Getting started with trading and transitioning into a financially independent lifestyle has become increasingly popular among people of all ages in recent years. Thanks to the meteoric rise of retail Forex trading achieved by online brokers over the years, the internet has opened up the Forex market to everyone from the comfort of their own homes. Here’s how to open your first trade, and how doing so consciously can make you a lot of money and make forex trading a worthwhile endeavour.
Forex is the world’s largest trading market, with a daily volume of $6.6 trillion. As soon as you open your first trade and start trading forex, you will understand why it is so popular in the global market. You’ve probably heard of the foreign exchange market and all the benefits smart investors can get from it. Perhaps it would be a good idea to practice it yourself so that you can get a real sense of it.
This detailed guide makes it easy for you to learn the basics of foreign trading, how to open your first trade, and help you decide on the strategy that works best for you.
1. Understand the Forex Market
Investing your time into learning as much as you can surely help you achieve long-term success in the Forex market. It’s vital to seek out information from a reliable source on any Forex concepts that you don’t understand. The AximDaily site is one such reliable platform where you can gain a piece of immense knowledge about Forex trading and its intricacies.
It is crucial to have a solid Forex education before you open your first trade if you want to succeed in Forex trading. Forex education will enable you to manage your risks effectively, maximize your profits, and put yourself in a strong position when it comes to your new investment. The basics of forex trading are easy to learn, but you still have to practice to understand the trading format better.
Here’s what beginners need to know: how forex trading works, active forex trading times, how to make forex trades, and risk management for beginners.
2. Figure Out Your Trading Personality
There is no magic trading strategy, indicator, or instrument that will guarantee your success in Forex trading. What matters is how you match your trading strategy to your unique personality. Some forex traders need only one trading strategy to be successful. Where others may require more than one. Where others may require more than one. Diversifying your trades and managing your losses are the two foremost advantages of having a dual trading strategy.
However, it is important not to add a strategy that is similar to your first. Doing so usually creates too much correlation, which leads to big drawdowns.
3. Find a Reliable Broker
A Forex broker acts as an intermediary between retail traders and the forex market or the interbank system. The broker provides financial services to facilitate the process of buying and selling foreign currencies for retail traders. Choosing the right forex broker is one of the most crucial forex trading tips since the broker is considered your trading partner.
Ensure that you choose a reliable broker that offers tools that match your trading style and offers a variety of trading options. The best forex broker provides reliable trading conditions with excellent trading opportunities. Choosing an ideal forex broker requires consideration of several factors, like regulatory compliance, currency pairs offered, customer support, and trading platform. Here’s how to choose the best Forex Broker.
4. Study Your Trading Platform
Studying your trading platform is crucial since it is the only way to avoid mistakes like order placement. You should make sure you are familiar with the buttons when executing market orders or pending orders. The MT4 platform makes this more straightforward than some other retail platforms. It’s not necessarily mean that you can start trading immediately. Practising on a Demo account is the best way to learn about a trading platform without losing real money.
AximTrade demo accounts are the best alternative for real trading accounts since it offers virtual funds for trading execution and real-time experience to learn about the platform and strategies. Furthermore, the company offers numerous promotions and contests for demo accounts, enabling traders to earn prizes and bonuses in the learning stage.
5. Select a Currency Pair
Forex trading is nothing but exchanging one form of currency for another. The two traded currencies are known collectively as currency pairs.
Generally, most forex traders are likely to trade currency pairs with large volumes, in other words, major currency pairs. Technical analysis of major currency pairs is considered more accurate than exotic currency pairs due to their low spreads and high trading volumes. Due to their large trading volumes and high liquidity, major currency pairs have a low possibility of slippage.
These are the 7 major currency pairs:
- EUR/USD (Euro / United States Dollar)
- USD/JPY (United States Dollar / Japanese Yen)
- GBP/USD (Great British Pound / United States dollar)
- AUD/USD (Australian Dollar / United States Dollar)
- USD/CAD (United States Dollar / Canadian dollar)
- USD/CHF (United States Dollar / Swiss Franc)
- NZD/USD (New Zealand Dollar/United States Dollar)
The exotic currency pairs involve currencies from emerging economies like Mexico USDMXN (Mexican Peso), Russia USDRUB (Russian Ruble), and other countries. Exotic currency pairs are generally more volatile, resulting in higher transaction costs for forex traders.
For this example, we are going to use the New Zealand Dollar vs U.S. Dollar, NSD/USD pair.
6. Add Indicators to the Chart
Following the selection of currency pairs, it is time to add some indicators to the chart. When trading Forex, technical indicators are very useful to perform technical analysis, as they help us determine where we stand in the market and allow us to make better trading decisions. The moving average is one of the most popular forex indicators, which shows the average price of a currency pair over a period of time.
- In the MT4 platform; Simply go to ‘Insert’ > click open on MT4 platform and place your cursor on indicators.
- It will show all the indicators available on the platform. Just click the indicator you want to add.
- You can make changes to the parameters, colors, levels, visualization according to your preferences.
- Then place the ‘OK’ button to add the indicator.
This is how a Moving Average Indicator appears on the chart.
7. Use the Correct Lot Size
When you are new to Forex, you may find the lot sizes confusing. But getting it wrong can easily ruin your trading account. There is a subtle difference between lot sizes in Forex and other markets, but once you understand it, it’s pretty straightforward. The first thing you need to do is determine how much capital you want to risk per trade. The recommended level of risk per trade is less than 2% of your total trading account.
Here is a detailed guide on Forex lot size and how to figure out the Proper Size and Calculate Profits.
8. Understanding the Spread
Spread is the difference between the bid and the ask prices of a security or asset that is measured by the pip. It is basically the transaction cost for a trade. Spread is the only cost you pay as a trader when you trade Forex.
It is crucial to understand this topic when trading Forex. In order to cover your trading fees, you need to know how much the market needs to move. For example, if you set a small profit target in pips, for instance, 10 pips, the transaction costs will be very high compared to your profit. Suppose you’re paying a spread of 2 pips, for example. That’s 20% of the profit target you’re aiming for, which is really high.
9. Set the Stop Loss and Take Profit Levels
Risk management is crucial to forex trading since it prevents your trade from losing too much money. Ideally, this should be done automatically with the help of Stop Loss and Take Profit orders.
Forex traders use stop loss and take profit orders to control their profits and losses. The purpose of both orders is to decide how much you are willing to risk or make from a particular trade. While it looks simple at first, knowing how to apply for each order correctly based on risk management rules is what separates successful forex traders from the rest.
10. Placing the Order
Having completed all the above-mentioned steps, it is finally time to place your first trade. When your order is submitted, wait for the confirmation screen to appear. The confirmation of the trade and the ticket number will be useful if you need to contact your broker regarding the trade.
Of course, you don’t want anything to go wrong with execution, but if the execution is wrong on the broker’s part, you should contact them with your confirmation and ticket number to make sure the mistake is corrected, and they can credit your account if necessary.
Beginners who trade forex often mistakenly think making money in Forex is a piece of cake. Despite the fact that Forex trading might appear fairly simple at first glance, the truth remains that making the transition from a beginner to a successful trader is much more difficult than it appears. To stay in the business for the long term, you need discipline, proper risk management, and a profitable trading approach. Being aware of why you are trading in the first place, and having fun while doing it, are essential to your success in Forex trading.
Experience seamless trading with AximTrade
AximTrade is one of the leading forex brokers in the financial market with a goal of revolutionizing the way people trade by offering cutting-edge technology, low-cost trading, comprehensive market research tools, advanced educational programs, and world-class customer service. AximTrade won multiple awards from the Global Forex Awards 2021.
AximTrade offers comprehensive brokerage services on global markets with MT4 execution and Copy Trade platforms. Open a Forex account now to explore the best trading conditions with AximTrade, a global leader with leverage up to infinity. AximTrade stands out as the best broker for its transparency, reliability, excellent trading conditions, 100+ trading instruments, 0.004s execution speed, and up to 100% Forex bonus.
Check full AximTrade Review to learn more about the trading conditions and the company regulations.