152173Learn to Play Forex

152173

Learn to Play Forex

Trading Basics

Compared to other financial markets, the forex market has no central transaction or physical location. It operates 24 hours a day through a global network of banks, businesses and individual traders. This means that one currency’s exchange rate fluctuates in value against another around the clock, providing plenty of trading opportunities to take advantage of.

Start trading forex in 6 steps

1. Choose your currency pair Choosing a currency pair to trade is the first decision you have to make as a forex trader. At haacorp.an, we offer a wide selection of major, minor and minor currency pairs to choose from. New traders who tend to start with a currency they are familiar with before moving on are looking for opportunities in a currency they have little exposure to.

2. Decide whether to buy or sell After choosing a market, you must decide on the current trading price and the direction in which you think the market will move. The forex pair is quoted as one currency (the base currency) against another (the quote currency), therefore:-If you think the quote currency will strengthen against the quote currency or the quote currency will depreciate against the quote currency, you will buy the currency pair.-If you think the quote currency will depreciate against the quote currency or the quote currency will appreciate against the quote currency price of the currency, you will sell. Each currency pair has two prices. The first price is the purchase price, while the second is the selling price. The difference between the two prices is reported as the spread, which is your transaction cost.

3. Add Orders – An order is an instruction to trade automatically at a future time when the exchange rate meets a specific pre-determined level. Stop Loss and Limit Orders are used to ensure that profits are locked in and losses are minimized.

4. Track Your Trading Position – In an open position, your profit and loss (P&L) fluctuates with each market price movement. That’s why it’s so important to track your P&L in real time. This way, you can easily add or close trading positions as needed.

5. Close your position – Closing a trade is similar to opening a position. If you initially buy 5 units, you must sell the same number of units when closing. When you close the trade, your profit and loss is immediately reflected in your trading account.

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Example of forex trading
To help you better understand how forex trading works, here are some examples of forex trading.

Each month, the economic calendar is filled with economic events. One of the most anticipated news is the release of NFP or Non-Farm Payrolls data. According to the monthly US Bureau of Labor Statistics report, providing traders with valuable insight into the performance of the US economy.

Buy EUR/USD

Below is an example of a purchase transaction. The US job market may lose control. You expect the level in Non-Farm Payrolls (NFP) to be lower than analysts’ estimates and expect the US Dollar to strengthen against the Euro. For that reason, you decide to buy 1 Lot ($100,000) of the EUR/USD currency pair at 1.2101, which equates to 10 USD per pip movement.

The report was released and the NFP’s basic figures printed out below experts’ estimates, causing the US dollar to fall. Now the EUR/USD pair trades at 1.2152 and you decide to close the position. You opened a trade at 1.2101 and sold at 1.2152. The 51 pip spread is your profit ($510).

Sell USD/JPY pair

Below is an example of a sell transaction. Remember when we said it was the fourth decimal point we used to calculate profits and losses? Currency pairs that include the Japanese Yen (JPY) are the exception to the rule. Then, here we look at the second decimal.

Let’s say you open the USD/JPY 1-hour chart looking for early morning trading opportunities. The pair is trading at 113.63 and your technical indicators suggest that the market is going to drink.

You sell 1 mini lot (10,000 USD), which is equal to 1 USD of four per pip movement. This time you decide to add a stop loss and take profit order to your position, so that your risk is managed while you are at work. You place a take profit order at 113.27 and stop loss at 114.24 .