{"id":31816,"date":"2022-12-29T06:37:00","date_gmt":"2022-12-29T06:37:00","guid":{"rendered":"https:\/\/businessyield.com\/?p=31816"},"modified":"2023-04-03T19:44:42","modified_gmt":"2023-04-03T19:44:42","slug":"forex-trading","status":"publish","type":"post","link":"https:\/\/businessyield.com\/forex\/forex-trading\/","title":{"rendered":"Forex Trading 101 – How To Have A Good Foundation For Your Trading","gt_translate_keys":[{"key":"rendered","format":"text"}]},"content":{"rendered":"\n

Forex trading is a process of buying and selling currencies with the goal of making a profit. It can be lucrative, but it’s also complex and risky. In order to be successful in forex trading, you need to understand the basics of how the market works and have a grasp on how to formulate your best strategy.<\/p>\n\n\n\n

There are no fixed rules for trading currencies, but there is some foundation that must be established by a trader to be successful in this market:<\/p>\n\n\n\n

The Basic Foundation<\/span><\/h2>\n\n\n\n

#1. Set Your Goals<\/span><\/h3>\n\n\n\n

In order to make a good forecast, it’s necessary to set targets for your currency pair; this will help you identify important price levels and understand when the price is likely to move in the desired direction.<\/p>\n\n\n\n

#2. Get The Right Tools<\/span><\/h3>\n\n\n\n

A good trader is every bit as good as his tools (analysis). As with any other profession, trading has its own specialties; some traders prefer technical analysis, while others opt for fundamental analysis. The most important thing is to find the right tool\/analysis and use it properly. One of the best examples of this will be by using a Virtual Private Server. VPS is a tool that can help you to have an uninterrupted trading session by hosting your trading platform on a remote server. For more details, you can check VPS Forex<\/a>. This is important because if your computer crashes or loses internet connection, your trade will not be affected. Additionally, a VPS can help you to speed up your trading process by allowing you to access your trading platform from anywhere in the world.<\/p>\n\n\n\n

#3. Have A Strategy<\/span><\/h3>\n\n\n\n

Use the “trade like a millionaire” strategy (TLAM). This simple technique can be applied not only on currency markets but also on stock or commodity markets. The “Trade like a millionaire” strategy is designed to preserve accumulated profits and cut losses (at the same time). The basic idea behind this technique is to use only 1% of your equity per trade. This means that if you have $ 10000, you can invest up to $ 100 on one single trade. If the price goes in your favor, you can either close the deal and get a 100% profit or you can use an “alternative order” (stop order, trailing stop, take-profit) to move your position into profit.<\/p>\n\n\n\n

#4. Set Enough Time Aside For Trading<\/span><\/h3>\n\n\n\n

Currency markets are volatile<\/a>, so it’s necessary to have plenty of time available in order to identify major price movements and take part in them. If you trade currencies, you should try to do it at the same time each day: this will help you determine patterns that can be used to forecast future price movements.<\/p>\n\n\n\n

Currency trading can be beneficial but it requires a great deal of practice in order to achieve success. There are many professional currency traders who work with brokers or invest large sums of money on forex forums. However, most people just want to try their hand at trading and see how it goes.<\/p>\n\n\n\n

Learning how the forex market works<\/a> will help you understand how to set your goals and plan yourself. Let’s take a look at some of the basics of forex so you can get started.<\/p>\n\n\n\n

Basics Of Forex<\/span><\/h2>\n\n\n\n

#1. Currency Pairs\u2014The Building Blocks Of Forex Trading<\/span><\/h3>\n\n\n\n

Every trade on the forex market is related to a currency pair<\/a> that consists of one major currency and another, counterbalancing currency. The first one is called the base currency, the second is the quote currency. For example, EUR\/USD consists of euro and US dollar; GBP\/JPY\u2014of the British pound and Japanese yen.<\/p>\n\n\n\n

The most popular currency pairs are majors (EUR\/USD, GBP\/USD…) along with crosses (EUR\/GBP, USD\/CHF…). When trading these currencies you should always take into account their moves and ever-changing quotes; for example, if you’re trading GBP\/USD it’s important to know that GBP is growing against USD.<\/p>\n\n\n\n

#2. Forex Trade: The Mechanics<\/span><\/h3>\n\n\n\n

When trading currencies on the forex market, a lot depends on how currency pairs are quoted. The moment you buy or sell a currency you get the base price of the pair. For example, if you’re trading GBP\/USD and buy a pound for $1, this means that one British pound costs 1.70 US dollars.<\/p>\n\n\n\n

When selling a currency it’s necessary to use the quote currency in order to calculate profit or loss. For instance, if you sell the same GBP\/USD pair, you’ll get 1.70 US dollars for one British pound and gain 0.30 (1.70-1.40) dollars for one sold unit of GBP\/USD after selling it; this is 30 pence if we’re talking about GBP\/GBP quotes.<\/p>\n\n\n\n

Of course, this is a very simplified example. In reality, trading is more complicated and instead of looking at transactions in the terms of “selling” or “buying” currencies you should consider them as going long (when going for a deal) and going short (when closing a deal).<\/p>\n\n\n\n

Almost all currency pairs can be traded both ways, but there are also some pairs that can only be traded in one direction. For example, USD\/CHF is a pair that can only go long (trading USD against CHF), because it’s not possible to sell Swiss francs for dollars.<\/p>\n\n\n\n

#3. Key Numbers<\/span><\/h3>\n\n\n\n

Every forex trader should know the key values of their market. Here are a few of the most important:<\/p>\n\n\n\n