Forex or spot forex is the buying and selling of the foreign currency. In the Forex Trading you can sell the currency of one country and buy the currency of another country.
For example, the currency of America or the USA is the dollar, the currency of Britain or the UK is the pound. In the Forex market you can buy dollars by selling dollars or by selling pounds. Apart from dollars or pounds, there are other currencies that you can buy and sell in the Forex market.
How to make money from the Forex market?
Currencies of different countries are always changing. You will see in the newspapers that sometimes the dollar is getting stronger against the money, and sometimes the money is getting stronger against the dollar. This is the opposite of most of the world’s currencies. So, if you have bought dollars, you can sell dollars and buy euros if the price of euros goes up against the dollar. Again, if the euro is strong against the dollar, you can get more dollars by selling the euro.
Maybe you had $100 that you sold and bought for 60 euros. He later sold the euro for $120. This way you can earn. We can make a profit only if the share price increases (buy) in the stock market. But in the forex market, no matter which currency is strong or weak, we have the opportunity to make a profit in both cases which is the biggest advantage of the forex market.
Advantages of Forex trading:
– In the past, only the rich or the banks had the opportunity to trade in the Forex market. But now with the change of time, due to the emergence and increasing competition of various forex brokers, anyone can trade in the forex market from any country in the world.
– It is possible to start forex trading with only 1 dollar. Also, almost all brokers will allow you to trade for free demos, that is, with virtual money. So first you can prepare yourself by trading demos for free and you can start real trading by depositing the success by trading demos.
– The scope of the Forex market is very large and it is not possible to manipulate this market. The largest stock market in the world is the New York Stock Market and the size of the Forex market is 25 times larger than that. Remember, the value of the dollar or the euro is not determined by the government of any country. The value of the currencies of different countries varies according to the economic situation and financial events of different countries. Dollars or euros will be bought and sold in all countries of the world at the same price at which you buy dollars or euros.
– There is a large leverage or loan facility available for trading in the Forex market, and so you can make a good profit from very little market movement.
– Scalping is a very popular term in Forex. This means open trade for a very short time. It is possible to make a good profit with very little change in the forex market. Many people open a trade for 10 or 15 seconds and exit the trade with a profit.
– Forex market is open 24 hours a day, 5 days a week from Monday to Friday. And so, whether you are a trader or an employee, you can trade at your convenience in the Forex market.
– You can do Forex trading sitting at home, there is no need to go out. And so you can give a lot of time for the family.
– To trade in the Forex market you have to do everything online and it is very easy to deposit or withdraw from the account starting from the account opening.
– If you can trade well, many will be encouraged to deposit with you and in that case you can manage their trade and you will get a part of their profit.
– Above all, a successful and skilled Forex trader can earn a lot from this market.
It is worth mentioning that to be a skilled and successful trader, you need to study a lot about the Forex market, to qualify yourself for this market. Anyone can make a lot of money from the forex market without knowing anything. Remember, the forex market is as challenging as the stock market. Unknowing may be the initial success that the stock market is also many. But to survive in the long run, there is no alternative but to become an expert.
In other words, there is no such thing as a recession in the forex market. Because in the stock market you can only buy, in the forex market you can buy or sell both.
When the stock market is going down and down, in forex, one currency is always up!
What do you need to do for forex trading?
Do you have a PC or Windows Mobile with an internet connection? So enough.
How do I buy and sell dollars or other currencies?
To trade Forex, first, you need to open an account with a Forex broker and deposit in it. Accounts can be easily opened online in 2 minutes. You can instantly deposit into your account with various online currencies like PayPal, Alert Pay, Liberty Reserve, etc. and start trading Forex.
However, most people make deposits with forex brokers through banks. In that case, after opening the account, you will get the details of your broker’s bank account number and bank deposit.
Once the deposit is completed in your account, you can start trading. Forex trading is done through online software. You can download this software for free from your broker’s website. After installing the software and signing in with the username and password given by the broker, charts and price lists of different pairs will be loaded and you will be able to open/close your trade.
What is traded?
Easy answer currency. Because we are not buying anything. So this type of trading can seem a bit confusing.
When we buy a currency we are buying some shares of a country, like buying shares of an entity. The value of the currency is a reflection of the current and future economic situation of that country.
When we buy the Japanese yen, we buy a share in the Japanese economy. We think the Japanese economy is improving and will continue to improve in the future. When we sell those shares, hopefully we will make a profit.
In general, the exchange rate of one currency with another is a reflection of the economy of that country compared to the economy of that country.
The currency symbol consists of three letters, where the first two indicate the name of the country and the third indicates the name of the currency of that country.
For example, in the case of NZD, NZ stands for New Zealand, and D stands for Dollar. Easy, isn’t it?
The above currencies are the main reason they are the most traded.
Buck is the nickname of USD.
USD is also called greenbacks, bones, Benji’s, benjamins, cheddar, paper, loot, scrilla, cheese, bread, moolah, dead presidents, coco, and cash.
The rule of the stock market is that the price of any share will be determined against the currency of that country. For example, in the stock market of our country, the price of a share is determined in Taka.
But in the forex market, it is impossible to determine the value of a country’s currency. There can be no value in euros or dollars alone. For example 83 Bangladeshi Taka is available with 1 dollar. This time it is possible to get only 0.80 Euros or 0.93 Australian Dollars with 1 dollar. Again, if you talk about the Japanese yen, then with 1 dollar you will get 80 yen. So, what is the value of the dollar? People from different countries trade in the Forex market, at what price will they buy dollars?
This is why everything in the Forex market is traded through currency pairs.
For example, EUR / USD (EUR / USD), a currency pair. Currently 1 EUR / USD = 1.4434. This means that with 1 euro you will get 1.4434 dollars. Oh, I forgot to say, USD = United States Dollar or American Dollar. Simply put, what we know as dollars.
Let’s see some more currency pairs
1 AUD / USD = 1.0543, which means that with 1 Australian dollar you will get 1.0543 US dollars.
1 GBP / USD = 1.6422, which means that with 1 pound you will get 1.8422 USD.
1 NZD / USD = 0.8177, which means that with 1 New Zealand dollar you will get 0.818 USD
1 USD / JPY = 80.29, which means that with 1 dollar you will get 80.29 Japanese Yen.
1 EUR / JPY = 115.91, which means that with 1 euro you get 115.91 Japanese Yen.
Now you understand the issue of currency pair?
Brother, what if I write a little twist? I mean, you wrote that 1 EUR / USD = 1.4434 If I write USD / EUR instead of EUR / USD, is there a problem?
Of course not. But remember, the first currency of a currency pair indicates how much currency you will get next.
1 EUR / USD = 1.4434. This means that with 1 euro you will get 1.4434 dollars.
So, 1 USD / EUR will indicate how many Euros you will get with 1 dollar. The answer would be, just the opposite, 1 / 1.4434 or 0.698
You don’t have a small test, I see you didn’t learn anything. You can match the answers, given below this post. Be careful, answer but do not steal!
1 EUR / GPB = 0.8708, what does that mean? If you want, you can take help from above, and you can get answers from below.
One question remains, why are you taking so many numbers after the decimal every time? For example, why write 1 EUR / USD = 1.4434? Just write 1.44. There is no adulteration of this decimal in the stock market, the price of all the shares is either 20 Taka, not 80 Taka or maybe 1200 Taka. I have never heard of a share price of 20.2543. Why so adulterated?
First of all, which currency pair in the Forex market is the ratio of two currencies. For example, EUR / USD means how many dollars you get with 1 euro. In the share market, we do not calculate how many shares of Meghna Cement we will get with 1 share of Janata Bank. And so, most of the shares in our country’s stock market are priced in full numbers, but some are priced in decimals.
In the Forex market, it has been taken up to 4th house after decimal because, in the Forex market, the movement is usually more in 3rd and 4th house after the decimal. So it has been taken as standard
Let’s take a look at the price of EUR / USD in these 5 days from June 8 to June 10, 2011:
EUR / USD
Date – day maximum – day minimum
June 6, 2011 – 1.4556 – 1.4656
June 7, 2011 – 1.4564 – 1.4698
June 8, 2011 – 1.4565 – 1.4695
June 9, 2011 – 1.447 – 1.4853
June 10, 2011 – 1.4323 – 1.4551
You can see that the market is moving in the 2nd, 3rd and 4th houses after the decimal.
[Puzzle 1 Answer: 1 EUR / GPB = 0.8708. This means that with 1 euro you get 0.8708 pounds]
Pips and pipettes
In the Forex market, a single change or movement per 4th digit after the decimal point of a currency pair is called PIP. PIPS or pips is the plural of PIP, for example, the Market has changed 120 pips today. In other words, the market has changed 120 pips today. Many people call Pips a point. However, pips are widely used internationally.
Most people spend a lot of time figuring out what pips are. Let’s see if we can make it easier to learn with some examples.
You have opened your terminal (trading software provided by your broker). You see, EUR / USD was 1.4340 and now it is 1.4345.
How many pips have changed?
Rules for extraction: more-less = 1.4345 – 1.4340 = 0.0005
As I said before, counting pips start from number four after the decimal. Forget decimals, let’s do simple calculations
4345-4360 = 5
That is, the market has changed by 5 pips.
GBB / USD went from 1.5630 to 1.5639. How many pips did the market move?
5639-5630 = 9 pips.
Market movement (EUR / USD)
Before it was 1.3450, now it is 1.3432 = 3450 – 3432 = 18 pips market movement
Earlier it was 1.3450, now it is 1.3550 = 3550 – 3450 = 100 pips market movement
Before it was 1.3750, now it is 1.3432 = 3650 – 3432 = 316 pips market movement
Earlier it was 1.4450, now it is 1.3450 = 4450 – 3450 = 1000 pips market movement
Hope you understand. Test yourself:
EUR / USD used to be 1.3570, now it is 1.3550.
How many pips did the market move?
If you can, then you are on the right track.
You need more than luck to succeed in the affiliate business.
The movement in the forex market is calculated with the help of pips. You will often hear that Euro / USD has increased by 200 pips today. The market is moving a lot, it has increased by 100 pips in 5 minutes and so on.
Some brokers have 5 digits after the price decimal. E.g. 1.42561. This fifth digit is therefore pipette. So if the price goes from 1.42561 to 1.426, then it should be understood that 10 pips 6 pipettes have increased or 108 pipettes have changed.
Lot / Volume:
The lot is a lot easier. But when you go as a unit, it will seem complicated to you. So we will not go here as a unit but try to explain it simply. See BabyPips for unit calculations.
In the forex market we can gain every pips movement. In other words, if the price goes from 1.1710 to 1.1820, we will have a gain or loss of 10 pips. By lot/volume we will determine the amount of profit or loss per pips if it goes in our favor or against us.
We are dividing forex brokers into 3 parts for convenience.
Standard Lot Broker
Mini Lot Broker
Micro Lot Broker
1 lot = $ 10 / pips in standard lot broker. But in mini lot broker 1 lot = $ 1 / pips. And 10 lot = $ 1 / pips in micro lot broker.
So, if you open a trade with 1 lot on a standard lot broker and 10 pips go in your favor, your profit is $ 10×10 = $ 100. Even if there is a similar loss, it will be $ 100.
But, if you open a trade with 1 lot in a mini lot broker and 10 pips go in your favor, your profit is $ 1×10 = $ 10. Even if there is a similar loss, it will be $ 10.
And, if you open a trade with 1 lot in a micro lot broker and 10 pips go in your favor, your profit is $ 0.1×10 = $ 1. Even if there is a similar loss, it will be $ 1.
Standard Lot Brokers:
1 standard lot = $ 10 / pips
0.1 standard lot = $ 1 / pips
0.01 Standard Lot = $ 0.10 / pips
10 standard lots = $ 100 / pips
Mini Lot Broker:
1 mini lot = $ 1 / pips
0.1 mini lot = $ 0.10 / pips
0.01 mini lot = $ 0.01 / pips
10 mini lots = $ 10 / pips
Micro Lot Brokers:
1 micro lot = $ 0.10 / pips
0.1 micro lot = $ 0.01 / pips
0.01 micro lot = $ 0.001 / pips
10 micro lots = $ 1 / pips
Surely you understand the difference between standard lot, mini lot and micro lot. Brokers adjust the lot size as per their convenience.
Most brokers will allow you to trade a minimum of 0.01 lots. That is, you can get a minimum pip value of 10 cents at a standard lot broker. But in Mini Lot Broker you can get the minimum pip value of 1 cent. And in Micro Lot Broker you can get the minimum pip value of 0.1 cents. So if your capital is low, you can trade with low risk in a mini lot or micro lot brokers.
Not only can you trade 1 lot, 0.1 lot or 0.01 lot, you can also trade 2.5 lot, 1.3 lot custom lots if you want.
How do I know if my broker is micro-lot, mini lot, or a standard lot?
You can trade in micro-lots on the micro account of the trading point. Brokers like InstaForex, HotForex, LightForex, etc. are mini lot brokers. F.B.S., f. X. Brokers like Optimax are standard lot brokers. If you do not know if your broker is a micro lot, mini lot, or standard lot, then ask the broker’s live support. Many times it is also given on their website. Or open a demo account with them and open a trade with 1 lot. If you see that there is a profit or loss of $ 10 per pips change, then you understand that it is a standard lot broker. And if you see that $ 1 is changing, then you understand that it is a mini lot broker. If you change it by 10 cents, you will understand that it is a micro lot broker. But some brokers have different lot sizes for each account type.
Through the timeframe we can find out how much the price has increased or decreased in a given 5 minutes, 15 minutes, 1 hour, 1 week, or 1 month. If we look at 1 5 minute candles, we can understand from that:
At what price has the candle started?
The candle is closed at any price
Price: The maximum increase in 5 minutes
Price: What was the minimum reduction in 5 minutes
The following timeframes are usually used more because they are given in MetaTrader 4. But in MetaTrader 5 you can use more custom timeframes.
If you look at any 1 candle of a certain timeframe, you will understand how the price movement was at that time.
Look at the selected candle with the red spot. Seeing this, the price action is understood in 4 hours.
In what timeframe will I trade?
It depends on what kind of trade you want to make. If you prefer scalping, you should trade on M1, M5, or M15. If you want to trade normal or a little long term, you should trade on M30, H1 or H4. If you are interested in trading swings or positions, you should analyze the timeframes of the week or month.
Spread, Stop Loss and Take Profit
If you open a trade, you will see that the trade will open with some loss. This is called a spread. Forex brokers deduct this fee as a commission or charge for opening a trade.
Suppose you buy GBPUSD at 1.7445, but it will open at 1.7449, which means 3 pips fee is applicable. If you open a trade with a value of $ 1 pips, the trade will open at a loss of $ 3.
Different pair spreads are different. Again, the spread may be more or less different brokers. For example, the spread of EURUSD on Instaforex is 3 pips. But the spread of EURUSD on Fxoptimax is 2 pips. In some pairs the spread can be up to 30 pips or more. So before trading unfamiliar pairs, you should look at the spread.
Stop Loss and Take Profit
Stop loss: With a stop loss, you can decide at what price you want to close the trade in your loss.
Take profit: With take profit, you can decide at what price you want to close the trade in your profit.
Suppose you open a buy trade at 1.3540. You want to gain 50 pips and not lose more than 50 pips. Then you can set 50 pips stop loss and 50 pips take profit. If your computer shuts down or a price rises or falls suddenly as a result of a spike, your trade will automatically close at a stop loss or take profit price.
What is the leverage?
Leverage or margin loan is the maximum number of loans your forex broker will give you on top of your capital.
Suppose your balance or capital is $100. If you use 1: 200 leverage, your broker will lend you up to a maximum of 200 times when you trade. Now it’s up to you how much you borrow. So, you can trade 10×200 = 2000 dollars with 10 dollars.
Well …. if I get a loan up to 200 times, then why not take it? The stock market does not want to give a 1: 2 loan.
Suppose you deposit $10, decide to use leverage, 1: 1, which means don’t take a loan. In that case, the broker will not allow you to open any large size trade. With those 10 dollars, you can open as many big trades as you want. In that case, if the market moves 50 pips in your favor, you may gain 1 dollar. Usually different currency pairs move 100-300 pips per day.
So you thought, take a loan and open a bigger trade so that the profit is more. If a broker offers you 1: 200 leverage, you can trade $2,000 with 10 if you wish. And so, the profit will be 200 times more than what it used to be. Similarly, if you make full use of the 1: 200 leverage that used to be a loss, the loss will be 200 times greater. If before the market moved 50 pips in your favor, it would have made a profit of $1, now it will make a profit of 200.
The broker loan will give you exactly. It is better to make a profit, in case of loss, if your loss is equal to your capital at any time, then your trade will be closed automatically. Under no circumstances will the broker allow your trade to run at a loss higher than the capital you have. This is called margin call in forex, forced sale in Bangladesh stock market.
Brother, this is a terrible thing! If my loss is equal to the capital to open the trade using more leverage, will I go bankrupt or not?
Straight in Bengali words, yes! So, no matter what leverage you set, never open a trade larger than the balance when opening a trade. Some people say that it is possible to double or triple the capital of Forex in one day. Of course, it is possible with luck. But if you trade with risk like this, you will have to eat one day or the other.
Forex trading is the buying and selling of one currency at a time. Currency is traded through any broker or dealer and in pairs.
For example Euro and EU. S. Dollar pair EUR / USD or British Pound and Japanese Yen pair GBP / JPY.
When you do Forex trading, you need to buy/sell through Pair.
Suppose, on both ends of this rope, there are economic conditions of two countries. Exchange rates fluctuate based on when a currency is strong.
Major Currency Pairs:
The following currency pairs are considered as major currency pairs. These currency pairs are USD pairs and are traded instantly. These major pairs have the highest liquidity and are the most traded in the world.
Major cross-currency or minor currency pairs:
U.S. S. Currency pairs other than dollars are called cross-currency pairs or just cross pairs. The major crosses are also known as minor currency pairs. The most-traded cross pairs came from – EUR, GBP, and JPY.
The pair that is added to a major currency as a complement to another currency is called an exotic pair.
These currency pairs can be traded on some Forex brokers. These are not traded as much as the main and cross pairs.
Exotic pairs have two or three times the spread of EUR / USD or USD / JPY. So if you want to trade these Exotic Pairs, think about it.
In the Forex market you will buy or sell.
It is very easy to open trade. The process of opening a trade is simple and if you have experience trading in the stock market, you will understand it sooner.
Suppose you bought 10,000 euros at EUR / USD at an exchange rate of 1.1600 for $ 11,600. After two weeks, the EUR / USD exchange rate rose to 1.2500. Then if you sell it for $ 12,500 you will make a profit of $ 600.
The exchange rate is the ratio of the price of one currency to another. For example, the USD / CHF exchange rate indicates how much U.S. S. 1 Swiss franc can be bought for 1 dollar, or 1 U.S. S. How many Swiss francs do you need to buy dollars?
How to read forex quotations
In each trade you buy one currency at a time and sell another. So the price of currency pair in the forex market is expressed through quotations.
The foreign exchange rate of GBP / USD is as follows:
The currency before the slash (/) is called the base currency and the currency after the slash (/) is called quote currency.
Here GBP is the base currency and USD is the quote currency.
When buying, the exchange rate indicates how many units of Kyoto currency you need to pay to buy 1 unit of the base currency. For example 1.5125 U for buying 1 British pound. S. You have to pay dollars.
When selling, the exchange rate indicates how many units of Kyoto currency can be obtained by selling 1 unit of the base currency. For example, if you sell 1 British pound, you get 1.5125 U.S. dollars. S. Get dollars.
The base currency is the main basis of buy and sell. If you buy EUR / USD, you are buying the base currency EUR and at the same time selling the Kyoto currency USD. Simply put, buy EUR, sell USD.
You will buy the currency pair if you believe that the base currency will be stronger than the Kyoto currency. You will sell it if you think the base currency will be weaker than the Kyoto currency.
First, you have to decide whether you will buy or sell.
If you want to buy (buy the base currency and sell Kyoto currency), it means you want the price of base currency to go up and you will sell it at a higher price. In the language of traders it is called long (long) or taking a long position. Remember, long = buy.
If you want to sell (sell the base currency and buy the Kyoto currency), it means you want the price of the base currency to go down and you will buy it at a lower price. In the language of traders it is called short or taking a short position. Remember, short = sell.
All the forex quotations show 2 prices. Bid and Ask. In almost all cases, the bid price is lower than the asking price.
The bid is a price at which the broker wants to buy the base currency instead of the Kyoto currency. That is, the bid is the best price to sell.
Ask is the price at which the broker wants to sell the base currency instead of the Kyoto currency. That is, Ask is the best price to buy.
The difference between the bid and ask is known as the spread.
The bid price above the EUR / USD quote is 1.3456 and the asking price is 1.3458.
That is, the spread here is 2 pips.
If you click the cell, you will sell at 1.3456. And if you click to buy, you will buy it at 1.3458.
What is a demo account? How to open a demo account?
You may be interested in trading Forex. But you do not know how to trade forex. Many people have heard of pips and leverage, but they do not understand anything because they have not traded. So you may be afraid to invest in Forex in the beginning. Because since you can’t do anything, the chances of losing are high. But in this modern age, you can trade test without spending any money. For this, the brokers have arranged demo trade. You can practice trading with virtual money on a demo account.
You can lose in the demo, even blow up the whole balance, no problem. It’s just to further enhance your skills. The more you trade, the more you learn to trade. You should not start your real trade before you learn to trade well. Because then you will be more likely to lose. So when you are satisfied with your trading by trading the demo, you should only start real trading.
How long should demo trading be done?
The demo should be traded for at least 2 months. But there is no specific time.
What is the profit if you trade demo?
Through Demo Trading, you can learn different Forex techniques
Able to test different trading strategies
You can identify the causes of your loss and correct it
You can check the effectiveness of any new EA or indicator
Overall, demo trading will help you in many ways to further improve your trading.
How to start a demo trade?
You will need software to do a demo or real trade. Which is called a trading terminal in the language of Forex? Most brokers use MetaTrader terminals. We also need to download a MetaTrader terminal. Open a demo account by clicking the link below and download the MetaTrader platform.
We know a lot about Forex. I have also opened a demo account. Now we will start trading. This article will discuss how we can close a trade by opening it.
You will see this screen after logging into the MetaTrader account.
To open trade in EURUSD, double click on EURUSD from the “Market Watch” window.
A window like below will open. If you want to buy EURUSD, click on “BUY”.
A trade like below will open. The trade will open with some losses due to the spread.
If you want to set Stop Loss or Take profit, double click on SL or TP.
A window will open. From there you can set stop loss and take profit.
See Stop Loss and Take Profit set. If you go to that price, the trade will close alone.
The trade is now at $ 1 profit. Now your equity is $ 5001, but your balance is $ 5000. If you close the trade, your balance will be $ 5001. If you go to the SL / TP price, the trade will close alone. But if you want to close now, you double-click on profit.
You will see a window will open to close the trade. Click on the yellow close button.
Trade $ 1 profit is closed.
Now your new balance is $5001.
So everything clear! GO for Forex Trading!
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