We have finally decided to put all of our experience and knowledge into this Forex Pdf. This Forex Trading PDF is written in such a way that even complete beginners can understand it and learn from it.

In other words, we have read tons of Forex books, opened and closed thousands of trades; have filtered out? all the needed basics for beginner traders, and simplified them.

So all you have to do is to take this FREE knowledge and start your online currency trading journey! TOP 3 Forex strategies that actually work? TOP 6 market movers, that create the most significant opportunities for profits? US dollar pair trades at 1. All currency pairs that involve the US dollar as either the base or counter-currency are called major currency pairs. They include the EURUSD, GBPUSD, and USDJPY, to name a few.

Examples of cross pairs are GBPJPY, GBPAUD, and AUDNZD. Finally, there is also a group of currencies that is not heavily traded on the Forex market, which means that their liquidity is low and volatility is high. Those currencies include the Turkish lira, Mexican peso, or Czech krone, for example. The high volatility of these currencies makes them unsuitable for beginners, at least until they gain enough trading experience.

All mentioned currencies have their own characteristics and personalities. The US dollar, euro, and Japanese yen are major reserve currencies held by central banks around the world, but the Japanese yen and US dollar to some extent are also safe-haven currencies that rise in value in times of political and economic turmoil in the world. On the other hand, currencies like the Canadian dollar, Australian dollar, New Zealand dollar, and Norwegian krone are also called commodity-linked currencies, as they heavily depend on the price of commodities such as oil and copper.

A trading platform is simply a program that you install on your computer which is then used to connect to your brokerage account and start trading. Nowadays, there are also web-based and mobile-based trading platforms which can be opened directly in your browser or installed on your smartphone.

Check with your broker if those types of platforms are offered. One of the most popular trading platforms among retail Forex traders is the MetaTrader platform. It offers advanced charting tools, a range of market orders and a large online community were you can ask for help whenever you need it. There are many Forex exchange tutorials that cover how to use MetaTrader to trade on the Forex market, and your broker of choice might also have some basic guidelines on its website.

A new exciting website with services that better suit your location has recently launched! Home page Getting started Articles about Forex Trading strategies Complete Forex trading tutorial for beginners.

Forex tutorial: What is Forex trading? History of the Forex market After World War II, countries needed stable currencies to restore their infrastructure and spur economic growth. Pips — Pips are the smallest increment that currency pairs can change in value. This process is called a Margin call. Margin Level will only appear in the toolbox window of your MetaTrader if you have open orders. Remember: Different Forex brokers have different margin calls rules. You should ask the broker about their minimum margin level before opening an account.

Market Order : A market order is executed immediately at the current market price Bid price for sell or Ask price for Buy. Buy limit : It is an order that is pending. It is an order to buy at a price lower than the current price. The Buy limit order will be activated if the price reaches this preset price and the order becomes an active buy order. Use Case: You use the buy limit in case you think the price will eventually go higher, but you expect it to move lower before reversing higher.

Sell Limit : It is an order that is pending, it is an order to sell at a price higher than the current price. The Sell limit order will be activated if the price reaches your preset price and the order becomes an active sell order.

Use Case: You use a sell limit in case you think the price will eventually go lower, but you expect it to move higher before reversing lower. Buy Stop : It is an order that is pending, it is an order to buy at a price higher than the current price. The buy stop order will be activated if the price reaches your preset price and the order becomes an active buy order.

Use Case: You use a buy stop in case you think the price will go high, but you need confirmation by witnessing the price rise to your specified level first. Sell Stop : It is an order that is pending, it is an order to sell at a price lower than the current price. The sell stop order will be activated if the price reaches your preset price and the order becomes an active sell order.

Use Case: just like the buy stop. You use a sell stop in case you think the price will go lower, but you need confirmation by witnessing the price fall to your specified level first.

Take Profit Order : A take-profit order automatically closes an open order when the exchange rate reaches the specified price. Stop Loss Order : A stop-loss order is a defensive mechanism. You can use it to protect gains or limit losses.

Like the take profit, it also closes an open order when the price reaches the specified level. Trailing Stop Order : This is a type of stop-loss order, but it is variable. It basically a stop loss that trails the price if the price move in the expected direction. Then if the price of gold reaches , the platform will automatically place a stop-loss order at If the price continues to move higher the stop will move with it.

So if the price reached , your stop will be at , and so on. Now if the price moves back reverses and moves back lower towards , your stop loss will be triggered and your trade will be closed at Assuming we bought the EURUSD at 1.

The trailing stop will keep moving higher along with the price until the price reaches the highest at 1. At that point, the stop loss will be at 1.

Then the price failed to continue higher and reversed to touch our stop loss at 1. Note: Traders have invented new terminology for the words buy and sell. For example, going long gold means buying gold. Rollover is a small percentage of interest that can be deducted or credited to your balance if you hold a position overnight.

Depending on the currency pair you are holding. What you need to know is that when you make a trade in the Forex market, you are simultaneously buying one currency and selling another. Therefore, you must pay interest on the currency you sold and you will earn interest on the currency you bought. For example, if we assume that the interest rate in Australia is 2. and you have a buy position of 1 lot in AUDUSD at 0. You will earn 2. So to calculate an approximate amount of what you will pay or gain on this trade we will do the following:.

You sold USD in this case. So to get the amount you sold, simply multiply the position size by the exchange rate:.

We subtract what we paid from what we gained. However, we have to convert the 5. However, in real life, this is not the case. In the Forex market, any positions that are open at or before 5 pm sharp are considered to be held overnight and are subject to rollover. A position opened at pm is not subject to rollover until 5 pm the next day.

UBS, JP Morgan, Citi, and Barclays are just a few names of large banks that exchange currencies in the forex market. Their purpose of participating varies from speculation investment banks to making the market to others. They provide most of the liquidity in the Interbank market. A Central bank participates in the Forex market directly, by intervening to buy or sell its currency according to its price target.

Central banks can intervene indirectly through monetary policy tools such as interest rates. For example, if inflation is higher than healthy levels, the central bank raises interest rates to shrink the money supply in the economy and that would have a positive impact on the currency. A simple example is importing components for their new kindle tablet from china requires them to exchange U. dollars for Chinese Yuan. They can also participate for hedging purposes hedging is buying or selling a currency at a certain price to protect the company from unfavorable changes in the future.

For example, if Amazon is planning to start producing the new kindle one year from now. Production requires amazon to buy components from china worth 50 million yuan. dollar equals 7 Yuans at that date. So if the purchasing manager is to purchase right away, it will cost the company 7. What if Amazon decided to wait 12 months, and the exchange rate changed to 6 yuans for every dollar? A good finance manager that expects the US dollar to fall against the Yuan, will advise to hedge this risk and purchase the components right away.

Remember: Always keep an eye on announcements from central banks. As they create major fluctuations up and down in the underlying currency, for the first few minutes of the announcement. The Forex Market is open for trading 24 hours, 5 days a week. Because the market operates in multiple time zones, it can be accessed at almost any time.

The market closes for retail trading on the weekend. The Forex market opens on the first business day of the week in Australia and closes on Friday with the end of the business day in the U. which translates to pm Eastern Time Sunday through pm ET on Friday A specific currency will usually be most active when that particular market is open. For example, the British pound pairs tend to be most active during the hours when the London market is open.

The Japanese yen pairs will be more widely traded during the Tokyo business day. The Most active pairs during the London session are the British pound and the European currencies like the Euro.

Asian currencies will be most active. Currencies such as the Australian Dollar and New Zealand Dollar. Remember: When there is an overlap between sessions, the market tends to be more active higher trading volumes, hence major price movement. During the hours of AM to PM in London, which is AM to AM in New York the two largest markets London and New York overlap.

And that makes it the most active Forex trading hours of the day. Also, Sydney and Tokyo sessions overlap between 7 PM and 2 AM Eastern time. And that makes it the most active session for pairs that include Asian currencies. The Forex market maker is a company that is always ready to buy or sell a financial asset and sets both the sell and the buy prices for their clients.

and that makes it a liquidity provider for its clients. Forex market makers are dealing desk brokers , this simply means that they have a dealer sitting at the dealing desk in the firm.

As you place an order the dealing desk agent receives it and deals with it. Forex market makers are your counterparties.

Therefore, many of them will then try protecting themselves by copying your order somewhere else typically their liquidity providers a bigger broker or bank.

So if you make a profit on the trade, they have themselves covered because they will also make the same profit. The process of covering usually happens in sums. For example, if the brokers have a net of units buy positions on the EURUSD, and units of sell EURUSD then the net exposure is units buy EURUSD. If the market maker decides to cover, then it will buy units of EURUSD from banks.

There are also times in which market makers may decide not to cover if they see that the majority of positions are wrong. As they must pay their clients the profits. Given all the information above, the market makers have flexibility.

Since they are making the market, they can execute your order at artificial prices that are not exactly the current real market price. They can delay your order execution few seconds until the price has changed and then resend to you the new price asking you whether you want to execute your order at this new price.

But they do strongly exist in the forex world. ECN Forex brokers provide access to the inter-bank market by using an electronic system to pass on prices from multiple market liquidity providers. Such as banks and market makers connected to the electronic communication network ECN.

This process is explained in the image below. The ECN broker aggregates multiple price quotes from different banks, for bid and ask and provides the trader with the highest BID price and lowest ASK price to minimize the spread. ECN Forex brokers do not make the market for you under this type. Therefore, they are not your counterparties. And thus there is no conflict of interest.

The broker profits only from the commission they receive on each trade. ECN brokers do not have the flexibility market makers have. For example, if you place an order on your trading platform, and the live price changes before the order reach the broker, the broker will not execute your order.

It will automatically resend you a new quote with the new price asking you if you want to execute the order at the new price. In terms of cost, ECN brokers have the tightest spread in the industry, but they charge an extra commission in addition to the spread on each transaction made by clients. Thus, the net cost per trade will be very similar to a market maker.

Forex Trading Tutorial Hint: You can see that there are trade-offs with each type of broker. Choosing the broker type depends on you and what suits your trading style. Regulation entities such as the NFA and CFTC in the U.

or FSA in the U. K aim to provide a safer environment for investors and traders. Regulators develop rules and services to protect the integrity of the Forex market, traders, and investors.

There are many financial markets in the world, such as the stock, bond, and commodities markets, but few of them can compare to the Forex market in terms of daily turnover, trading hours, and opportunities.

The Forex market is the largest financial market in the world and is open around the clock, from Monday to Friday. Being an over-the-counter market, there are no centralised exchanges like in the case of the stock market. Instead, currencies are traded during various Forex trading sessions that span from Sydney in Australia, to New York in the United States. Forex traders buy a currency if they anticipate that its price may rise, and short-sell a currency if they believe its price could fall, making a profit from the difference in the entry and exit price.

In order to start trading on Forex, all you need is a computer with internet access, a trading platform, and a brokerage account. After World War II, countries needed stable currencies to restore their infrastructure and spur economic growth.

As a result, the Bretton Woods agreement established a fixed exchange rate regime among major currencies and the US dollar, which in turn was pegged to the price of gold. The US government had to devalue the US dollar a few times, before the Bretton Woods agreement came finally to an end in As a result, major currencies began floating again and the Forex market with freely floating currencies was born. However, only large institutional players could trade on the Forex market at that time, but advancements in technology have made Forex available to smaller retail traders as well.

The retail Forex market, as we know it today, has started growing in the last few decades with the advancement of internet and technology. Those include the US dollar USD , euro EUR , British pound GBP , Swiss franc CHF , Japanese yen JPY , Australian dollar AUD , New Zealand dollar NZD and the Canadian dollar CAD.

Besides these eight major currencies, there are two more currencies that round up the G10 currencies — the Norwegian krone NOK and the Swedish krone SEK. All currencies are quoted in pairs, which consist of the base and the counter-currency.

The exchange rate always shows the price of the base currency, expressed in terms of the counter-currency. For example, if the EURUSD euro vs. US dollar pair trades at 1. All currency pairs that involve the US dollar as either the base or counter-currency are called major currency pairs. They include the EURUSD, GBPUSD, and USDJPY, to name a few.

Examples of cross pairs are GBPJPY, GBPAUD, and AUDNZD. Finally, there is also a group of currencies that is not heavily traded on the Forex market, which means that their liquidity is low and volatility is high.

Those currencies include the Turkish lira, Mexican peso, or Czech krone, for example. The high volatility of these currencies makes them unsuitable for beginners, at least until they gain enough trading experience. All mentioned currencies have their own characteristics and personalities. The US dollar, euro, and Japanese yen are major reserve currencies held by central banks around the world, but the Japanese yen and US dollar to some extent are also safe-haven currencies that rise in value in times of political and economic turmoil in the world.

On the other hand, currencies like the Canadian dollar, Australian dollar, New Zealand dollar, and Norwegian krone are also called commodity-linked currencies, as they heavily depend on the price of commodities such as oil and copper.

A trading platform is simply a program that you install on your computer which is then used to connect to your brokerage account and start trading. Nowadays, there are also web-based and mobile-based trading platforms which can be opened directly in your browser or installed on your smartphone. Check with your broker if those types of platforms are offered.

One of the most popular trading platforms among retail Forex traders is the MetaTrader platform. It offers advanced charting tools, a range of market orders and a large online community were you can ask for help whenever you need it. There are many Forex exchange tutorials that cover how to use MetaTrader to trade on the Forex market, and your broker of choice might also have some basic guidelines on its website.

A new exciting website with services that better suit your location has recently launched! Home page Getting started Articles about Forex Trading strategies Complete Forex trading tutorial for beginners.

Forex tutorial: What is Forex trading? History of the Forex market After World War II, countries needed stable currencies to restore their infrastructure and spur economic growth. Pips — Pips are the smallest increment that currency pairs can change in value. A pip refers to the fourth decimal place of an exchange rate, but bear in mind that some pairs that include the Japanese yen have their pips on the second decimal place.

For example, if the EURUSD pair rises from 1. On the other hand, if USDJPY rises from Trading on leverage refers to borrowing money from your broker in order to open a larger position size than your initial trading account size would allow. For example, leverage of allows you to open a position times larger than your account size.

But be cautious when trading on leverage, as it magnifies both your profits and losses! Margin — To be able to trade on leverage, you need to put a small part of your trading account aside as collateral for the leveraged trade. The margin will be returned to your trading account once you close your leveraged trade or it hits its exit price. The following table shows the required margin to open a trade, based on the used leverage ratio. Spread — The spread is the difference between the bid and ask price of a currency pair.

This is usually the only transaction cost you need to pay to your broker in order to open a Forex trade. Spreads can be as low as 1 pip or lower on major pairs like EURUSD, but can widen in the event of lessliquid cross-pairs and exotic currencies. Market, stop loss and take profit orders — A market execution order is used to open a Forex trade at the current rates offered by your broker. Whenever you open a new trade, you should use stop loss orders to prevent large losses if the price goes against you.

A stop loss order automatically closes your position once the prespecified price is reached. Similarly, take profit orders are used to lock in your profits after a trade plays out well and hits a certain price. More useful articles How much money do you need to start trading Forex? What is a Forex arbitrage strategy?

Top 10 Forex money management tips 24 January, Alpari. Latest analytical reviews Cryptocurrencies. Crypto contagion: Genesis may be next after FTX bankruptcy 22 November, This Week: Can US dollar hold firm? Oil gripped by gloomy demand outlook 18 November, All reviews. Trading strategies. Trader psychology. Financial market analysis.

The process of covering usually happens in sums. Simply if you want to travel from the U. Hence the transactions are done electronically. There are plenty of calculators available online here or here. What is needed for Beginners in Forex Trading? The broker also provides excellent customer service and the availability of demo account. all the needed basics for beginner traders, and simplified them.

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