The majority of the Forex traders fail to survive in the market because they try to run before they can even walk. As millions of people around the world are involved in forex trading, it is logical that not everybody turns out to be successful. The fact that Forex is easily accessible and anyone with a computer and an internet connection can open an account with a broker and start trading, many people skip the training part. One may be passionate about trading, but that does not mean that jumping into the trading precipitously without any knowledge will do them any good. Like all
other professions, Forex needs training too.
In today’s topic, we will discuss what forex is and explore the importance of forex trading education and the steps of trading in the forex market.
What is Forex?
Forex, also known as foreign exchange, is a decentralized global market where all the world’s currencies are traded. It is a $ 5 trillion dollar market and is the most liquid and less volatile market in the world. It is an internationally well-recognized business which is open 24 hours a day.
With so many choices – over 3,000 tradable markets – it becomes difficult for beginners to be certain where to start from. Therefore, it is important to
learn about trading in a detailed way. There is no point in going through a number of courses on how to trade if the right trading tools are not available to you to execute your trading ideas.
Some of the trading tools you will need in Forex trading are discussed below-
1. A broker
A broker, through their platform, will connect you to other buyers and sellers in the currency market or stock exchanges your product trades on. If you want to buy any currency or shares, the broker will connect you to the potential seller, who owns what you are looking for. Your broker is where you deposit your capital to trade with. Therefore, you need to make sure they offer the highest regulation possible. In that way, you’ll know your capital is as safe as possible.
2. A trader & charting platform
The trading and charting platform allow us to see historical price charts of the product we are trading, as well as provides us with order tickets we need to manage our trade. Some people may have a charting platform that is separate from their brokerage platform.
Learning to trade in Forex
Before we look at the steps for learning the trade, it is useful to describe some areas within trading that you may need to learn. Learning everything
at a time may be extremely overwhelming. Therefore, the key is to break everything down into small units.
1. Which time frame will you use to trade?
Outside of the markets, most traders often have busy lives. Some may have a family or a business to look after. Hence, it is very important to structure the trading time when learning how to trade. It is highly unlikely that one will be available 24 hours in the market to trade. Therefore, it is recommended to create a routine to avoid stress in the long run. Many beginner traders check charts at random times and use different time frames. Looking at markets without a specific purpose will lead to rash decision making and hence more frustration.
2. Which markets will you focus on?
The next step will be to identify the best markets for yourself to trade on during those times. Without forex education, it is not possible to predict the right market. Instead of learning to trade on a number of markets at the same time, create a plan on learning and trading on just one or two markets at first. As your confidence starts to grow, start to learn how to trade on the other markets.
3. What tools will you use in deciding to place a buy or sell trade?
Traders use either technical analysis or fundamental analysis when making trading decisions to buy or sell. Without a good forex education, a trader may not know the proper use of either of the tools. They also use a combination of both sometimes.
Technical analysis is the study of price charts and trading signals. There are various types of chart patterns and trading signals available to traders.
Fundamental analysis is the study of economic data, or company news to locate trends and turning points. It is believed by many people that a fundamental trader needs to be well educated in economics before they are able to use it to help with their decision making. This is not the case as there are abundant economic resources and trading blogs that can be of assist.
4. What risk management techniques will you use to exit your trade at a loss or in profit?
Anyone can open a trading account and place a buy or sell trades. However, placing a trade that is profitable, takes a lot of skill. As they lack knowledge about Forex, most traders do not even take the time to think about when they should exit a trade to minimize losses and maximize gains. Instead, they choose to continue trading; letting their emotions get the best of them. This could be a mistake as anything can happen in the market at any time. Hence, it is important to use the best tools that can help with managing our trades in the best way possible.
5. How can you learn the strategies used by professional traders?
Involving yourself in the trading world might help to speed up your trading training. Watching how the professional traders view the market can give you the confidence to analyze and trade in the market by yourself. Without a good education in forex, it is very difficult to learn the strategies.
The Steps of learning a trade
Reading as much as about trading is one of the best ways to gain knowledge or learn about trading but only from professional traders who are actually doing it.
Another great way to learn about trading is through seeing how expert traders do trades in live market conditions or situations.
It is good to learn about trading through trading courses. However, it is also important to practice what you have absorbed. Creating a demo trading account is the perfect way to hone your skills and test your ideas in a risk- free environment.
The more you watch professional traders live and the more you practice on a demo account, the better the habits you will create. As a result, you will have a better chance of long term success.
Are all Forex educations helpful?
It is all about finding the right source. There are numerous sources for forex education in the internet. However, instead of simple explanations, some of them are complicated, confusing and does not include the details of how the market actually operates. Therefore, it is imperative that the quality of the material and the credibility of the website is checked before you invest your time on it.
In conclusion, forex education is important if you wish to be successful in this market. Therefore, it is recommended that you study and learn the terminology, open a demo account and make some errors so that you gain
experience and become a professional operator.