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You might find these parameters a little overwhelming, but don't worry if they aren't clear. Just skip what is not clear, then everything will become clearer. The Forex Marketplace is global. Forex is not limited regionally, traders are always selling and buying - currency, securities, metals, oil.

Thanks to the internet and modern information technologies, any online user can participate in the Forex Market. These are the largest foreign exchange markets. A break in trading occurs only once a week - when American exchanges close on Saturday at GMT, and New Zealand exchanges open again on Sunday at 9 p.

An individual who trades in the Forex market. Any person can become a trader, including you. The only limitation is that a trader cannot enter Forex on his own, only through a certain company - a forex broker. The organization that gives the trader the opportunity to trade on Forex. In fact, a broker is an intermediary between a trader and the interbank market. The broker provides the trader with trading instruments, a trading terminal and other conditions necessary for trading. Organizations whose activities determine the current performance of currency pairs.

First of all, these are international banks and large multinational corporations. For example John Smith wants to make money on Forex. Regardless of where he lives, he chooses a broker. You will find the best brokers on our list of the best forex brokers. John gets registered on the site of the selected broker, goes through verification there, makes a deposit, and starts making bets.

Now he is a trader who goes to the interbank through the selected broker. John does not need to worry about who acts as a liquidity provider. This is the broker's problem - where to get current quotes and through which bank they can withdraw their transactions to the interbank. Now that the basics of what the Forex Market has been outlined, let me onto its benefits. Why it attracts hundreds of thousands of people around the world. This gives you a chance to earn in your free time. Lots of traders can work regular business hours in their main jobs, and trade in the Forex market after work.

This means that a trader can trade at any moment, even in the middle of the night. Every day, millions of transactions occur on the Forex market, each of them is backed by currency. There is always demand and there are always offers.

Market turnover is measured in trillions of dollars. Forex trading allows you to trade on a margin system, a trader can get huge leverage. For example, And the profit in case of success will be enormous, while the trader risks only the available capital.

You can read more about investments and their types in this article. Many risk diversification decisions. The distribution of capital, the use of portfolios instead of specific accounts, trust management - this is only a small part of the opportunities due to which a trader can reduce the risk of unsuccessful trading to a minimum. High level of potential earnings: the profit which Traders can make in the stock markets receive within the year can be received by the Forex trader in a day.

Forex Trading is a process of exchanging currency in the Forex market. As in the exchange office, each pair in the Forex market has two prices. The first one is a BID. This is the price at which the broker is ready to buy currency from the trader. The second one is an ASK. This is the price at which he is ready to sell the currency. The difference between the bid and ask indicators is called the spread.

It can be fixed or floating, depending on the type of currency pair. The spread is taken by the broker, just like the exchange office takes the difference between the sale and purchase prices. Success in the Forex market depends only on the trading strategy Each trader has his strategy. There can potentially be an infinite number of trading strategies, while all traders are usually divided into two groups:. Bulls are traders who predict an increase in the price of a currency and actively buy it to sell it at a higher price in the future.

Bears are traders who specialize in price fall forecasts and, accordingly, they sell off their assets to buy them back later at a lower cost. Of course, no one forbids the bull to work on a bearish strategy. And this is a national division.

Sooner or later, each professional trader begins to carry out the bulk of transactions in one of these strategic groups. As a beginner you will need to decide what assets you will work with. There are no restrictions, and experienced traders work with several tools at once.

Now we will take a closer look at the main Forex trading tools. Here everything is simple, there are major currency pairs they have the US dollar , and there are cross-pairs they do not have the US dollar. Here you can set various parameters, up to the exact number of points, that will make the difference between the currencies.

If the forecast is successful, the trader gets his profit taking into account leverage that is, he bought it cheaper than he sold. If it is unsuccessful, the trader loses the bet. The list of cross-pairs is way longer, but you are not required to use them as some are complex.

It is also recommended not to start with the so-called exotic pairs. They are either very difficult to predict or they give very little profit at high risk. Metals and energy sources are less popular than currency pairs, but they are not less liquid. Countries and banks constantly trade gold and oil among themselves, so there is no problem with demand. Note that forecasting these instruments is more difficult than currency pairs. Intersections with the euro are less liquid than with the dollar.

And silver has an important detail: 1 pip of price movement always has a high cost, higher than for gold. Therefore, it is recommended that beginner traders trade only the first pair - gold and the US dollar, it is always a liquid pair, and it is relatively easy to calculate the risks.

The most popular option among energy resources is oil. Indices were invented to reflect the efficiency of the stock market and the economy of specific countries. With the development of Forex, traders now have the opportunity to bet on changes in indices. Stock indices have a lot of their nuances, but they all relate to forecasting. Because in the trading technique everything is the same as for other instruments presented on Forex.

Buy cheaper - sell better, predicting the right price movement. Cryptocurrency is a fully automated digital currency that uses a decentralized payment system to carry out operations. Technically, cryptocurrency does not have material, and even digital expression - it's just a number indicating the number of units of account.

With the growing popularity of cryptocurrencies, they could not avoid integrating into the Forex market. Today some traders professionally trade cryptocurrency pairs. This segment is not recommended for beginners, because, unlike classical currencies, forecasting is complicated here. Cryptocurrencies can be traded about each other and there are already fifty of them or about classic currencies. Here are some examples:. A trading platform is software that a broker provides to a trader for trading on the Forex market.

That is a program where a trader generates his orders and sends them to the interbank by clicking the mouse in certain places. There are several dozens of trading platforms, and there are brokers that provide their own, original platforms. But the vast majority uses standard, so-called time-tested platforms. Now we will take a look at their main advantages and disadvantages.. In addition to the classic desktop version, they have a mobile version for iOS and Android.

As we outlined above, the Forex market offers opportunities for passive earnings. Let's look at these:. Investing in Forex is a process where you invest your funds in any investment program of a broker without making any transactions on your own. Today, Forex brokers mainly offer these types of programs:.

Such accounts are formed from the accounts of several investors and the manager. The manager trades, and in addition to his funds, he uses the funds of investors in transactions. Investors do not make any decisions; they only determine the amount they are ready to provide to the manager. This is the safest investment option. It is especially popular with beginners because here a professional makes all decisions for you.

In this case, the investor directly transfers funds from his account to the account of a third party. This approach does not imply any automatic protection against fraud, as is the case with PAMM accounts.

However, the investor can work with the trader under the contract or transfer funds under the management of the broker's traders. This investment option allows traders to view and copy the trades of another trader commonly referred to as the signal provider to make the same trades. Trades can be copied in whole or in part.

If the trade wins, the investor pays a commission to the signal provider. The main difference between PAMM accounts and trust management is that the investor does not transfer his funds to anyone and makes bets himself. But not everyone needs this control. A lot of people prefer trusting professional Forex market players and making money with them doing nothing. Forex brokers often allow traders to make money on their advertising as part of their affiliate programs. All you need to do is to tell others about the broker in one way or another.

Forex affiliate programs, unlike investing, are as individualized as possible. That is, each broker has its terms of affiliate programs, its restrictions on entry, and different potential. But in general, all affiliate programs are usually divided into several types:.

CPM for example, you give a link to a broker on your YouTube channel and get a fixed amount for it;. Payment for registration or first deposit for such an affiliate program, you will receive payment only when the user who clicks on your link registers with a broker or makes his first deposit. These are the main types of affiliate programs, but again - each Forex broker has its programs.

At first, they often do not bring a lot of income, but in the future, they can give an excellent passive increase in profit, and without any effort on your part. Many newcomers to the foreign exchange market completely forget about bonuses when choosing a broker. But it is bonuses that largely determine the success of the first trade. These bonuses are divided into two types - deposit and no deposit ones. According to the name, these are the bonuses that you receive for making a deposit.

The terms can be different. The main idea is that after replenishing the depositor for a certain amount, the broker transfers additional funds to you. Usually, brokers make restrictions so that traders trade for bonuses and do not withdraw them.

This type of Forex bonus is less common. Here, as the name implies, the trader receives additional funds to the account only for registering with this broker. This is very convenient because it allows you to test the trading platform, trading tools, and other features provided by the broker live on real accounts.

The Forex market is regulated by law in many countries of the world. This is necessary to reduce the likelihood of fraud by the Forex broker and protect the capital of traders. To enter the interbank market, a broker only needs to register as an organization offering financial services.

That is, licensing Forex brokers is not obligatory. But brokers who plan to work honestly seek to obtain a license, because it provides traders with a guarantee of reliability and protection. Indeed, to obtain a license, a broker needs to fulfill several difficult conditions: undergo proper checks, organize a compensation fund, maintain transparent reporting, etc. Broker licenses are divided into several levels.

First level. These are the most demanding organizations, they strictly regulate the work of their brokers, therefore brokers with such licenses are the most reliable. Second level. Here, the requirements for issuing a license are a little easier, but in general it is very difficult to obtain.

Third level. Reporting is more simple and overall control is weaker for these organizations. However, their licenses are also issued only to reliable brokers. Fourth level. These organizations do not require a broker of his own representative office, but they conduct a regular audit. Fifth and sixth levels. They feature a simplified license issuance system and a reduced level of control. These regulators are given as an example, in fact there are way more.

The best option is to choose a broker whose activities are regulated by level organizations; they are the most reliable. But there is one more detail. Territorially the regulator has legal force only within the borders of his country.

Create an account. Popular Categories. All Categories. Edit this Article. We use cookies to make wikiHow great. By using our site, you agree to our cookie policy. Cookie Settings. Learn why people trust wikiHow. Download Article Explore this Article parts. Tips and Warnings. Things You'll Need. Related Articles. Article Summary. Part 1. Understand basic forex terminology. The type of currency you are spending or getting rid of, is the base currency.

The currency that you are purchasing is called quote currency. In forex trading, you sell one currency to purchase another. The exchange rate tells you how much you have to spend in quote currency to purchase base currency.

A long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U. A short position means that you want to buy quote currency and sell the base currency. In other words, you would sell British pounds and purchase U. The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market.

The ask price, or the offer price is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market. A spread is the difference between the bid price and the asking price.

Read a forex quote. You'll see two numbers on a forex quote: the bid price on the left and the asking price on the right. Decide what currency you want to buy and sell. Make predictions about the economy. If you believe that the U. Look at a country's trading position. If a country has many goods that are in demand, then the country will likely export many goods to make money.

This trading advantage will boost the country's economy, thus boosting the value of its currency. Consider politics. If a country is having an election, then the country's currency will appreciate if the winner of the election has a fiscally responsible agenda. Also, if the government of a country loosens regulations for economic growth, the currency is likely to increase in value.

Read economic reports. Reports on a country's GDP, for instance, or reports about other economic factors like employment and inflation will have an effect on the value of the country's currency. Learn how to calculate profits. A pip measures the change in value between two currencies. Usually, one pip equals 0. Multiply the number of pips that your account has changed by the exchange rate. This calculation will tell you how much your account has increased or decreased in value.

Part 2. Research different brokerages. Take these factors into consideration when choosing your brokerage: Look for someone who has been in the industry for ten years or more. Experience indicates that the company knows what it's doing and knows how to take care of clients.

Check to see that the brokerage is regulated by a major oversight body. If your broker voluntarily submits to government oversight, then you can feel reassured about your broker's honesty and transparency. If the broker also trades securities and commodities, for instance, then you know that the broker has a bigger client base and a wider business reach.

Read reviews but be careful. Sometimes unscrupulous brokers will go into review sites and write reviews to boost their own reputations. Reviews can give you a flavor for a broker, but you should always take them with a grain of salt. Visit the broker's website. It should look professional, and links should be active. If the website says something like "Coming Soon!

Check on transaction costs for each trade. You should also check to see how much your bank will charge to wire money into your forex account. Focus on the essentials. You need good customer support, easy transactions, and transparency. You should also gravitate toward brokers who have a good reputation. Request information about opening an account. You can open a personal account or you can choose a managed account. With a personal account, you can execute your own trades. With a managed account, your broker will execute trades for you.

Fill out the appropriate paperwork. You can ask for the paperwork by mail or download it, usually in the form of a PDF file. Make sure to check the costs of transferring cash from your bank account into your brokerage account. The fees will cut into your profits.

Activate your account. Usually, the broker will send you an email containing a link to activate your account. Click the link and follow the instructions to get started with trading. Part 3. Analyze the market. You can try several different methods: Technical analysis: Technical analysis involves reviewing charts or historical data to predict how the currency will move based on past events.

You can usually obtain charts from your broker or use a popular platform like Metatrader 4. Fundamental analysis: This type of analysis involves looking at a country's economic fundamentals and using this information to influence your trading decisions. Sentiment analysis: This kind of analysis is largely subjective. Essentially you try to analyze the mood of the market to figure out if it's "bearish" or "bullish. Determine your margin. Depending on your broker's policies, you can invest a little bit of money but still, make big trades.

Your gains and losses will either add to the account or deduct from its value. For this reason, a good general rule is to invest only two percent of your cash in a particular currency pair. Place your order. Limit orders: These orders instruct your broker to execute a trade at a specific price.

For instance, you can buy currency when it reaches a certain price or sells currency if it lowers to a particular price. Stop orders: A stop order is a choice to buy currency above the current market price in anticipation that its value will increase or to sell currency below the current market price to cut your losses.

Watch your profit and loss. Above all, don't get emotional. The forex market is volatile, and you will see a lot of ups and downs. What matters is to continue doing your research and sticking with your strategy. Eventually, you will see profits.