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How to Trade Forex : Quick Steps to get Started

How to Trade Forex

How to Trade Forex Forex trading is about exchanging one currency for another with calculated assumption that the price will change i.e. the currency that you purchased will increase in value as compared to the one you sold.

Learning how to trade Forex can seem be bit confusing, so we’ve broken down Forex trading into some simple steps to help you get started:

Decide how you’d like to trade Forex

An extensive forex trading takes place between major banks and financial institutions. These mammoths buy & sell massive amounts of currency like billion-dollar every single day. But for individual traders making billion-dollar Forex trades is not feasible/possible. So for individual traders there are two easy ways to get involved: Forex CFDs or trading Forex via a broker.

What is a Forex CFD (Contract For Difference)?

A Forex contract for differences CFD is an arrangement/agreement in which you agree to exchange the difference in price of a currency pair from the time of opening your position to when you close it. When you open long position, you make profit if the Forex position increases in price & if it drops in price, you’ll experience a loss. While its opposite when you open a short position. You can trade in various markets using CDFs, Forex being one of them.

Hire Forex Broker for trading

Many a time’s people hire brokers for handling their Forex investments. Surprisingly   Forex trading via a broker or a bank – works in a much similar way to that of CFD trading. Its analogues to investing in stock market via stock expert. You speculate on the price movements of currency pairs in market, without actually taking ownership of the currencies themselves. You don’t have access to the other markets when you trade Forex via broker.

Best-Forex-trader-in-India

Learn how the Forex market works

First thing to understand about Forex trading is that it’s different from stock and share market. Forex market operates differently from other stock-exchange markets.

Unlike Stock exchange in which buying and selling currencies is done on centralized system, Forex is purchased and sold via banks and financial institutions. This type of system is called an over-the-counter, or OTC market. These banks and financial institutions acts as market makers – offering a bid price to buy a particular currency pair, and a quote price to sell a Forex pair.

Forex providers: How to start Forex trading via Forex Providers

Buying and selling Forex directly can be bit time consuming as you have to find best available price and act accordingly. So to make trading easy there are many Forex providers in market which help you in process of trading. Many retail traders buy and sell Forex by using a Forex trading provider instead of dealing directly with bank. These Forex trading providers on your behalf deal with the banks, find the best available prices and add them on their own market spread thus making it easier for you to choose from selected.

Build a trading plan

Before starting trading in Forex, its advised to build a trading plan. Making plans will be helpful in making decisions quickly & wisely and sticking to them. It also provides some structure when you open and close your positions. You also should apply some trading strategy which can help you find opportunity in the market.

After choosing Forex trading strategy you have to select a technical analysis tools to apply it.

Plan for forex

Choosing Forex trading platform

There are many Forex platforms in market provided by Forex brokers. Each platform has their own pros and cons. It is very essential for you to understand the various types of Forex trading platforms as it impacts your trading outcome immensely. The Forex trade platforms are classified into three ways:

  • According to format
  • Programmable language
  • Trading models

To understand the platforms in details read the following blog.

Experience Forex Trading: Open, monitor and close your first position

As you have chosen your platform now is time to start trading. Platforms may vary in their interface but major platforms share basic & important functionalities. As soon as you open the deal ticket for your chosen market, both buy and sell price listed will be available for you. You will also be able to specify side of your position and add stop limit what will act as a threshold and will close your trade once it hits a certain level. To open a long position click on buy and click sell to open a short position.

In OPEN POSITIONS section of your platform you can monitor the profit/loss. To close your position you just make an opposite trade to when you opened it.

So now you are ready to start off with your experience in Forex trading. We have tried to cover major steps in this writeup. To understand more about Forex signup to our upcoming training course in which we will explain in detail of how to trade Forex.

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