Why Trade Forex?
The forex market, often known as the spot market, is the exchange of global currencies.
What is the average number of transactions each day?
The FX market can handle trillions of dollars in transactions every day!
What is the location of Forex trading?
The deals do not take place in a specific location.
These currencies can be bought and sold using MetaTrader 4/5 (MT4 MT5) Meta Trader is accessible in the app store or from Chartviper/Autochartist.
You can also get the app on your phone and start Trading right away.
Forex Trading: Two Sides to Every Trade
Every market has two sides, and forex trading is no exception.
The way prices are quoted in the Forex market is one of its distinguishing features.
The only way to quote a currency is to compare it to another currency, because currencies are the foundation of the financial Trading system.
This results in a relative gauge that may appear baffling at first, but which can become more balanced as time goes on with this two-sided approach.
Forex trading pairs give the trader a little more flexibility by allowing them to trade the currencies they choose. For a deeper understanding of forex and enhancing your financial knowledge, delving into trading shares can be a valuable asset.
Let’s take the USD as an example. Let’s imagine a trader believes the American economy is on the rise and wants to BUY the currency.
However, imagine that this Trader is pessimistic on the UK economy.
In this case, the investor does not have to buy the USD against the EUR (a short EUR/USD trade); instead, he can buy the USD against the British Pound (a Short GBP/USD trade).
Forex Trading: Base v/s Counter Currencies
The convention of a Forex quote is important: the first currency included in the quote is known as the pair’s ‘base’ currency. The base Currency is either bought or sold against the second currency.
Forex Trading: The Forex Market Explained
The foreign exchange market is driven by supply and demand, just like other markets.
To provide a simple example, if there is a high demand for the US Dollar among European residents holding Euros, they will convert their Euros to Dollars.
The US Dollar will appreciate in value, while the Euro will depreciate.
Remember that this transaction solely affects the EUR/USD exchange rate.
“What is Stop Loss & Take Profit?”
“What is Break Even (BE+)?”
BE is a step to protect your capital or balance from experiencing any loss after making profit!
Basically, making bits of profit while minimizing any losses when trading.
You can set your BE by shifting your SL to before price action.
You can see a sample from the image above. Left is for Stop Loss (SL) and on the right is once Break Even (BE) has been done.
Chart Patterns
These are the chart patterns usually found with the #GOLD pair. It’s easy to trade it, trust me! Take a look at the chart patterns one by one.
This usually happens before the market starts to speed up. It can be considered as an indicator to the change of a market’s direction.
Double Top & Double Bottom
Double Top is when the price reaches resistance level twice. Due to strong resistance, the price won’t breakthrough and will drop.
Double Top: SELL ONLY
Double bottom is when the price reaches support twice. Due to strong support, the price won’t drop and will continue to rise.
Double Bottom: BUY ONLY
Head & Shoulder
This pattern is broken to two ✌🏻
1. Head & Shoulder
2. Inverted Head & Shoulder
Head & Shoulder works as a pattern for us to identify a sell setup. We will sell once we see the shaping of the 1st Shoulder & Head.
So, we will buy at the 2nd part of the Shoulder.
Head & Shoulder: SELL ONLY
Inverted Head & Shoulder also functions the same but we look for a buy setup at the 2nd Shoulder.
Inverted: BUY ONLY
What’s the difference between Forex and Stocks? 🧐
Forex
1. 2-way trades (SELL & BUY)
2. You can buy or sell anytime you want.
Stocks
1. Limited amount of trades.
2. One way trades (BUY only)