What is Forex Market?
Forex is commonly known as ‘Foreign Exchange’ and it is also known as ‘FX market’, ‘Currency market’ or ‘Foreign exchange currency market’. Forex is an exchange of one currency for another currency. It is related to retail traders. It is considered to be the largest and liquid market in the world. It is the over the counter market in which the foreign currencies of the world are traded.
About Forex Market:
The Forex market is the largest market in the world, mostly used by banks, corporates, governments/central banks, Hedge funds, traders, and investors. The FX market is open 24 hours a day, 5 days a week. It has the most important world trading centers located in New York, Tokyo, London, Hong Kong, Singapore, Paris, Sydney, Zurich, and Frankfurt. There is no central marketplace for Forex market.
1. Daily volumes exceed $6.2 trillion per day so dense liquidity makes it easy to get in and out of positions.
2. You can enter or exit a trade whenever you want from Sunday around 5pm EST to Friday around 4pm EST.
3. Forex trading is freedom to trade anywhere in the world only requirements being a laptop and internet connection.
4. Commission-free trading with many retail markets overall lower transaction costs than stocks and commodities.
5. It provides high-probability weekly trading opportunities.
The Reason for The Popularity of Forex Market:
Forex trader offers an incredible potential lifestyle of any profession in the world. It’s not easy to get there, but you can make it happen if you are determined and disciplined. To reach your goals in the Forex Market there is some quick list of skills they are ability, confidence, dedication, discipline, flexibility, patience, realism and self-control etc.
What is Forex Trading?
Forex trading relates to retail traders is the speculation on the price of one currency against another. Forex trading is also similar to stock trading as a forex trader will buy a currency pair if they expect its exchange rate will rise in the future and sell a currency pair if they expect its exchange rate will fall in the future.
For example, if you think the euro is going to rise against the US Dollar, then you can choose EURUSD i.e you can buy euro and sell the dollar to make the profit.
Basic Terms for Forex:
Cross rate – The currency exchange rate between two currencies both of which are not official currencies of the country in which exchange quote is given in example
• If any exchange rate between the British pound and Japanese Yen was quoted in the American newspaper, this is cross rate because pound and yen are not a standard currency of US.
• If the pound and US dollar-quoted in the same newspaper then it is not a cross rate.
Exchange Rate – The value of one currency expressed in terms of another. For example, if EUR/USD is 1.3200, 1 Euro is worth the US $1.3200.
Leverage is the ability to buying power offering by the broker. It means total account margin capacity will be an increase or it organizes your account into greater than your account margin.
For example: If the trader has $1000 of margin in his account and he opens a $500000 position. Leverage of his account will increase 1:500 times.
The smallest increment of price movement a currency can make.
For example: If the USD/JPY currency pair increased from 104.22 to 104.23. This is one pip change.
The difference between the buying price and the selling price or bid and ask price. Eg: the spread is the difference between 1.3200 and 1.3203 or 3 pips. Here the difference amount will go to the forex broker company, That is the reason the traders gives important to the tight spread forex trading broker company. BlueMax is one of them.
List of currency pairs:
There are more than 60 currency pairs available but there are 8 major currency pairs given below:
1. EURUSD – Euro VS American Dollarmt4-desktop-platform
2. USDJPY – American Dollar VS Japanese Yen
3. GBPUSD – British Pound VS American Dollar
4. USDCHF – American Dollar VS Swiss France
5. USDCAD – American Dollar VS Canadian Dollar
6. AUDUSD – Australian Dollar VS American Dollar
7. EURJPY – Euro VS Japanese Yen
8. GBPJPY – British Pound VS Japanese Yen
There are 3 types of charts available they are
a) Line charts – It is good at giving a quick view of the overall market trend as well as support and resistance level.
b) Bar charts – It shows a price bar for each period of time by looking at the daily chart you will see a price bar for each day.
c) Candlestick chart – Candlestick charts show the same information as a bar chart but in a graphical format. It indicates the high and low of the given time period just as bar charts do, with a vertical line. candlestick charts display the opening and closing price.
What is MT4 Trading Platform?
MT4 means Meta Trader 4. It is a Russian software used for trading. It is used by more than 5000 Banks, Financial institutions, Hedge funds etc., all over the world.
It is more secure, user-friendly and world’s best trading software till date. That’s what we use in BlueMax.
Order Types for Trading:
There are different types of order in Forex Marketing.
a) Market Order – A Market order is an order that is placed on the market
and it is executed at the best price.
b) Limit Entry Order – It is a place to either buy bellow current market price or sells the above current market price.
c) Stop Entry Order – It is a place to buy above current market price and sell below.
d) Stop Loss Order – It is an order that is connected to a trader for the purpose of preventing further losses or loss in future.
e) Good Till Cancelled Order (GTC) – If you place a GTC order it will not expire until you manually cancel it.
f) Good For The Day Order (GFD) – Good for the day order remains active in the market until the end of the trading day.
It uses indicators, statistics, candle charts. It uses stock historical performance to forecast future stock prices.
There are more indicators for trading. We use some of the major indicators they are:
a) Heat Map
b) MTF Analysis
c) Market Trend
e) Parabolic SAR
f) Status Monitor
g) Trend Candy
It tries to predict fundamental value by analyzing forex news and report. You can also refer the below sites.
www.forexfactory.com and www.investing.com
Auto Trading – Expert Advisor:
Forex Auto Trading is a slang term for automated trading on the foreign exchange market, here trades are executed by a computer system based on a trading strategy implemented as a program run by the computer system. EA is known as Expert Advice.
PAMM – Forex Fund Management:
Some Forex Brokers gives the opportunity to Fund Managers to showcase their performance and identifies the need for a new investing tool that can be beneficial for fund managers and investors by diversifying their risk and enhancing their returns. The PAMM software uses the ratio based allocation which allows Fund Managers to control over many sub account with the variable balance.
There are some steps to follow the risk management.
1. Understand the risks involved in leveraged forex trading
2. Make a trading plan and stick to a strategy that works.
3. Keep up-to-date with market conditions.
4. Use Fundamental and Technical Analysis. See our Market Analysis page for more information.
5. Know when to close a trade and take a loss.
6. Use trading tools such as stop orders to manage risk.
Money management is one of the most important problems of new and even advanced forex traders. Forex money management has several different aspects and stages and should be started from the very first stages of your live forex trading business which is opening your live trading account. There are some important steps to follow.
1. Avoid Using Too Much Leverage its losses your huge capital.
2. Calculate risk / reward ratio before entering a trade.
3. Traders should focus on pips.
4. The traders don’t risk more than 1% or 2% of the account size in a single trade.
5. A use stop loss is an order that automatically closes your trade at a specific price.
6. Avoid trading too aggressively.
7. Admit when you are wrong.
A Forex brokers generally provide a trading platform to execute trades online. Forex broker is a firm or individual who offers trading services to people who want to buy and sell currencies. Forex brokers are also known as a currency trading broker, retail forex broker and fx broker.