Forex trading
In this time of uncertainty, many traders are certain that forex trading can bring them success in the industry. Forex Trading, What is it really all about? How do you start? Can you really earn from it? Let’s get the facts straight!
What is forex trading?
Foreign exchange, or forex, can be defined as a network of buyers and sellers who exchange currencies at a predetermined price. It is the process by which individuals, businesses, and financial institutions convert one currency into another. The act of buying one currency while selling another is known as forex trading. A currency pair is formed by the combination of these two currencies.
Forex trading has a straightforward goal. Users can buy a currency at one price and sell it at a higher price or even sell a currency at one price and buy it at a lower price to earn a profit. With trillions of dollars changing hands every day, the forex market is the world's largest and most liquid market.
Currency pairs
Currency pairs must be traded. There are 27 distinct currency pairs however, due to their total liquidity, about 18 currency pairings are traditionally quoted by forex market makers and these are:
| • USD/CAD; | • EUR/JPY; |
| • EUR/USD; | • EUR/CHF; |
| • USD/CHF; | • EUR/GBP; |
| • GBP/USD; | • AUD/CAD; |
| • NZD/USD; | • GBP/CHF; |
| • AUD/USD; | • GBP/JPY; |
| • USD/JPY; | • CHF/JPY; |
| • EUR/CAD; | • AUD/JPY; |
| • EUR/AUD; | • AUD/NZD. |
Types of forex trading analysis
There are many ways to evaluate and analyze the forex market, and many users have their own thinking and analysis so that they can have more good trading chances and opportunities.
The study of deciding whether to buy, trade, or hold on a currency pair is known as forex analysis.
The most common types of forex trading analysis are:
- Fundamental. In this kind of forex market analysis, the interest rate of a currency is at its core, because interest rates have a significant impact when it comes to the FX market. Users or traders that are looking at the fundamental data should really consider how they might affect interest rate fluctuation in the future. The ultimate goal is to arrive at a number that can be compared to the present price of a security to determine whether it is undervalued or overvalued.
- Technical.In this kind of forex market analysis, it analyzes the price trends in order to know the best time and moment to enter and exit a deal, and because of this kind of feature traders commonly use this method when it comes to the analysis in the forex market.
- Sentiment.In this kind of forex market analysis, when a sentiment is heavily tilted in one direction then it only means that a large percentage of traders was committed to that direction. Forex sentiment analysis is the practice of recognizing traders' positions in the currency market. This is to influence their own trading decisions.
List of the main technical indicators for Forex
- Moving Averages;
- Relative Strength Index;
- MACD;
- Bollinger Bands;
- Stochastic;
- Ichimoku Kinko Hyo;
- Fibonacci;
- Average True Range;
- Parabolic SAR;
- Pivot Point.
Basic Forex trading strategies
Different traders have their different strategies when it comes to Forex trading and some of their strategies are really taken in consideration so that many more traders can make profit for it quickly. Technical analysis or fundamental, media events might be used to develop forex trading strategies and some of these includes:
- Price Action Trading. This kind of strategy really allows a trader to actually observe and analyze the market and make wise trading decisions and risks that are based on the existing price volatility. The price movement of a securities plotted over time is known as price action. All technical analysis of a stock, commodity, or other asset chart is based on price activity.
- Range Trading Strategy. This kind of strategy allows the investors to determine a price range in which to purchase and sell in a short amount of time. Price resistance is commonly found at the top of a security's trading range, while price support is usually found at the bottom.
- Trend Trading Strategy. This kind of strategy uses technical analysis to identify the market momentum, and it is because of the assumption that a trader can foretell what will happen to the market by analyzing trends and market prices. Traders find trend trading to be straightforward because after identifying a long-term trend there’s not much you can do.
How to start Forex trading?
To start trading in the Forex market, users need to know the facts and laws of Forex. Traders should be aware that trading on non-MAS regulated platforms comes with some risks. Also, if you are trading Forex as a hobby and not as a source of income, any profit you make is tax-free. Users simply need a bank account to access the services provided by the Forex platform of their choice, after which they can select the desired platform and register an account on it.
Beginners can also first practice Forex trading by opening a demo account like on the IQ Option website. There is a free demo account wherein losses, and profits are virtual, and users can easily practice trading with the instruments and tools that the platform has.
Demo accounts are available on many online platforms, allowing users to practice trading with simulated “money” without risking real money, and in IQ Option there is also a free tutorial after you register for the demo account.
How to register?
Just like opening a normal bank account users can easily start Forex trading.
Users can follow these steps:
- Visit a trading platform through a website or an application.
- Open an account by Signing Up.
- Decide if you want to open a demo account or a live trading account.
- Pick currency pairs that are suited for you.
- Plan and determine the money you’ll need to get started.
- Be updated on what’s happening all around the world.
How to open a demo account?
- Visit a trading platform like the IQ Option Website.
- Choose Sign Up.
- Fill up your personal details.
- Choose the “Open and Account for free”.
- Check your Email and Verify it.
- Sign In to your Demo Account.
In the Demo Account, users must take note that the account has a $10,000 balance but this balance can’t be withdrawn as a real money because it is just for demo, still the users can enjoy and practice with it because it has all the instruments and tools that are the same in the real account and the balance can also be refilled for them to practice their skills more.
How to open a real account?
To open a real account the users can easily switch between the demo account that they registered to a real account.
Just click the balance in the upper-right corner, and the user must make sure that he/she is in the trade room then click the panel that shows all the accounts which are the demo account and real account. The user can already click an account to make it active and real, and so that he/she can use it already for real trading.
How to replenish a deposit?
To replenish a deposit in the demo account, the user must make sure that he/she have less than $10,000 because if he/she doesn’t have less than $10,000 replenishing it won’t be possible.
The user must click on the balance then easily choose the Top Up button and from there the user can top the balance up the way he/she wants.
Minimum deposit amount
The minimum deposit in IQ Option is $10. Users can easily deposit with just $10 and they can use their debit or credit card and even their E-Wallets like Webmoney, Skrill and many more.
Users can easily make deposits by just logging in their trading account and by clicking the “Deposit” button and after that they can decide on the amount then proceed to payment.
How to withdraw money?
To withdraw money from IQOption, users must know that the mode of payment that they used while depositing would be the same mode if they choose to withdraw their money. So if the user used a debit card to deposit then he/she would be able to withdraw with the use of that same debit card account.
The user must log in to his/her account in IQOption then click on “Withdrawals” tab and if he/she is in the trade room, click on the profile and choose “Withdraw Funds” then after clicking it he/she can choose the amount of withdrawal then click on the “Withdraw funds” button.
FAQ:
What is the best time frame for forex?
- Different countries have their own best time frame for forex and it may be because of how the users use that time as an advantage when it comes to trading. Some prefer day and some prefer night depending on the strategy that they have in mind.
Here are the best timeframes for Forex trading by time:
• Tokyo, Japan: 7AM to 4PM;
• Sydney, Australia: 6AM to 3PM;
• New York: 8PM to 5AM;
• London: 3PM to 12PM.
Can you trade forex at night?
- Yes. Users can possibly trade forex at night and it can be actually an advantage to trade at night.
Trading at night was known to be very beneficial to the users or traders because the users believe that the best currency pairings to trade late at night may have lower margin lending rates than those traded during the European sessions. Traders trade at night because they know that they can have long term output if they enter the market early by trading late at night.
Which forex indicators are the most profitable?
Many forex traders has their own choices when it comes to indicators but it is really normal for traders to choose the best and most profitable indicator and some of these are:
1. Moving Average.This kind of indicator is one of the greatest and most successful indicators because it is a trend indicator that aids in the identification and continuation of a trend and it depicts a specified price average value over time.
2. Bollinger Bands. This kind of indicator is used to gauge the market movement and in a sideways trade market, this indication is very useful when its currency pair is trading in its range. Bollinger bands are used to evaluate if prices are relatively high or low. It can help establish a trend’s direction and observe volatility.
3. Moving Average Convergence/Divergence (MACD). This kind of indicator identifies the market’s driving power, it aids in identifying whether the market has had enough of advancing in one direction. This falls under the category of oscillators, which are a type of technical indicator.
What types of trades are the most profitable?
Forex traders would actually want the type of trading stocks that is really more profitable than the others but it actually depends on what strategy does one trader wants when it comes to trading for them to be successful.
These are some trading types that are known to be the most profitable:
1. Day Trading. This refers when a trader opens and closes a position within a single trading day. Like for example when a trader opens a position at 9PM and closes it before 1PM then it is considered as a day trading. Traders use this kind of technique based on their scenarios and chances, but there are also traders that don't commit to this kind of technique.
2. Position Trading. This kind of trade is considered as a buy-and-hold technique rather than active trading. Charts that are ranging from daily to monthly are used in tandem with other approaches to assess the current market trend. This was known to last for several days and weeks and longer depending on the market trend.
3. Swing Trading. Traders in Swing trading generally enter the market when a trend begins to break. When the volatility increases, swing traders purchase or sell. These kinds of traders typically held for longer than a day but not as long as trend transactions.
What is a Pip in forex?
Pip or “Percentage in Point” is a small unit of measurement in the forex market. It signifies a change in a currency pair. It can be also expressed as a percentage of the quoted currency or as a percentage of the underlying currency.
How do you predict trends in forex?
To predict trends in forex, traders can utilize the moving average, it is one of the most extensively utilized trend forecasters in the forex market. When assessing moments, a short-term moving average climbs above or falls below a longer term moving average. This technique seeks to pinpoint the trend’s midpoint. There are still many predictors that traders can utilize like momentum and support and resistance which has different features.
How do you check trends in forex?
To check trends in forex, traders can just easily and visually examine price movement on a chart. It is crucial to notice where the highs and lows are. Traders can tell if the movement is ascending, descending, or horizontal based on where they are on the chart. A significant price impulse usually starts a trend and ends it in the same way.
Which chart is best for trading?
There are so many charts that can be used for trading but the point and figure chart is one of the best and most popular charts for trading. It uses XS and OS to measure the changes in currency pairs. It is known to be one of the best trading charts because it reduces risks and it has clear market data.
Can I trade forex with $ 10?
Yes. With just $10 traders can trade forex, traders just need to find trading platforms that accept this kind of amount. Just like in IQOption, traders can trade forex with $10 because it is their minimum deposit.
