's difficult for the price break through and move beyond these levels.
At these levels traders are likely to perceive the price of the currency pair as being cheap or being expensive.
Support
Support prevents the price of an asset from getting pushed downwards. Support levels are therefore regarded as the floor because these price levels prevent the market from moving prices downwards past a certain point.
Resistance
Resistance prevents the price of an asset from getting pushed upward. Resistance levels are therefore regarded as the ceiling because these price levels prevent the market from moving prices upward.
FX Trading Trend Lines
Trend lines are used to determine the general direction of the market.
Sometimes support & resistances are formed diagonally in a similar way like a staircase. This forms a trend, a trend is a sustained movement in one direction either upward or downward.
A trend-line depicts these points of support and resistance for price.
Trend line is an aspect of technical analysis that uses line studies to try and predict where price will move next.
A trend line is a straight diagonal line that connects two or more price points & then extends into the future to act as line of support or resistance.
Trend lines are based upon the idea that markets move in trends. Trendlines are used to show 3 things.
- The general direction of the price movement up or down.
- The strength of the current price movement and
- Where future support & resistance of the current price movement are likely to be located.
If a trendline forms in a certain direction then price usually move in that direction for a period of time until a time when the trend line breaks-out.
Upwards trend line - If price of a currency is moving up then a line is formed that is also moving up. This line is called an upward trend line.
Downwards trend line - If price of a currency is moving down then a line is formed that also moves down. This line is called a downward trend line.
Moving Averages Forex TradingTrading Indicator
Moving averages are also used in forex trading to determine the general direction of the FX market. Moving average is a trend following technical indicators that is used to show the direction of the market.
The most common trading method of determine direction of the trend is by using two moving averages to form the moving average crossover trading system. The moving average crossover trading system is covered in our forex trading strategies section. The moving average crossover system is made up of two moving averages one with a lower period and the other with a higher period, for example a trader may use the 5 period moving average and the 7 period moving average, when price of a currency is moving up the two moving averages will also be moving up and when prices are moving down the two moving averages will also be moving down. Traders can also identify when a trend changes its direction because the two moving averages will cross over each other once there is a change in direction of the currency movement. This crossover signal is used by traders to determine when to open a new trade after the crossover signal has been generated and the two moving average start to move in the same direction. This crossover signal is also used to determine when to close a trade and take profit after there is a crossover in opposite direction.
Selecting a Forex Broker
Traders will need to know how to choose a good forex broker. The first thing to look for is regulation; a trader should research and determine if a broker is regulated before deciding to open an account with the broker.
Opening a Demo Account
Traders should open a forex practice account commonly known as a practice account and use this demo account to practice trading for a period of one or two months. Traders will use the demo account as they learn forex concepts and strategies. Traders can test their strategies on this demo account before deciding if the strategy is profitable enough to trade with it on a live account.
Open a Live Forex Account
After traders have completed learning forex trading and have come up with a profitable trading strategy they should then open a live trading with their broker and start investing and trading the FX trading market. To open a live forex account a trader will have to fill some paperwork after which they can then log in to their account and start placing trades in the online forex market through their forex trading broker.
Forex Tips
Come up with a written forex trading plan that will be a summary of all that you have learnt in forex and this trading plan will specify when you will open a trade, when you will close a trade, the money management rules that you will use when opening trades and also it will set out a list of the goals that you want to accomplish when it comes to forex trading. A trader can get an example forex trading plan template from the learn forex lessons section of this website in the forex key concepts topics.
Learn money management rules is also another good tip - forex money management rules are also explained in the learn forex section of this website in the forex key concepts topics. Money management rules will help a trader to learn the best methods to follow when it comes to managing their account balance. For example a trader can learn that forex money management specifies that a trader should not risk more than 2% of their capital on any one single trade.
