Forex Trading For Beginners

Forex stands for foreign exchange and is a decentralized platform through which you can buy and sell currencies. These transactions are carried out through the interbank market rather than a centralized exchange.

Even if you have little idea about forex, you may be surprised to know that you may have likely participated in it when buying imported items.

 

 

how to trade forex for begginers

 

 

 

Forex trading is immensely popular due to numerous reasons that attract traders to the forex market. These factors include the following:

  • A wide range of currencies for trading
  • Large of the market
  • Low transaction costs
  • Varying volatility levels
  • Trading at all times during the day

forex trading for beginners

 

 

 

The basic principal of forex trading lies in demand and supply. Let’s understand this better with the help of an example. Suppose that EU citizens are showing a high demand for US dollars. They will thus exchange euros for US dollars. As a result, the value of US dollar will rise, while the value of the euro will go down. Such a transaction will affect the value of the dollar vs. euro only. It will not affect the value of the US dollar against any other currency, such as the Japanese yen.

 

The forex market can witness a of ups and downs due to several factors. These include political events, changes in interest rates, inflation, among others.

 

What Is Traded?

 

Simply put, different currencies are traded in the forex market. Forex trading might appear confusing to some as nothing physical is actually being bought in the market. And the idea of buying cash with another kind of cash may seem perplexing to newcomers.

If you know something about stock trading, then that can be help you understand forex. Stock trading involves the purchase of stocks whose value is likely to increase. The same principal applies to forex trading. For instance, if you think that the yen will appreciate, then you need to buy the currency to sell it at a profit later on.

The kind of currency you are looking at is not too different from stocks. Think of a currency as the ‘stock’ of its national economy. So you can consider the Japanese yen to be the stock of the Japanese economy. This is not the reality, but it will give you an idea of how currencies work.

Thus, if the Japanese economy is doing well, the yen will appreciate. This is much like how the value of a particular stock rises when the company behind it is doing well.

Currencies also happen to have nicknames as well. For instance, the Canadian dollar is called the loonie. This is because the country’s dollar coin shows the loon, which is a common bird in Canada.

 

What Is a Broker?

 

In the forex world, the broker acts as the intermediary between the interbank system and you. Interbank refers to the network of banks that trade with one another.

Forex brokers have access to currencies and lines of credit from banks that they deal with. Thus, they can offer you values for various currencies. Since they usually deal with different banks, they can offer you the best available prices.

For forex trading, you can open an account with a forex broker. It’s somewhat like opening a bank account. Just like banks, you will need to go through paperwork, file an application and reveal your identification to get your account opened. This process can take a few days.

But if you are in a hurry to begin honing your skills, you can always go for the demo accounts. You can open one quickly with minimal information. The demo account can help you enhance and augment your trading skills so that you can start dealing profitably with real currencies later on.

You can gain leverage with forex brokers. It can vary from 10:1 to 100:1. Thus, with a 10:1 leverage, you have $10 to trade for every dollar that you have in your account.

 

What Is a Pip?

 

A pip basically shows small increments in currency values. It is an abbreviation for a point in percentage. The forex pip is usually measured in the form of the currency it represents or the quote.

The pip represents the smallest increment by which a particular currency can change. For instance, dollar currency pairs have a pip of $0.0001. This is also referred to as one basis point, or 1/100 of 1 percent. The small size of the pip protects traders from incurring massive losses. So if one pip was equal to 10 basis points, then a change of pip could spell much bigger changes in currency values. This can translate into much bigger losses for traders.

The pip helps you to understand currency value movement. For instance, suppose that the USD/EUR direct quote is 0.7746. If there is one pip change, the quote will now be 0.7747. Since you can now buy more euros with US dollars, it means that the dollar is now more valuable. Thus, the pip can show you how much more (or less) you can purchase of another currency.

Currencies are usually quoted up to the 4th decimal digit. The pip is the 4th that is, the last digit.

 

What Are Currency Pairs?

 

A currency pair shows how two different currencies are trading. That is, it shows the relative values of two currencies. Among the most well-known is the euro/dollar currency pair, also designated as EUR/USD. Since this currency pair is traded so heavily, it also has the greatest liquidity.

So a quotation of EUR/USD = 1.2500 shows that one euro currently costs 1.2500 US dollars. The euro here is the base currency, while the US dollar is the quote/counter currency. So you can spend 1.2500 US dollars to buy 1 euro. Or you can sell 1 euro to purchase 1.2500 US dollars.

Since there are so many currencies used throughout the world, the number of currency pairs is tremendous. Those currencies that are used the most for trading with the US dollar are called the major currencies. On this basis, the USD/CAD, AUD/USD, USD/CHF, GBP/USD, USD/JPY, EUR/USD are the most important currency pairs due to their enormous trading volumes. The abbreviations stand for, EUR = Euro, JPY = Japanese Yen, GBP = Great Britain Pound, CHF = Swiss Franc, AUD = Australian Dollar and CAD = Canadian Dollar.

The final USD/CAD and AUD/USD currency pairs are known as commodity pairs because Australia and Canada are rich in commodities. Hence, these two exchange rates affect the economies of the 2 countries very strongly.

What Is a Forex Binary Option?

 

Forex binary options are an advanced form of forex trading. In comparison to leveraged spot forex trading, binary options can be a better way of trading forex for beginners. The big advantage of binary options is that there is a limit on losses, which is known in advance.

There are two outcomes for binary options. You can get either nil or the predetermined value, which is 70% of the trade value in most cases. This final amount depends on price of the underlying asset. Here is an example.

If you enter a buy trade of the currency pair EUR/USD for $10 and the price has increased by the time your time limit expires you will earn $17 dollars.

The strategies and process is simple too learn and implement.  I highly recommend you check out the IM Mastery Academy if you want to maximize your gains and minimize your losses from the beginning.

 

 

Click Here To Learn How This Firefighter and Trashman Learned Forex

 

 

 

 

 

 

 

21 comments
  1. Sunny
    Sunny
    July 16, 2020 at 9:10 pm

    Exactly what you wrote in one of your chapters, happened to me, I was confused with the trade market. Once someone signed me up for this and I couldn’t understand how is possible that someone gives me virtual money which I then trade into real money. And it wasn’t a scam. That person actually was making money through the platform but was never able to explain to me how to do it. 

    Does Forex broker accept people from Europe? Actually from Serbia? Not many of them do. 

    So reading your review I assume that you have to be at least a little bit educated on this topic of the trade market or not? 
    Would it be difficult for a complete newbie to find himself there? 

    Thanks

    Reply
    • admin
      admin
      July 17, 2020 at 3:28 am

      Hello Sunny,  The forex brokers are open to the world.  Being educated is key to success in anything.  We offer training so the newbie can start having success on day one.  We offer live training sessions where the educators not only teach you but also call out possible trades you could take.

      Reply
  2. Ferra
    Ferra
    July 17, 2020 at 11:11 pm

    Hi Wes,

    Trading seems to be getting more and more popular nowadays since everyone is trying to find alternatives and make money, especially during the pandemic like now.

    My husband and I just opened an account with E*Trade but we are still so green in trading. We are looking for learning more about it so we can start investing for real and make sure our daughter has her college fund started. 

    I like your suggestion for opening demo accounts. I think we will start from there and see where it will take us. 🙂

    Thanks a lot for sharing this informative post. I have bookmarked your site for future reference.

    Cheers,

    Ferra

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 17, 2020 at 11:59 pm

      It is a great way to fund their college.  We teach how to risk as little as 2% and grow your account daily compounded.  Binary options is great because you are in and out in a matter of minutes and know how much you will make or could lose before entering the trade.

      Reply
  3. Sherry
    Sherry
    July 18, 2020 at 12:24 am

    Oh thank you for sharing here online. To be very honest,  it is not an easy thing being able to make money inline trading forex. Forex is a very difficult approach to earning online that requires months and years of dedication to finally understand thr market and make mineym this is really good since you have given the intro to it. Thanks

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 1:48 am

      For beginners I highly recommend binary forex options.  Forex binary options is very easy to learn.  We offer training that is so simple to understand and the live training and trading sessions has anyone who can click a mouse be able to learn and earn.

      Reply
  4. Payton
    Payton
    July 19, 2020 at 12:01 am

    Forex trading seems to be taking a new turn everyday with the whole thing becoming more and more popular to people. You know, when I first heard of it, I thought that it was some advanced way of making bets but I better not harness that thought anymore after reading this post you have written here. I do not know if I am ready to start trading though because it seems like it takes some human characteristics like patience. Maybe I could get a mentor that will help.

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 1:45 am

      Payton,  I recommend Forex binary options.  You are in an out in just a few minutes.  We offer scanners that help you identify entry points so you can get into trades on your first day.  A true earn as you learn method.

      Reply
  5. Md. Asraful Islam
    Md. Asraful Islam
    July 20, 2020 at 12:03 am

    Thank you so much for sharing with us a beautiful and informative article. The main content of this article is Forex Trading For Beginners. It is truly remarkable that you have presented this topic so well in your article. I have learned a lot by reading your article and gained a lot of knowledge about Forex Trading. Of the points mentioned in your article, I like the Forex Binary Option. I learned a lot from IM Mastery Academy and learned the ins and outs of Forex trading.
    Finally, I enjoyed reading your article and enjoyed it so I’d like to share your article in my Facebook group if you give me permission.

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 1:43 am

      Forex binary options is a great way for beginners to learn and the training at IM Mastery Academy is top notch.  Feel free to share in your Facebook group.

      Reply
  6. Gomer
    Gomer
    July 20, 2020 at 6:49 am

    I remember my brother trying to teach all these via a Messenger chat and I can’t understand what he was talking about. His tone of words were like he’s so excited and he wanted me to get on board with him doing Forex Trading. Then, on the next day, he gave up on teaching me the actual forex trading and just shifted to explaining about Forex Binary Options. In what I can remember then was, the binary options is like simplified version of the Forex Trading. So, upon reading this explanation of yours, I was refreshed. It takes a good explanation like yours here and a proper illustration on how it works before someone can really understand how it works and what are the techniques to be used. Thanks for diligently explanation Forex Trading, I now understand it.

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 1:41 am

      Thanks,  I highly recommend forex binary options for beginners.  It is the easiest to learn and get a good handle on the foreign exchange markets.  Plus, it is global.

      Reply
  7. DigitallyRajesh
    DigitallyRajesh
    July 21, 2020 at 7:31 am

    Hello, enjoyed your article. Trading seems to be getting more and more popular nowadays since everyone is trying to find alternatives and make money, especially during the pandemic like now. I like your suggestion for opening demo accounts. I think we will start from there and see where it will take us. So reading your review I assume that you have to be at least a little bit educated on this topic of the trade market or not? Would it be difficult for a complete newbie to find himself there?

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 1:39 am

      It is great for new people as long as they are willing to learn the simple strategies on investing in forex.  My favorite is binary options.  Why,  I now the risk and reward before I enter a trade.

      Reply
  8. Joy
    Joy
    July 23, 2020 at 12:03 am

    Hello there! this is an amazing review you have got here. I am very sure this post will be of help to others who come across it as it has been to me this moment. I think I will finally gather the courage to invest in Forex trade since I now know how it works as a beginner.

     Thank you very much for sharing this with me.

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 23, 2020 at 3:31 am

      Hi Joy, Thanks for the comment. I just started learning a two weeks ago. Training is key to learning how to trade with a higher probability of profit.

      Reply
  9. Brendaliz
    Brendaliz
    July 24, 2020 at 9:31 pm

    I have very little knowledge of Forex Trading and it does seem interesting in that your exchanging one type of currency with another. Although it is a large market, Trading is open 24 hours 7 days a week and has a low cost transaction, the market can still see its ups and downs too!

    I think this article did a great job describing this type of trading and I will consider doing this in my future! Thank you!

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 25, 2020 at 6:19 pm

      The beauty of it is you can make money when the market moves up or down.  It is pretty simple to learn simple strategies and start earning money.

      Reply
  10. Brendaliz
    Brendaliz
    July 24, 2020 at 9:31 pm

    I have very little knowledge of Forex Trading and it does seem interesting in that your exchanging one type of currency with another. Although it is a large market, Trading is open 24 hours 7 days a week and has a low cost transaction, the market can still see its ups and downs too!

    I think this article did a great job describing this type of trading and I will consider doing this in my future! Thank you!

    Reply
  11. Bella
    Bella
    July 26, 2020 at 1:14 am

    Hello there, it’s really nice to see how we beginners can become good when it comes to trading a nd to be sincere forex trading is one that really needs to be carefully understood before jumping into it all at. I love the idea of trading and I really wish to learn more about it as time goes on.i will keep this site in mind and come back for more lessons about it. Cheers

    Reply
    • Wes Gaddis
      Wes Gaddis
      July 26, 2020 at 1:44 am

      Thanks Bella,  Binary options is the best option for beginners.  You know the risk and reward before hand and can risk only $1 per trade.  With our training you will be successful.

      Reply
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