Learn To Trade
Forex and everything related to it
11-12-2017 | No Views : 580
In this lesson we will discuss the definition of Forex and everything related to it, beginning to define what Forex is to the risks that can be faced by stores, to the manner of choosing the right company for the trader.
What is Forex?Forex is the so-called foreign exchange market or foreign currency exchange, as it is called the Foreign Exchange Exchange, an abbreviation for Foreign Exchange, one of the most financial markets in the world and is one of the fastest growing.
As the volume of daily trading in the Forex market exceed 4 trillion US dollars, and similar to the trading of Forex with the stock trading, but in the Forex market is trading in the form of currency exchange, which you are selling currency to buy another currency.
But it differs from stock exchanges that open at specific times of the day. The Forex market is open 24 hours a day, five days a week, and the speed of executing the deal, which is done by pressing a button through a forex trading platform.
How to trade in Forex?Forex Market Forex is a decentralized market not subject to a state, as the process of trading is done from the Internet through trading companies for the Forex.
As the trading company provides traders with a trading platform with a set of orders to help the trader in the execution of transactions, and all required to sell a pair of currencies is a click of a button on the trading platform and the implementation is immediate.
Despite the ease of execution of transactions in Forex trading, but the renewal of the sale of the purchase is a difficult process, and the trader should analyze the pair that works to increase the likelihood of success of the transaction and reduce the risks that characterize the foreign exchange market.
Is forex trading risky?
As we mentioned at the beginning of the article that the Forex market is one of the largest financial markets in the world, and this means that the volume of liquidity is very high, resulting in violent price movements raise the risk.
It can be said that some of the advantages of trading in Forex represent disadvantages, such as the advantage of the existence of leverage, although it doubles the capital, raising the value of profit potential, but the use of wrong causes a high risk may cause severe losses as the trader could not control his feelings and use Leverage moderately.
Forex provides good profits when the trader can adjust his feelings and study the types of analysis helpful in the process of trading and proficiency, with attention to risk management and attention to economic data, but random trading without a good study carries high risks.
Forex Trading HoursForex is an unregulated online financial market, which is not linked to a specific exchange trading platform, allowing traders to trade 24 hours a day, five days a week from Monday morning to Friday evening.
However, it does not mean that the foreign exchange market is not affected by the stock exchanges of the world because of the decentralization, but is affected by Forex trading periods of the largest exchanges of the world from the Sydney Stock Exchange and Tokyo to the New York Stock Exchange.
It should be noted that the period of overlap New York with the London Stock Exchange is characterized by high liquidity due to frequent trading on the US dollar and the euro, and also because of the large economic data in this period, causing a sharp price movements.
Dear traders It is important to choose the trading period based on the trading plan and the pairs that are traded, and we show below periods of stock exchanges affecting trading in Forex.
Australian Period: Australian stocks start trading at 10:00 pm and end at 07:00 GMT.
Asian Period: Asian bourses open at 12:00 am and close at 09:00 GMT. During this period, liquidity is rising on JPY crosses.
European period: The first European stock exchange starts trading at 08:00 am and the last European stock exchange closes at 05:00 GMT.
The US is the largest economy in the world and the New York Stock Exchange is the largest financial market in the world, It also starts in the European period, raising the volume of liquidity and trading.
Forex and stock marketsForex and the stock exchange agree that the two markets are financial and this makes them similar, but the differences are also numerous, ranging from the size of the available investment assets to the volume of liquidity and trading times.
When we look at the investment alternatives available in Forex, we find that the most traders focus on the major currency pairs and gold, unlike the Stock Exchange, which the traders choose between hundreds of shares.
- The trading hours on the stock exchange are for eight hours a day with the opening of the country's stock exchange to the time of the daily closing and can not be heard after trading. However, the foreign exchange market is distinguished by a decentralized market, as mentioned above, which allows traders to trade 24 hours a day within 5 days In the week.
- The Forex market also provides the trader with leverage that doubles the capital to 400 times in some cases, making it a good profit advantage if it is used well and is not available on the stock exchange.
- One of the most striking differences between the stock market and the foreign exchange market is the speed of execution of transactions. In the forex market, the trader uses trading platforms such as Metatrader, which helps him to execute deals quickly, which is only a few seconds, Deals are slow.
The number of daily trades for Forex tradersMany forex traders resort to the daily or daily Forex trading method, which makes many novices question the right number to open daily deals, but this question has no typical answer and varies from one trader to another.
Where the method of rolling is the intraday trading, it is possible that the number of transactions per day to 20 transactions, and this is proportional to the method of trading, whether the shops is the daily trading, the number of 20 transactions is very large.
Besides, the trading method determines the appropriate number of transactions. However, the psychological factor is very important as the number of transactions becomes more difficult to control. Therefore, the trader must monitor himself to be able to determine the appropriate number of transactions, Psychological.
What You Need To Start Trading In ForexMany novices believe that the beginning of trading in Forex is easy and does not require much effort, and ignore that the foreign exchange market is one of the largest financial markets in the world and work requires time and effort.
Dear reader, entering the FOX market is not an easy process and requires a lot of time and effort. The beginning is by learning and learning different technical analysis methods and training for a period of time, then starting with a small capital, since working on the demo account you can not test the real trading feelings.
The process of testing feelings and training to deal with them is only through a real trading account that shows fear and greed and your ability to control your feelings. The process of controlling the feelings of the trader is as important as teaching and studying the fundamentals of technical analysis.
How to earn profits in Forex trading?
The profit is earned in Forex through the financial intermediary that is dealt with at the beginning of trading. The trader is the one who chooses the time at which the profit is to be taken. There are those who profit on a monthly, quarterly or yearly basis.
We will take an example of a trader who makes profits on a monthly basis. Here we are talking about profit taking, which means closing open positions and withdrawing the profit, not closing a deal without withdrawing profits.
At the end of each month, if the stores reach the goal that he wants to achieve, he stops trading and submits a request to withdraw the profit from the brokerage company. Here the brokerage company deducts the profits from the trading account and transfers them to the stores through the banks.
The information on the bank account of the stores to which the funds are received is in advance, as the trader at the opening of the account provides the company with his bank account information, and this is the point of opening the account in many trading brokers.
Forex Trading RiskDear reader, we mentioned above that Forex is one of the largest financial markets in the world in terms of liquidity and the volume of daily trading, and this makes prices move sharply and unexpectedly often, raising the risk of trading in the foreign exchange market.
But the question here is, is the risk of forex trading calculated or random? The answer is both a calculated risk and a random risk according to the trader's behavior. If the trader has a trading plan, examines price movements, takes care of economic data and does not neglect capital management, the risks are calculated according to the trader's trading rules.
If the trader is not a student, does not deal with Forex professionally, does not have a clear trading plan and does not know the technical analysis, the risks here are not calculated and the capital can be lost at any time.
Dear traders, this scenario of risk is in natural, disaster-free market situations. In the case of economic disasters, risk can not be calculated like any other financial market, but you can make an alternative plan in the event of an economic disaster.
Forex trading strategy testA successful trader in Forex has a successful trading strategy. Through a trading strategy, the entry and exit points of the transaction are identified, and the risks are identified and the probability of the transaction succeeding.
There is a way to test the trading strategy through programs that restore the old price movement, but we do not prefer this method of testing because of the different prices when testing the real prices, so we prefer to test the strategy by monitoring the real price.
The strategy is tested by monitoring the real price through a demo trading account. The trader handles the entry and exit signals of the strategy as if it were a real account for at least three months. If successful, the strategy is applied for another three months on a real account but only a small amount Money to adjust the psychological factor.
Dear reader, we know that six months to test a strategy is a long time, but remember that you work as an investor, and the higher the quality of the strategy the lower the expected risk the greater the chances of maximizing profits, thus increasing the probability of continued profits.
Forex Fake BrokersDespite the many advantages of trading in Forex, it also has drawbacks, and one of the most serious defects in the foreign exchange market are the Forex brokers, as the novice trader of the month to be a victim of these companies aimed at beginners for easy to deceive.
Therefore, the trader should not only pay attention to the study of financial markets and the methods of technical analysis, and follow-up economic data, but should also be concerned with regulatory bodies and know about the licenses of the Forex companies and what regulatory bodies that represent the integrity of the Forex company.
Many traders believe that a company with a leverage of up to 1,000 is a good company, but the opposite is true. This type of company is called the market maker, although they do not erect, it is a conflict against the trader.
This means that the trader's profit is a loss for the company and the loss of the trader is a profit for the company, which makes them offer a high leverage to satisfy the trader and increase the probability of losing it, and remember well that the professional trader does not use leverage more than 100 in most cases to reduce the risk and increase the possibility of profit in the long term Remote.
Regulators of Forex companiesWe also mentioned that Forex is an online forex market, meaning that there is no direct dealings between the trader and the trading company, which is a concern because of the inability of stores to protect their money from brokerage firm scam.
However, the non-protection of capital is only if the brokerage company does not belong to a regulatory body that protects the investor. Therefore, it is important to be aware of the bodies that control the forex companies to avoid the frauds of unlicensed companies. Investor, and in case of violation of these conditions, the company pays high fines.
Below we will mention the most important regulatory bodies on Forex companies, as follows
- CFTC Commodity Futures Trading Commission, a subsidiary of the US Congress.
- NFA National Futures Association in the United States of America.
- SEC Securities and Exchanges Commission in America.
- FCA Financial Conduct Authority.
- PRA Prudential Regulation Authority (PRA) is one of the UK regulators.
- The Cyprus Securities and Exchange Commission (CYSEC Cyprus Securities and Exchange Commission) is a supervisory body of Greece.
- FSC Financial Services Commission, supervised by the Ministry of Finance and Economic Development of Mauritius.
- Australian Securities and Investment Commission (ASIC Australian Securities and Investments Commission).
- The Central Bank of the United Arab Emirates, which regulates the brokerage business in the financial markets.
- DMCC Dubai Multi Commodities Center to monitor, register and license financial institutions and companies in the UAE market.
So we have finished the lesson that deals with everything related to Forex, which we dealt with most of the topics that novice stores need to be clear about the foreign exchange market.
But remember, this is not enough and each of these points need to be studied intensively, we are here to shed light on the topics that need to study in addition to studying the movement of price.
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