FOREX Trading for Beginners

An Introduction to the World of Dreams and Tragedies…

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by

Owen Jones

Copyright Owen Jones 2023 ©

Published by

Megan Publishing Services

https://meganthemisconception.com

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Hello and thank you for buying this book called ‘FOREX Trading for Beginners’, I hope that you will find the information herein informative, useful and profitable.

As a beginner, you may feel overwhelmed with the numerous terminologies, strategies, and platforms available. However, with the right knowledge and guidance, Forex trading can be a lucrative investment opportunity.

Forex trading involves the buying and selling of currencies in the foreign exchange market. The market operates 24 hours a day, five days a week, and is the largest financial market globally, with an average daily turnover of over $5 trillion.

In this book, we aim to introduce you to the key concepts and principles of Forex trading. We will explore the mechanics of the market, the benefits and risks involved, the currencies involved, and the different trading strategies you can implement in your trading.

Our goal is to provide you with enough knowledge and understanding to start trading Forex confidently. Whether you’re an aspiring investor or a seasoned trader, this book will serve as a valuable resource to help you make informed decisions and achieve your trading goals.

The information in this ebook on FOREX trading and related subjects is organised into 23 chapters of about 500-600 words each.

It will help you work out trading strategies and it may even help you venture out into a new profitable hobby. The least that it will do is save you hundreds on professional advice, but as an added bonus I am granting you permission to use the content on your own website or in your own blogs and newsletter, although it is better if you rewrite them in your own words first.

In fact, the only right that you do not have is to resell or give away the book as it was delivered to you.

If you have any feedback, please leave it with the company you bought this book from.

Regards,

Owen Jones.

Table of Contents

1: Introduction to Forex Trading: Understanding the Basics

2: Essential Tools for Forex Trading: A Beginner’s Guide

3: How To Be Successful At Forex Day Trading

4: Five Easy Steps For Creating Profitable Forex Trading Systems

5: How To Educate Yourself In Forex Trading

6: How to Read a Forex Chart

7: Choosing an Online Forex Trading System

8: How to Find a Forex Broker

9: Reading Forex Charts: A Comprehensive Beginner’s Guide

10: Forex Trading Strategies

11 Common Forex Trading Strategies: Which One is Right for You?

12: Important Facts about the Forex Trading System

13: The Internet And Forex Trading

14: The Advantages Of Forex Trading Training

15: Practising in the Forex Market

16: Top 20 Terms You Need To Know To Trade Forex

17: Market Indicators For Forex Trading

18: The Major Components Of A Forex Trading Strategy

19: The Importance of Forex Trading Courses

20: What is a Forex Robot?

21: Who Are the Big Players on the Forex Currency Market?

22: Managing Risk in Forex Trading: Protecting Your Investment

23: The First Truth of Forex

1: Introduction to Forex Trading: Understanding the Basics

Forex trading, also known as foreign exchange trading or simply FX trading, is the exchange of one currency for another at an agreed exchange price on the over-the-counter (OTC) market. Forex trading takes place in a decentralised network of banks, corporations, and individuals, which makes it the largest and most liquid financial market in the world, with daily trading volumes exceeding $5 trillion.

If you are new to Forex trading, it’s important to understand the basics before you start trading. In this article, we’ll introduce you to some key concepts and terminology related to Forex trading.

Currency Pairs: Forex trading involves the buying of one currency while selling another currency simultaneously. These currencies are always traded in pairs, such as EUR/USD, GBP/JPY, or AUD/NZD. The first currency in the pair is the base currency, while the second currency is the quote currency. The exchange rate represents the value of the base currency relative to the quote currency.

Market Participants: The Forex market is made up of a variety of participants, including central banks, commercial banks, hedge funds, investment firms, retail Forex brokers, and individual investors. These participants trade currencies for various reasons, such as hedging, speculation, and commercial purposes.

Market Hours: Forex trading is a 24-hour market that operates five days a week. The market opens in Sydney, Australia on Monday morning (Sunday night in New York) and closes in New York on Friday afternoon (late Friday night in Sydney). However, trading hours can vary depending on the currency pair and the local market hours.

Leverage and Margin: Forex trading involves the use of leverage, which allows you to trade larger positions with a smaller amount of capital. Leverage is expressed as a ratio, such as 50:1 or 100:1, which means that for every dollar of capital you have, you can trade up to 50 or 100 dollars in the market. However, leverage can also increase your losses if the market moves against you.

Margin: is the amount of money you need to have in your account to open and maintain a trading position. Margin requirements depend on the leverage ratio, the currency pair, and the size of the trade.

Pip and Spread: Pip is short for “percentage in point” and is the smallest price movement that a currency pair can make. Most currency pairs are quoted to four decimal places, so a pip is 0.0001 or 1/100th of 1%. The value of a pip depends on the currency pair and the lot size.

Spread: is the difference between the bid price and the ask price of a currency pair. The bid price is the highest price that a buyer is willing to pay for a currency, while the ask price is the lowest price that a seller is willing to accept. The spread is the transaction cost that a trader incurs when entering and exiting a position.

Forex trading is a complex and dynamic market that requires knowledge, experience, and disciplined risk management. As a beginner, it’s important to educate yourself and practice trading with a demo account before investing real money. Always remember to use leverage and margin responsibly and to manage your risk effectively.

2: Essential Tools for Forex Trading: A Beginner’s Guide

Forex trading is a global marketplace where currencies of different countries are bought and sold. The purpose of Forex trading is to make a profit by buying a currency at a lower price and selling it at a higher price. It is a complex market and requires a lot of effort to master.

Forex trading involves making quick decisions based on accurate analysis, which requires the use of advanced tools. Here are some essential tools for Forex trading that beginners should know about.

Trading Platform

The trading platform is software that allows traders to access the Forex market. It is essential to choose a trading platform that is user-friendly, reliable and has various tools for analysis. Trading platforms such as MetaTrader 4 and 5, cTrader, and NinjaTrader are some of the popular platforms used by Forex traders.

Economic Calendar

The economic calendar is an essential tool for Forex trading. It lists all the significant economic events that affect the Forex market, such as government reports, economic releases, and announcements by central banks. Traders use the economic calendar to plan their trades and identify potential trading opportunities.

Technical Analysis Tools

Technical analysis tools are essential for Forex trading. They help to analyse and predict price movements based on past market data. Some of the popular technical analysis tools for Forex trading include:

i. Moving Averages: Moving averages are commonly used to determine the trend direction of a currency pair. They help to smooth out price fluctuations and provide a clear picture of the trend direction.

ii. Relative Strength Index: The Relative Strength Index (RSI) is a momentum indicator that helps indicate whether a currency pair is oversold or overbought.

iii. Bollinger Bands: Bollinger Bands are based on the volatility of the currency pair. They are a useful tool for identifying potential breakouts and market reversals.

iv. Fibonacci Retracement: Fibonacci Retracement is a tool used to identify potential levels of support and resistance in a currency pair.

Fundamental Analysis Tools

Fundamental analysis tools are essential for Forex trading. They help to analyse the economic, political and social factors that influence the price movements of a currency pair. Some of the popular fundamental analysis tools used by Forex traders are:

i. News Feeds: News feeds are essential for Forex trading as they provide up-to-date news and analysis of significant economic events.

ii. Market Sentiment: Market sentiment is the general attitude of traders towards a particular currency pair. Traders use market sentiment to determine whether the current trend is likely to continue or change.

iii. Central Bank Announcements: Central bank announcements can have a significant impact on the Forex market. Traders use central bank announcements to predict market movements.

Risk Management Tools

Risk management is an important aspect of Forex trading. Traders use risk management tools to minimise losses and maximise profits. Some of the popular risk management tools used by Forex traders are:

i. Stop Loss Orders: Stop loss orders help traders to limit their losses by automatically closing a trade when the price reaches a specific level.

ii. Take Profit Orders: Take profit orders help traders to lock in profits by automatically closing a trade when the price reaches a specific level.

iii. Risk/Reward Ratio: The risk/reward ratio is the ratio of the potential profit to the potential loss on a trade. Traders use the risk/reward ratio to determine whether a trade is worth taking.

Forex trading requires a lot of effort to master. These essential tools for Forex trading will help beginners to make informed trading decisions and maximise their profits. However, it is important to understand that no tool can guarantee a profit, and traders should always trade with caution and use proper risk management techniques.

3: How To Be Successful At Forex Day Trading

The Forex trading market is the biggest market in the world by far. In fact it is bigger than all the stock exchanges in the world put together. Trading goes on day and night five days a week and there are millions of individuals, companies and even governments using the Forex to make money every minute. However, do not let this fool you into believing that trading Forex is easy money, because it is not.

Most Forex traders buy and sell on a long term basis, but others trade much more frequently buying and selling the same position within 24-72 hours. These traders are called ‘day traders’. In order to trade Forex profitably you will need to learn the ropes.

One of the best methods of doing this is to open a practice Forex trading account. Most of the online Forex trading companies offer a practice account and the best ones offer free accounts and free practice accounts too. Again, the best Forex trading companies offer free technical and fundamental analysis along with access to all historical financial data and current financial reports.

If you have never traded Forex before, you will almost certainly lose money, unless you are lucky, but you do not want to be relying on good fortune when you use your own, real money. You will want to be relying on ability and information, although hoping for a bit of good luck too is not uncommon.

At the same time as you are learning to use all the financial and analytical tools at your disposal, you should endeavour to develop a sense of detachment from your trades. Never become emotionally involved with one of your trades. It sounds daft, but people do become attached to a trade and lose touch with reality. This is a big mistake and one that professionals do not make.

So, when the data tells you to sell, just sell, do not attempt to fool yourself into thinking that everything will be all right next week. This may be successful for long term trading, but it does not work for day trading, it ties up too much of your capital. When you have developed a system that you think you can trust, say, one that uses the results from a combination of charts, you should stick to it rigidly. This is the only way that you can see if your system works. This is why you need disinterest from your trades.

Fear and greed are treacherous emotions, but they play a big part in the strategies, or lack of them, of many day traders. People are scared of losing money, so if their choice goes down, they hang on hoping that it will rise again. This is a perilous game. You could lose a lot more than if you had sold in the first place.

Likewise, if your judgment was accurate and the currency rises as you forecasted, get out when it reaches your goal, do not hang on in there hoping to make more. Greed will get the better of you in the end, if you do. Following a rapid rise, there is often a correction in the price. ‘Correction’ is a euphemism for ‘fall’ and you will be kicking yourself for not selling when you knew you should have.

So beware greed and fear, do not become emotional and stick to your system. However, if your scheme does not work, even when you follow it to the letter, then change it and test it again. This is the only way that you will be able to improve and make some real money at Forex trading.

4: Five Easy Steps For Creating Profitable Forex Trading Systems

The foreign currency trading market, better known as the Forex, is by far the biggest market in the world. In excess of two trillion dollars are traded on it each and every day, while ‘only’ 50 billion dollars are traded on the world’s biggest stock exchange, the New York Stock Exchange, every day. This essentially makes Forex bigger than all the world’s stock exchanges combined!

It is possible to get a managed Forex account, which means that you pay a professional Forex trader to manage your money and trades for you. You have as much say in your account as you like or none at all. However, this is not the way to make a useful amount of money unless you start with a great deal of money.

If you want to earn a small fortune from a few hundred or a few thousand dollars, you will have to do a lot of research yourself. If this is your main occupation, because you are retired or unemployed, that is all very well. If you are working and treat Forex dealing as a pastime, that is fine too, but researching the markets of a few currencies is the key.

Gambling outrageously is not.

There are a few basic principals that you ought to be aware of, before you begin to think about making up your own personal Forex trading system.

Firstly, a successful Forex trading system is normally fairly simple. Complicated trading systems with too many rules are too difficult to follow and it is a simple truth that simple systems work better than complex ones. They simply have a higher chance of success.

Secondly, a successful Forex trading system cuts losses and runs profits. Your system will have to be able to cut losses quickly, if not instantly.

Thirdly, a lucrative Forex trading system follows long-term trends. Focus on long-term trends and you will see better results.

The five tips to trade Forex effectively are:

1. Your trading system must be as easy as possible. Incorporate only a small number of essential rules and an extensive investment administrative system.

2. Only seek long-term trends. A week is not long enough, a long term trend will last for months, but take into account local events like elections, industrial relations and even the weather (for seasonal earnings).

3. Look for unexpected changes to trends and try to work out why they took place. Can you ride the trend, or will it reverse? This will take research and perception.

4. Try to learn how to read charts. This is a topic all on its own and there is a vast amount of material on the topic. Read up on Stochastic charts to start with and then go on to others.

5. Specialise. Specialise in a few currencies, the countries of which appeal to you too.

Read all the news items you can get hold of, listen to TV reports and keep your ears open to every bit of intelligence that comes your way,

You do not have to react to everything you hear, but over time with any luck you will learn to distinguish between what can affect a currency and what may not.

5: How To Educate Yourself In Forex Trading

Forex or Foreign Exchange Trading is the largest market in the world. In fact, it is bigger than all the worldâ€™s stock exchanges combined. It has another unusual characteristic; there is no one single market place. The NYSE is in New York, the FTSE is in London, but the Forex is everywhere and nowhere. It exists only in electric wiring and the Internet.

Other than that, the Forex market is the same as any other market. The principles are the same; you try to buy low and sell higher. This sounds easy, but of course it is not.

Fortunes can be made and lost very quickly. Just imagine if you had bought or sold the USD an hour before the destruction of the Twin Towers? I am sure that fortunes were made and lost on that day.

The difficulty is that you cannot foresee attacks like that. There are other events such as jobless totals and industrial output that you have a chance with, but not terrorist attacks.

You must realise that although you have a chance of getting some facts and figures correct, there will always be a few wild cards in the pack. Therefore, you should make a superlative effort to master the techniques that are at your disposal to make accurate predictions of the movement of the currencies of your preference. The way that you select to learn how to appraise the relationships between currencies depends on your purpose.

If you would like to take Forex trading professionally, then you ought to go to business school and take the appropriate courses. If you would just like to try your hand on a hobby/extra income basis, then you can study alone by reading books and reading forecasts on the Internet. You should also open a practice