Strategy and How To Play Forex 2022, We Must Know

Forex trading is always an attractive investment because of the high returns. Many people become wealthy suddenly from forex trading. But the risks of playing forex are far from small. Many also went bankrupt due to losses in forex. How exactly is forex trading done? What are the risks and how is it done to be safe? 

What Is Forex Trading?

Forex trading is the trading of currencies with the aim of profiting from fluctuations in the value of these currencies. To open a position, the trader must select a specific currency pair, for example USD / Euro, as well as the direction of movement of the currency exchange rate. Besides changes in the exchange rate between the two currencies, traders can profit/gain or lose/loss. Profit/loss trades are earned after the trader closes his position. It is important for forex traders to choose a currency pair that expresses the value of one currency against another. For example, if the pair of USD and IDR is declared as USD/IDR at 1/14,000, then one US dollar is equivalent to 14,000 rupees. 

In forex trading, the most commonly traded currency pairs include GBP/USD, AUD/USD, and EUR/USD. If we buy the GBP/USD pair, then we can say that we are buying GBP and selling USD at the same time. When we close a position, we sell the previously bought GBP and buy the USD again. If the pound gets stronger against the US dollar at that time, we win - because we can now buy more US dollars than we sold earlier. 

How To Trade Forex?

 We have to choose a forex broker. Through intermediaries, retail traders enter the forex market. There are many types of forex brokers. A forex broker may move the market (market maker) or connect directly to international markets (direct market access). To start trading, a trader must first open an account with a broker. Forex is usually traded through a product called a Contract for Difference (CFD) with the broker we use. CFD is a contract between us and a broker to pay the difference in the value of two currencies when opening and closing a position. The benefit of CFD contracts is that we and the broker do not need to own or hold the currency. Because what will appear when the contract is closed is only the price difference. 

Forex vs Stocks

What is the difference between forex trading (trading) and stock trading? When we think of trading, we usually think of stocks on a stock exchange, and we usually assume that forex trading is the same as stocks. There are a number of differences between forex trading and investing in stocks: In forex trading, currencies are traded in pairs, while stocks are shares that can be bought immediately. 

The forex market is a decentralized off-exchange trading market, where all transactions and transactions are kept confidential, unlike a central exchange where the data is open and visible to everyone on the exchange. Forex trading does not require a large capital to get started. Unlike stocks, which need a large capital to be able to generate large profits, it does not provide opportunities for investors with limited income. Forex trading is not the same as investing because the trader does not actually own the asset being traded. In CFD trading, traders speculate on the future price of an asset. Thus, describing forex trading activities as an investment is wrong because what is actually being done is speculation about the future value of the asset. While in stocks, a lot of people invest. Owning shares in the hope of increasing the value of the company, which will be reflected in price increases and dividends. 

Why Is Leverage Important In Forex Ttrading?

 The role of leverage is very important in forex. Forex CFD trading usually uses leverage; For example, a trader pays only a small part of the transaction value and borrows the rest from a liquidity provider (usually a large financial institution or a bank that works with a broker). 

This means two things: The price jump into forex trading is still small. All profits are multiplied as well as losses. Traders of course still have to bear the total amount of losses they incur. 

How Beginners Start Forex Trading? 

Beginners are usually advised to learn to trade with a demo account before depositing money into their account. It takes time and persistence to master how to trade CFDs. A trader needs to learn various components and strategies to achieve success through trading.

How To Forex Strategy For Beginners? 

There are many forex trading strategies and it is unlikely that you will succeed with just one strategy. Good business planning requires a number of strategies implemented together. At the most basic level, your forex trading strategy will be based on what is known as fundamental analysis (analysis of recent economic trends and geopolitical events - for example the impact of Brexit on the GBP/USD or the release of the US Non-Farm Payrolls and its impact on the EUR/USD) ) and technical analysis (analysis of historical price action on data charts). There are many strategies that are effective under different circumstances and that rely on charts in technical analysis. Other factors to consider when planning a forex strategy are timing (since it is highly volatile), order type (eg trailing stop loss - arguably the most valuable part of any strategy) and auto trading software/robots (which can see market value movements). which you probably didn't have time to observe). 

Minimum Capital For Forex Trading 

Trading accounts can be opened even with a capital of $5 (Rs. 70,000), but we recommend a deposit of $200-$500. We recommend this value because the balance in your account will determine the amount of leverage you can use. When you place a leveraged trade, your contribution is called the margin - depending on the leverage you have in your account, it can be 1% (with 100:1 leverage), 0.5% (200:1 leverage) or even 0.25% (400 leverage). : 1) 1). Your margin is your initial trading fee, but your broker may also charge you a commission per trade or other fees (such as a deposit fee if you use a credit card or bank transfer). Basically, CFD trading fees are in the form of spreads. The spread is the difference between the buy and sell value of the pair that is drawn as a trading fee by your broker. This spread is measured in pips (the smallest value movement in a currency pair). If the bid or bid price for GBP/USD is 1.22415, then your broker may set the bid, or ask price for GBP/USD at 1.22424 - a spread of 9 pips - then the spread is 0.9. The lower the spread, the lower the fees charged. 

Forex Trading Risks

Forex and CFD trading carries a high level of risk that can result in the loss of all the money you have in your trading account in a short period of time. 75-90% of retail investors incur losses when trading these products. You should really consider your level of understanding of how CFDs work and whether you can afford to risk losing all your capital. The main risks in trading are as follows: 

Risk 1: The forex market can be very volatile from time to time. It can also be said that volatility is a condition that allows traders to profit from trading. However, the market can move very quickly, and this means that the trades you make can instantly turn against you. When trading, you should actively monitor the trades you make at all times. 

Risk 2: The forex market is unpredictable. There are so many factors and players in the market that it is completely unpredictable. Traders need to set a target profit-loss ratio that takes losses into account and a solid strategy to minimize them. 

Risk 3: CFD trading requires the use of leverage. Leverage is a tool used in trading to multiply your profits, but it also multiplies your losses which is automatically withdrawn from your trading account balance. Just one trade that doesn't go according to plan and your entire balance could be completely gone. 

Risk 4: In some cases, your trades may involve interest. For example, interest may be charged when you open a trading position after midnight when the next tomorrow's adjustment is in effect, meaning your broker will collect a fee from your account as payment. 

List of Top CoFTRA Licensed Forex Brokers : 

1. GKinvest
2. Monex
3. Octa Investama
4. Finex
6. Maxco
7. HSB Investment
8. HFX
9. Royal Trust 

List Of The Best International Forex Brokers : 

1. XM Broker
2. eToro
3. Exness
4. Amarkets
5. Avatrade
6. Accetrade
7. BDSwiss
8. Forex4You
9. FP Market
10. Fullerton Markets
11. FXPro
12. FXTM
13. IG Markets
14. Just Forex
15. Liteforex
16. Trade W
17. Soegee Futures
18. Willtrade
19. LiteForex
20. Oxtrade 

Trading Application Platform :
1. MT4 Brokers
2. ECN Broker
3. High Leverage Broker
4. Commodity broker

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