The forex market is a unique financial platform. It gives traders the opportunity for both incredible earnings and equally incredible losses. Thousands of people daily decide to test their strengths or simply try their luck in the financial race, but most of them It often happens that even people with a fairly high income do not know how to properly manage their money and, therefore, do not have financial independence.do not even suspect where their overestimated ambitions will lead them. Before embarking on this dangerous path, we advise you to carefully study the issue and weigh the pros and cons. If after that the desire to try yourself in the role of a trader has not disappeared, we suggest that you familiarize yourself with the algorithm of actions for making the first transaction in the forex market.
Step 1. Choosing a broker
Choosing a brokerage firm is one of the key aspects of all forex trading. Your chances of success directly depend on the conscientiousness of the broker. Remember that Forex is not traded by traders, but by brokers. It is brokers who offer you sets of financial instruments, set the size of spreads and commissions, swaps, quotes and liquidity. The choice must be approached very responsibly, so that later you do not blame the broker for your failures.
Pay attention to the broker’s rating and reviews on different platforms, but remember that not everything written on the Internet can be trusted. The larger the brokerage firm, the more not only clients, but also competitors, and they are on the alert. The final decision should be made based on how personally the trading conditions offered by the broker are suitable for you to meet your goals.
Step 2. Installing the trading terminal
After you have decided on the choice of a broker, you can proceed to the next step – the choice and installation of a trading terminal. It is with its help that you will carry out trading on the market, therefore, the choice should be treated equally responsibly. There are many different terminals that differ in cost and functionality. For a novice trader, the simplest free version is also suitable. The trading terminal can be downloaded directly from the broker’s website. Installing it does not take much time and effort. Be sure to study all the functions of your trading terminal before trading.
Step 3. Create a demo account
As soon as you understand all the functions of the trading terminal and feel the taste of excitement, you can proceed to the next step – opening an account. But take your time to trade with real money, first hone your skills on a demo account. A demo account is a demo account for training beginner traders. The essence of the account is that when concluding transactions, you use electronic money and do not risk real funds. The demo account is completely identical to the real account, with the same interfaces, functions and trading mechanics. Even experienced traders do not neglect the use of demo accounts. Be sure to try it out before opening a live account.
Step 4. Opening a real account
And finally, after you study the terminal in detail, try to trade on a demo account and get the first profit, you can proceed to opening a real account. Congratulations, you are already on the home stretch! Deposit money into your trading account and start trading. Choose trading instruments to your liking. You can start with popular currency pairs such as euro / dollar or dollar / yen. Let’s look at a specific example of the EURUSD currency pair.
First, you need to look at the chart of price changes and try to predict in which direction the price movement will occur. Let’s say we decide that after a certain time the curve will go up and reach the 1.1025 mark. To make a profit, we need to buy EUR / USD now at a price of 0.0982, and then, when the price rises, sell. Open a new order in the “Trade” tab. In the pop-up window, indicate the details of the transaction.
Remember that “Volume” in Forex is always measured in lots! One lot is equal to 100,000 units of the base currency, that is, in our case, the euro.
In the “Stop Loss” column, we indicate the value at which the order will be automatically closed in the event of a fall in the price of the base currency. In the “Take Profit” column, we indicate the value at which the order will be closed and fix our profit. Next, select the type of order: immediate execution or a pending order. And finally, we press the coveted “Buy” button and wait for the price to reach the “Take Profit” level – 1.1025 (or the “Stop Loss” level – 1.0950 in case of an unsuccessful transaction).
After pressing the button, a notification about the concluded deal will appear in the lower window of the trading terminal. Please note that immediately after the transaction is completed, the “Profit” indicator will be negative. This situation happens due to the spread that we pay to the broker for each completed trade. The size of the spread is set by each broker independently and may vary depending on the specific instrument and the general market situation. The spread is not measured in money, but in points. On average, the spread is 1-2 pips for the major currency pairs and 5-6 for the more rare ones. A pip is a one-step change in the last digit in the quote of a currency pair.
If you see that the quote has changed in your direction, you can always close the deal ahead of schedule. Don’t open too big deals at once! Even if you were lucky on a demo account, the market is volatile and it does not forgive mistakes. After clicking the “buy” button, you just have to wait and do not forget to follow the changes in quotes. After waiting for the required marks, feel free to close the deal and catch your profit.
Forex trading psychology
We figured out the practical algorithm of actions, now let’s turn our attention to the main psychological aspects of making transactions in Forex. Traders should never neglect trading psychology. It is she who helps to understand and predict the behavior of competitors in the market and, accordingly, build your own effective trading strategy. Our perception of the market and the changes taking place in it is formed under the influence of previous experience and the characteristics of the psyche. Fear, greed, and self-confidence form patterns in traders’ behavior. For effective trading, a trader must always control his emotions and adequately assess the situation and not be led by cognitive distortions, falling into panic or euphoria after the next transaction. The result of any single transaction can be considered random. The best strategy is to take each separate order separately, regardless of the previous and subsequent ones.
