Hello readers and welcome to the premium feature of Winning Ways In Forex.
The Mission and Vision statement driving this column is to make balanced knowledge of Forex Trading widespread and easily accessible in our country so that Nigeria becomes a profitable Forex trading community with over 1 million traders. active in 2015 with more than 100,000 of these making a profit of at least $10,000 annually.
The approach we are going to take in this column is to use simple methodologies to explain what may seem like difficult forex terms/concepts.
Forex trading, for the well-trained, is one of the most profitable home-based businesses in the world today. The daily annual turnover of this “business without borders” is currently estimated at $4 trillion from traders, more than 40 times more than the transactions on the New York Stock Exchange (NYSE), which is the largest stock exchange in the world. world.
In this column, we will teach forex trading from the ground up to the ground level and then start building the super structures that will empower you to become an advanced and profitable forex trader.
Requirements to trade Forex
To trade forex, you must
*Have a computer with internet access. The minimum acceptable speed should be 115 kbps, as anything below this will not be good for operation. More importantly, your Internet Service Provider (ISP) must provide more than a fair quality of service for you to do well. Poor service quality will affect your trading psychology… and as the Mantra says, “psychology is almost everything in forex.”
* Good training and mentoring. This is the foundation on which you will build any other structure if you are going to be successful in forex trading. The components of the type of education and continuous updates you receive are critical to your success in forex trading. Market patterns are somewhat seasonal and if you don’t understand the different nuances of market movements, big money-making opportunities come and go and will outstrip your recognition.
* Open a forex trading account with a reputable forex broker. Before you start, you are expected to have demo traded for a minimum of 4 weeks.
*You must open a foreign currency domiciliary account with an efficient bank in order to transfer and remit funds from your trading platform/broker.
A LOOK AT THE MARKET
Forex currencies are traded in pairs, e.g. g EUR/USD, GBP/USD, USD/CAD, etc. The first currency in the pair is called the base currency and the second currency is called the counter currency. The market price for any currency pair is usually 2 different values known as the bid (ask) and ask (offer) rates. The first price in the quote is the ask (bid) price and the second quote is the ask (buy) price. The difference between these 2 values is known as the spread and this is the commission that your forex broker takes from your account each time you trade, regardless of the outcome of your market, whether you win or lose.
If, for example, you buy 0.1 lot EUR/USD at 1.5759/1.5762, your open trade on your trading platform will show that you entered the market at 1.5762 and the platform will start reading your market at 1, 5759 with an opening profit/loss of -$4.
Conversely, if you sell 0.1 lot of USD/CHF at 1.0345/1.0348, your open trade on your platform will show that you entered the market at 1.0345 and the platform will start reading your market at 1.0348 with an opening P/L of -$4.
HOW TO REPRESENT PRICE MOVEMENTS IN THE MARKET
Price movements in the market are graphically represented by lines, bar charts, renko, and Japanese candlesticks. The most popular means of depicting price action in the forex market is the use of candlesticks, made even more popular by legendary trader and trainer Steve Nison. This means of depicting market price action rises far above other means of depicting the market as “candles are pregnant” and a good understanding of the various types of candles along with other parameters is your passport to making big profits. earnings on forex trading. Candlesticks are representative of price action over a specific time period, it can be 5 minutes, 10 minutes, 15 minutes, 30 minutes, 1 hour, daily, etc.
When the opening price is lower than the closing price for a specified period of time, this is bullish price action and the standard convention to represent it is a white or green candlestick. It also indicates that the base currency is gaining strength against the counter currency and buyers are winning, i.e. the market is in buy mode.
When the opening price is higher than the closing price for a specific period of time, it is bearish price action and the standard convention to represent it is a red or black candlestick. It also indicates that the base currency is losing strength against the counter currency and that means the market is in sell mode.