Start Forex Trading in 6 Steps
1. Choose the currency pairs you want to start trading on
Choosing which currency pairs to trade is the first decision you will have to make as a Forex trader. Major, minor and non-traded currency pairs that you can choose from. New traders tend to start with currencies they are familiar with before moving on to look for opportunities in currencies they are less exposed to.
2. Select the type of Forex trading you wish to do
Implement it. There are many ways to trade with us. These methods include both CFDs and spread betting.
Trading CFDs – You can trade a certain number of CFDs in units of the base currency. If you choose to trade EUR/USD, for example, your investment will be in Euros. On the other hand, if you are trading USD/JPY, your investment will be in US dollars.
Spread Betting – You trade currency pairs for each pip movement, usually the fourth decimal point.
3. Determine your decision whether to buy or sell
After you have chosen the market you will trade, you also need to determine the current trading price and the direction in which you think the market will move. Forex pairs are traded as one currency (the base currency) against another currency (the quote currency), so:
- If you believe that the base currency will strengthen against the quote currency or that the quote currency will decline against the base currency, you can buy this pair of currencies.
-If you believe that the base currency will fall against the quote currency or that the quote currency will rise against the base currency, you can decide to sell.
Each currency pair has two prices, the first is the bid or sell price, and the second is the ask or buy price. The difference between the two quoted prices is what we call the spread, which is the cost of your trade.
4. Add trading orders,
Trading orders are instructions to trade automatically at a later time when exchange rates meet a certain pre-determined level. Stop loss and limit orders are used to ensure that profits are locked in and losses are kept to a minimum.
5. Track your trading transactions
In active mode, your profits and losses are subject to fluctuations with every price movement in the market. For this reason, it is important that you track your buy and sell orders in real time. This way, you can easily add or close trading positions when necessary.
6. Closing trading positions
Closing a trading transaction is similar to opening a trade. If you initially bought 5 units, you need to sell the same number of units at closing. When you close the trade, your profits and losses will be reflected directly in your trading account.