There are many different definitions of forex, but from a trading perspective, you only need one: Forex is a decentralised global marketplace where traders agree to exchange one currency to another at specified prices.
Trading platform and basic terms
You need to familiarise yourself with trading platform basics. There are many different features on the platform, but we will focus only on the essentials to take your first steps in trading.
Methods of making trading decisions
We must analyse forex pairs to decide whether to buy/sell or hold positions. Without analysis, trading is random and sure to fail.
The Foreign Exchange Market
What makes the forex market so great to trade is its size. It is the biggest market in the world. Despite being dominated by large banks, corporations, and governments, participants of any size can join in and trade at almost the same relative cost.
What is Fundamental Analysis?
The four major currency pairs account for about two-thirds of all the daily turnover in the foreign exchange market and are the most-watched barometers. The majors are EURUSD, USDJPY, GBPUSD and USDCHF.
Charts have been used to illustrate price movements for hundreds of years. Today technical analysis, the study of charts and indicators, is commonplace and used extensively by traders, analysts and investors.
What to do to Improve Your Trading
The best traders have a plan and stick to it. Most winners in trading are working to a trading plan and treat trading seriously and as a business. No one would seriously expect to succeed in business without a plan.
An order to close a trade at a specific price to stem losses. This is used to close a trade to stop your account being wiped out.
An order to close a trade at a specific price to lock in profit without you having to physically close the trade yourself.
To put in very simple terms, it allows you to open larger trades with less capital. Leverage is a great tool that allows you to earn more, but it comes at a price. The higher the leverage you use, the higher the risk of losing your investment. It can amplify both your earnings and losses. You need to find a balance between your capital and leverage. If you’re new to forex, it’s highly recommended to keep leverage low and not to open too many positions. A small investment + high leverage = likely disaster.
Turnover of a market. In MetaTrader you define the size of your trade in lots.
Difference between order price and execution usually caused by lack of liquidity or a surprise news event.