Foreign exchange trading, aka forex trading, is the trading of currencies internationally. The forex trading marketplace is one of the most liquid marketplaces that exist in the world.
If you are a forex trader, as an investor, you can compete with banks and large hedge funds if you are operating the right type of account which makes forex trading very unique in nature. So, to make it simple for you, we’ll explain how to learn forex trading on your own.
How to Learn Forex Trading
Learning forex trading on your own is not as simple as it seems. All the marketplaces work on the principles of supply and demand. The rules of supply and demand are the only rulebook for price action in any market, not only forex.
Learn Forex Trading First
Everything that matters to trade systems and technical analysis indicators is on the price chart right in front of your eyes. Just keep your eyes open and discover it!
You don’t really need any fancy indicators to point it out to you as supply and demand is the only thing that drives PA in any marketplace. If you have an eye for the hidden techniques of supply and demand on the price chart, you have an advantage over all your rival traders.
Learn Currencies Exchanging on Forex
In the forex market, currencies are traded in ‘lots’ of different sizes. Now you have to understand the concept of lots. In financial terminology, a lot refers to a standard number of units of monetary assets for exchange or other similar regulatory bodies. The number of these units are defined by the lot size. Each market has a different lot size of its own.
A micro lot is 1000 units where the mini lot is 10000 units, and the standard lot is 100000 units. If your account is in USD, the micro lot means $1000 of your base currency, the USD.
All currency trading is done in ‘pairs’ which means two national currencies coupled in one for forex trading. In the forex market, you buy a currency and sell a different currency. All currencies are precise to the fourth decimal point. A percentage in point, also known as the ‘pip,’ is the smallest increment unit of trading. One pip means one percent.
Learn How Economies are Performing
Macroeconomics, capital markets, international trade, political new, and economic statistics are all vital catalysts of foreign exchange and directly or indirectly control the market.
Macroeconomic statistics like inflation has a significant effect on forex markets.
Commodity, bond, stock as in all sorts of capital markets have a noticeable impact on exchange rates.
Trade deficits, trade surpluses, and other international trade numbers also play a major role in forex marketplaces.
Political news sometimes has a crucial influence on forex markets, especially in case of unpredictable occurrences.
Learn About Currency Prices Movements
Currency pairs are volatile as they fluctuate all the time. Various factors move the FX market like relative values, macro data, central bank policy, changes & deviations, supply and demand, momentum, fear, and greed.
Learn How to Trade Currencies
Select a currency pair. Decide which currency pair is suitable for you to trade.
Select the category of an FX trade. There are three different ways to trade forex, such as with CFD, City Index Spread Betting, etc.
Decide whether you want to buy or sell. Add orders. Monitor and then, finally, close your trade.
Follow Case Studies of Forex Trading
It would help if you had a thorough understanding and a clear concept about the market. For that purpose, a lot of market research is required. The best thing you can do is, follow a lot of case studies related to forex trading online that will guide you through your path. Look into the experiences and opinions of former and current successful currency traders and investors to make things easier for you to understand. Don’t only look into success stories, also look into the case studies of their losses and failed investments so that you can learn from their mistakes and adopt a better strategy for your trade.
How to understand the market
Professional traders must have a fair knowledge of time and price. Other factors don’t matter much except the position of supply and demand areas on the price chart and the length of time when price action could not invest in that particular value area. That’s pretty much it; it’s as simple as they come. Beginner level investors often think there is some sort of magic formula or sign that will tell them when and where to press the button. But to be a successful investor, you must stop thinking that way. Just follow the proper algorithm and patterns, and you will be good to go!
Join Forex Traders’ Communities
Join open social trading networks that will allow you to connect with other traders and investors. It can be helpful to socialize and collaborate with other traders all over the world and discuss your trading business. A lot of professional meetups are arranged by traders just for the sake of meeting other traders and growing as an investor. There are many groups on various social media platforms, forex forums, and blogs, forex signaling or forecasting websites, etc. that can make your life easier! This is the kind of business platform where you can not succeed without proper guidance from your fellow investors.
Forex trading is a tricky business, and it exposes you to a high amount of risks. So, you have to learn the rules first before you take any steps. It’s high time to brush up your knowledge about the market and fill in the gaps. You must understand how to read forex charts and then forecast or presume the investment results. You have to learn the technical analysis and fundamental analysis too. As now we have explained to you how to learn forex trading, it shouldn’t be complicated.