Forex, Foreign Exchange or the OTC (Over the counter) market is considered a global network for all the businesses, businessmen and individual investors to deal with their foreign currency exchanges. Unlike all the other financial needs, these markets do not have a specific or a fixed location, and they’re generally available for trading 24 hours a day. This also makes way to the functionals in the currency prices across multiple trading opportunities.
For instance, at the city index, you have the chance to direct the future currencies, either by taking a long term position or a short term position, which also depends primarily on the value of the currency.
If you’re a beginner reading this article, and you’re already overwhelmed, then worry not; we’ve jotted down the crucial steps to follow for trading efficiently in the Forex market.
FX Trading Steps
- Choose your currency: One of the crucial steps is to choose the currency pair that you wish to exchange or trade. There are over 65 currency pairs available on the trading market and selecting the right one is of utmost importance. You can consider the city index technical or the research tools to support and help you with your trading style. We recommend you to spend the utmost time in first understanding the currency pair associated with each other, which is also helpful in managing the future risk and risk factors.
- Type of FX trade:There are three types of FX trade available in the market with the City Index, CFD and Forex trading, and each one has its stake size. Usually, in the city Index Spread Betting, you trade in terms of pounds per point movement. In CFD, a quantity of the CFD is traded in the unit of the base currency (the currency present on the left of the bar). For instance, if you trade GBP/USD, then your stakes should be in terms of Pounds, but the opposite, your stakes will be in terms of the US dollar.
- Deciding your buy or your sell:Once you’re done picking the above two, you ought to perform research on the current trade in the market. This can be done by bringing the trade ticket- in Forex it is generally one currency versus the other. Each one of which, comprises of the base and the quote currency. By buying a currency pair, you can strengthen your base currency, over your quote currency. In such cases, your profits will rise and increase in exchange prices. Whereas for a sell, the base currency will weaken against the quote, and the quote currency will strengthen. Whenever the market rate for that currency falls, you quote money will raise.
- Adding order:When prices reach certain limits, you can stop the order automatically. A stop-loss order closes the price, lesser than the current market and the limit order closes the trade in a much better position than the one in the current market.
- Closing the trade: When you a reread to close, you have to do the opposite., If you have bought 3 CFD to open, then you ought to sell 3 to close. Once you have closed the trade, you can realise your net profit or loss.