Tue, November 29, 2022

Forex trading examples: how to trade Forex?

Trading Accounts - Forex trader and Forex charts

Suppose that you, like most Forex enthusiasts, wanted to start your trading career and find the best Forex trading examples and tips that will help you achieve your goal. You are eager to learn all there is to know about it to increase your income and make trading your long-term and successful career.

Given that this is one of the most profitable online businesses lately, it is no wonder why you wanted to discover all the secrets of this new craft that attracts a growing number of new traders to this industry. It is not necessary to have a rich prior knowledge; it is only essential to have a basic understanding of technology, access to the Internet, and a solid will to master all Forex trading techniques.

Nowadays, there are many articles and courses on how to trade Forex, and it is effortless for people not to know where to start learning. Suppose you are also among these enthusiasts who cannot wait to learn how to start Forex trading. In that case, it is essential to withdraw from the beginning and understand what Forex is in general before you get all the crucial Forex trading examples.

Let’s get started with the basic definition of Forex, shall we?

What is Forex – get all the necessary information

Forex is the acronym of the foreign exchange market for trading international currencies. As the name suggests, Forex trading is the process of trading one particular currency to another for numerous different reasons such as trading, tourism, and commerce.

One of the essential financial markets on the planet is the Forex market. It’s a decentralized online place where currencies are traded. Currencies play a crucial role since they enable people to purchase goods and services locally and globally.

What’s extremely interesting about the Forex market is that there’s no central market for Forex exchange. Instead of that, all the currencies are conducted over the counter (OTC). It means that every single transaction is happening via computer networks among Forex traders on a global level. The market operates 5.5 a week, 24 hours a day.

How to start Forex trading – a brief guide for beginners

Now that you’re familiar with Forex in general, it’s also essential to understand how to start Forex trading before moving on to Forex trading examples. If you are serious about making Forex trading into your full-time job and getting all there is to know about it, here are all the necessary steps for starting this business:

  1. Select a currency pair you wish to exchange – Currencies are always traded in pairs.
  2. Do proper research – it includes monitoring the news for economic announcements, checking indicators, performing fundamental and technical analyses.
  3. Read a quote to see a live spread on each currency pair.
  4. Pick your position – It can be either a buy or sell position.
  5. Get started with trading.

How to start a trade on a particular trading platform:

  1. Open the trading platform.
  2. Choose a preferable currency pair and open a chart.
  3. Add some indicators to the chart.
  4. Place the order
  5. Set your stop loss
  6. Take profit levels
  7. Submit the order
  8. Wait for the confirmation.
  9. After the waiting period, your order will be complete.

Keep in mind that not all trades result in a profit. Therefore it is essential to take all the necessary measures to limit your risk on each transaction. Now that you’ve got the answer on how to trade Forex for beginners, it’s time to discover the best Forex trading examples.

What are the best Forex trading examples?

Once you’ve understood the fundamentals of Forex trading, it’s time to learn the best Forex trading examples that you can also use. We’ll provide you with the two most important ones.

#1 Buying EUR/GBP

First of all, EUR/GBP is trading at: 0.84950/0.84960. Let’s say you want to purchase 20.000 EUR since you’re assuming that the price of EUR/GBP will increase. The margin rate of the EUR/GBP currency pair is 3.34%. It means that you can deposit only 3.34% of the total position value as position margin.

For that reason, in this particular example, your position margin will be 3.34% x 20.000 EUR x 0.84955, which is £567.50. Keep in mind that in case the price moves against you, it’s likely to lose more than the total amount of your investment, which in this case is £567.50.

If the outcome is positive and a winning trade, the price will increase over one hour to 0.85530/0.85540. Therefore you will close your long trade by selling at the current sell price of 0.85530. The price has moved 57 points in your favour, and your profit is £114 ([€20,000 x 0.85530] – [€20,000 x 0.84960]).

On the other hand, if the outcome is losing trade, and the price of this currency pair drops to 0.84390/0.84499, and you decide to sell it at the current sale price, you will lose £114.

#2 Selling EUR/USD

EUR/USD is trading at 1.13010/1.13020. Let’s say you think the price of this currency pair will go down and you decide to sell 20.000EUR. Since the EUR/USD margin rate is 3.34%, you will only have to deposit 3.34% of the total position value as position margin. For that reason, your position margin will be the following: 3.34% x €20,000 x 1.13015, which is $754.94.

The position margin amount will be automatically converted into your account currency. Keep in mind that if a price moves against you, it’s likely to lose more than your current position margin of $754.94.

If your prediction is correct, and the EUR/USD pair drops to 1.2510/1.12520 in an hour, you’ll close your short trade by buying at 1.2520. Your total profit will be $98 since the price has moved 49 points in your favour.

On the opposite, if your prediction is wrong and the price of this pair increases, you’ll decide to buy at 1.13810 and close the trade. The price moved 80 points against you, and your loss is $160.

What are the advantages of forex trading overstocks?

If you are wondering what the advantages of Forex trading overstocks are, here is what you need to know:

  • Lower transaction costs – The forex market comes at a lower transaction cost than trading in the stock market.
  • Easier to follow – There are several significant pairs to trade and follow the news of.
  • Liquidity – the market is the most liquid financial decentralized market on the planet.
  • High leverage – traders can trade on a high leverage basis.
  • Speculator’s influence – The Forex market, therefore, is more resilient to manipulation.
  • Position taking – It is much easier to short a particular currency and sell it than selling short stocks because it is psychologically more acceptable.

Where to start with trading Forex? Try opening an account with the best broker for beginners.



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