Introduction Video [9 minutes]
1st Video Forex Trading Basics
- The first video is a Basic Introduction to Trading Forex using Meta Trader platform
- Currency Pairs
- Interpreting Graphs
- Live Trade demo
- Setting Take Profit
2nd Video to be published soon
- An overview & demo of what is covered textually within this article.
- In addition is a live recording of running a demo account over a few hours session followed by trading for real on a live account for a full days trading session
- Each recorded trading session is broken into segments each of which show any major trading events.
- Open and Close balances are shown for each trade as well as for each trading session.
- The opening balance for the demo and live account is US$500, this amount reflects the affordable limitation of most people in the west, I have also chosen this figure as it is the optimum starting amount for small account. I wouldn’t start with less than the absolute minimum of $350. There are a number of reasons for this, in particular the Free Margin as determined by your broker.
- There are NO monthly subs or associated fees to start earning today & it is NOT necessary to use a Virtual Private Server (VPS) as I am unless you intend to use a robot or Expert Advisor (EA) to manage you trading account(s).
1st Video Forex Trading Basics
I encourage members to add their own comments regarding trading practices, strategies and general trading experiences.
Why the U.S. Dollar Is the Global Currency
A global currency is one that is accepted for trade throughout the world. Some of the world’s currencies are accepted for most international transactions. The most popular are the U.S. dollar, the euro, and the yen. Another name for a global currency is the reserve currency.
Of these, the U.S. dollar is the most popular. As of the third quarter of 2018, it makes up nearly 62 percent of all known central bank foreign exchange reserves. That makes it the de facto global currency, even though it doesn’t hold an official title.
What is the forex market?
Foreign exchange (also known as forex or FX) refers to the global, over-the-counter market (OTC) where traders, investors, institutions and banks, exchange speculate on, buy and sell world currencies.
Trading is conducted over the ‘interbank market’, an online channel through which currencies are traded 24 hours a day, five days a week. Forex is one of the largest trading markets, with a global daily turnover estimated to exceed US$5 trillion.
All transactions made on the forex market involve the simultaneous purchasing and selling of two currencies.
These are called ‘currency pairs’, and include a base currency and a quote currency. The Live Forex Chart display below shows the forex pair EUR/USD (Euro/US Dollar), one of the most common currency pairs used on the forex market. The timeframe is currently set to One Day (1d), play with it and change the timeframe to 1 minute and watch the changes in real time.
You will notice there is little activity when the markets are closed, so if you are viewing this chart during the weekend then you will see very little movement, bookmark this page.& try it again during Monday to Friday, many traders do not trade on a Friday, you’ll see a marked drop in activity.
What is a forex broker?
Brokers act as intermediaries, facilitating trades by providing clients access to the 24-hour interbank in order to conduct trades.
ShKooP Finance offers a number of different accounts, each providing services and features tailored to our clients’ individual trading objectives. Discover the account that’s right for you on our account page. New to forex trading? Learn about the markets by opening a demo account page.
Risks associated with Forex Trading
Trading foreign currencies can be a challenging and potentially profitable opportunity for investors. However, before deciding to participate in the Forex market, you should carefully consider your investment objectives, level of experience, and risk appetite. Most importantly, do not invest money you cannot afford to lose.
There is considerable exposure to risk in any foreign exchange transaction. Any transaction involving currencies involves risks including, but not limited to, the potential for changing political and/or economic conditions that may substantially affect the price or liquidity of a currency.
Investments in foreign exchange speculation may also be susceptible to sharp rises and falls as the relevant market values fluctuate.
The leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. Not only may investors get back less than they invested, but in the case of higher risk strategies, investors may lose the entirety of their investment. It is for this reason that when speculating in such markets it is advisable to use only risk capital.
Risk Disclaimer for Forex Trading
Trading foreign exchange on margin (Margin Trading) carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you.
Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
Benefits and Risks of Leverage
Leverage allows traders the ability to enter into a position worth many times the account value with a relatively small amount of money this is called Margin. This leverage can work with you as well as against you. Even though the Forex market offers traders the ability to use a high degree of leverage, trading with high leverage may increase the losses suffered. Please use caution when using leverage in trading or investing.
Leverage is a feature offered by the brokers.
It is like an special offer.
It helps the traders to trade the larger amounts of securities through having a smaller account balance.
For example, when your account leverage is 1:100, you can buy $100 by paying $1.
Therefore, to buy $100,000 (one lot), you should pay only $1000.
When you are first starting ensure your leverage is low, 1:200 is a good starting point. when you have more confidence in your trading raise the leverage in Coinexx to 1:500 (500X). Brokers such as Tradersway do offer a higher leverage of 1:1000.
Automated Trading Software
There are many platforms that proclaim to trade on auto-pilot, these types of packages use algorithms that merely find and open trades for you, the closing element is generally your decision.
With any trading platform on the market it is worthy of noting that a ‘SET & FORGET’ system does not exist, this is partly due to the fluctuation of currency affected by political events globally. All trading platforms must by law allow a fully controllable system by the user.
We are currently evaluating one such Expert Advisor (EA) which trades one pair at any one time before opening another deal with the same or a different pair. There is one lifetime fee which also covers updates for each of the two products, the first product offers one licence whereas the second product offers two licenses at a considerable discount than purchasing two licenses separately.
My evaluation results are favourable and I am pleased with the profits being made, although the software was established and recognised within the trading community during 2010, after a few more weeks of evaluation I will publish further details.
Any advice given here is only our preferred settings and not given as a financial adviser.
Get Positioned to TRADE
The key element prior to investing and/or trading finance is to open trading accounts with reputable brokers and very importantly ensuring that you are fully verified and completing the necessary proof of id documents.
You can use any broker of your choosing as long as they use Meta Trading 4 or 5 (MT4/5), preferably both.
Meta Trading Charts
5-minute charts illustrate the summary of a stock’s activity for every 5-minute period within the trading session. The stock market is open for 6.5 hours per day therefore, a 5-minute chart will have 78 five minute bars printed for every full trading session. Day traders are commonly trading 5-minute charts to identify short-term trends and execute their trading strategy of choice.
5-minutes provides you with the right mix of monitoring the details, without scalping, and conversely allowing you to avoid waiting for 60-minutes to pull the trigger as well.
To trade consistently, quickly and most efficiently open a VPS (Virtual Private Server) account, A virtual private server is a virtual machine sold as a service by an Internet hosting service. The virtual dedicated server has also a similar meaning.
On your VPS you will download the Meta Trading software provided by your chosen broker. The VPS recommended has a Windows OS installed and Chrome browser. It is recommended to download and activate all related software here.
Access to your VPS is done using a link installed on your local PC, here you can connect directly to your VPS.
Day Trading using your PC
If you do not want the added expense of hiring a VPS service and do not use EA’s and wish to pursue Day Trading download the Meta Trading software from your broker account directly to your PC. The only problem is the ‘latency‘, distance between your PC and your broker, this can effect the speed at which a signal from a mouse click on your PC is recieved by the broker and executed, it is always likely that the market may change within these milliseconds.
It is not something to be too concerned about but be aware of the possibilities. Professional traders execute trades of immense size therefor it is essential the trade is executed very quickly.
Steps to position for successful Trading
These Trading Platforms also offer Expert Advisor compatibility (Auto Trading Systems).
Follow these steps prior to investing and/or trading.
It is imperative that this step is completed, it is FREE to open these accounts, you can open any one of the listed accounts but it is always good practise to have more than one account opened. Click below to create your accounts for Coinexx, FXChoice and Trader’s Way if you haven’t already.
“Ensure you are verified and have uploaded all the id documents required correctly, it may take a few attempts, I personally have had id documents accepted after as many as 10 attempts with other platforms.”
Now you have your trading accounts activated and verified you are ready to commence trading and earn a good extra income.
Open a demo and live ECN (MT4.ECN & MT5.ECN) account with each broker.
Another consideration is the commissions charged, I will say at the time of writing that Coinexx has a very low commission fee whereas Tradersway is considerably higher, also take into account the number of trades a broker opens over a given time, 4+ per day is the least to expect, 30+ new deals per day is not uncommon. This is dependant on the trade settings as well as market conditions.
Learn more about crypto currencies here
This is when a broker changes the lot size of your order, the lot size is the amount of funds in your account for any given trade.
Some brokers manipulate the market, a ‘Tier 1‘ Broker does not manipulate markets. Coinexx is a Tier 2 broker, avoid higher tiers when choosing a broker. Tier 3 and upwards are to be avoided on ECN platforms..
An advantage of using a VPS is faster trade execution.
By using a VPS in the same location as your broker, you’re able to open and close trades much faster than would otherwise be possible.For the uninitiated, VPS stands for Virtual Private Server. Which is really just a fancy way of saying a cloud based desktop PC.
Imagine a PC with the same familiar Windows desktop you’re accustomed to, located in a datacentre elsewhere in the world. To access this PC you would log into it using your local machine’s remote desktop option (type “remote desktop” into your start menu to find the gateway).
What are the advantages of trading forex using a VPS?
In order of importance:
- To ensure your MT4 platform stays online. It reduces the risk of loss because of power outages or internet disconnections. Look for a VPS provider that guarantees 100% uptime.
- Assistance setting up your automated software. Some VPS companies will help you install indicators or EA’s if you get stuck
- These benefits only apply if you’re trading using a robot or EA (Expert Advisor).
- There is NO advantage to clicking buy/sell inside your virtual private server. Consider the time it takes to click your mouse, then the signal to be sent from your PC to your VPS at the datacentre and then to the market will be marginally slower than if you’d opened the order directly on your local PC.
- The only time a virtual private server is useful is when you are relying on software to trade, or manage your trades on your behalf.
FYI – “latency” is just a fancy word for the distance between the broker and datacentre.
Make sure your broker is listed and select the location with the lowest latency, preferably below 5ms (milliseconds).
Expert Advisors & Robots
For the uninitiated, a forex robot is also known as an Expert Advisor (EA).
A forex robot is software that trades automatically based on a set of preset conditions. The trick is knowing which conditions you should set, this is were our Telegram channel will be a necessary piece of armoury to add to your arsenal.
We are currently evaluating an EA and will shortly publish the results.
Join the channel NOW so you don’t miss out on the most current news.
Conservative settings when trading manually on MT4 & MT5 platforms
I use MT4
- Account balance $350 to $1000
Sell/Buy Limit [0.01] of a PIP. This is the lot size or amount proportional to you account balance that is paid for each trade, any higher is very risky, be aware of any market manipulation by your broker here, if the trade has been placed for a greater amount than 0.01 and you did not intend it to be higher then the best I can suggest is close this deal as soon as you are in profit or at worst have a minimal loss.
- Only increase the lot size when you have $1000USD in your account.
- NOT recommended You might consider increasing the lot size to 0.02 if your balance is $100 – $350, this is risky but is worthy of consideration given the low account balance however a lot size of 0.01 should be sufficient, it will take a few minutes longer to cover commissions, close the deal and make a profit, even if it is only a few pennies, 30¢ or less for example.
Click on the Trading size (units) box and choose Lots from the drop down menu & enter 0.01 Trade size, currency pair EUR/USD then Calculate. You will see the Pip value is 0.1 USD be aware of what Leverage your trading account is set to.
- Trading pairs
- AUD/USD M5 (5 minute chart)
- EUR/USD M5 (5 minute chart)
You can add any pairs you wish but always be aware of any political meeting and/or other events that may effect values and potentially create a drawdown situation.
- I suggest that all deals are closed when you leave your PC at the end of the day.
- Never trade on Fridays
- Close all open deals on Thursday evening at close of business (4pm GMT), it is good practice not to have any open trades over the weekend, the markets are closed and who knows what will happen to exchange rates over the weekend, also nobody in their right mind trades on a Friday.
- In the top left of your Traders MT screen is the time at their server location, keep a note of the GMT time difference to your local timezone.
You may have noticed that on the above screenshot of a chart I use there are two graphical elements at the bottom, these are indicators.
The top indicator, ‘Moving Average Convergence Divergence’ (MACD) is a trend-following momentum indicator that shows the relationship between two moving averages of a security’s price. … A nine-day EMA of the MACD, called the “signal line”, is then plotted on top of the MACD line, which can function as a trigger for buy and sell signals.
“The indicator shown at the base is my favourite”
‘The Relative Strength Index’ (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 (SELL here) and oversold when below 30 (BUY here). Some traders consider RSI is overbought when at 80 and oversold at 20.
To set these on your chart GOTO – Insert – Indicators on the top menu bar.
Save these settings to default, every time you add a chart the indicators will automatically be there. To save the template, right click on any chart, GOTO – Template – Save – Save as default.tpl, If there is not a file named default.tpl save the file and enter default as the name, ensure the extension is .tpl
For user friendly version to share.
Published: March 27, 2019, 08:56 | Comments Off on Forex Trading