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14 tháng 9, 2021

Forex trading. How to start?

Forex is simple: how to become a trader in 8 steps. Read the article before entering your first position and avoiding losses and disappointments

Forex trading. How to start?

Forex trading can bring a stable profit if it is treated as a job, and not a "casino", in which the result is determined by a random choice. Advertisements for training courses with "copyright strategies" promising to teach anyone to earn a million dollars for money, in a month. Newbies do not know what to choose – buy a course or study you? The answer is one: your knowledge is always better; it will help you avoid losses and disappointments. Read the article for the main steps you need to go through before opening the first position.

The names of companies and software products are indicated for information only and are not advertising. The trader makes all decisions independently.

1. Choose a broker.

The right choice of a broker is the main factor of successful Forex trading. If there are incorrect quotes, execution of transactions at other prices, long opening/closing of positions, even the most profitable strategy will only give losses.

forex brokers

Before opening the first demo account, see the following:

  • The broker may not provide services to residents of certain jurisdictions. Check if you are on the allowed list or not.
  • Licenses. Brokers want to register in offshore zones. If the site only has licenses from local regulators, look for other options.
  • Withdrawal of funds. If there is no withdrawal to VISA / MasterCard or verification of personal data is required, it is better to look for another broker.

Important. Some traders are constantly looking for a new broker. This is the wrong approach, even if better terms are offered. If there are no problems with your broker, it is better not to change the stable situation. The main thing is stable work, and not 1-2% less commission for withdrawing funds. It is necessary to look for new options, but without prejudice to the main trade.

2. Trading platform.

The main working tool of the trader. The choice is limited by the broker's offer, usually, for Forex it is the MetaTrader terminal. It is easy to learn, there are good free training courses, many additional indicators and advisors have been developed.

You can trade browser or mobile phone iOS/Android. All functions of the desktop version are supported, except for connecting additional indicators, automatic trading, and testing.

trading platform

Only through the terminal can you really evaluate the work of the broker. To do this, open several demo accounts with different brokers, compare quotes through terminals. Quotes should not differ from others by more than 3-5 points. If the quotes are clearly different, change your broker.

Important. The main thing for any trading terminal will be reliable Internet access and an uninterrupted power supply. Speed is very important for mobile and online platforms - if there are short-term transactions (scalping), it is better to choose the desktop option.

3. Graphical, technical, and fundamental analysis.

The next step after choosing a broker, installing a terminal, and opening a demo account will be to study methods for predicting price movement.

The market is predicted by the following methods:

forex charts
  • Candlestick (graphical) analysis. Developed in Japan and has been effective on all trading assets for over 200 years. According to the author, the "candle" contains all information that determines the current price, the combinations are repeated, and it is possible to accurately predict the future price movement.
  • Technical analysis. Unlike candlestick, it works with statistics of past prices. They are processed by mathematical algorithms; the result will be indicators on the price chart. It is on technical analysis that ALL automatic advisors work!
  • Fundamental analysis. The publication of important news from the leading economies of Europe, America and Asia produces strong price movements. The trend may even reverse completely. It is considered the most difficult Forex trading option, but everyone needs to know the basics.

Important. Any of the methods of analysis (even fundamental) cannot be used alone to make a decision. You always need additional confirmation: a graphical pattern based on indicators, news on market volumes. Learn all types of analysis!

4. Graphic patterns.

To study candle analysis, there are many "classic" books that you can buy or download on the Internet. Beginners need to know one main principle.

All candlestick patterns are divided into two groups: reversal patterns and trend continuation patterns. Further, the patterns differ in "strength", but the basic principle remains. There are few basic patterns; there is no problem finding them on any trend, asset, and timeframe.

Graphic patterns

Important. In the "classic" form, candlestick patterns rarely appear on the chart. You need visual experience in finding and analyzing "wrong" shapes. If you have problems with remembering images, switch to technical strategies.

5. Technical indicators.

Let's move on to indicators. Hundreds of options have been developed - among which it is difficult to understand whether the algorithm works or not? Keep the following in mind when choosing your toolbox. All indicators are divided into three groups:

  • Trend. Determining the presence and direction of the current trend, the beginning of a reversal or correction. One of the most popular is Moving Average, on the basis of which the main channel indicators are created.
  • Overbought/Oversold oscillators. If trend indicators determine a trend, the oscillators show the moment of its end and the beginning of the reversal. When the uptrend ends, they talk about the "overbought" of the market, descending about "oversold".
  • Volatility, volume, trend speed. A group of indicators showing the "trend". If the beginning of a reversal is determined on the oscillators, here you can estimate how “quickly” it will be.

Important. As practice has shown, the optimal number of indicators on the chart is no more than 3-5. Otherwise, they begin to give opposite signals; the trader begins to make mistakes in the direction and point of opening a position.

6. Technical analysis strategies.

A trader must have his strategy, even if it is a modification of a ready-made technique. This is the only way to compete with other traders, making profits where others close losses. With Internet options, you can take ideas as a basis. Like indicators, all strategies are divided into three groups.

Technical strategies
  • Trending. In any strategy, a trend indicator is mandatory, it is the basis of any analysis. Its signals will then be confirmed by oscillators, volatility and market volumes. In the image, the "classic" option is at the intersection of two Moving Average.
  • Channel. They work well in a sideways market, when the price goes inside the "channel" of two Moving Averages. Positions are opened on a rebound from the borders, a breakdown is a signal of a new strong movement, and we switch to trending strategies.
  • News. The figure shows an example of the market reaction to the publication of strong fundamental news. The trader earns on the first 2-3 strong impulses. You need experience, quick response, and reliable work of a broker. Not recommended for beginners!

Important. In addition to the strategy, you need to choose the right timeframe. Both of these factors must match for psychological comfort. The characteristics of Forex timeframes require a separate article; look for the necessary information on the Internet.

7.  Automatic advisors.

Beginners are the main target audience of advisors. It's simple: we put on a real account, start trading, and watch how the profit grows. You don't need to learn technical analysis, look for patterns, or calculate the volume of trade. Everything has already been done. The Expert Advisor often does not have any settings, and it is impossible to influence the process of opening/closing positions.

Automatic advisors

Such a "passive" trading mode always leads only to losses. Maybe there are advisors that really trade in any market for profit, but they cannot cost 50-100 dollars. There are other offers - for $1000 you can buy a simple combination of standard oscillators or Moving Average, which are freely available for free.

Be careful when buying. Look for products with settings, a description of the strategy used, and statistics for no more than the last 2-3 years. Even if these are medium and long-term positions. Make sure that the statistics do not have gaps; this means that the authors selected the most profitable periods without losses.

Important. Automatic advisors require the uninterrupted operation of the computer and the Internet. If there is no connection with the broker's trading server, the advisor closes all positions, and this can lead to losses. This will not happen when using a VPS server. It can be rented from a broker for pay or free.

8. Trading signals.

As an alternative to automated trading, you can use trading signals from a broker or independent services. Thus, risks are reduced: the terminal does not automatically open deals, and you can safely make a decision. Signals can be either paid or free. There are signals for any asset: currency pairs, stocks, cryptocurrencies, and binary options. The subscription price also varies in a wide range: from free broker signals when opening a real account to tens and hundreds of dollars per month from independent services.

Trading signals

Most signaling services have two main problems:

  1. Even in general terms, the strategy for receiving signals is not described;
  2. Statistics are missing or not in "real" time.

There may be a short test period, but if it is less than a week, you will not be able to assess the quality of signals in the current market. If you decide to use signals or services with unlimited FREE packages. Let some information is not available, but the test results will be better.

Important. All trading signals (even paid ones) are used only as recommendations confirming their strategy. The supplier is not responsible for losses, only you make all decisions.

Summarize…

Newbies should always start with a demo account and basic technical analysis tools. Even if you are only an investor, basic knowledge of technical and graphical analysis, risk management systems (money management) will also be useful to you.

So you will be able to speak with traders “in one language" and understand what his strategy is – there will be a stable profit or positions are opened simply "on the market" without a system hoping for price movement into profit