What is Forex Trading and how it works?
Forex trading known as foreign exchange trading or FX market is the buying and selling of currencies on the foreign exchange market. This market is the most liquid market in the world. The Forex trading market’s daily volume is about 7.5 trillion dollars.
The Forex market is open for trading 24 hours a day and 5 days a week. In this time of trading days, big banks and big institutions trade in the forex market worldwide. This is a totally decentralized market means no one is controlling the forex market its price fluctuates due to an increase in the value of a currency.
The vision of forex trading is to make profits from changes in the value of one currency against another. Forex trading is done through a broker like TD Ameritrade or a market maker and can be done through online platforms or over the phone and laptop.
Traders buy or sell a currency pair, such as the GBP/USD (Pound/U.S. Dollar), at a rate that they believe will increase in the future. If the currency they bought increases in value relative to the currency they sold, they can make easy profits.
Conversely, if the currency they bought decreases in value relative to the currency they sold, they will incur a loss, So you should try to learn the proper money management formula and forex trading strategies. In this time of trading days, big banks and big institutions trade in this market. In this course, you will learn how to start forex trading within a few steps.
Forex Trading Beginners: How to Start Trading?
You can start trading Fx easily through a broker. Here are a few steps to start trading the Fx market.
Forex Trading Best Apps:
Learn the Basics of Forex Trading:
To be honest it’s not so complicated to learn forex trading. It’s very easy to learn forex, all you need to learn to read the price action within the charts is called technical analysis. You will forget about the fundamentals and news drivers of the FX market. I posted an article about how to learn technical analysis you can check HERE.
Create an account with the broker:
To start forex trading you must need an account with a broker. Forex brokers provide leverage and charge commissions through spreads. It’s the same as the trading fee they charge. In my opinion, I recommend choosing brokers wisely. Beginners should open micro accounts means low-capital accounts. Start with small.
Choose one Strategy:
If you are a new trader trust me don’t jump into strategies. Learn a forex trading strategy with a great risk-reward ratio. because some of you will be attracted to indicators and all stuff. These are all useless. All you need is a clean price action chart to get high accuracy in your trading career.
The strategy will help you to be consistent in your trading career. For example, you will never gamble. You will always wait for the market to create a formation of candlestick patterns on the charts. This will help you to stay within the guidelines you set for trading.
Create a Journal of your Trades:
One of the best teachers or mentors of your trading journey is your trading journal. Because it will help you to find mistakes in your trades that cause losses. When you study those mistakes, so the next time you will never do the same mistakes.
Trading Journal helps you get more opportunities within a day and lower your risk in trades.
Forex trading strategies for beginners
Scalping:
In which you trade for one minute to 15 minutes, Meaning if you are entering a trade. You are just doing trade for 1 minute to 15 minutes. Trade input depends upon the forex strategy that you are following for scalp trading. Big banks and big players do scalp trading with high-frequency computers.
The main vision of scalp trading is to make multiple profits by buying and selling a trading asset quickly, usually with high volume (USD) and low leverage. Scalp traders typically use a combination of technical analysis tools, such as trading charts and order book data, to identify great opportunities for profitable trades.
Day Trading:
This FX trading style allows you to trade and close your trades same day. This trading style is most favorite among traders. Which duration of trades can be in minutes and also can be hours. The main goal of day traders is to take advantage of trading opportunities within the same day.
However, day trading also has its own set of risks. Day trading requires a high degree of skill, knowledge, and discipline and the ability to make quick and accurate decisions under pressure. But if you have full control of reading price charts you can do day trading confidently.
You can find my forex trading strategy by tapping HERE.
Swing Trading:
Swing trading is a medium-term trading style that involves holding an asset or trade for a period of several days to a few weeks. The goal of capture gains within the weekly and daily time frame. This trading style is popular among traders who are looking to take advantage of medium-term price movements without the need for constant monitoring of the charts like day trading. The main goal of swing trading is to identify the trend of an asset and then enter and exit positions at specific times to capture the majority of the price movement.
FAQ’s
Is forex trading haram or halal?
The question of whether forex trading is halal or haram is a debated one in Islamic finance and economics. Some scholar says it’s halal and some say it’s haram. Islamic scholars argue that forex trading can be halal if it is done in a way that is permissible under Sharia, such as through a Sharia-compliant forex trading account.
This account follows principles such as no interest in trades, no speculation, and no use of excessive leverage.
These accounts are designed to be compliant with sharia principles. They offer features that are different from traditional forex trading accounts.
Every broker provides this feature.
Is forex trading profitable?
Yes, I am generating 15% a month from forex trading. Forex trading can be profitable, but it also carries a high level of risk. Profitability depends on several factors, including a trader’s experience, strategy, risk management, and market conditions.
The Fx market has a daily 7.5 Trillion dollar volume. You can also make money in the fx market by learning Technical analysis strategies and fundamental analysis.
It’s important to understand that Forex trading is not a get-rich-quick scheme and requires discipline, patience, and a solid understanding of the financial markets.
Best Forex Trading Strategy?
There are a lot of forex trading strategies in the market like head and shoulder patterns, candlestick patterns, indicators, and bot strategies. I have been trading forex for 4 years, and what I realized in this journey is not to follow the indicators and chart patterns because these indicators are created just to encourage you to trade more and more and have less accuracy.
SMC ( Smart Money Concepts ) is best for being a profitable trader in the Fx market. Because these concepts don’t allow indicators and patterns that don’t have high accuracy, these concepts are based on pure price action and are easy to understand. If you want to learn smart money concepts Click HERE
How to calculate pips in forex trading?
To calculate pips in forex, you can use tools on Trading View and other forex trading apps. The best way to count pips in forex, you use a formula: Pip value = (pip size/exchange rate) x position size. For example, the price of EURUSD is at 1.05353, and if it moves to 1.05720
If it moves from 35 to 72 it means it moves 37 pips to the upside. This is the simplest way to calculate pips in forex
How many forex trading sessions?
There are 4 forex trading sessions. New York Session, London Session, Tokyo Session, and Sydney Session and the best tradeable sessions are in New York and London.