Forex Trading: 3 Things to Consider, 4 Basic Trading Terms to Note

Kelly Yeung

ATFX.com Representative
Messages
797
There is no doubt that earning money through the internet is something most people are interested in. One of the most prominent ways of profiting from the Internet is by trading the global financial markets. We cannot talk about trading the Forex markets without mentioning the popular MetaTrader 4 platform used by most traders. You can buy and sell currency pairs, stock and index CFDs, and commodities using the MT4 platform and profit from the financial markets.

A brokerage company is the main link between investors and the global markets. Brokers provide trading platforms that allow investors to access and invest in the financial markets. Most brokers provide a customised version of the popular MT4 platform to their clients, given its ease of use and the large number of assets to trade using the platform.

v_RU4yfooKzJW8nwLG7kJwHOqUBkxeYclWWM1E3PiUMHfzJXuNL-LSm-830TAPGibZEx8F4dBeh3iLrWFhCOkL3lBaWxc7wfzRWHedOVAABooBRAflCKW_S-cwlrd1Brwkxgk3B5


The Basics of Forex trading
1. Choose your preferred trading session

Choosing the best time to trade the markets will significantly impact your trading results and the markets that you can trade.
The Australian session runs from 10:00 pm to 7:00 am GMT, while the Asian markets are open from 12:00 am to 9:00 am GMT. European markets are open between 8:00 am and 5:00 pm GMT, while the American session starts at 1:00 pm GMT and ends at 10:00 pm GMT. The liquidity in the forex markets increases in periods when two markets are open simultaneously, such as when both the European and American markets are in session.

2. Capital management and risk management
Two emotions that you must always watch out for when trading are fear and greed. Fear will stop you from taking the opportunities available in the markets, making you miss great profit opportunities. Greed will make you feel dissatisfied with your profits leading you to risk more money than you should. Therefore, you should not allow these extreme emotions to dictate your trading actions. You should always approach the markets with the courage to take the trades identified by your system. Risk management should be one of your top priorities as you limit your risk exposure on each trade. You should always use a stop-loss order and have a profit target before entering into a trade. We will discuss this point in more detail in the next paragraph.

3. Determining the Take Profit and Stop Loss order
One of the most significant features of the MetaTrader 4 platform is the possibility of adding two extra orders when entering a new trade, which is the take profit order and the stop-loss order. You take profit orders based on the price point at which you think your trade has run its course and yielded the maximum profit. Many beginner traders are tempted to take their profits early and let their losses run, which is why it is advisable to have a fixed profit target and stop-loss order when starting. Doing the above will help you build the discipline required to trade the markets successfully. It also protects the trade from mental exhaustion as they watch their trades play out. It also helps you preserve your capital by minimising your losses and maximising your profits.

4. Know the terms of trading
It is natural to feel the strangeness of the terminology you encounter in any new field. The Forex markets have terminology that can seem a bit strange to a novice trader. Therefore, you should invest some time learning some standard forex terms such as pips, currency pairs, profit targets. You should also familiarise yourself with some of the terms used in technical analysis, such as support and resistance, as well as some of the popular indicators. Knowing the meaning of some of these terms will help you learn to trade much faster.

GJWbJURitwSS29UqsVbSGgTI-DrdkrtJ9q6-jEcmo7OREFAPfHiEVGngBt0ect7gLEDYSTlS2SROphKtLok7K6v--v2spdXB58V-Knp6wyAacui71m1fO_1QWrLSQ4HX2hDzQnlR


Among the essential trading terms:
1. Pip

It is considered the smallest unit of the price of any currency. The price of a currency pair is typically quoted using five digits. For example, if the euro/dollar pair price is equal to 1.2498, then if the currency’s price in any pair is equal to a dollar, the pip will always be equal to 1/100 one hundredth of the base currency.

2. Bid purchase price
The bid price refers to the price at which you can buy a Forex pair. Brokers usually quote two prices for each currency pair, with the bid/purchase price being the one on the left. The bid price is usually the amount of the currency on the right needed to buy the currency on the left (base currency).

3. Ask/selling price
The Ask price refers to the price at which you can sell the base currency (left currency) quoted in the secondary currency (right currency). You can sell a currency pair when you want to profit from a downward price move.

4. The price difference between buying and selling-Spread
The spread is a term given to the difference between the buying and selling prices. The spread is how brokers make their profits, and each broker may have a different spread on the same currency pairs. The best brokers charge low spreads to ensure that their clients keep a large chunk of their hard-won profits. You have to be careful when choosing a broker because some have very high spreads that could eat into your profits.

Set up a Metatrader 4 account or Demo Account to kick start your trading journey now!

ATFX is a co-brand shared by a group entities including:
  • AT Global Markets (UK) Ltd is authorized and regulated by the Financial Conduct Authority (FCA) in the United Kingdom with registration number 760555. The Registered Office: 1st Floor, 32 Cornhill, London EC3V 3SG, United Kingdom.
  • AT Global Markets LLC is a Limited Liability Company in Saint Vincent and the Grenadines with company number 333 LLC 2020. The Registered Office: 1st Floor, First St. Vincent Bank Bldg, James Street, Kingstown, St. Vincent and the Grenadines.
  • ATFX Global Markets (CY) Ltd is authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under the license no. 285/15. The Registered Office: 159 Leontiou A' Street, Maryvonne Building Office 204, 3022, Limassol, Cyprus.
  • AT Global Markets Intl Ltd is authorized and regulated by the Financial Services Commission with license Number C118023331. The Registered Office: Suite 207, 2nd Floor, The Catalyst, Silicon Avenue, 40 Cybercity, 72201 Ebène, Republic of Mauritius.
 
Top