What are the Basics of Forex trading that You Should Know?

Basics of forex trading

Reasons Behind Choosing Forex

Forex Investors get the opportunity to venture into the movement in the Forex exchange market. There is no specific time to trade, Individual can trade around the clocks. To understand the FOREX Trading basics we have to know a few reasons why people choose Forex.

How Liquid Forex Trading is?

Forex market is five Trillion dollars a day. So there is a lot of opportunities to trade in this forex market. You can quickly get in and get out of the market.

How Diversified Forex Trading is?

First of all, there are eight different currency pares, you can trade in all these currencies, On the other hand, there are many other regional currencies available out there, more options, more opportunities to turn a profit.

How Accessible Forex Trading is?

The Forex market is easily accessible, it is 24/5 hours a day. As a result, you can decide how to trade and when to trade.

How much Leverage Forex Market offers?

It can be good for you or it can be bad for you because you can amplify your gain or you can amplify your losses. Leverage in forex is larger than stocks so it has the potential to lose or gain a lot of money. The way people understand leverage usually tends to be as the thing that can make me a lot of money very quickly but if I don’t use it wisely it can also losses my money.

Does Forex take Low commissions?

Forex takes relatively low cost and sometimes it takes no cost at all but in Stocks it takes spreads and sometimes it is very high. So trading in forex is easier than stocks.

Major Pares

In International business, there are many currencies to trade but there are eight currencies which can be taken as a major currencies. The currencies are:

  1. EUR/USD (euro/dollar)
  2. USD/JPY (dollar/Japanese yen)
  3. GBP/USD (British pound/dollar)
  4. USD/CHF (dollar/Swiss franc)
  5. AUD/USD (Australian dollar/dollar)
  6. USD/CAD (dollar/Canadian dollar)
  7. NZD/USD (New Zealand dollar/dollar)

When in currency pare we do not use US Dollar then we consider it as a minor currency or it is called cross-currency. Some minor currencies are the British pound, Euro, or Japanese yen, such as:

  1. EUR/GBP (euro/British pound)
  2. EUR/AUD (euro/Australian dollar)
  3. GBP/JPY (British pound/Japanese yen)
  4. CHF/JPY (Swiss franc/Japanese yen)

There are also some exotic currencies like Thai Baht and Norwegian or Swedish krone. However, these currencies have greater risk and volatility.

How can we find Best Forex Broker in Forex Trading?

There are also some exotic currencies like Thai Baht and Norwegian or Swedish krone. However, these currencies have greater risk and volatility.

Find Best Forex Broker in Forex Trading

There are some factors based on which we can make our Forex Trading decisions.

Lowest Trading Costs

  1. Spreads
  2. Commission
  3. Overnight fees

These things need to be considered while choosing your Trading options. The Commission fee is a major point in choosing a broker.

Trading Platform

A trading platform is needed to be suitable for traders. You can choose a demo account in trading so that you understand the trading platform better. Once you find which is best you can trade.

Mobile Trading

For some traders trading on mobile can be a good option. Most of the companies provide their apps for iOS, Android and Windows. So you have to check the full version of the app so that you do not miss any important features and plugins.

Customer Service

  1. Language is your preference
  2. Live chat option
  3. Email and
  4. Telephone support

You have to consider all these things before you choose a broker.

Asset List in Forex Trading

How many currencies and how many packages does your broker offers? If you want to trade in Thai Bahts or Swedish Krone you have to check the offers carefully.

Regulation of Forex Trading

  1. FCA
  2. SEC or
  3. ASICc

These are the regulatory body. Do you want a broker regulated by a particular body then it might affect your trading and leverage?

Deposit Method of Forex Trading

Deposit method options are very important in the forex business. You might use:

  1. Paypal
  2. Skrill
  3. Neteller

These are options you have to consider according to your availability and expenses. At present time brokers now accept deposits in Bitcoin or a range of other cryptos too.

Security in Forex Trading

Security in Forex Trading

What is the security that I am investing the money in a trustworthy company? How would I know that the company is not fake? These are the questions most of the time investors think about. The Company shares its information and investor password so that you can be sure about it.

More You Should Know

The Idea of Demo Accounts in Forex Trading

A demo account is a good option. Which means Try before you buy. Most brokers are willing to let you see their platform’s risk free but if you practice on a demo account you can learn organically.

Account Types

  1. Cash
  2. Margin
  3. PAMM accounts
  4. Bronze
  5. Silver
  6. Gold
  7. VIP levels

All of these are different types of accounts. You can understand the difference by:

  1. The amount of cost
  2. Reduced spread
  3. Access to Level II data
  4. Settlement or different leverage etc.


Without having proper knowledge in Forex Trading it is gambling. You need to study regularly for it. You can learn through:

  1. E-books
  2. Pdf documents
  3. Live webinars
  4. Expert advisors
  5. Courses or a full academy program

Whatever the medium of source you have to judge it before you start.

Which one I should choose? Meta Trader 4 or 5

In both of these, the purpose is the same but it differs according to the features. Meta Trade 5 is the advanced version of MT4 which offers much more instruments to trade and allows improved connectivity to the market. It has more adaptability to the customers.

Execution Speed

The Desktop platform is normally more consistent in execution speed. Mobile options are a little bit slower. Sometime miscommunication might cost you. So it is better to use the Desktop version.

Different Forex Trading Systems:

There are many different Forex day trading systems –

  1. Scalping: It means quick in and quick out
  2. Fading: This system involves the shorting of stocks, an index or a currency pair, immediately after upward moves.
  3. Daily Pivots: Profit is gained through the volatility of the daily prices of assets.
  4. Momentum: Trading is usually performed on news releases, or by locating the strong moves
    which are trending.

What you should do in Forex Trading

  1. First open a demo account using the MT4 or MT5 trading platform.
  2. Choose a few strategies you are good at.
  3. Use the chosen system on a demo account and try to make a profit.
  4. Try to trade realistic in the demo account.
  5. The practice you develop in the demo account should be used in real trading.

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