What is the currency and stock exchange? How to act in a game on the currency online exchange? How to trade on the currency exchange online in real time?
1. What is a currency exchange
Already the title is clear, that the currencies of different states are sold and bought on the currency exchange. Name synonym – Forex trading. At first it was created for the most convenient exchange of one currency for another, but gradually turned into a money machine for traders.
The total amount of money on the currency exchange is not known exactly, but, studies show, four trillion dollars is recruited without problems. All are trading currencies: from ordinary amateur traders to large funds and Central Banks.
In addition to people and companies, which are bidding, brokers operate on the currency exchange – intermediaries, executing trade orders. They charge a small fee for their work, called spread.
Currency Exchange operates 5 days a week, trading is conducted around the clock. Now more and more brokers open access to foreign exchange trading, and to stock exchange instruments at the same time.
Forex Market, unlike stock, only traded on the Internet, there is no separate building for him in any country. true, there are currency sections on different exchanges, including at Moscow, but this is only for convenience, prices are not formed there.
Currency Exchange Advantage — in features of price fluctuations. If stocks take off and crash, then the currency moves relatively stably, does not make sharp jumps (and if they happen, usually the course returns to previous levels).
Respectively, exchange rates easier to predict, collapses do not happen very often. But it does not mean, that they do not happen at all.
let’s, by the way, summarize the main differences in the table.
Differences in the foreign exchange market from the stock market:
|№||Criterion||Currency exchange||Stock Exchange|
|1||Working hours||Around the clock||Not working at night|
|4||Localization||Traded over the Internet||Separate buildings in different cities, can trade online|
Forex is attractive for beginners to trade with leverage.
Leverage allows you to buy $1000, having only $10, with absolutely no risk. When speculating in securities, leverage cannot be used, and tools are usually expensive, especially in the american and european markets.
Currency exchange is not only for traders. Let’s get acquainted with other goals of her work.
2. What functions does the currency exchange — 4 main functions
If you give free rein «sharks» trading, they will turn the market upside down in pursuit of profit.
This cannot be allowed, for uncontrolled growth of the exchange rate or its decrease will cause a distortion in the state economy.
Function 1. Determination and regulation of stock prices
So that the activity of speculators does not lead to disaster, Central Banks keep track of currency prices. They make currency interventions (foreign currency purchase and sale transactions) in order to influence the course of their own. There are other price adjustment tools.
For a crowd of speculators, which cannot independently control market movements, such «Attention» banks to the economy – only plus. If the currency fluctuates within certain limits — this is a great opportunity to make good money, buying and selling from zones «overbought» and «oversold».
This happened to franc (Swiss currency) in January 2015. A well-predictable currency rushed up and rose by a third against the dollar, Euro and other instruments. Then gradually returned back, but stability is forever in the past.
Function 2. Education and Price Forecast
You know, what is the price? Agreement between seller and buyer? The definition is correct, but not quite beneficial for the trader. Everything depends on the correct understanding of the essence of price.
Prices do not arise by themselves, they are based on something. And from this «something» vibration dynamics, degree of predictability and so on. The foreign exchange market takes into account absolutely everything: politics and economics news, natural disasters, the mood of most traders and t.P.
Speculators, trading several years in a row, can tell a lot about price changes: all currencies have their own characteristics. So, eg, Japanese yen may for several months «hover» and fluctuate within certain limits, and then shoot up/down and move on to powerful motion with virtually no kickbacks.
But Bitcoin does not depend on the state economy, therefore walks himself with leaps and bounds:
Function 3. Bidding
Brokers create comfortable conditions for traders, provide them with trading terminals for placing orders (orders) and market analysis. Therefore, the foreign exchange market copes with the third function.
Function 4. Selection of exchange bidders
All people have the right to trade on the currency exchange, but only major players have the ability to influence market trends (Central Banks mentioned above, foundations and other wealthy organizations).
No one is allowed to start trading. However amateurs, greedy or timid traders themselves fly out of the market during «natural selection»: they give in to emotions and quickly drain money.
3. How to play on the currency exchange online — 5 easy steps for novice traders
If you are eager to start trading in the foreign exchange market, where to start the movement to success?
I note right away, thorny path awaits you, don’t expect easy victories.
Step 1. Choose a broker
If you do not choose an intermediary or entrust money to an unscrupulous partner, definitely left without capital. Fortunately, high-quality brokerage firms today are enough, choose a reliable intermediary — not difficult.
Below you will find a list of several companies, which over the years have proven their reliability and promise to millions of people.
Step 2. Open an account
I think, problems with opening an account will not arise. Everything is simple: register, deposit amount (minimum deposits with brokers are different) and go to the next step.
Step 3. Analyze the market
When a trading account is activated, it’s time to go to direct exchange trading. Open deals, counting on intuition, not allowed. Confidence in the sixth sense is allowed only when speculating with options (for it is guessing), although there you can’t do without analysis.
Typically, brokers conduct free seminars on technical and fundamental analysis.
Step 4. We are developing a strategy
There is no universal and forever profitable trading strategy. There are different approaches to the consideration of market movements, they must be able to use.
«We are developing a strategy» — that is, we check the market for profitable entry signals using graphical or indicator methods, candlestick patterns, patterns and t.P. If a profitable signal is found, building a trading plan – where to enter the market, where to take profit, at what level to get rid of a deal, if the assumption did not materialize.
When measurements are taken, risk assessment – how much money will we lose in the worst case (if the market goes against us and does not turn in the right direction). The risk should not exceed 2% from all money in the account. If the possible loss exceeds 2% – do not open a position, no matter how profitable it seems. Otherwise, sooner or later you will lose all your money, and you won’t save your nerves.
Step 5. Start bidding
Start trading – means click on one of the two buttons: «Buy» — buy currency (counting on her growth) or «Sell» — to sell (counting on reduction). Yes, before opening a position, a lot is indicated – exactly how many units of currency do we buy or sell.
It is very important not to give in to emotions and not to break the trading plan, do not close even with a solid plus on the balance.
If the profit is twice the loss, then one successful transaction with two unsuccessful ones will leave the deposit unchanged. And if the possible loss is twice the profit? You will inevitably roll down.
4. How to make money on the currency exchange — 6 easy tips for beginners
I always thought, that the tips below – idle talk. In the process of real trading, I realized, how important are they.
When will you start bidding for real money?, understand, that the complexity is not in the strategies, and in self-control.
Tip 1. Use a demo account
I’ll never forget, how I was drawn to move from a demo account to a real one. Especially when profitable trades followed one after another. It seemed to me, what am I missing out on huge profits, continuing to trade on a demo.
Exchange is not going anywhere, months and years later, the prospects for it will even improve.
And understood, how is that right. Before moving to trading on your own money, you have to go through a lot, analyze dubious trading signals, lose some money on gaps («breaks» prices before and after the weekend, when the market is closed) and so on.
Some traders say, that you can master exchange trading only on a real account. In something they, probably, are right, because the emotions on the demo and on real life are very different, but pilots don’t immediately land on real planes.
Tip 2. Take a currency exchange game training course
It is advisable to undergo paid training at the broker’s office in the format «1 on 1». If this is not possible – learn webinars, read books, build basic knowledge. Practice shows, that attempts to independently develop the market take a lot of time.
Once I talked with a friend trader. He has a huge deposit, he gets about 10% arrived per month (average), at risk 2-5% means. I asked him, how he came to his result and how much time was spent.
His answer: «In order to go to zero, it took me six years. Six! I will deposit money – per year salt, I will bring it back – salt again. In the sixth year of trading, after all deals, my deposit decreased by only 1% — it was an achievement! From next year I went into plus».
I also asked, who did he study with, what books did i read. Answer: «I studied everything myself. Sat in front of the monitor, plotted levels. I tried one strategy, another, third. And what was my surprise, when i understood, that they do not work! I would pay, sure, paid for tuition, but there was nobody».
Sometimes you have to give large sums of money for training, but worth it.
Tip 3. Start playing with small amounts
Put the amount on the account, which you are not particularly afraid of losing and start trading. I once watched a recording of a lesson Eduard Sungatullin was asked the question about the minimum amount of money for normal trading.
He said, which is usually recommended to start an exchange game with $ 250. I remember his phrase: «Deposit money into the account and do not increase the deposit until, until double». I.e, until you earn another 250 dollars – you cannot deposit money again.
In my opinion, the technique is very true. At a risk of 2% from the deposit you have to trade long enough, to double the amount deposited. You will gain tremendous experience.
Tip 4. Always stay tuned
Currency exchange is more technical, than stock, i.e. prices, usually, move in trends and return to them even after news «shakes».
However, if you trade on small timeframes, the news can eat a lot of money, for there are sharp price spikes. To prepare for the news release, tighten protective orders, look at economic calendars.
Tip 5. Do not get hung up on losing trades
Earlier, I wrote many times about this amazing property of amateurs. The price goes against the trader, it’s time to close the deal, and he hesitates: «The market will turn around soon». Very often, because of this view of things, the entire deposit is lost.
But worse, if the market does turn around. Then, as the trader says Anatoly Radchenko, the amateur begins to consider himself just a professional stock market game. In future, most likely, he will merge more than one deposit.
Guided by the Warren Buffett Principle:
Cut losses on the vine!
Set a protective order for each transaction and do not move it. If the market went against you, let the position close with minimal loss.
Tip 6. Do not make decisions on emotions
Emotions must be turned off completely. Get rid of them. Let the cold mind rule you. If you do not cope with feelings – never become a trader.
The desire to close the losing trade or fix profit («suddenly the market will turn around, I won’t get even that money???») will never make you a professional player.