What are Demo Accounts

LESSON NO 20

What are Demo Accounts:          Almost every broker provides free practice facility at his platform to all new traders as well as old traders, so that before starting trading on real account trader can make his own system, traders can know how to open and close the trades and what things are to be kept in mind while trading.  Please keep in mind that untill you have gain success in your demo / practice account don't think about opening or starting trading on your real / live account.  If you will start trading on live account without having practice on demo account you will loss all of your savings.  Always take the demo account as your real account and put your trades as you are trading in your real account, save your money, trade carefully earn more profits and make less loss.  You must have a very crystal clear concept that why are you buying or selling and why are your opening a trade or closing a trade, where are you putting your Take Profit and Stop Loss and what is your lot size.  These things will make you more consistent and will give you more experience in trading and you will gain good skills.  After having all these practices and skills now you can start trading on your real account but always remember at the start of your real trading select micro lot size as in this way you will have chances of very less profit but your loss will also be very less.  If you will select a big lot size for sake of high profit and if you will loss the trade your loss will also be high and sometimes it will totally washed away your account.

Some Bitter Facts about Forex Trading:         Every trader even if he is very very expert in forex trades will surely met some loss.  In forex about 90% of traders lost their all capital and the reason is No Education about forex, no practice on demo account, having no trading system, lack of discipline, part time trading lack of money management skills.

Forex trading is not useful or beneficial for um-employed, bank-corrupts, money borrower.  Even after having alot of practice on demo account you required at least 400 USD to make your system smooth for earning profit.  And if you have good strategy you can earn 10-15 dollars in single trade easily.  If you have have 500-1000 USD capital you can make it as a part time earning opportunity, but this phenomena can be wrong in some case.

For forex trading you must have some qualities, make a trading system and then stick with it, wait patiently for a trading set up, learn money management and act upon it, don't do over trading, do be greedy, make your target for example make a target to earn 50$ a day and only work for these 50$ do be greedy and do over trading in this way you will loss even your earned 50$. 

Remember, Forex is not a game to be a millionaire over the night, I have seen alot of attractive advertisement claiming to make you millionaire in few days, all these are the tactics to catch the attention of new traders, if it is true then everybody will be billionaire or even millionaire in this world.

What are Lot in Forex

LESSON NO 19

What are Lot in Forex:      Lot express the value in forex.  There are three types of lots:

Ø  Micro Lot  :  It means that one pip is equal to 10 cents, in trading you will gain profit or met loss 10 cents per pip.

Ø  Mini Lot  : In mini lot one pip is equal to 1 dollar which means that during the course of trading you will earn or loose one dollar for every pip.

Ø  Standard Lot  : In Standard Lot one pip is equal to 10 dollars so if you have earned one pip you have earned 10 dollars and if you have lost one pip you have met a loss of 10 dollars.

What are Types of Order in Forex:       In forex trading there are mainly two types of orders:

Ø  Instant Execution / Market Order           :           Trading on Current Market rates is called market order.  If you are buying or selling any pair on the rates shown on your platform it is called market order

Ø  Pending Order        :           There are two sub categories of Pending Orders:

Ø  Stop Orders       :           In Stop orders you buy on higher rates than current market rats of sell on lower rates than current market rates.  For example if current price of EUR/USD is 1.3060 and you want that if it reaches at 1.3040 and you sell then you have two options either stick in front of your computer / laptop and stick to screen to watch the price variations carefully or place a stop order and when price will reach at 1.3040 your order will be executed and your trade will automatically be opened.

Ø  Limit Orders      :           In limit orders we buy below current market rate or sell above current market rates.  For example if current price of EUR/USD is 1.3060 and you want to buy at the price of 1.3030 then you will place a pending Limit order and as the price will hit 1.3030 you buying trade will be automatically executed and opened.

How to Earn money from Forex Trading

LESSON NO 18

How to Earn money from Forex Trading

It is the most important question for new traders as well as for old and experienced traders.  If you don't know the art of earning profits from Forex Trading then this nothing else but just a waste of time and money to indulge in Forex Trading.  So let's learn how can we earn money from forex trading.

In forex trading either a currency is bought or sold.  For example if price of EUR/USD is 1.3033 and you assess that price of Euro will increase and you buy this pair, after few hours as per your assessment and analyses price increases and hits 1.3083 and you close your trade, you have earned 50 pips and if your one pip is equal to 1 dollar then you have earned 50 dollars from one trade.

Likewise, GBP/USD price is e.g 1.6087 and you evaluate that price of pound will decrease and you sell that currency pair and after few hours its price decreases and hits 1.6037 and you close your trade, you have earned 50 pips and if your one pip is equal to 1 dollar then you have earned 50 dollars from one trade.

How to read a Currency Pair:

                             GBP             /                       USD :           1.51258

 

                        Base Currency    /     Quote Currency

Currency at the left side is called base currency while the currency at right side is known as counter or quote currency.  During trading base currency is kept in mind for example in currency pair GBP / USD if you want to buy you will buy GBP and if you want to sold you will sold GBP.

What is Long or Short:     If you intends to buy a currency pair I mean if you are going to buy a base currency it will called Buy or Long and if you intends to sell a base currency it will called Sell or Short.

Things to Kept in Mind during Forex Trading:          Following important things are to be kept in mind while executing forex trading.

Before starting any trade, market is analyzed, there are two main types of analysis:

Ø  Fundamental Analysis

Ø  Technical Analysis

What is Fundamental Analysis: We will try to learn with following few examples that what is fundamental analysis:

Examples of Fundamental Analysis

For a currency pair EUR/USD, if we see that there is increasing ratio of unemployment in USA, GNP is decreasing or there is downfall in exports then it means that dollar has become weaker, if dollar is weaker it means Euro has become stronger with regards to dollar so definitely we will buy Euro (I mean EUR/USD Pair) and if the situation is against (employment opportunities are increased, GNP and Exports are also increased) the it means that dollar has become stronger and Euro has become weaker so in this case we will sell EUR/USD.

Which Session Starts at which time

Lesson No 16

Tokyo Session:      Tokyo session starts first, which is also called Asian session.  Japan is third economic power of the world, and Japanese Currency Yen has 16.50% share in forex market and 21% trading of yes is made during Asian session.

Characteristics of Tokyo Session:        Following are the salient features of Tokyo Session:

Ø  In Tokyo Session (also called Asian Session), trading is not limited to Japan only, but forex trading shifts in millions of dollars to Singapore, Sydney, Hong Kong and China which is connected to Tokyo Session.

Ø  In Tokyo Session major partners are Exporter and Central Banks.  Although economy of China and Japan mainly depends on exports but even then volume of forex trading remains very low sometimes it looks that market is even closed.

Ø  Besides above, even then in Asia Pacific currency pairs like NZD/USD, AUD/USD a quick movement is quite visible.

Ø  Due to limited volume of trades markets runs on sideways which at the end become the cause of breakout and make opportunities for trading.

Ø  Market move more quickly when central banks and governments announce economic reforms and policies.

Currency Pairs in Asian Session:         When there is any political upset or announcement of economic policies in Japan, New Zeeland, Australia and China then there is fast flow of trading of JPY, AUD, NZD which is called news trading, but to be very truthful at that time trading is very dangerous it can even washout your accounts if you don't know good money management skills, very few traders have the skills to deal with this type of trading.

London Session:    When Asian traders close their trading at that time London's traders start their trading.  In Europe there are many other financial departments dealing with financial activities and investments but most of the traders focus on London market.  Historically, due to its geographical location, London remained an attraction for the traders.  And this is not an astonishing fact that in London session, in one minute, thousands of traders take part.  Overall 30% of forex trading occurs during London session.

Salient Features of London Session:   Followings are some characteristics of London Session:

Ø  London session overlaps Tokyo and New York sessions due to which there is a fast flow of trading in this session of volume of trades remain very high during London Session.

Ø  Most of trends occurs during London session which remains continue till the start of New York Session.

Ø  In the middle of London session flow of trading decreases, as traders take rest and wait for New York Session.

Ø  Sometimes, at the end of London Session, there are reverse trends as mostly traders lock their profits and close their trades.

LESSON No 17

What are Trends:   Movement of price in any direction is called "Trend".  Price always moves from left to right.  There are three possible trends / movements of price:

 

ü  Upward Trend                      

ü  Downward Trend                

ü  Sideways Trend                  

Suitable Pairs for Trading:          It is very important to know that which currency pairs are to be traded during forex trading.  Specially new traders should know about these currency pairs so that they can earn good profit for the trades and time.

According to flow and volume of the market trading of major pairs is very important i.e EUR/USD, AUD/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, NZD/USD, because their spreads (difference between buying and selling price) remain very low.  You can trade cross currency pairs but their spreads are vey high.\

New York Session:            At about 12PM or 1PM London time New York Session starts. 

Characteristics of New York Session: Following of salient features of New York Session:

Ø  During first few hours of New York Session market flow remains very high due to overlapping of London Session.

Ø  In starting few hours mostly important news are released those effects the market in any way.

Ø  On Friday at noon flow of market decreases as London and Tokyo markets are already closed.

Forex Trading Guide

Lesson No 15

What is Leverage:  I hope you have heard about leverage, you can understand leverage with an example of a big stone which cannot be moved by five men but one man can move it very easily with the help of a LEVER.  Likewise if you have only 50 dollars you cannot buy a lot which costs more than 50 dollars but if you have a leverage of 1:50 you can buy a lot of 2500 dollars, which means that you have borrowed 1:50 ration from your broker (means you have borrowed 50 dollars for each of your 1 dollar).  But remember leverage is like a two way knife which can cut you from either of its side, if you don't have good money management your can loss all of your capital / equity in one trade.  So don't think that leverage is very good, although it is very helpful in buying or selling big lots but it has very high risk of loss too.  So always select leverage according to your available balance and your money management skills.

When to Make a Trade:     There is no doubt that market remains open for 24 hours but it doesn't means that it is suitable for trades all the day.  Forex Market moves in three directions i.e upward, downward and side-ways.  If market is moving upward or downward then you can earn profit and trading is easy in this situation but if market is moving side-ways then trading is very very difficult and you cannot assess that at which point market will move to which direction.  Forex Market can be divided into three main markets which are also called as sessions:

1.         Tokoyo Session

2.         London Session

3.         New York Session.

Opening and Closing Timing of Forex Market:          These three markets / session have different timings of opening and closing which are shown in following table.  Timings are different for April to October and November to March, both are shown in the table given below:

April to October

Market Zone	Time (GMT)
Tokyo Open Tokyo Close	11:00 PM 08:00 AM
London Open London Close	07:00 AM 04:00 PM
New York Open New York Close	12:00 PM 09:00 PM

November to March

Market Zone	Time (GMT)
Tokyo Open Tokyo Close	11:00 PM 08:00 AM
London Open London Close	08:00 AM 05:00 PM
New York Open New York Close	01:00 PM 10:00 PM

Closing of one market and opening of other market is called overlapping.   In first table Tokyo market closes at 08:00 while London market opens at 07:00 in this one hour between 07:00 to 08:00 both markets remain open and trading is on full swing.  Likewise, London session closes at 04:00 pm while New York session opens at 12:00 pm, so in these four hours trading remains on full swing and a lot of trading is made during these overlapping periods.

What is PIP:             Mostly all currency pairs have 4 digits after decimal e.g 1.3245 when moves one point in upward direction and reaches 1.3246 we said that one pip has been increased.  Mostly traders calculate their profit and loss with the increase or decrease in pips.  Pips of different trades have different values but mostly it depends upon your volume of the trade if your volume is 1 (Standard lot size) then mostly your pip will be for one dollar but if your volume size is 0.01 then your pip may be of 10 cents.  And if your lot size if 10 then your pip will be of 10 dollars and if there is move of only 5 pips in market you can earn 50$ dollars with this move of 5 pips, but on the other hand if move is against your prediction your loss will also be of multiple amount.

Why Dollar is so Strong:

Lesson No 13

There are many reasons for a powerful currency in forex market.  US Dollar is so strong for the following reasons:

America has world's biggest economy.

All countries' reserves are in US Dollars.

Political system of America is very stable.

America has world's largest Army

All countries do trade in dollar

Dollar is an International Currency. etc etc

What are the benefits of Forex Trading:

Lesson No 14

All of you know that we do any business in which we have any benefits, so there is a question that what the benefits of forex trading?.  In this lesson we will discuss about the benefits of forex trading.

No Commission:    There is no commission, no broker fee, no government fee and no exchange fee in forex trading, however the difference between buy and sell price is received by broker.

No Middle Man:       In forex trading you have direct access to the software/platform provided by the broker and you can do trading independently without the interruption of any body.

Trading Size:           In forex you can select size of your trade according to your available capital, this size is called volume or lot size in forex trading.

24 Hours Trading:  As we have discussed that forex market remains open for 24 hours a day and 5 days a week.  Its opens on Monday at 08:00 AM Australia time and remains open till Friday evening New York Time.  So you can work at any time from any place i.e your office or home.  Almost all brokers have their mobile apps so even you can control your trade during your journey when you are away from your laptop and computers but you cell phones are available.

No Individual Can Control Forex Market:        Sometimes we heard news about our regional stock exchanges that any particular business or group of businesses have controlled the market and turned it in their favour, but it is almost impossible in case of Forex market.  Reasons are that first of all it has almost 5 trillion dollars liquidity on daily basis and there is no business who can control such a large equity or even 50% of this amount.  On the other hands even banks or even countries cannot control this market because if one country is trying to control this market there are many others who have their interests in this market and they will fully respond to this attempt so keeping in view this response and possible loss no country tries to control this market.

Forex Market Size and Liquidity

Lesson No 12

It is very important for all traders to have knowledge about Forex Market Size and Liquidity, even in our normal business we take care of your market size and liquidity so that we can earn our share of profit from the existing market and traders.  Regional stock exchanges works for specific period of time in a day and are closed after that time, while forex trading is totally different from this.  It remains open for 24 hours a day and 5 days a week.  Let have look over which currency have higher trading volume and which currency have lower trading volume in forex trading:

This chart shows that USD is at number one, EUR at number two and JPY is at number three while CAD has lowest trade in forex market.

From this chart we can say that US Dollar is the king of forex market, as it has almost 85% of market share, so we should say that Dollar is the King of the Forex Market.

Forex Trading Always Works in Currency Pairs

Lesson No 10

There is an important question that how forex trading works?, so toady we will discuss this aspect of forex trading, that how it works.

During the process of forex trade one currency is bought while other is sold out, which means that you are buying one currency and selling other currency in the pair, e.g for the pair EUR/USD, AUD/USD, and USD/JPY in this example you are buying one currency and selling other currency.  In case of EUR/USD you are buying EUR and selling USD and vice versa.  Currency pairs are either bought or sold out, a stronger currency is always bought while weaker currency is sold out.  Strength or weakness of a currency depends upon its production, inflation, employment opportunities, political stability, its relations with other nations and law and order situation with in the country.

Division of Currency Pairs

Lesson No 11

Currency pairs are always divided into three major categories

Majors:          Those pairs in which atleast one currency is USD are called Major Currency Pairs like EUR/USD, AUD/USD, USD/JPY, GBP/USD, USD/CAD, USD/CHF, NZD/USD etc.

Cross:           All those pairs those dont any USD currency are called Cross Currency Pairs like NZD/JPY, CAD/JPY, AUD/NZD, EUR/JPY, EUR/GBP etc etc.

Exotic:           Currencies of developing countries are included in this group like, USD/HKD, USD/SEK, USD/DKK, USD/NOK, USD/ZAR, USD/SGD etc

What is Stop Loss and Take Profit?

Lesson No 9

In our lesson No 7 we have learned how to start our first trade through instant execution, there are two options in this case i.e Stop Loss and Take Profit.  In this lesson we will learn how to set stop loss and take profit limits and how these two options work. 

So, if you are going to buy any pair your take profit limit must be less than the price showing above sell button in case above sell button price is shown as 1.0525 then your take profit limit must be any value less than this e.g it may be 1.0500, now it is time to set your Stop Loss, if you have analyzed that market is fluctuating between 1.0495 to 1.0580 then your stop loss may be a little above 1.0580, it means that you have assessed that if price will go up till 1.0580 then there is chance that it will come back towards our take profit limit i.e 1.0500 and if it will go more beyond 1.0580 then there are chances that it will go more above this value and if it will keep going above it will increase our loss so we have set our loss on the limit very near to 1.0580 it may be 1.0585 so if market keep going on and it hits 1.0585 our stop loss limit will hit and our trade will be closed with a loss of almost 55 pips.  It will prevent your trade to incurred more loss if price goes upto 1.0700.  In case you have not set your stop loss limit and market goes upt 1.0700 then your loss will be 175 pips which is very high than 55 pips.

Stop Loss and Take Profit options make your trade automatic in case any of your limit is hit your trade will be closed automatically, in case you haven't set your take profit limit and price goes down till 1.0480 and you are not on your trade terminal and soon this price comes back to 1.0540 then it means you have missed a chance to earn profit, so either you have to stick to the screen to have keen eyes on your profit and you can close trade at any good profit or the other option is best i.e automatic trade with a take profit limit.  Same is the case with stop loss option.

Now its upto you that which options suites best if you have enough time and you are good to work online for more times and love to keep on looking market trends then you can chose other option i.e manual trading and you can close your trade at any time you earned good profit or can close at any point to avoid huge loss.  And if you are not so, then I will advise you to always do automatic trade with take profit and stop loss limits as it will not only save your time but will earn good profits for you.

Forex Trading - Learning

Forex Trading - Learning

Hello friends how are you, I hope all of your will be in good state of health.  Till now we have learned many things about forex trading, we have also learned about basics of Instant Execution order and stop loss and take profit limits.  In upcoming lessons we will learn more about how to place an order and how to set different options in pending order type.  So keep on visiting my blog and you will learn new things.  Also visit my youtube channel and watch videos how to practically carry out the forex trading.

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