Everything you Need to Know About Forex by Fuad Ahmed

learn forex trading

The term currency trading has a wider connotation. It can mean all the things related to foreign payment and different currency fund transfers. Fuad Ahmed, a currency trading expert is bringing all the relevant information there is to have on the forex trading.

Currency prices for several different reasons have been enduring highs and lows. The foreign exchange rates have been very dynamic in the recent past and making a place in the headlines lately. Therefore, its said that trading forex involves a high level of risk of losing money. Guidance on every single aspect of the forex trading is going to secure the trader on the front where he cannot afford to lose the capital he has invested.

What is Forex

Forex is a blend of two words that is Foreign and Exchange, which together form foreign exchange and hence are called forex. The phenomenon of buying and selling the currency for the prospect of making a profit out of it is known as forex trading. This kind of trading involves different sorts of evaluations and estimations to gain in the trade.

Why should one trade forex

It’s a business where all currencies of the world trade in a decentralized global market. The market stands as largest among all the financial markets with a daily transaction of more than $5 trillion. The reason the market size is given such significance is the amount of liquidity that it provides to the trader.

Some of the basic benefits trading forex provides to the trader are listed below

  • There are many firms in forex that don’t charge any commission, its only paying just the bid/ask price.
  • The market is active 24 hours, so trading can take place at all hours in a day.
  • There is an option of trading with a leverage, which can increase the level of profit and loss in a trade.
  • A forex trading account can be started from $25, you don’t need too much money to start with.
  • Buying forex and trading it is easier, you aren’t required to choose from 5000 stocks.

How forex works

The key players in the trading of forex are investors, brokers and a trading platform, along with these the object that is traded by the trader is a currency pair. As we have mentioned earlier that there are many factors that influence the currency rates, it’s the price, the exchange rate, which plays the most significant role in the trade. An exchange rate is the price at which a currency can be bought, while in forex trading which is based on the buy and sell of currencies, it’s one currency that is bought against another with the prospect of generating profit from the price parity. The quotes are always written in the form of pairs like the USD/EUR (the US Dollar and the Euro). There are many economic factors that influence the rates of exchange like industrial production, inflation, and political events. These factors are basic determiners of buying and selling prices of currency pairs.

Example of Forex Trade:

The USD/EUR rate is a representation of the number of Euros that can be bought again one US Dollar. The entire business is based on your estimation of the price change, if you feel that the price of US Dollar is going to go up against the Euro, you being a trader will make money with it. This is the reason forex trading is considered synonymous with gambling, as the risk of losing money is quite high in it.

Tools to use in Forex Trading

When a trader starts trading, there are certain areas that he aims to master, to secure himself with the guarantee of generating a profitable trade. Financial tools provide the very help he needs in the business to achieve the best training and mastering the trade that he has aimed to begin. Following are the technical tools he needs to learn making use of to receive the desired outcome from his trade.

Technical analysis

Trading is all about devising a good strategy and using it in a right place at a right time. Many traders use a variety of tools and techniques that help them make a better analysis of the market and study its trends. The study of these trends helps them understand the market moves and predict future in a way that can make them win a good profit in trading.  It’s the use of these technical analyses that brings the major difference among traders and their perfection of use determines which one is going to lead in the trade.

Fundamental Analysis

While some traders use technical analysis for trading, others rely on fundamental analysis for their trading strategy. They read the basic economic trends that can be influenced by political or social conditions then, to predict the fluctuation in forex prices. It’s also suggested that the trader should read all the forex news to stay updated on the current trends to see how these events can affect the currency prices.

Economic News Calendars

The most powerful stimulators in the forex trade prices are economic events, that’s the reason the tool of using an economic news calendar can keep the investor updated with the latest happenings and also possible changes that are going to influence the trading activity of him. This list provides the future market consensus, and also with the past events and their consequences. These tools also list the policy statements on monetary issues devised by central banks following the eco-political changes.

Pip calculator tool

If one doesn’t have the idea of how pip valuation system works, experimenting with foreign currencies can get really difficult for him. Pip is the lowest trading unit for currency pairs and can often be worth different amount based on both the main currency and counter currency against which trading takes place.

Broker spread comparison

There are many tools now available in the market. Since broker serves as a middleman in any trade, there are many concerns of traders about the broker that they are choosing. It’s considered important that a broker be selected that’s providing the best spreads to the trader. To ensure the selection of a right broker, a tool that compares broker spreads should be used.

Guidelines to make trading a better experience

Fuad Ahmed for his traders has collected a few suggestions to save them from losing money in trade.

Understand the language

Traders in currency trading often use technical jargons and symbols that can be very confusing and demotivating for a novice. Therefore, Fuad Ahmed recommends that if you ever come across words that are incomprehensible, try to understand them by using a glossary of money transfer terms. Once a trader is well acquainted with the language of the forex, half his trouble with starting to trade forex will be resolved and he can trade with significantly better results.

Practice is the key

It has been commonly said that practice makes a man perfect, forex traders prove the potential of this phrase through their actions. The more you practice trading forex, the better you become in your performance. To give traders the same practice that they need to start, brokers give them the demo account to practice, so they can enter the trading business after getting properly trained and eliminating the threats of losing money in a trade.

Know your risks

The risks involved in trading forex are quite high because of its volatility, therefore it may not be the best option for everyone to jump in the forex trading market. What better can be done by a trader is to find out his risks and know the purpose, the aim for which you are trading. The core reason for which trading is done is to make a profit out of the deal and make an amount more than that’s invested in the trade. This is the reason, a trader should know that his aim is to make money, which should not be blindly put at stake. It’s better to sustain a loss in the initial stage and learn from the experience than continuously losing the money without learning to better the trade. A trader can also always seek advice from an independent financial advisor.

Use a trading software

Gone are the days when trading used to take place on telephones, now there are many trading software to carry out the operations of trading forex in an absolutely professional manner. A trader can easily rely on a trading platform for a better experience of a trade.

Plan before you trade                                                           

It’s a common saying that “a goal without a plan is just a wish”, therefore, it can be safely said its extremely important to make a strategy, a plan before entering the forex trading business. all the successful traders test their plans and make a strategy based on tried and tested methods to leave no room for a flaw in trading results and use the same method in all their trades. Planning also includes following steps

Choosing a currency pair that’s most suitable for you.

Deciding how long you plan to stay in one position.

Setting your target to stay in that position.

 Follow the forex market

The use of forex analysis charts and market trends make it easier for a trader to take a decision, this is the reason, using forex indicators and symbols, understanding the market depth is recommended for traders.

A trader can use

Forex charts.

Market analysis.

Maintain a forex diary.

Features of the best trading platform

In the age of technology, when it plays a vital role in everyone’s lives, financial trading is also becoming dependent on different software. Mr. Ahmed has compiled a list of features that the best trading platform should have in it.

  1. Good financial backing.
  2. Accurate Forex quotes.
  3. Reliable deal execution.
  4. Good order placement.
  5. Client friendly.
  6. Manage multiple accounts.
  7. Technical analysis tools.
  8. Fundamental analysis tools.
  9. Strong data security.
  10. Minimal system downtime.
  11. Support for trading strategy automation.

Conclusion

Fuad Ahmed, the currency trading expert realizes the importance of forex trading in all the financial markets and understands why scores of people are entering this market, above all others. Looking at the prospect and growth of this forex trading, he collected all the facts a novice to an expert trader needs to have about forex trading. From risk management to the benefits of devising a strategy, he has covered all the relevant subjects under one article to help his reader friends.