Trading on the currency exchange – how to conduct foreign exchange trading online: 6 main stages8 min read
What time do trading on the currency exchange end? How is Forex trading online?? How to make money on changes in the course of currency trading in real time?
1. What is trading on the currency exchange and how are they held
Take the USD currency pair/RUB. The name is easy to guess, what is the american dollar and russian ruble. Consider, for example, the whole variety of trading on the currency exchange.
From July 2014 to January 2015, the American currency strengthened against the Russian.
And quite powerful — on the graph of monthly price fluctuations, a continuous upward movement:
Unfortunately (and for big players — Fortunately) crowd of ordinary people, inspired by TV analysts’ exhortations, lined up for the dollar just then, when he was already 75-85 rubles.
If the crowd buys something – wait for market reversal. He was not slow to follow:
All transactions in trading on the currency exchange are divided into two categories – buy and sell positions. We buy with a rise in price, sell in recession.
Yes, this is not difficult. But the problem is, what the average person does not know, when to buy and when to sell.
To make the right decision, need to predict market movement (a little more detailed — in article «Currency market»). Two large branches of analytics stand out: fundamental and technical.
Fundamental analysis – predicting market movements based on a deep study of economic indicators: GDP, inflation, unemployment, number of new jobs, interest rates of banks, etc.
If I want to buy a dollar today, and sell it tomorrow and earn, fundamental analysis will not help me. It works well only at large time intervals – weeks, months, and even years.
In the short term, the analyst determines, who is stronger in the market: traders, earning on currency growth (bulls) or speculators, making money on her decline (the Bears). The second branch helps in this – technical analysis.
for instance, if I see an uptrend in the market, I’ll try to determine support and resistance levels and will trade from them:
The upward trend of the euro and the dollarBut not only from them. I will check the indicators, I will find horizontal levels, I will use other tools.
Technical analysis – it is necessarily an integrated approach to each individual market situation. The purpose of technical analysis – forecast market movements based on «of the past» –of prices, previously observed.
Motley advertising headlines, mentioned in the introduction, most often illustrate trading on the news.
Traders planned, that GDP will be higher, than last quarter, and he was lower, counted on reducing unemployment, but in fact there is an increase.
Such surprises cause sharp price fluctuations. We talked about news trading earlier in the article «Forex training from scratch» — Welcome.
Why am I telling you specifically about the foreign exchange market?
Firstly, about stock exchanges the material is already written – take a look at «Stock market», Secondly, the currency has a number of advantages.
Everything, now go to the advantages of Forex trading.
2. What are the advantages of Forex trading? — 4 main advantages
Returning to the areas of analysis, I will say, that the Forex market is better suited to technical analysis, than fundamental. If a crowd of wealthy traders moves the currency up or down, then even economic events do not always make them unfold.
Often after news and sharp ups/currency rate downturns returning to their shores, therefore, speculating here is still easier and safer. Although the stock market has its positive features.
Advantage 1. 24-hour exchange work
Stocks and bods market not trading at night. But exchange rates, unlike traders, do not sleep. If the earthquake in Japan destroys the plants of a promising company, in the morning, traders will see a global price gap and a serious decrease in their deposit (if they traded in the expectation of an appreciation, and he collapsed).
Price gaps are called gaps. On Forex, gaps are observed after days off and holidays (Forex Brokers – real hard workers, but they also need to rest):
Respectively, Forex risks are slightly less, especially, if you trade on large timeframes (watch daily, not hourly and, all the more, minute price fluctuations).
Less significant, but the advantages that are important for the trader are described in the article «Currency exchange», we will not repeat.
Advantage 2. Leverage
Currency is for sale «packs» — lots, minimum lot – 1000 units. That is, I can’t buy a hundred Canadian dollars and wait for them to rise in price, broker will execute a transaction for at least a thousand.
I hope, the essence of the shoulder is clear. Leverage provides a good chance to increase deposit, but at the same time it increases the risks, so be careful.
Advantage 3. The possibility of additional earnings
There are trading strategies for short time intervals – traders catch the slightest price fluctuations. We will analyze the most popular of them in the article «Scalping». Scalpers make good money, but they sit at the computer for days.
In my opinion, better focus on medium-term strategies – they are not so nervous, Yes, and require much less time (20-30 minutes in the morning and evening is enough).
If you become a professional mid-term, turn Forex into a great source of extra income.
Advantage 4. Online bidding
If stock exchanges have only recently been online, then Forex was originally created exactly as «interbank» market. To trade currency, we don’t need to go anywhere, just download the trading terminal to the computer, analyze and start bidding.
And not only trade is carried out through the network, but also the flow of news, the latest analytics are published on web portals.
3. How to trade on the currency exchange in real time — 6 main steps
The process of transition to real trading – simple thing. However, newcomers are not always clear, what exactly needs to be done, scared, throw in the middle.
Let’s highlight the 6 main steps to success.
Stage 1. Choosing a broker
I recommend you three large brokerage firms, which you can safely trust. The success of the whole business depends on the choice of an intermediary in the auction, therefore, be careful about your choice.
We must not forget about the trading conditions (spread value, number of currency pairs, order execution speed) and training. Let’s define, what kind «qualities» distinguish good brokers from bad.
How to compare brokers trading conditions:
|№||Criterion Name||What should be|
|1||Leverage||More than, all the better|
|2||Spread||Less, all the better|
|3||Lot||For trading with a small deposit, there must be a minimum value of 0,01|
|4||Currency pairs||Should be everything «major» instruments (with minimal spreads), rest – the more, all the better|
|5||Order execution speed||Higher, all the better|
That is not all, sure, but we’ll not go completely to the depths.
Stage 2. Registration in the system
To register, just enter your email, password, Telephone number, by which the company manager will contact you.
Stage 3. Offer Overview
Carefully analyze, what broker offers you to trade and on what terms. Consider investing in PAMM accounts, because this is a good chance to increase the deposit with first-class traders.
Stage 4. Position opening
They decided to trade themselves? Excellent, then analyze the market and open a trading position. Do not forget to undergo training in technical or fundamental analysis, so as not to drain all the money at once.
Remember the demo account – a good opportunity to practice all the skills before moving to real trading. Opening a deal on «real» money is always connected with serious emotional experiences, so take your time.
Stage 5. Change in exchange rates
You are not looking up looking at the chart of a currency pair, on which the position is open, and the heart in my chest pounds…
I remember my first deal with a minimum lot on a small timeframe. I broke the trading plan, closed the deal with a tiny profit of 25 cents, missed a great move. Nerves passed, it happens.
I subsequently learned to analyze, enter the market, establish protective orders and «disconnect», not let the market control my life.
Prices fluctuate constantly. Soon, in daily trading, You will become calm to small fluctuations and get closer to the level of a professional trader.
Stage 6. Closing position
Typically, positions are closed by trade order «Take Profit», but some strategies involve manually closing trades. In this case, the hour of triumph comes – you close the position and see, how to replenish a trading account.
That’s the whole sequence. After several weeks of trading, you will begin to go through six stages automatically, without thinking about their actions.
4. How to succeed on the currency exchange — 4 tips for beginners
I suggest you take note of four simple, but extremely important advice.
They will help not only not to lose money, but also become a true trading professional.
Tip 1. Use the services of experienced brokers
Managers from new brokerage companies often call me and offer to cooperate, I politely refuse. No matter how tempting the proposals of young intermediaries may seem, time they are not tested, better not to take risks.
Tip 2. Take training courses on trading
Check out the basic course first, then learn to work in the trading platform. When this fundamental knowledge is gained – go on to learn trading strategies.
Try different areas of technical analysis: they will learn to understand the market. After mastering other people’s strategies, learn to synthesize them, shaping your own.
Trading Training — the most important stage in the formation of a professional stock player. Without this, significant earnings in the currency market are simply impossible.
Tip 3. Control profits
In other words, follow your trading plan. If you have analyzed and made a conclusion, that the price should rise to a certain level, place orders «Take Profit» and «Stop Loss» and wait.
Profit early closing, exit the market with a small loss before touching Stop Loss – trading plan violations. Sooner or later you will merge completely, if you don’t think about discipline.
Tip 4. Throw away emotions when making deals
There are situations, when the price itself, not because of the news, moves sharply up or down. And so I want to make money on her movement, open large… Don’t give in to emotions, open positions only on the basis of a cold-blooded analysis.
Don’t give in to emotions!
Stock exchange – your enemy. All traders want, so you lose money, because otherwise they will not be able to earn. So do not follow the spontaneous price fluctuations, which often lead to «traps».