Table of Contents
- Step 1 – Getting Started
- Step 2 – Registration
- Step 3 – Account Ready!
- Step 4 – Beginner’s quest
- Step 5 – Getting App’ed
- REAL ACCOUNT
- Step 6 – Executing your First Trade
Forex Trading INTRO
FX is the largest market in the world – As explained on – What is Forex Trading – article; it is derived from the words – Foreign Exchange. The market was established in 1971. The basic business transaction of the Foreign Exchange market is an exchange of one currency to another (Buying and/or selling of currencies) – and this is done through by participants around the world such as – Banks, speculators (Traders – amateurs and professionals) and investors.
The Market is often referred to as FOREX – more bluntly said to be a spot exchange between currencies. There are 5 major currencies in the market – however, this may change over the years. Currently, the big focus has been on the US Dollar, British Pound, Japanese Yen, Eurodollar, and Swiss Franc.
The market trades trillions of dollars a day, and this happens during the 5 days when the market is open – The FOREX Market closes over the weekend.
The Market has become so large that even mere mortals like me and you can dwell in and start trading the market from the comfort of our own homes, through a forex broker.
It is important to choose a reliable broker – with a trading platform that will put your spirit at ease; most traders prefer using Metatrader Platforms. The most popular reason for FX Market participation is speculation for profit – the OTC (Over the counter) / ‘Interbank’ market is not centralized, as with stocks and futures market, as the transactions are conducted between two counterparts (online and or telephonically) – currently the major transactions are done online via the internet.
The Forex Market starts in Sydney – and it is really is an around the clock market, as one center closes, the other opens, making it a 24-hour market, it’ll move around as the financial markets open, first in Tokyo – then London – all the way to New York – and investors (Traders) can respond immediately to currency fluctuations caused by factors affecting the financial market, such as social, economic and political events the very time that they occur regardless of the time of the day or night.
Way before the money was traded – over the years, men were using gold to trade as well as Silver, and in most cases, they would trade goods among one another – where gold price was the reference point – this grew between nations – and thus moving of good became risky and at most – time-consuming.
That when a system was sought for trades to be settled in seller’s local currency – this became an issue in determining the strength of one’s gold to another – however, this was resolved as The Gold Standard when it was said one country’s gold reserves are the double the gold reserves of another country, then the country with double the gold will be twice in value when exchanged with the second country, and this was accepted worldwide in 1880.
The 1st World War – there was a huge backlash in most countries and needed a huge amount of capital to fulfill their needs, that’s when paper money was created in huge quantities that exceeded gold reserves.
There was an unstable exchange rate in over 45 nations that they gathered at the United Nations Monetary and Financial Conference in Bretton Wood, New Hampshire, in July 1944, during the first 3 weeks, all this happened after the end of the 2nd World War.
Discussed was the postwar recovery of Europe and monetary issues such as unstable exchange rates and protectionist trade policies, hence in 1957 the European Economic Community was established. In 1967 Special Drawing Rights (SDRs) were created at the IMF Meeting in Rio de Janeiro. These are international reserve assets.
In 1971, the United States was taking off the gold standard, by President Nixon. The floating exchange began to materialize.
In 1972 the European Joint Float was formed by – West Germany, France, Italy, the Netherlands, Belgium, and Luxembourg.
A lot happened over the year that in the end, the driving factors in determining the exchange rates is the supply and demand for a particular currency or its relative value.
In this tutorial, we focus on specific trading platforms such as Metatrader platform, because it is a mostly and widely used trading platform – recommended and offered by more than 90% of brokers around the world.
Metatrader is perfect when it comes to execution – it’s very fast and time-effective. It’s very easy to use and very convenient. It is mostly advised to use a trading platform that’s easier to use for you as a trader and not because a vast mass of people is using it.
Step 1 – Getting Started
By now you probably have made your research on FOREX and just want to know how to make your first trade. Well, it is important to understand that the first thing you need to do before opening your first position:
There are so many brokers around the globe that one can choose from, but it’s best to choose a broker that knows how to do its job, and you have a made a thorough research and you know some of the traders using it – and best to know if they have withdrawn – and if depositing method is convenient for you.
Step 2 – Registration
You have now chosen a broker, a reliable broker – The whole idea here is to learn to make your first trade – Once you have found a broker that you prefer, you will need to register with them. Registering takes about 2 minutes. Then your account is not fully ready – but it’s absolutely registered. Usually, they will use your email and number, when you first register – this will require you to confirm both of them, usually your email first, then your number if necessary.
When this part is completed, you will need to verify your entire account, by sending your Identity Documents and Proof of Residence using your dashboard front portal of your broker. When this is completed, you will then be allocated login credentials for your Metatrader Platform.
Step 3 – Account Ready!
By now you have a fully functional account.However both your accounts will be linked – the amount shown on your real account on the Metatrader platform will reflect the same on your broker’s portal assuming there are no positions opened.
Step 4 – Beginner’s quest
It is best for you to start a demo account even when your account is ready – However if you would like just a practice run without a real account, you may download the Metatrader App or Software for PC, can be Metatrader 4 or Metatrader 5 (As to which one to use, as a beginner, I would recommend MetaTrader 4 as it is the most used platform with fewer resources, all of which is enough for a beginner – even for professional traders). Once you have the App on your device you can open a free demo account (It is important to understand that demo account are just for practice, but it is in real-time just as with a real account – read more here)
Step 5 – Getting App’ed
Once you have downloaded the APP or the MT Software for your PC, you can start a demo account without any credentials, and you are in. this will take you to the real Metatrader’s trading platform. (see Figure 0.0.1)
However, you won’t be able to trade as yet, even if it has taken you to the demo platform, as you will need to make a mini-registration, no verification needed.
opening a demo account
All you have to do is to click on ‘file‘, and scroll down and click on ‘open an account‘ – see figure 0.0.3
Opening a demo account – part 2
When you click on open ‘open an account‘ – you should expect a pop-up, this pop-up, enables you to search your broker – and or login to your account, for a demo account, leave everything as is and just click on next,
demo account – part 3
When part 2 is done, the next step gives you 3 options (see figure 0.0.5)
- Open a demo account and gain experience – this option lets you trade virtual money risk-free.
- Open a real account – which requires proof of Identity and residence.
- Connect to an existing trading account
demo account – part 4
When you are done with Part 3 – click on next and you will be required to enter the following: (see figure 0.0.6)
- Your name
- Second Name
- Choose if you want to Hedge in trading
- Account Type (Currency Type) USD, EUR, etc.
- Choose from 3000 to 100000 of virtual money
- Select your Leverage (read more on this)
- Agree to the terms and click on next.
demo account – part 5
When part 4 is done, click on next and you will get confirmation as well as your demo login credentials to start making your first demo trade in the forex market. see figure 0.0.7
demo account – part 6
Now you may log in to your Demo account – Make sure you copy and paste the login credentials somewhere.
Click on finish and you will automatically be logged in – however, Do not forget to copy your credentials to your clipboard.
You will be taken to the Mailbox tap – where you will receive the Welcome mail just as with a real account. see figure 0.0.8
demo account – part 7
Just as with a real account you will notice taps below your Metatrader, namely:
- Default MailBox tap as you log in
- Trade – from the far left
see figure 0.0.9
Executing your first trade
This will be explained below on a real account, as charts are also explained for a bit of clarity – as it is very important when executing your first trade.
It is important to understand Forex Quotes before execution (Read more about fx quotes)
In this case, I assume you have already made your first deposit to your real account. This is will enable you to open real live position – and an opportunity to start making real money (However it is very imperative that you read our declaimer in regard to forex trading and the risks involved thereof)
When you have downloaded the Metatrader, this is available as a bridge from your broker’s website.
Click on the icon and open the Metatrader app / Metatrader Software for your PC. Once this is open – it will load a login box where you have to enter your credentials –
See: Figure 0.0.2 – login box
Your username is usually just numbers – known as your account number, and the password is a mix of numbers, letters and sometimes characters – can be really hard to type them in one by one.
Once you have entered these correctly you will be taken to the Metatrader’s user interface. You are in. see figure 0.0.1
Step 6 – Executing your First Trade
You will notice on the top left of your Metatrader Trading platform real-live currency exchange rates – The market’s volatility seen in real-time.
When it comes to FOREX, currencies are always traded in pairs. Selling one currency while buying another or conversely buying one currency while selling another, either way, it’s profitable whether you selling or buying, as long as the market goes your way.
By default, the timeframe is hourly, and the chart type is by default candlesticks, which is advisable to be used because it makes things easier and shows you the market direction clearly.
You can easily drag and drop any currency pair that you want to trade and move it to the MetaTrader panel for monitoring purposes.
When you open a position on MT4 or MT5 you will need to select a lot size, (read more about lot sizes)
BUY OR SELL
Once you are determined on which direction to go, you can buy or sell by clicking on the “SELL OR BUY” button as illustrated in figure 0.1.2.
A one-click trading pop-up disclaimer will appear, read through, agree with the terms and conditions and click “OK”
Buy or Sell, and immediately you will notice a floating negative profit, and it is perfectly normal and expected. If the market goes your way you will notice and rise in profit gain, if it goes against you, you will notice a rise in profit loss.