Forex TradingTrading

How To Start Forex Trading As Beginners 2020

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Starting day trading in currencies is easy, since one of the most open financial markets is the foreign exchange (forex) market. Some forex brokers require a minimum initial deposit of only $25 to open an account and some accounts with an initial deposit of $0 may be opened

But just because you can start with as little as $50 doesn’t mean that is the amount with which you should start. Before deciding how much money to put into your forex trading account you may want to consider some scenarios involving the possible risks and rewards of different investment amounts.

Don’t change mind by seeing 25$ it is a big amount for some countries I will recommend a broker if you go with that you will get 50$ for just adding 25$ in your account. How to get that and how to get profit.

If you dont know how to take profit dont worry here i am going to tell you basic to advanced everything so stay tuned keep reading.

Forex trading is possible through the purchase and selling of currency pairs or through the purchasing of derivatives such as options and futures. Both are very similar to equity trading.

Factors to Consider Before Opening a Forex Brokerage Account

1. Leverage

Leverage is the multiplier, the X times the margin you could take a position for. For instance, if you have $10,000 in your account and a 10-Times leverage then you can take a position value of $10,000 x 10 times = $100,000.

In the range from 50:1 to 300:1 Forex brokerage houses have a varying leverage. With a small investment, the leverage helps you to make major profits. Losses in case the trades go wrong are also amplified, though.

If you not understand dont wory you will understand ahead

2. Commissions and Fees

You don’t have to pay fees on each forex trade, unlike stock trading. Forex trading deals with market makers directly and not through brokers.

Spreading on a pair of currencies is what differs from companies to companies. The difference can be as small as one pip (0.0001) but it can make a big difference with large volume. Larger spreads allow for the capture or loss of more pips.

You need to test the spreads on the currency pairs offered by the brokerage houses which you wish to trade.

3.Pip Values and Trading Lots

The forex market is moving about in pips. Let’s just say Euro-U.S. The currency pair Dollar (EUR / USD) is valued at 1.3025. That is, the value of one euro, the pair’s first currency, known as the base currency, is $1,3025.

A pip is 0.0001, which is equivalent to 1/100th of a percent for most currency pairs. If the price of EUR / USD goes up to 1.3026, that is a one-pip move. If it changes to 1.3125 this is a move of 100 pip.

Forex pairs trade in 1,000, 10,000 or 100,000 units , known as micro, mini and standard lots.

The value of the pip is fixed for each type of load when your second USD is listed in the pair (equivalent to EUR / USD or AUD / USD), and the value of your account is fully funded by U.S. dollars. If you hold a 1,000-unit micro lot, each pip move is worth $0.10.

If you hold a 10,000 mini lot then each pip move is $1.8 if you hold a 100,000 standard lot, then each pip move is $10.

Best Forex Broker

And my all time suggestion is OctaFX , so you will ask why octaFx

so here is the answer

forex trading with octafx

If you want to create account on OCTAFX click here

Just crete account using email as like normal signup process ,verify your email account, Done

Now click on deposit you have to deposit minimum 25 USD OR 1500 INR. It depends on your currency

choose your payment methood, you can pay through bitcoin also

forex trading

before payment just click on bonus

As I promise you in the beginning if you deposit 25$ you will get 50$ and if you put more amount you will get an additional 50% on that amount.

Major benifit of OCTAFX is its copytrading option

what is copytrading

If you don’t have any knowledge of forex trading and you trade but baring loss and don’t want to trade by using your own tricks and want to copy other successful traders

Yes you can do that here you can copy the trade of the professional traders but you have to pay 10% commission on your profit just imagine using other tactics you can also make more profit if you don’t have even basic knowledge.

How to Do Forex Trading 

Forex trading is possible through the purchase and selling of currency pairs or through the purchasing of derivatives such as options and futures. Both are very similar to equity trading.

Buying and Selling

In simple buying and selling currency pairs, you ‘re long on the pair with the belief that the value of the pair is rising and that you’re benefiting in the process. 

Let us say, for example, that you purchased a pair of GBP / USD at 1.2936. You would gain the profit if the value increases to 1.2937 and higher and lose money if the pair goes below to 1.2635  

The pair is rising as the value of the GBP rises against the US dollar.

Types of Forex Trading Orders

This is the very first order to open a new position which can be a buy (long) or sell (short) position. Now you have two choices

1. Market Order or a Limit Order

Market Order: This is the first time a new position can be opened that is a buying (long) or a selling(short). There are now two choices.

Limit Order: Another approach is to set the rate at which you would like to buy or sell which is called the order of limit. When the rate reaches a predefined limit, the limited order is executed.

2. Take-profit Order

With an open position, a trader might want to lock profits which can be achieved by placing a take-profit order.

A trader is hopeful, for example, that the GBP / USD will hit 1.2940, but not very confident that the rate will rise much further. He can put a profit order in this case and lock the money.

The take-profit orders also get executed when the rate reaches the predefined set limits. The rate may move ahead or may not reach the limit to get the order executed.

3. Stop-loss Order

The stop-loss order is just the opposite of the take-profit order, where the trader limits losses.

You take a long position at 1.2936 in GBP / USD, for example, and know that the maximum losses you can bear are 4 pips. In this case, the stop-loss order can be put on 1,2933 for closing the position.

Stop-loss order limits losses should the rate move further down.

How Much Leverage is Right in Forex Trade

Forex trade involves leverage up to 300:1, so you can trade up to $30,000 on your account with just $100.

Leverage misuse is one of the reasons for the loss of money for forex traders.

1. Risk of High Leverage

For example, let us understand. Let’s assume you have 1000 dollars in your account and use a leverage of 200:1 to borrow 200 dollars for every single dollar that you have.

Up to $1,000 x 200 = $200,000 can now be traded.

Three lot sizes of forex trading occur. Standard 100,000 lot, mini-lot of 10,000 units, and 1000 units of any currency micro-lot.

You can buy 2 regular batches with $200K.

One pip movement is equal to 100,000 x 0.0001 = 10 change units in standard batch. It will cost $10 x 2 = $20 for each pip movement. You lose 25 pips x $20 = $500 if the exchange goes against 25 pips. That is 50 % of the total capital amount.

2. Lower Leverage

If you had only leveraged 50:1, then in the same example. You will then have a deal of $1000 x 50 = $50,000. That’s enough to buy 5 mini lots.

One pipe costs $1 in mini lots. This will cost you $5 for every pipe move.

Now if only 25 pips are in the wrong place you would lose $5 x 25 = $75. This is 7.5% of the overall quantity.

How to Pick the Right Leverage Level

It would be appropriate to start learning less than 5:1 or 10:1 if you had just started and still did. It takes time and practice to pick the best leverage.

The prudent way to do this is to

  • Trade forex with a comfortable leverage ratio
  • Stop-loss orders to reduce losses and Limit each position to 1% to 2% of the total amount.

What is Bid, Ask, Spreads & Pips in Forex Trading

1. Quote

A quote is a pair of currencies, where one currency’s value is expressed by another currency’s value. The quote for the British and US Dollar currency pairs will look like GBP / USD = 1,2936.

The pair will also represent the currency you are dealing with. The first currency (GBP) is the base currency and the subsequent currency (USD) is the quote currency.

The base currency is equal to one unit. The most used base currency is USD (US Dollar), EUR (Euro), GBP (British Pound) and AUD (Australian Dollar).

The quoted amount of 1.2936 is the quote currency (USD) number equal to 1 base currency unit (GBP). Which means 1 GBP = USD 1,2936 or with GBP 1 you can buy USD 1.2936.

Direct & Indirect Quote

Quotes based on the domestic currency can be direct or indirect.

The domestic currency is the quoted currency in a direct quote. For eg, a direct quote is for a US based forex trader GBP / USD.

In an indirect quote the domestic currency is the base currency. For the above case the GBP / USD is an indirect quote for a British forex trader.

In other words, suppose that USD is the domestic currency so GBP / USD = 1.2936 is the direct quote in which you can purchase 1.2936 USD with 1 GBP, and USD / GBP = 0.7730 is the indirect quote where 1 USD will purchase 0.7730 GBP.

2. Bid & Ask

You will always find forex quotes with a bid or buy price and ask or sell the price. Both are essential in terms of the base currency.

BID – When you decide to buy a currency pair, the asking price refers to the amount of the quoted currency to be paid in order to buy one unit of the base currency.

Here, you need to pay 1,2944 USD to buy 1 GBP.

ASK – When you intend to sell a currency pair, the bid price is considered, reflecting how much of the quoted currency you will get when you sell one unit of the base currency.

Here, you’ll get 1,2940 USD when you sell 1 GBP.

In the quote ASK price will always be greater than the BID price.

The bid price is what the bank is ready to “buy at” and ask for the price is what the bank is ready to “sell at.” .In the example above, the bank is ready to buy GBP 1 for 1.2940 and ready to sell GBP 1 for 1.2944.

3.Spread and Pip

The difference between the price of the Ask and the price of the Bid is the spread. In the case referred to above, the spread is 1,2944 – 1,2940 = 0.0004.

Pip is the smallest amount that the price can move in any currency quote. In the GBP / USD quote, the smallest price movement can be 0.0001. Thus, one pip would have been 0.0001.

Popular Currencies for Forex Trading in India

The demand is always there for highly liquid currencies of the developed countries which are politically stable like USD, GBP, JPY.

1. The U.S. Dollar (USD)

2. The Japanese Yen (JPY)

3. The Euro (EUR)

4. The Great British Pound (GBP)

5. The Canadian Dollar (CAD)

6. The Australian Dollar (AUD)

Reasons for Currency Fluctuations

Changes in interest rates, GDP, consumer confidence, inflation, unemployment, and the country’s political stability have a huge impact on its currency movements.

Below is the list of economic indicators that are commonly considered as having the greatest monetary impact.

1. Employment Data

A sharp rise in jobs shows the country has a stable economy which can have a positive impact. Although decreases are a sign of possible contraction, the data may be sending down the currency.

 2.Inflation

Increases in prices are indicators of inflation that depreciates the home currency.

3.Gross Domestic Product (GDP)

GDP tests the country’s economic wellness. The healthier the region, the more it attracts foreign investment, which eventually contributes to the growth in currency’s value.

4.Interest Rates

The higher interest rate tends to attract foreign investment, thus boosting home currency value. In contrast, lower interest rates are unattractive to foreign investment, and thus decrease the relative value of the currency.

Forex trading Legal in India

You can trade Forex in India, of course. Yet if we inquire about Indian retail forex trading, the response is that there are restrictions.
In India, you can exchange Forex with Indian Exchanges (NSE, BSE, MCX-SX) that include Forex Instruments. Nevertheless, Indian Exchanges currently sell pairs for trading purposes from USDINR, GBPINR, JPYINR, and EURINR.

Trading non-INR Forex pairs under FEMA act is illegal in India.

I tried to provide complete information on how to trade forex . Let me know what is missing in this article and if you have any queries ask in comment box i will try my best to resolve your queries

Thank you, Happy Trading

kaustubh

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1 Comment

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