Key Steps to Make Your First Trade in Forex
Making your first trade in Forex successfully requires in-depth knowledge about trading basics and Forex trading strategies. The learning curve to trading currencies can seem overwhelming and complex, but when you have the right information by your side, it can make the entire process all the more easier.
Here are the three vital steps on to make your first trade in Forex:
1. Learn and know the basics
The first step to enter a Forex trade is to understand what is Forex and understand the fundamental Forex trading terms. The key terms that one must know before they enter a Forex trade are:
- Currency pairs: Since Forex is always traded in a pair of two currencies, they represent one's value against the other. For example, if the two currencies you wish to trade in are GBP and USD, the valuation will be defined as GBP/USD or vice versa.
- Base: The base currency is the first currency in the pair. In our example of GBP/USD, the base currency is GBP.
- Quote: This is the second currency in the pair. In our example of GBP/USD, the quote currency is USD.
- Exchange rate: The exchange rate is the amount of quote currency needed to buy a single base currency unit. For example, if GBP/USD = 1.5, we need 1.5 USD to buy 1 GBP.
- Bid: The bid price is the price at which you are willing to buy the currency pair, nothing above that and nothing below that.
- Ask: The ask price is the price at which you are willing to sell the currency pair, nothing above that and nothing below that.
- PIP: The slightest price change that occurs given an exchange rate is called pip. Traders use it to reference gains or losses.
- Spread: Spread is the difference in PIps between the bid and ask prices, which can either result in a profit or a loss.
- Leverage: Leverage is the trader's borrowed capital from the broker's credit. This allows the trader to trade huge sums without having to pay the entire amount immediately.
2. Understand all the factors affecting Forex
Understanding the factors that directly affect Forex helps you make intelligent trade moves and minimize the risk of losses. Some of the most important factors increasing trading risk in Forex include –
- Interest rate: Rising interest rate means a more substantial exchange rate and vice versa.
- Country: The country's economic stability matters a lot in Forex trading, a strong economy depicts a stronger currency in the market.
- Counterparty: The broker or trading platform used for Forex trading comes with its own set of risks.
- Leverage: The more the leverage, the higher the potential loss.
- Transaction: Communication/confirmation errors can lead to losses.
- Politics and economy: Political stability and economic conditions significantly impact a country's currency's Forex market performance.
- Liquidity: Higher liquidity of the Forex market depicts demand and supply vary greatly, affecting market prices.
3. Choose a reliable Forex broker and a trustworthy trading platform:
The last step into entering your first Forex trade is to find a reliable broker and the right trading platform. The broker is an individual or a firm facilitating your trade and providing you with leverage. Broker plays a significant role in your Forex trading since you buy and sell currencies through a broker.
If you are new to Forex trading, go for a platform that allows you to make demo accounts so that you can experiment and practice trading under actual market conditions, before investing actual money.
We make Forex trading superbly easy
Trading in Forex never comes without risk. However, you can hedge your risk by knowing the basic information, including industry terms, economic conditions of the countries and political (in)stability of those economies, allowing yourself to make more favorable decisions. It is as risky as other trading options but often results in fast profits due to the high volatility in the Forex market.
At Blueberry Markets, we offer lightning fast trade, tight spreads, zero commissions on standard accounts and completely hassle free withdrawals within 24 hours. Create a demo account to practice Forex trading or sign up for a live account to start Forex trading with as less as $100
How to Calculate Forex Position Sizing
Each trader in the forex market defines their position size before moving forward with a trade.
Understanding Forex Risk Management
The forex market is the most liquid and largest market in the world. However, like any other financial market, the forex market can also be risky during times of high volatility.
Hedging in Forex: How to Hedge Currency Risk
Forex hedging or currency hedging allows you to open multiple trade positions to offset any possible currency risk associated with your current position
What Is PIP in forex trading?
PIPs are essential in forex as they tell the traders about the size of profits or losses that can be made from a particular currency pair.
What Is Gap Trading?
Gaps in the Forex market help traders identify price movement clues, entry and exit signals, and trend reversals.
Top Swing Trading Indicators
Swing trading is all about profiting from market swings. It is a popular speculative strategy where traders tend to buy and hold their assets hoping to profit from expected market movement.
What are Support and Resistance Levels
Support and resistance levels in the Forex market allow traders to understand the market direction and predict future prices to consider in making trade decisions.
MT4 vs MT5: Which is Better?
MetaTrader is one of the most popular online trading platforms used globally and its two main versions are MetaTrader 4 and MetaTrader 5. But between MT4 and MT5, which is one best for you?
What is Forex?
The Forex market offers high liquidity and margin opportunities for you to trade and potentially profit off of exchange rates of currencies. With a daily volume of more than $6.6 trillion in 2019, it is the largest financial market in the world.
What is Margin trading?
Margin trading is one of the most common derivative strategies used in financial markets. It can also be considered tax-efficient as it allows you to choose the size of your wager and exempts profits earned from stamp duties and taxes.
What is Leverage in Forex
Leverage allows traders to hold large positions in the Forex market with fewer capital. With leverage trading, traders can borrow money from a broker and hold larger positions, which in turn could magnify returns or losses.
How To Set a Stop Loss Order in Forex Trading
A stop loss order is used to prevent extensive losses, especially during severe market dip situations. By placing a stop loss order, you can automatically close your position if the market moves against you.
MetaTrader 5: The Complete Guide
MetaTrader 5, the powerful automated trading platform, offers advanced tools for successful trading analysis and trades in the financial markets. Aside from Forex, the MT5 platform helps you trade Stocks, CFDs, and Futures.
What is MetaTrader 4: The Complete Guide to MT4
An advanced trading platform, MT4 has become a norm for seasoned Forex traders as it helps them execute their trades even when their machine is off. It comes with a user-friendly interface, numerous technical analysis tools for forecasting market patterns, real-time currency price data, and much more.
What are Long and Short Positions in Forex?
In Forex trading, you can take long or short positions based on expectations of the market rising or falling. Long or buy positions are maintained when traders expect currency pair prices to increase in the future.
What is a Spread in Forex?
A spread is a cost built into the buying and the selling price of all the currency pairs. In most cases, Forex spreads depend on your Forex broker.
What is a Currency Pair in Forex?
The foreign exchange (Forex) market is the largest financial market in the world. With a daily average volume of about $6.6 trillion and worth over $2.4 quadrillion as of 2021, Forex is a decentralised global market for trading currencies.
How do you trade forex?
Many people want to get into Forex trading and make quick profits, but only a few even know how to start. While trading Forex online has now become easier than ever because of powerful platforms like Blueberry Markets, it can still feel incredibly overwhelming to get started with it.
When Can You Trade Forex?
In case you are wondering is Forex trading profitable, the short answer is yes. But many opt for Forex traders to make fast profits since Forex markets are operational 24 hours for five days a week.
Who trades forex?
Major players in the Forex market are financial institutions including commercial banks, central banks, money managers along with hedge funds. Many global corporations also trade in Forex to hedge currency risk.
Why trade forex?
As the largest financial market globally, Forex trading is one of the most popular investment avenues for many. The liquidity and huge trading volume make Forex trading an option worth exploring.
Forex Margin & Leverage
Forex trading usually provides much higher leverage compared to other financial instruments like stocks. This is one of the primary reasons why so many people are attracted to Forex, and more and more people have started to enter the Forex trading market.
How is Forex regulated?
There are several Forex brokers in the Forex market, and amidst those thousands of Forex brokers, it can become nothing less than challenging for traders to find the best brokers.
When you hold a currency spot position overnight, the interest you either earn or pay is the rollover amount. Each currency has a different overnight interbank interest rate, and because you trade Forex in pairs, you also deal with two different interest rates.
Tips for Forex trading beginners
In terms of trading volume, the Forex market is the largest financial market in the world. It is also the only financial market that operates round the clock every day.
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