How to start trading on Forex and where to get lessons for dummies? How to work with the trading platform for beginners MetaTrader4? How to start analyzing the Forex market?
Forex Dummies – basic terms and concepts
In the framework of this material, we will cover only concepts «the trend», «support and resistance» and some others.
You can familiarize yourself with these fundamental names in more depth in the material «How to play on the stock exchange».
Most of the time, the forex market is in motion, which can go either up, either down. Therefore, the first two types of trends: ascending (he is bullish or bullish), downward (he’s bearish or bearish).
For successful trading, remember key definitions:
Bull trend observed then, when a new vertex updates the previous, and the new cavity does not fall below the previous one
In a downtrend, the situation is reversed:
Bear trend observed then, new cavity updates previous, and the new peak does not rise above the previous one
Sometimes prices move in «the corridor»: then grow, then fall within certain limits. Earlier we wrote, that a similar situation is often observed for several days before the planned important news.
«Corridor movement» called sideways trend (it is horizontal or neutral). For such a trend, it is important to remember the following:
Side trend observed only then, when the amplitude of the oscillations – not less than 300 points.
If this rule is not respected – in no case do you trade. In the example below, we see a side trend with an amplitude of 158 points – not enough to open positions.
Summarize the above in table form:
|1||Ascendant||Bullish, upward||Up||Are absent|
|2||Descending||Bearish, bearish||Down||Are absent|
|3||Horizontal||Side, neutral||No direction||Amplitude not less than 300 points|
In the process of movement, prices are based or repelled from invisible lines, who got the name «support and resistance lines». To spend them – just connect the peaks or troughs.
If the price breaks through support or does not reach resistance – this is a signal of a weakening trend. If the price does not reach support or breaks through resistance – acceleration signal:
Screen price higher «confirmed» the support (yellow line), but did not touch the resistance (blue line) – reversal signal confirmed: the market has not updated the top, and then struck support.
Remember another very important point:
Transactions can only be opened in the direction of the trend – if he is ascending – to purchase (Buy), if downward – for sale (Sell)
These were the general principles of making money on Forex for a beginner, but everyone wants to become a professional, right?
Where to start Forex Market Analysis?
When opening any transaction, it is important to rely on something, since trade «by intuition» or with automatic robots inevitably leads to collapse. There are two big areas of market analysis on Forex: technical and fundamental.
According to technical analysis, the price chart contains all the necessary information – to decide to open a deal, just study the price history.
According to fundamental analysis, market prices exist and change under the influence of fundamental factors.
If the state begins to actively export its products to the market, its currency will inevitably rise in price – there is a fundamental economic basis for this.
Technical analysis is carried out on any timeframes, but, usually, maximum time interval – one day. Weekly and monthly timeframes – path of fundamental analysis.
Mastering fundamental analysis is much more difficult, than technical, therefore, we will pay special attention to the second direction.
Technical analysis methods:
- Graphic (classical) – chart analysis. This includes pattern trading strategies, equidistant channel, Fibonacci lines and many others.
- Candle – several hundred candlestick patterns stand out, predicting certain changes in the market — «maribose (bald candle)», «leggy rickshaw», «hanged», «the hammer/shooting star», «gravestone» and so on.
- Indicator – use of special programs for trading.
- Wave – Elliott wave theory is controversial, but many traders trade it and earn very well.
Now let’s talk about, how to get to the top of trading excellence as efficiently as possible.
How to succeed quickly – The main stages of Forex trading
Any professional growth can be represented as a sequence of steps, Forex trading – not an exception. Successful traders follow the path below.
Stage 1. Choose a broker
Terms of trade: minimum lot, number of tools, spread size.
Stage 2. Learning to work in a trading platform
Usually, brokers provide trading instructions, but this does not always happen. Below we will talk about trading in the most popular platform today called MetaTrader4.
It is important to be able to work with tools, use alerts, trade «in one click» – without all these skills, it will be difficult for you.
We strongly recommend that you work with reliable brokerage companies.
Stage 3. We gain knowledge
If you do not understand financial markets – you cannot trade, this is a clear fact.
Don’t think, that for success in Forex you need to sit for five years at school, like in high school – if you spend 2 hours daily for two to three months, You can create a good understanding of the market and master several strategies.
This will be enough for a successful start, but in the future you need to continue to learn.
Stage 4. We replenish your trading account
When we open a deal, then set the Stop Loss level – if the price goes in our direction and reaches it, deal closes with minimal loss. Loss due to Stop Loss should not exceed two percent of capital.
Almost all traders agree with this: 2% reserve us the right to make another 49 transactions and «recoup»; psychologists noted, that because of such losses, we do not lose control of the mind, but we continue to think sensibly.
Counts show, that to trade on timeframes from 15 minutes to 1-4 hours to cover Stop Loss with two percent of capital, you need at least two hundred dollars – this is the optimal deposit size for a successful start.
Stage 5. Choose a strategy and follow it
The essence of any strategy – excess of the number of successful transactions over unsuccessful, therefore, in trading, you must be guided by a clear plan.
We will consider short-term and intraday strategies in the future, and you will figure it out, where to enter the deal, where to go, what level to set Stop Loss.
How to work in the MetaTrader4 trading platform – 8 easy steps
Many companies are trying to create their own platforms, but so far nothing better has been invented in comparison with the Metatrader. Performing eight simple steps will give you the most complete picture of this program.
Step 1. Download the platform
MT4 needs to be downloaded on that broker’s website, with whom you plan to cooperate: different set of financial instruments and some minor parameters.
Installation is straightforward – the program is loaded on drive C, automatically opens.
Step 2. Log in
Typically, the terminal itself issues an authorization window. If this did not happen – click on «Connection status» in the lower right corner and click «Login»:
Trading account, usually, opens on the broker’s website – you get the password and server, connect to it.
If authorization is successful, you will see on the scoreboard the amount of money in the account, can open real deals. We have as an example 101.32 dollars:
Step 3. Create a template and customize graphics
To trade successfully, we will bring the graphs to the desired form, remove all unnecessary. At first, only four currency pairs are available, but you can easily open new ones.
To configure the schedule, right-click on it, choose «The properties» or just press F8. A window with two tabs opens to us, first – «Colors». Here we change the color scheme to “Black on White”.
Now in the tab «Are common» put the necessary checkmarks and remove unnecessary.
Fine, we successfully set up the schedule! In order not to carry out such a procedure with each currency pair, we right-click on the chart, choose «Template» — «Save Template».
In the opened folder (we have it Templates) carry out conservation. Now, to configure a new chart, it will be enough to select the saved one in the list of templates and click on it.
Step 4. Set indicators
To install the program you need to select it in «Navigator», drag to the chart and adjust the settings.
Step 5. Set up alerts
Sound alerts or alerts will greatly enhance your trading – when the price reaches a certain level you will hear a signal, which will be repeated periodically.
To configure, click in the right place on the chart with the right mouse button, choose «Trade» — «Alert».
After clicking on the screen, a red arrow will immediately appear, when the price touches her – a signal will sound. If the notification is connected by just a mouse click, then in the settings window you only need to change the timeout and the number of repetitions.
«Time-out» – this is a time period, through which the signal will repeat, minimum value – 10 Seconds, «maximum repetition» – how many times the alert will make itself felt.
Step 6. Determine the trend
In almost any strategy, you need to determine the trend. You can do this either using the indicator, either tool «Trend line drawing» — connecting each peak and trough:
After trading for several days, the newcomer assimilates and determines the trend simply «gaze», but at first it can be complicated. In the figure and above, the trend lines helped us in determining the trend, and MA indicator.
Step 7. Open a new order
To open a deal, click «Open order» on the toolbar, either press F9, or double click on the chart. The window looks like this:
Lot is indicated depending on capital. Stop Loss and Take Profit must be registered immediately at the moment of opening a position, at which level – depends on trading strategy.
When the order is open, trade begins – we will see the profit or loss online on the scoreboard.
This concludes our short tour of the MT4 terminal, but we will return to certain points in other texts.
How to work with graphic tools — useful tips for beginners
Analyzing issues, arising from beginners, we made three recommendations on some elements of the MT4 platform.
When you draw a trend line, it is drawn by default «beam», but you can do «section» — right click on the line, select «The properties», in the tab «Parameters» uncheck.
In the tab «Are common» thickness and color are chosen, which is also important. If you click on the extreme points of the segment – you can change its slope, clicking on the center allows you to transfer the line.
If you hold Ctrl and start dragging the line to the side – we get parallel «a copy».
Two more points. «Crosshair» shows the height from one point to another, not line length (contrary to the confusion of newcomers). So if you move it horizontally, the number of points will not change.
Sometimes a beginner wants to rewind the chart to the side, but he stubbornly comes back. To prevent this from happening, need to turn off auto scrolling – green arrow on the toolbar.
Red arrow, vice versa, «pushes back» schedule to the side, opening up more space for graphical analysis.
The Basics of Profitable Forex Trading — 5 golden rules for a novice trader
Approaching the completion of this material, we will indicate five rules, which can never be violated by, who wants to trade in the foreign exchange market successfully.
The largest Russian brokers provide free training for everyone who wants to learn how to trade.
Rule 1. Always control your emotions
The great trader of our time Alexander Elder says, that most people on the exchange are driven by two emotions: fear and greed. They equally deprive the ability to think rationally.
Never follow emotion, wherever the price goes – in your direction or against you. Emotions definitely lead to death, strategies require cold calculation and sober mind.
Rule 2. Strictly follow your chosen strategy
As we said, strict adherence to the chosen strategy will not give you permanent profits, but will increase the number of successful transactions in comparison with unsuccessful, therefore, one should not deviate from the intended trading plan.
If you doubt the consistency of the strategy – do not use it on a live account – conduct a thorough analysis on «demo», and then risk your own hard earned money.
Rule 3. Manage risks wisely
Set Stop Loss according to your strategy, measure the distance to it and determine, how much will you lose, if the price touches it. If possible losses exceed two percent of your capital – do not open a deal.
Do not try to take big profits, risking large sums. A smarter way – increase deposit or take money under management (through the service of PAMM accounts), making more profit with previous risks.
Rule 4. Always learn
To successfully follow the strategy, basic knowledge and understanding of the essence of the trading plan are sufficient. But if you are burning with the desire to become a true professional – learn constantly, love the market.
Rule 5. Practice constantly
Forex trading is necessary daily, never mind, how much time will you take: constant trading forms a trading skill, without which success is impossible.
It is advisable to keep a diary in electronic or printed form and enter the results in it, print charts, celebrate your emotions.