Today’s foreign exchange trading (Forex) is recognized as one of the lucrative ways to make money online. To trade Forex, all you need is a computer with an Internet connection and an account with a Forex broker. Because the market is open 24 hours a day (5.5 days a week), forex traders mostly work freely, regardless of place and time. Despite the high daily turnover (almost $ 2 trillion a day), it is surprising that only a few currencies are actively traded: US dollars, Australian dollars, Japanese yen, British pounds, Swiss francs, Canadian dollars and Eurodollars. major seven.
In fact in FOREX trading, FOREX is mostly traded in major international banks even after it was opened to the public in 1998. According to the Wall Street Journal Europe, 73% of trade covers the top ten. Deutsche Bank, which ranks first in the table, covered 17% of total foreign exchange trading; then UBS in second place and Citi Group in third; occupying 12.5% and 7.5% of the market. Other major financial collaborations on the list are HSBC, Barclays, Merril Lynch, JP Morgan Chase, Coldman Sachs, ABN Amro and Morgan Stanley.
For the market participant segment, about half of the transactions were made strictly between dealers (e.g., a bank or a major foreign exchange dealer); others mainly between dealers and non-financial institutions.
Practically, traders often use one or more than one trading system / software to trade Forex online. This software often comes bundled when you open an account with Forex brokers. In short, here’s how this software works: Forex trading software is connected to a broker’s system over the Internet, currency prices are updated live, and you make your call to trade through software. Such trading software often requires minimal computing power, so it can be run on most home computers nowadays as long as it is connected to the Internet.
Some of the main things you will see in most Forex trading software are:
1. Exchange rate window: show the prices of currency pairs with live updates. Usually this window will also show market low and high.
2. Open the position window: Specify the number of tickets (transactions) you have purchased. This window usually shows basic information such as ticket number (trade reference number), transaction amount, currency, open positions, current closing position and order.
3. Window of closed positions: Indicate the number of tickets sold (trade). Good trading software will show you a summary of your trade in this window, such as gross profit / loss, open / closed positions, trading volume, and amount of interest.
4. Account window: a window that shows your general status. The balance of cash in your account, the balance of equity, daily profit / loss, total profit / loss, useful margin and real capital. Follow the useful field of this window. Always keep a sufficient amount of margin to avoid “margin calls” that force you to close all trades.
5. Automated Trading Orders: Normally trading order functions are built into the Forex trading software. For Forex trading, a stop loss order and a limit order are the two most used functions.
Automated trading orders in Forex trading
As a trader, you can place these orders if you want to buy / sell currency at a better price compared to the current market. Limit orders are often used to win automatically when the price reaches a certain level. For example, the current EUR / USD is at 1.2693, and your pre-determined limit order is to sell everything at 1.2700. The order will be executed automatically when the price reaches 1.2700.
It is important to know that limit orders can only be placed at a minimum distance from the current market price. In addition, such an order may be canceled or modified by you at any time as long as the limit order price tag is set beyond the minimum allowable distance.
Stop orders, or sometimes known as stop losses, are automated orders used to limit and limit open position losses. It can also be used to capture profits in your trade when the market goes in your favorite direction.
Stop orders work in a similar way to limit sales orders, they predetermine what is the lowest price to sell in certain deals. For example, EUR / USD 1.2693 with a stop order at 1.2685, the system will sell your share of the dollar when the price reaches 1.2685. In this case, the price of 1.2685 is guaranteed, which means that even if the market falls too quickly and falls below 1.2685, you can still sell your money at the price you set earlier.
A stop order works great when processing your risk profile. However, it is recommended to use the order carefully as it allows the market maker to cheat your money.
Since the article is intended for beginners in Forex trading, you are probably one of the beginners looking for some learning resources in Forex trading. Apparently, there is no immediate solution to make you a professional trader. The only answer will be education. Spend all the time you need to learn this new trading skill well – practice everything you’ve learned with a demo account before thinking about getting into a “live” own account. Seminars, e-books, the Internet, and video courses are all you need to attend.