Forex Trading: A Beginner’s Guide

When trading Forex, you are simultaneously selling one currency and buying another currency. Currency is traded in pairs (for example EUR/USD). When you buy EUR, you are selling USD at the same time and thereby betting that the value of the Euro will increase, relative to USD, and vice versa.

Forex Trading Terms Explained:

• Currency Pairs: The base currency and the quote currency.
• Pip: The smallest unit of measurement for a price movement.
• Lot: Your trading position’s size (micro, mini or standard).
• Leverage: The amount of borrowed capital you can use to trade larger amounts of currency.
• Broker: A Forex trading platform that enables you to execute your trades.

Reasons Why Beginners Are Attracted to Forex Trading

• Minimum Initial Investment Required for Trading

The use of leverage enables the ability to trade with little initial funding.

•  Forex Trades Can Be Made 24 Hours A Day

The forex market continuously trades every day of the week except for Saturday and Sunday, providing ample opportunities for trading to be done outside the normal trading hours of the day.

•  Highest Liquidity in Forex Markets

Due to the overwhelming volume traded in the Forex market on a daily basis means that it is easy to open and close a trade quickly.

•  A Global Forex Trading Arena

The current technological advancements allow for individuals to have access to currency trading from virtually every part of the World allowing for great diversification.

How to Trade Forex

Forex trading is made possible using broker provided online platforms. A change in price is driven by an event or announcement made by a government or Central Bank that affects the value of its currency. An example of this would be an announcement regarding the Gross Domestic Product (GDP), or employment numbers for a country.

To Trade Effectively You Must:

• Find a trusted and reliable Brokerage Company
• Establish a Trading account with a Brokerage Firm
• Understand how to read Chart Patterns, Technical Indicators, and identify Support and Resistance levels
• Conduct both Technical and Fundamental Analysis of the Forex Market
• Execute an Order to Buy or Sell a Currency Pair
• Apply Risk Management by Setting Stop-Loss levels

Different Types of Analysis Used in Forex Trading

  1.Technical Analysis

Technical Analysis consists of Chart Patterns, Chart Indicators (RSI; Moving Averages; MACD; Etc.), and Chart Patterns based on the Price Action.

  2.Fundamental Analysis

Fundamental Analysis is based on Economic Data, examples include; GDP; Inflation; Employment Status; and Use of Central Bank Tools and Methods.

  3.Sentiment Analysis

Sentiment Analysis is a means of identifying how the market Participants feel about the future direction of the market.

Risks Involved in Forex Trading

There are risks associated with forex trading which include:

• Market Volatility
• Leverage Losses
• Failure to Analyze Properly
• Making Decisions Based on Emotions
• Not Being Trained Properly
• All these reasons explain why it is important to join a reputable academy to assist you.

Reasons to Learn Forex Trading from a Professional Trading School

If you want to be serious about trading then you should look into a structured approach to your learning. By attending a reputable trading school, you will have access to resources that can teach you the essential components of trading, as well as supporting your development of solid trading plans.

At NXT Institutions we help beginner to intermediate traders learn real-world strategies, participate in live trading sessions with professional mentors. For this reason, we are widely accepted as the leading trading school in Malappuram and the best forex trading school in Malappuram.