If you are considering Forex trading, you will also have to consider adapting to several trading strategies. These strategies help ensure the safety of your capital and make a consistent, risk-averse profit. Some of the best trading strategies in the market include finding the best trading platform like MetaTrader 4 and ensuring a perfect balance between the upside potential and risk management. We are going to tackle important guides applicable for scalpers and Forex traders, experienced or newbies.
Mastering the Basics of Trading
To those who are just starting out in Forex trading, it is very important to take a grasp of the basics of trading. If you refuse to do so, sooner or later, you will walk away from your trading endeavor without profit. There are so many things to learn in Forex trading, but these three pillars must be understood by every trader before they open a position.
In the Forex market, currencies are always traded in pairs. These two pairs will compete against each other. These currencies fall into three categories – majors, minors, and exotics.
Majors are currency pairs that are highly recommended every time you come across a Forex trading strategy. These pairs consist of a strong currency and the U.S dollar. Majors are the pairs that are mostly traded in the Forex market and they are the most liquid, have the lowest levels of volatility, and have the tightest spreads.
Meanwhile, you can also trade and be profitable with minor currency pairs. These pairs are strong currency pairs but don’t include US dollars. Some of its examples are NZD/AUD and EUR/GBP.
Finally, there are exotic pairs that must be avoided by newbies. These are the currencies of a non-major economic region like Turkey, Kenya, Peru, and South Africa. If you are new to the market, it is highly advantageous for you to avoid this group of currency pairs because the volatility levels and spreads are high in exotics.
Percentage in Points (PIPs) is very important in currency trading and you need to know and understand it to become an effective trader. Basically, when the exchange rate of a currency pair fluctuates, it is being calculated in pips. Aside from the Japanese yen, most trading platforms display five digits following the decimal. The pips will determine if you have won or lost in trading and because of that, it is necessary that you know all about pips before you start risking your money.
When you buy or sell a currency, you will have to let your broker know first. Additionally, you can add a risk-management order to ensure your capital is well-protected. Although it won’t totally eliminate the risks, it ensures that the gains overpower the losses. You can use the limit order, stop-loss order, and take profit order as part of your risk management strategy. For beginners, you can use a highly comprehensive trading platform like MetaTrader 4 to help you handle your trades.