The Beginner’s Ultimate Step-By-Step Guide To Forex Trading


How This Guide Is Written

Are you the type of person who enjoy looking at 1% gains a day?

Or are you one of those who can stomach high volatility in the search for huge profits?

If you are the kind of daredevil who is hungry for quick gains in the financial markets…

Forex trading might just be the ideal financial instrument for you to trade!

However,

Most people are not as familiar with Forex trading as they are with stock trading…

Hence this guide is written to serve as a one stop solution for all your Forex trading questions!

It would be written in a way as simple as possible so that the average layperson can understand.

As you continue to learn more in your Forex trading journey…

You might like to progress to some of our more advance guides such as:

  • Step by step guide to candle stick reading
  • Step by step guide to trading with CFDs
  • Step by step guide to Option Trading

But for the rest of you who are completely new to the world of Forex trading,

This would be a great place to begin!

Some Important Things You Need To Know Before We Begin

In the world of finance,

Bankers and investors always like to use very sophisticated language and investing jargon to confuse the non-financially savvy people!

However in this guide, we will try to do away with as much financial jargon as we can…

So don’t get too uptight about the specific terms that you might come across!

What is Forex Trading?

Forex trading is essentially the art of buying & selling foreign currencies…

For a profit!

Remember how before you travel overseas…

You always have to go over to the money exchanger to convert your Singapore dollars into another country’s currency?

What you are essentially doing is that you’re using your Singapore dollars…

To buy foreign currency from money exchanger!

And you would realize that even if you were to sell your foreign currency back to the money exchange instantly,

You would have lost a bit of Singapore dollars in the converting process!

That is because the money changer makes a bit of money from you whenever he buys and sells your currencies!

Even through the amount he makes might be very small due to the very small amounts of currencies you convert,

Imagine how much he could possibly earn if you had converted hundreds of thousand…

Or even millions of dollar with him?

When you trade Forex,

That’s essentially what you’re doing!

But How Can I Trade Forex Profitably When I Don’t Have Millions of Dollars?

Of course, we aren’t going to ask you to lug suitcases of dollars notes to the banks or money changer to buy and sell currencies!

Instead, what you need to know is that Forex is a leveraged product.

What this means is that…

Just by using a small amount of money,

You can control a huge amount of capital!

In the retail forex markets, leverage can be as much as 250:1,

This means if you had $1,000 in your brokerage account,

You can control up to $250,000!

Now… who says you can’t trade Forex profitably if you don’t have a million dollars?

2 Important Things You Need To Know Before You Start Trading Forex

1)How Do You Read A Currency Pair?

When trading Forex, you quickly notice that they always come in 2 currencies such as…

  • EUR/USD
  • GBP/USD
  • USD/CHF

That’s because…

Currencies are traded in pairs!

When you see a currency pair,

All you need to remember is that the first currency symbol you see in the pair,

Is the BASE CURRENCY.

Hence, when they quote EUR/USD at an exchange rate of 1.1534…

What they mean is that 1 Euro can buy you 1.1534 U.S. Dollar!

When the exchange rate of EUR/USD increase…

What it means is that the base currency (EUR) is increasing in value!

(This also implies that the USD currency is losing its value.)

On the other hand,

When the exchange rate of EUR/USD decrease…

What it means is that the base currency (EUR) is decreasing in value!

(This also implies that the USD currency is appreciating in value.)

What Is A Pip & How Do You Calculate Them

As the Forex exchange rate changes in very minute amounts,

Currencies are typically traded…

Up to 4 decimal places!

Hence, many traders generally trade in something they call “Pips”.

Pips stands for “Price in Points”,

And a pip is basically the 4th decimal place of the exchange rate!

So when they say EUR/USD pair increase by 5 pips,

What it means is that the 1.1534 exchange rate has increased to 1.1539!

Mini Exercise:

1.3425 + 7 pips = ?

1.7623 + 24 pips = ?

Ans: 1.3432, 1.7647

How Do You Trade Forex?

Now that you know what currency pairs & pips are…

You’re ready to embark on your Forex trading journey!

In order for you to trade Forex,

You will need to follow these 4 simple steps:

1. Open An Account With A Forex Brokerage

Opening an account with a Forex brokerage is a very simple thing to do.

There are many Forex brokerages in Singapore…

And they are all eager to have you open an account with them!

Below are some examples of the brokerages available in Singapore

  • Oanda
  • IG Markets
  • City Index

Different brokerages have different charges,

Hence you might like to read this article about how you can select a low cost stock brokerage.

After you have decided on a brokerage,

Opening an account is simply a matter of going to their website to fill up a form…

Or heading down to one of their branches to have their representative serve you.

One of the advantages of heading down is that they often assign someone to teach you how to trade using their system,

So you will be able to pick up forex trading even faster!

(I personally prefer to head down personally because I dislike the hassle of mailing all my documents.)

2. Download MT4 Trading Platform

Besides opening for an account with a brokerage,

The other thing you need in order for you to track market trends, trade strategically or even execute trade orders…

Is a trading platform!

We encourage you to download the highly popular MT4 trading platform because…

It is absolutely FREE!

Download the MT4 trading platform here!

http://www.metatrader4.com/en

Besides being very easy to use,

One of the best things about the MT4 trading account is that it allows you open a demo account for you to trade!

We highly recommend you start off trading via a demo account first as this allows you to get a hang of Forex trading…

Without losing a single cent!

3. Fund The Account (Optional Step)

After you have set up your brokerage account and installed the MT4 trading platform,

The next thing you need to do is to fund the account…

As we will be teaching you how to trade using a demo account,

This is will be an optional step for you…

However, if you want to start trading with real money,

Funding your account is a very easy thing to do!

Most brokerages allow you to transfer funds via bank transfer…

Some of them even allow you to transfer funds by charging it to your credit card!

Regardless of transfer method,

Funding your account is a quick and simple process!

4. Place Your Trade Order

Regardless whether you trade using a demo account or a live account,

Placing a trade is EXACTLY the same!

(For this example, I would be using MT4 trading platform as that is the trading platform I use personally.)

If you were to log into your trading platform,

You will usually see a set of prices like these…

Forex_Prices

 For every currency pair,

There will be a pair of Bid/Ask prices.

The reason for this is because for every counter,

There are always two parties required to make a successful transaction.

The prices under the BID section indicate the highest amount the buyers are willing to pay for the stock,

Forex_Bid_Price

While the prices under the ASK section indicate the lowest price the sellers are willing to sell the stock for.

Forex_Sell_Price

 So if you are looking to trade the EURUSD currency pair,

EURUSD

 All you need to do is to double click on the currency pair and you will see a screen like this…

image5

So if you want to buy the EURUSD currency immediately,

You can place an instant execution order at the current price.

However if you an advanced trader who is only intending to buy the currency pair only after it has hit a certain price,

You’ve got to switch the order type to “PENDING ORDER”…

And select “BUY STOP”.

Forex_Pending_Order

After that,

All you need to do is to key in the target price you wish to buy the currency pair at…

And click on “Place”.

Forex_Place_Order

And that’s it… you’re all ready to trade Forex!

Thank you for taking the time to read this guide.

We hope that you now have a basic understanding of Forex Trading…

And how simple it really is!

Bonus: Want to learn how you can make a steady profits by trading Forex?

If you would like to learn EVEN more about Forex,

Then I have GREAT NEWS for you!

This coming March, 3 top Forex traders from around the world will be in Singapore…

To teach Singaporeans how to make profitable trades consistently!

This event is called…

FOREX TO FREEDOM 2016!

It will be Singapore’s largest, and most exclusive Forex seminar this year, so…

Visit the link below to secure your FREE seat today!

https://www.wealthmastery.sg/forextofreedom

Share this post

Tai Jit Meng

Simply known by most friends and colleagues as Jit, this avid writer's goal is to educate Singaporeans with investing and trading knowledge, as he understands too well how difficult it can be to make it big in this small city. When Jit isn't penning (or typing, rather) his thoughts down, you will probably find him enjoying a good video game.



No comments

Add yours