The word Forex has been heard in many places for a long time. So in this article, let us see how to learn Forex trading for beginner in this article. But before that, let’s see how the economy is set in the modern day so we can better understand how Forex trading works. The crumble of the economy has given rise to many ways to make money. Nowadays, there are many ways to make money by just working from home and researching and spending time. So there are many ways to earn money online, one of which is trading.
When we go into trading, we are familiar with lots of trading. Trading has been in use since ancient times. In ancient times people used to trade whatever they had for the product they needed. This is also known as the barter method. The barter method is the backbone of all types of trading in this modern world.
We have been doing in this modern world have risen from this simple exchange of goods. Since the two people are exchanging goods, they have to get their desired goods, and a problem arises with the value of the goods. As civilization started to develop, people learned the value of their goods. So using the barter system as a mode of transaction lead to the following problem.
If a person needs a fish and has only an apple as a trade, the person givng the fish will be considered cheated since he is giving it for just a single apple. With the problem being found, a solution was found. The solution for this situation is to create an intermediary to give you a stamped paper with specific values that can be exchanged for the needed product. It has to be noted that the stamped paper is not a currency, but it was called “I Owe You.” This was the subsequent revolutionary development in trading.
In this concept, the people in the same vicinity could use this IOU, but when they travel to another city, the IOU given in one place becomes invalid. So this problem gave rise to a universal mode of transaction: currency. With the birth of money and currency, transactions have become more liberal. The value of each currency is different in different locations, and the product’s value also differs in different locations.
So this is how a trade is executed in the modern day physically. Now there is a digital world in which trading is executed, termed Stock Market, Forex trading, and Crypto trading. A stock Market is a place where a person can buy shares of the listed companies and sell them at his desired price over a period of time. Different government-authorized authorities govern the stock market in different countries.
Forex (Foreign Currency and Exchange) is a currency exchange terminal. We can split it into two types an over the counter and digital. The transaction will take place over the counter between two persons, and there won’t be any governing authority to look after the transactions. Since there was no governing authority in the Forex, there won’t be any commission that would be set for the transaction. The next big thing will be the fluctuation that takes place in the market will be minimum.
How to Learn Forex Trading For Beginner
Before entering Forex trading, some prerequisites must be fulfilled to be a better Forex trader. Let us see what those for you to be a better forex trader are. The first and foremost thing a trader requires is some discipline in his trading. The reason the discipline is given more importance in how to learn forex trading for beginner is that it will be playing a very vital role in the days to come. In any trading, there will always be a bad day which any seasoned player cannot avoid.
When you face a terrible day and lose 100$, don’t go into aggression to recover the amount lost the next day. Some strict rules and patience have to be followed to get back the amount lost and build your profit. Instead of increasing the lot size or going at the wrong levels, try to learn to analyze the levels in the chart, make your entry according to those levels, and also go with your usual lot size. Maintaining your regular lot size is crucial to gaining more profit in Forex.
The main reason for insisting on how to learn Forex trading for beginner is that whatever the profit you have made so far can be wiped out in just one bad trade, and your pot will be left with zero. So don’t ever go into a trade with an aggressive mindset; this is the first thing you must learn to learn forex trading for a beginner. The next main thing to be learned in Forex trading is understanding the charts. Learning to read a candle chart in Forex trading will help you greatly in executing successful and profitable trade in Forex trading.
Money management is the next rule that has to be followed in learning Forex trading for beginners. A Forex trader must have money management skills. The essential rule about money management is the way we split up our accounts and invest the money has to be such that if we were to incur a loss in one trade, there has to be an amount left in the pot to recover the loss. This split up is the best way to trade in Forex trading
How to Learn Forex Trading Step By Step
To learn forex trading for beginner, we have to follow the following steps to be better forex traders.
Open a Trading Account
Many trading brokers allow you to create your forex trading account for free. But the most popular and trustworthy brokerage that we recommend will be exness. Opening an account with exness is very easy and it will be discussed in how to learn forex trading for beginner.You must provide your country details and valid email address and enter a valid password following the rules given in exness.
Once the account has been opened, the next level will be to provide your valid KYC.In exness, you don’t have to wait to complete your KYC. You can go ahead and make your deposit into your account and start your trading. This is the reason we insist on exness as the best broker in how to learn forex trading for beginner.
Choosing Your FX Pair
In Forex trading, there are many pairs you can choose to trade in Forex trading. So choosing the right FX pair is very important to trade in Forex successfully.
Let us see some essential trading pairs we can use to profit in forex trading. All the major Forex pairs usually have USD in them, and these pairs have more price action and make money in those pairs a little risk-free. However, the reward always equals the risk we are willing to take. The essential USD pairs we discuss in how to learn forex trading for beginner are GBP/USD, USD/CAD, AUD/USD, USD/CHF, USD/JPY, EUR/USD, and NZD/USD. Other than USD pairs, we have CAD/JPY, also called cross pair.
Do Research On The Pair
Researching is always a must in any trading. Doing a better research about a currency pair before entering a trade is must follow step in how to learn forex trading for beginner. As beginner we tend to make some rookie errors this the reason that we insist on doing your research. There are lots of indicators and patterns that will help you to analyze the chart and find out your perfect entry point. Finding the chart’s trend and your entry point is a must for a successful trade.
Make Your Strategy
Next step in how to learn forex trading for beginner will be creating your own strategy. For any successful trading strategy is very much a required skill. The strategy can be any rules like fixing your lot size to the take profit you take. Sometimes keeping a certain amount of profit as a day’s target is a good strategy. If you have achieved it, close that day’s trade and have a peaceful day.
Placing Your Trade
The next important step in trading is placing your trade. In Forex, the essential thing to be noted is the number of pips we get in each trade, and the higher the number of pips that we acquire, our profit will be in Forex.
Ending The Trade
The next important thing that we will learn in how to learn forex trading for beginner will be when to end the trade. Once the trade has been made, wait patiently for your levels to exit the trade. It is the right decision to wait for the favorable levels. If your entry has been wrong and the market is going in the opposite direction, it is advisable to cut your loss short. If we keep waiting for the market to reverse and it doesn’t take place, the loss you incur will be exponential. So this is the main rule to follow in learning forex trading for beginners. Also, you must take a particular risk to profit in Forex trading.
How To Learn Forex Trading For Beginner Online
Many acclaimed traders are taking classes online. These classes are available in both paid and free courses. However, these courses will only give you training and prepare you to enter Forex trading, but the real deal comes with training.
So to train in Forex trading, almost all forex brokers give demo accounts. These demo accounts are the same as the live account, but the amount in the demo account cannot be withdrawn. All the charts and indicators we use in the demo account are available in the real account and can be used. This is the most brilliant way we refer in how to learn Forex trading for beginner online. With a demo account, you can train in all types of pairs and learn the nook and corners of Forex trading in the live market, which is the beauty of a demo account.
How To Use Forex Tutorial
As the name suggests, these are all tutorials. Each tutorial is built from the experience of the person taking it. Each person will have different strategies for a different set of currency pairs. So the better idea will be to learn the strategies from these experienced traders and formulate your strategy.
In Forex trading, the trader with his strategy only can go to long-term earning. If we follow someone else’s strategy, in the end, we will be left in an awful position if that person plans to stop trading for personal reasons. So continually formulate your strategies to gain more profit in Forex. Use all these tutorials available online to learn about Forex and use it to your advantage when you enter actual time trading. More importantly, you can use these tips in the online tutorials in the demo account to get hold of the strategies and create your ones.
How To Learn Currency Trading
In this how to learn forex trading for beginner, first let’s see what currency trading is and how it works. Currency trading is the primary trading we execute daily, and giving a currency and buying something else is a trade. If we give one country’s currency and use it to buy another country’s currency, then it is called currency trading. For example, if we give the currency of India and try to buy the American dollar, it is considered currency trading.
In Forex, each currency trade will come as a pair, for example, GBP/USD, USD/CAD, and many more. The reason for using USD in the trade is that the American dollar holds more value and is considered a universal currency.
So we have to choose the currency pair we want to make money in and then use that pair to build our strategy to find the perfect entry into that trade. As we discussed earlier in how to learn forex trading for beginner, use your strategies to stop loss and take profit to complete the trade successfully.
How To Study Forex Market
In this how to learn forex trading for beginner let us split studying the forex market into two categories. The first will use indicators and other markers to learn the market trend, and the second will use the news generated worldwide. In forex trading, many indicators are available in your terminal chart that can be used to assess the market trend. We can use these charts to find the levels of resistance and support to create our entry point, stop loss and take profit.
In how to learn Forex trading for beginner, we recommend indicators like Bollinger Bands, Fibonacci Levels and RSIto help us get clear entry point. These points will be very accurate in most cases to create profitable trade.There are times when these levels and entries generated by the indicators go entirely wrong; that is where the news-based movement will happen in the market. So in market learning via news, we have to look at important news that may affect the currency pair we will enter. By reading those news, we have to alter our mindset and levels in the indicator to find the best option to enter the market.
There have been many news-based movements in Forex that have entirely changed the trend of the market.So a trader needs to stay updated with the currency pair or the commodity they trade-in. The most important commodity traded in Forex is gold, and if there is any gold-based news, it is the day to loot more money in Forex, but to do that, we have to have a complete analysis of the market from news and strategies.
Strategies For Forex Trading
So far, we have spoken about the strategies and patterns used to find the market trend. Now let us see how to read a candle in this how to learn forex trading for beginner.
The next important thing we will concentrate on how to learn forex trading for beginner is candlestick. Candlestick is a price chart that visually represents the price movement in trading. Traders use candlesticks to make decisions based on pattern occurs. It is much helpful in trading, and it shows four points:
In the 18th century Munehisa Homma, a Japanese Rice Trader, developed the Candlestick pattern. He discovers a link between the price and supply and demand of rice in a market. The daily candle stick pattern shows rice trading movements on open, close, high, and low On a day.
Steve Nison published his book, “Japanese Candlestick charting Techniques,” and he introduced it to Western Countries. Candlestick’s Rectangular part is called “Real Body” it shows the price range between the opening and closing prices on the daily market. Where a rectangular area (real body) is filled with black or red color means close is lower the open then it is called Bearish Candle means Prices are down and closed lower than the opening price.
Whereas rectangular area(real body) is filled with white or green color means close is higher than the open, Bullish Candle means Prices up and closed higher than the opening price. The Vertical thin lines above and below the real body are known as shadows, representing high or low prices of trading, whereas the upper shadow shows the higher price and the lower shadow shows the low price during trading.
Candlestick has different Body sizes:
#1.Long: In a Candlestick where Strong Buying or selling is close above the open with a long body.
#2.Short: where Candlestick represents less selling or buying activity.
In how to learn forex trading for beginner we follow strength represents the Bullish or Green Candle, and Weak Represents the Bearish Candle or Red Candle. Buying Should be done on Green candle day, whereas selling should be done on Red Candle day.
In how to learn forex trading for beginner next, we will look into price action. This is a type of trading that will be based on the price movement of the market. Instead of relying on the indicators, we use the price action method to find the trend and entry point into the trade. In price action, we see the movement of the market in previous days or hours, or minutes. By looking at the chart, we can deduce a pattern in the price action that will allow us to find the market trend.
For example, if we see a sideways market in the price action, there was heavy resistance and support at the high of the sideways market and the low of the sideways market. The market will go bullish or bearish on breaking the resistance or support.
We will use the price action method more in our trading to enter successful trades in how to learn forex trading for beginner. The most used price action pattern in our trades will be the Head and Shoulder pattern. The Head and Shoulder pattern will form when we get a new high followed by a steep fall. This new high will be the head of the pattern. After the head is formed, there will be a steep fall in the market, and then it will reverse to a high, which will be less than the head. This second peak in the pattern will be the shoulder.
When we see the head and shoulder method, we can be sure there will be a breakout event. The breakout event can either lead to the stock’s fall or rise. To catch more pips in a single trade, we need to find the breakout event, which can be found using the Head and Shoulder pattern. Other price action patterns will be the double bottom, triple bottom, cup and handle, and many more. Like usual, don’t take multiple patterns to choose the entry. As we discussed earlier, we have a demo account with live trading, in which you can learn your patterns and the market trend over there.
Double bottom is formed when the market reaches a certain level and reverses. However, due to the resistance at the top, the market will fall again, but due to the support at the bottom, the market will fail to form a new low and reverses close to the previous low, the double formation bottom.
The creation of double bottom is a breakout event, and that will always lead to a new high or new low in the market. With this data, we can enter and profit in forex trading. Likewise, there is a triple bottom. Much like a double bottom, there will be three bottoms at the support, leading to a massive breakout. When we see a triple bottom, this pattern wields more dominance in finding the breakout event.
Let’s Begin Our Forex Journey
As discussed in this, how to learn forex trading for beginner, patience, and analysis capability is necessary for any forex trader. They may be well versed in trading, but that doesn’t mean that they can be a successful trader in Forex without specific disciplines. The reason that these disciplines are pushed is mainly to keep the loss minimum in Forex trading.
As we discussed early, the price action in Forex is very high, and the loss we will incur in going into a wrong trade will be huge. With all these prerequisites, you are set to begin your forex journey. Follow all the tips on how to learn forex trading for beginner and have a successful trading experience. So Happy Trading to all the beginners!