come in a range of shapes and sizes, so you need to find a platform that meets your individual requirements. Consider the following factors when joining a new forex trading platform. <\/span><\/p>\n<\/i> How to select a forex trading platform<\/strong><\/span><\/p>\n<\/strong><\/p>\n
\n- <\/i> Regulation : <\/strong>Choose a broker with FCA and CySEC regulations. Ultimately, if the forex trading platform is not regulated, avoid it at all costs.<\/li>\n
- <\/i> Payment methods: <\/strong>The supported payment methods will vary broker-to-broker. Ensure you choose a platform which supports your preferred banking method.<\/li>\n
- <\/i> Currency pairs supported: <\/strong>Currency pairs are split into three categories – majors, minors, and exotics. If you\u2019ve got a specific pair that you like to trade, make sure that the broker supports it.<\/li>\n
- <\/i> Average spreads: <\/strong>Stick with forex trading platforms offering tight-spreads – especially on major pairs.<\/li>\n
- <\/i> Trading fees and commissions: <\/strong>In most cases, you will need to pay a commission every time you buy and sell a forex pair. It\u2019s typically expressed as a percentage of the amount you trade. A forex platform with zero-commission trading is preferable.<\/li>\n
- <\/i> Leverage: <\/strong>If you\u2019ve got a higher appetite for risk, explore what leverage levels are available at your chosen forex trading platform.<\/li>\n
- <\/i> Customer support: <\/strong>It\u2019s best to choose a forex broker that offers customer support on a 24\/7 basis. Moreover, go with a broker that offers support via live chat, as this avoids the need to wait for an email reply.<\/li>\n<\/ul>\n
<\/div><\/strong><\/p>\n<\/div><\/div>\nHaving analyzed all those features, we have found the best forex trading platform to be Forex.com.\u00a0<\/strong><\/p>\n \nStep 2: Learn these forex terms<\/h2>\n
Now that you’ve selected your broker, it’s time to brush up on your knowledge of key forex terms. This is crucial, as you need to have a firm understanding of how the investment space works in its entirety prior to depositing funds. <\/span><\/p>\nBelow we have outlined some of the key terms that you will all-but-certainly come across.<\/span><\/p>\nStep 3: Decide on a forex trading strategy<\/h2>\n
You now need to have a think about the type of trading strategy that you are going to employ. After all, you need to have a clear system in place to ensure you don\u2019t join the 90%-plus majority of traders that lose money. <\/span><\/p>\nThere is no one-size-fits-all answer as to what strategy you should follow, as no-two traders are the same. However, we have outlined some of the key factors that you should consider when designing your strategy. <\/span><\/p>\n<\/span>Consider your trading time frames<\/strong><\/div>\n
If you like to look at charts daily and want to have several positions open at once, you would be classified as a day trader. On the other hand, if you prefer holding on to your positions for a longer period of time, swing trading will be your strategy. <\/div><\/div><\/div>\n
<\/span>Define your risk levels<\/strong><\/div>\n
How much are you willing to risk on each trade? Forex trading is a risky form of investment, so consider your losses. <\/div><\/div><\/div>\n
<\/span>Define your entry and exit points<\/strong><\/div>\n
Determine when you will enter and exit trades. Some people like to enter as soon as all of their indicators give a good signal, while others prefer waiting until the close of the candle. <\/div><\/div><\/div>\n
<\/span>Use technical indicators<\/strong><\/div>\n
One of the most important tools that you will need to have a firm grasp of is that of technical indicators. For those unaware, technical indicators allow us to gauge the relationship between historical trends and current prices. Depending on the specific technical indicator that you are using, the tool might evaluate pricing movements, volume, liquidity, or a combination of all three. <\/span><\/p>\nPopular technical indicators include:<\/span><\/p>\n\n- Fibonacci Retracement Levels<\/span><\/li>\n
- Exponential Moving Averages<\/span><\/li>\n
- Bollinger Bands<\/span><\/li>\n
- Parabolic Stop and Reverse <\/span><\/li>\n
- Relative Strength Index<\/span><\/li>\n<\/ul>\n
Using technical indicators will allow you to gauge which way the market is going to move next. This is why they should be at the forefront of all forex trading strategies. <\/div><\/div><\/div><\/span><\/p>\n<\/span>Carry out fundamental research<\/strong><\/div>\n
Fundamental research will also inform your trading strategy. This is where you keep an eye on real-world new events that might impact a currency pair. For example, let\u2019s say that you were trading GBP\/USD in the weeks leading up to the 2016 Brexit Referendum. It would have been crucial for you to have access to relevant news in real-time to ensure you stayed ahead of the curve. <\/span><\/p>\nRegardless of what forex trading strategy you end up using, you need to ensure that you are exposed to important news events as soon as they hit the public domain. <\/div><\/div><\/div><\/span><\/p>\n<\/span>Niche down<\/strong><\/div>\n
With dozens of forex pairs active in the market, it\u2019s virtually impossible for you to have a firm understanding of all of them. Instead, we suggest strongly that you niche down to one or two pairs, with the view of gaining expert knowledge in your chosen currencies. For example, by only trading GBP\/USD and EUR\/USD, you\u2019ll soon understand what makes the pairs tick. <\/span><\/p>\nYou\u2019ll also stand a much better chance of predicting which way the markets are going to go, not least because you\u2019ll recognize common patterns. Focusing on a small number of forex pairs will also give you the opportunity to analyze the charts in greater detail, as opposed to trying to evaluate heaps and heaps of different currencies. <\/div><\/div><\/div><\/span><\/p>\n<\/span>Learn about different forex trading tactics<\/strong><\/div>\n
There are a number of trading strategies and tactics that have been proven to work. Some of these include:<\/p>\n
\n- Scalping<\/li>\n
- Bolly Band Bounce Trade<\/li>\n
- The Bladerunner Trade<\/li>\n
- The Pop ‘n’ Stop Trade<\/li>\n
- Forex Overlapping Fibonacci Trade<\/li>\n
- Daily Fibonacci Pivot Trade<\/li>\n
- Trading the Forex Fractal<\/li>\n<\/ul>\n
A number of traders active in the online forex trading space engage in these tactics. One of the most popular is scalping, a trading strategy that seeks to make ultra-small profits by holding on to a currency pair for just a few seconds. This can be a highly profitable strategy to employ when a forex pair is in a period on consolidation – meaning that it is trading within a tight range. <\/span><\/p>\nFor example, if GBP\/USD is trading between 1.3110 and 1.3190<\/span> – and it has done for the past few days, this would be highly conducive for scalping. <\/span><\/p>\nWe suggest that you read up on all the different forex trading strategies and know them like the back of your hand. This way, you will be able to spot trends and act on them quickly. <\/div><\/div><\/div>\n
Step 4: Open a trade<\/h2>\n
We are now going to explain the process of opening a trade. We will go through the steps which apply to most forex brokers.<\/span><\/p>\nSign up to a forex broker<\/h3>\n
The first step will be to sign up to a broker. You will be required to enter your personal information such as first name, last name, username, email, phone number and a strong password. Once done, go through the broker’s verification process and deposit funds into your account.<\/p>\n
Select your currency pair and decide whether to buy or sell<\/h3>\n
Once your account is funded and verified, you will need to decide which currency pair you wish to trade – for example, GBP\/USD, EUR\/USD, or USD\/JPY. Navigate to the search bar and enter your currency pair.<\/span><\/p>\nYou now need to speculate which way you think the markets will go. To keep things simple – let\u2019s say that you are trading GBP\/USD, which is currently priced at 1.29.<\/p>\n
\n- Buy Order: If you think that the price of GBP will <\/span>increase<\/span><\/i> in value against USD, then the exchange rate will need to go up. As such, you would need to place a <\/span>buy order.<\/span><\/b><\/li>\n
- Sell Order:<\/strong> If your more confident on USD increasing against GBP, then the exchange rate will need to go <\/span>down<\/span><\/i>. As such, you would need to place a <\/span>sell order<\/strong>.<\/span><\/li>\n<\/ul>\n
Set your investment amount<\/h3>\n
Next, think about how much you want to invest.<\/span> For example, if you want to purchase $500 worth of GBP\/USD, simply enter $500 into the order form. <\/span><\/p>\nDecide whether you want to apply leverage<\/h3>\n
You will also have the option of applying leverage to your trade. If you’re a retail trader based in Europe, then you will need to abide by the limits put in place by ESMA. To clarify, this allows you to apply leverage of up to 25x on major pairs, and 20x on minors and exotics.<\/span><\/p>\nSet your stop loss and take profit<\/h3>\n
Although not mandatory, we would suggest that you at least set up a stop loss order. This will allow you to exit an unsuccessful trade automatically and <\/span>mitigate your losses.<\/span><\/p>\nFinally, we would suggest installing a profit-take order. This operates like a stop-loss order, but in re<\/span>verse. By this, we mean that you can choose how much profit you wish to make before the trade is automatically closed. If your take profit is hit, you\u2019ll be able to lock in your profits without needing to be sat at your device.<\/span> Crucially, this allows you to protect your gains regardless of where you are.<\/p>\nChoose a market order or limit order and open your trade<\/h3>\n
You now need to think about your entry price. If you simply want to take the next available market price, then opt for a \u2018market order\u2019. However, if you want to purchase GBP\/USD at a specific price, you can do this via a \u2018limit order\u2019. In doing so, you stand the chance of entering the market at a more favourable price. <\/span>When all your parameters have been selected, click on OK and open your trade.<\/p>\nClose your position<\/h3>\n
If you have set up a stop loss and take profit, the position will close automatically if one of the limits is reached. However, you can also close your trade manually at any time by pressing the red “Close” button. Once your trade is closed, it will be available to view on your history area, and any profits you realized will be available to view in your account balance.<\/p>\n
Video summary<\/h2>\n
We’ve covered the steps to trading forex in the following video summary. The following video will go through the basics of FX trading and how to get started in a simple tutorial.<\/p>\n