October 22, 2021

Forex training from scratch – 6 main stages of Forex trading + overview of trading programs for beginners

10 min read
Forex training from scratch - 6 main stages of Forex trading + overview of trading programs for beginners

How to get Forex training and where to take lessons for beginners? How to learn to trade Forex from scratch and increase your earnings? Where to get Forex trading courses from professionals?

In today’s article, we will start talking about Forex earnings, namely — about indicator methods and news trading.

Sure, you can not describe all the secrets of exchange trading in one post, therefore, we plan to cover the material in stages.

The main types of Forex trading

Conventionally, you can divide the strategies of all currency traders, stock or commodity exchanges into two broad categories: short and long.

Category 1. Short term strategies

Short-term traders open and close all their transactions within one day, but, as is known, you can work on Forex at different time intervals.

Therefore, short-term trading strategies fall into two more components:

  1. Scalping or pipsing – to open and close positions, time intervals from one minute to thirty are used.
  2. Intraday trade – optimal time frames – from a quarter to four.

For successful earnings on short-term strategies, traders clearly define, where to enter the deal, And where – go out.

Key advantage – opens a large number of positions, therefore, the percentage of unprofitable will always be lower than the percentage of profitable, the speculator will remain profitable.

Category 2. Long term strategies

Traders, opening long-term deals, may not leave the position or a few days (for example, Monday through Friday), either even weeks or months.

Professionals, able to analyze the market well, at times hold open positions for several years, taking huge sums of money in the final.

To be successful in long-term strategies, you need to understand correctly, «where does the price look» and open deals in her direction «sight».

There are two advantages:

  • long-term strategies less stressful, than short term;
  • you do not have to constantly pay the spread to the broker, therefore, total revenue is greater.

Good self-control is indispensable here, because you need not to give in to emotions and not close deals even then, when prices change wrong, as planned, and their every move leads to a decrease in profit.

What type of trade to choose – you decide. Practice shows, that newcomers in any direction often lose money, a professionals – earn, because trading skill is needed everywhere, experience and hard work.

But the most interesting, what you can also earn in the foreign exchange market, using analysis of news and economic situation in the world.

Watching TV and reading newspapers can now become your profitable business. This is called fundamental analysis of the foreign exchange market.

Forex Trading Software – main types of indicators

With the rise of computers, the exchange has improved significantly, the best, what appeared on it, except terminals, these are indicators – programs, indispensable in the trading process. Let’s find out, what are they.

Trend indicators. Moving Average

Programs in this category include indicators, prompting points for entering trades if there is an uptrend or downtrend in the market.

If the price is steadily rising or steadily falling, trend indicators will work well, if the price moves in «the corridor» — then up, then down — signals will be false. The simplest example of a trend indicator – Moving Average (MA).

Moving Average (Moving Average) – line indicator, showing the average price for a certain period.

MA can be of several types, the most important ones: simple (all prices are added up and divided by the number of periods), exponential (the last price is given more weight than the first). It is preferable to use exponential.

Let’s go to the MT4 terminal and set up the MA indicator, this is done in several steps.

Step 1. Set the indicator on the chart

All indicators are located in the window «Navigator». To install, click on the name of the program with the left mouse button and drag it onto the chart of the currency instrument:

If everything is done correctly, the terminal will display a settings window, where you need to specify the conditions for the analysis.

Step 2. Customize options

Usually, indicator parameters are configured in accordance with that strategy, which is traded. In our case, the program issued the following option:

«Period» – these are the days, which are taken into account, «shift» we do not need, «MA method» take exponential as more accurate. The color and thickness of the line can be set as you wish.

If nothing is changed, it turns out this picture:

Moving average with a period of 20
Moving average with a period of 20

Moving Average now shows us, where is the trend directed, but does not give signals yet. To get the simplest signals from MA, we put on the chart a second indicator of a shorter period.

We carry out a similar procedure, but we write, that period is not 20, a 10, choose another color, e.g. blue:

Two moving averages
Two moving averages

Result – «blue» rolling closer to the price, in some places crosses with «in red».

Step 3. We analyze signals

How to understand signals, trend indicator? In the case of MA, everything is simple: when sliding cross – a signal arriving at the end of the trend, the market is ready to turn around – open a deal in a new direction:

Since the indicator readings are secondary to the price, they are a little late: the signal then occurs, when the trend has already begun, part of the profit because of this, we will inevitably lose.

With deep corrections, the indicator may give false signals – on the screen above we received a buy signal, as the price went against the main trend, but it turned out, that the market was only adjusting.

We will talk about this and some other problematic issues below.

Step 4. Create «trading robot»

«Is it really that simple?!» — you think. Yes, and most of the existing trading robots are based on the principle of moving averages. but, as practice shows, blind trading on indicators is always unprofitable.

If the market situation changes like this, what’s up/downtrend will go sideways, or if flat starts – the indicator will give conflicting signals, and following them will definitely lead to losses:

False indicator signals
False indicator signals

In the screenshot above, the indicator gives several incorrect signals, by which you can drain most of the deposit.

If you learn the MQL language, you can make a trading robot based on MA, but we are one step away №4 want not to motivate you to do this, and show the destructiveness of automatic systems.

The indicator should only advise, where is better to open deals, not explicitly indicate. Below we will consider another group of similar programs for trading, able to provide tremendous support to the trader.

We also got acquainted with indicator analysis and trading on the news in various brokerage companies, at free online seminars. So do not miss the opportunity.

Side trend indicators – oscillators

The side trend is observed then, when the price moves up, then down under «the corridor», whose height must be at least 300 points:

Lateral trend with an amplitude of 1767 points
Lateral trend with an amplitude of 1767 points

In the figure above, the oscillation amplitude is 1767 points – mean, you can trade. To determine, where the price will change direction, oscillators were created. In the instructions below we will set up the Relative Strength Index.

Step 1. Improving the parameters

All indicators are set on the chart in the same way, only the parameters are different. In the RSI oscillator, only the period changes – than he is bigger, the indicator is less sensitive (less like false, and true signals).

The RSI window with a period of 14 showed only two large fluctuations well:

RSI Oscillator with a period of 14
RSI Oscillator with a period of 14

With period 7, the program becomes much more sensitive, if in the first case we selected only two signals, now there are seven:

RSI with period 7
RSI with period 7

Must not be forgotten, that this alignment will lead to an increase in the number of false signals.

Step 2. Find profitable entry points

Behind the dotted line in the indicator window is an overbought zone: when price reaches her, need to sell; from below – oversold zone – when the price approaches it, we are buying.

As in the previous case, oscillators do not always work well: if the side trend goes up/bearish, testimony will become false.

Step 3. We trade and earn

Oscillators can be very well traded for several days before the release of important news: you yourself will notice, that there will be no strong trends in the market, players will prefer to wait.

Below we will learn about the news trading strategy, you will understand, where to get the necessary information, you can use the oscillators at full power.

Volume Indicators, custom, Bill williams

In the heading, we indicated other indicators existing in MT4, You can get to know them through «Help». Here we just pay a little attention to volume indicators.

On a note

Forex Volumes, unlike stock/commodity exchange, teak, not cash – they show no amount of money in the market, and the amount of open transactions

The above point is very important – by the amount of money you can judge «market plans», but by the amount of transactions – not allowed, for deals of one hundred dollars and a billion equally increase the tick volume by 1 unit.

Hence the distrust of indicators of this type – think, before using them in trading.

Trading on the news – advantages and disadvantages of this method

In the economic calendars months ahead, planned news of the financial world are painted. They report on the state of the economy of different states: GDP, building, agricultural data and other.

Here we see several parameters:

  1. State flag – shows, what currency pair will the news act on.
  2. News Title explains its essence.
  3. Volatility – higher indicator, all the more powerful movement can cause news in the market.
  4. Actual value – reported in the news.
  5. Forecast – estimated value.
  6. Previous value – old data.

The essence of news trading – We are waiting for the release of news and compare them with the forecast. Greatest movements then happen, when fact and assumption are very different.

In the table below we will indicate, when the price rises, and when it falls (In most cases), use it as a guide when making deals.

Opening news deals:

Comparison of Actual and Estimated Value Impact on the exchange rate (how to trade) Change in the national currency
1 Actual Better Than Estimated Height (we buy) Strengthening
2 Actual same, as expected No reaction (do not trade) No change
3 Actual worse than expected Decline (sell) Weakening
4 The value was assumed lower than the previous one, but the actual was higher than the previous Strong growth (we buy) Strong reinforcement
5 The value was assumed to be higher than the previous one, but the actual was lower than the previous Severe decline (sell) Severe weakening

Usually, you need to trade on the news with maximum volatility, displayed by three red exclamation points. Other news may also affect the market, but to a small extent.

Simple algorithm – find important news on the calendar, at the time of their release, we decide to open a position on the basis of the table, open a deal.

Negative news trading – we don’t know, where price will stop rising or falling. Often, after news releases, the market adjusts and returns to its previous level, therefore, you need to close quickly.

Try trading on a demo account, and if the results are positive – go to real. In our opinion, news (like indicators) should be used only as an auxiliary, not the main means of trading.

Read also another publication about, how to play the stock exchange.

Forex Trading Training – 6 main steps

Above we got acquainted with indicator methods and clarified trading on the news. Below is a list of steps, which will create in your mind a clear picture of the development of Forex.

Stage 1. Getting basic knowledge

The largest Russian brokers provide free training for everyone who wants to learn how to trade. We advise you to undergo training at well-known and large companies and not get involved with small players.

Stage 2. Meet the trading terminal

When you read our Forex article series, you will already know everything you need to work in MT4 — the most popular terminal for trading. If there is a desire, can see webinars of various brokers on this topic.

Learning to use the option is very important «One Click Trading», which optimizes trading as much as possible, and without which it is impossible to do, for example, in scalping.

Stage 3. We connect indicator methods

We have described indicator methods above, but you can study this topic more deeply, if you want to. It’s not always necessary to use rare or complex indicators: MA is enough for intraday trading.

Stage 4. We use graphic methods

We will describe in detail the graphical analysis in other texts. For those, who already has certain knowledge about him, We advise you to periodically review seminars and workshops on Forex trading.

Stage 5. We study scalping strategies

Despite «stress», scalping is very popular.

Scalping, by the way, also implies the use of indicators – on small time frames it is very important to be able to correctly determine the direction of a trend.

Stage 6. Introducing Fundamental Analysis

If you want to trade long term, will have to look into the depths of financial markets and understand, how do they function.

In fundamental analysis, everything is much more complicated, rather than technical, but also the results, In most cases, more impressive.

Automatic programs for trading – can they be trusted?

Approaching the conclusion, we cannot but mention trading robots again, which on the Internet are sold a huge amount.

Robots function based on either indicators, either cyclical – if previously the market changed in certain cycles, then he will do the same in the future (according to the creators of robots).

Experienced traders know, that indicators work only within the framework of their logic, and market cycles are constantly changing. Therefore, despite the presence of robots, speculators still analyze the market themselves and trade themselves.