Learn How to Trade Forex

For learning about trading You will find information on how to trade. Fundamental and technical analysis A brief description of technical indicators or indicators And other important components needed to start trading

What is forex?

Will give you insights into the world of the forex trading market Some advantages and risks in forex trading Including trading currencies. In addition, you will find information about Forex work And important terminology that will help you understand the terminology for trading

In terms of fundamental and technical analysis Will introduce trading concepts using news, data, and various graph recommendations in order to be able to understand market trends. After that, recommendations will be made on What is Indicator In which we will explain 4 important technical indicators that traders use

How Does Forex Work?

  • Forex trading is buying one currency and selling one currency at the same time.
  • Both currencies are called currency pairs.
  • There will always be currency pairs trading – each currency has three-letter symbols.
  • The first two letters indicate the country of origin of the currency and the third letter specifies the currency name.
  • Forex pairs will be read in the opposite direction to mathematical proportions or ratios.

For example:
EUR / USD = 1.23700

  • The currency to the left of the slash (“/”) is called the base currency (in this example, the euro), and the other currency to the right is the quote currency (in this example, it is US dollar)
  • This means that 1 unit of the base currency (1 Euro) is equal to 1.23700 US dollars.
  • You will have to pay 1.23700 USD to buy 1 Euro.
  • For sales cases The exchange rate represents the reference currency amount that will be received from the sale of one base currency.
  • In this example, you will receive 1.23700 US Dollars when you sell 1 Euro.

When to Buy Forex?

Traders will open buy positions if they are confident that the value of the base currency will increase.

When Should I Sell?

Traders will open sell positions if they believe that the value of the base currency will decrease.

What Time Period Is It Possible for Forex Trading?

The Spot Forex market is different from other financial markets because it is open 24 hours a day, 5 days a week. Please refer to the table below for trading times in GMT and EST:

Trading hours according to GMT (Greenwich Mean Time):

areacityOpen (GMT)Close (GMT)
EuropeLondon
Frankfurt
8:00 am
7:00 am
5:00 pm
4:00 pm
AmericaNew york
chicago
1:00 pm
2:00 pm
10:00 pm
11:00 pm
AsiaTokyo,
Hong Kong
Midnight
1:00 am
9:00 am
10:00 am
PacificSydney
Wellington
10:00 pm
10:00 pm
7:00 am
6:00 am

Trading hours according to EST (Eastern Standard Time):

areacityOpen (EST)Close (EST)
EuropeLondon
Frankfurt
3:00 am
2:00 am
12:00 noon
11:00 am
AmericaNew york
chicago
8:00 am
9:00 am
5:00 pm
6:00 pm
AsiaTokyo,
Hong Kong
7:00 pm
8:00 pm
4:00 am
5:00 am
PacificSydney
Wellington
5:00 pm
5:00 pm
2:00 am
1:00 am

* Trading hours may change depending on daylight saving time.

Basic Vocabulary

Before trading foreign currencies Investors must first understand the basic terminology of the foreign exchange market. This includes the interpretation of forex quotations and various calculations.

Straight Through Processing (STP) Brokers

Pepperstone is an ECN STP broker that uses electronic communication networks (ECNs) to enable clients to directly access to participants in the currency market by collecting quotes from multiple banks. Pepperstone customers will have access to prices at Best (Straight Through Processing) instantly, with a very low spread

Pips and Pipettes

Pepperstone displays the currency pair price as 5, 3, and 2 decimal points – these are fractions of pips or pipettes.

  • For currency pairs with the places 5 to 1 pip is 0.00010.
  • For currency pairs with the places 3 Position 1 pip is 0.010.
  • For currency pairs with places 2 Position 1 pip is 0.10.

For example : If GBP / USD changed from 1.51542 to 1.51552, then the increased 00010 USD is 1 pip.

Spread

The spread is the difference between the Bid price and the Ask price in the market. The Ask price will be used for the order and the Bid price will be used for the sell order.

Pepperstone uses variable spreads. Which will not have the same constant value and will shrink in or out as the market conditions and changing liquidity

Leverage

Leverage is the ability to control large amounts of money in the forex market.

For example, Pepperstone allows a maximum of 400: 1 leverage, meaning that every $ 1 that you have in your trading account You will be able to trade in the forex market for an amount of $ 400. The same principle applies to all major currencies and leverage of all sizes.

Leverage allows traders to make a lot of profits due to the small movements of currencies each day. The risk is limited to the investment in each position only.

Leverage can create huge profits or losses. Therefore, investors must be careful when using leverage. The larger your open position, the higher your pip value will be. Which also results in increased profits / losses (P / L)

Margin

Margin is a term used to refer to the amount or margin required in an account in order to be able to open a position.

This margin or margin is calculated from the current market price of the base currency in the trader’s account. Amount to be traded And the level of leverage of the trader’s account

In the MT4 trading system, the remaining margin will be displayed.

The formula for calculating margin is as follows: (Market price * Quantity) / Leverage = Required margin.

For example:

  • Traders want to open 0.1 lot (10,000 units of base currency) of EUR / USD at the current market price of 1.4177 with a 1: 200 leverage.
  • The base currency in the trader’s account is USD.
  • (1.4177 * 10,000) / 200 = $ 70.89 is the amount required to open 0.1 lot

Margin Call

An additional margin call, also known as a Margin Call, is a notification that a trader’s account has a credit limit that may not be sufficient to maintain the position that is currently open.

If the market moves in the opposite direction There will be a notification telling traders to add funds to their account via Margin Call.

In the event that the funds in the account are insufficient Open positions of the trader will be closed.

In the event that the trader’s equity (balance – profit / loss of open positions) is lower than the specified margin level to maintain the position The position will be closed automatically.

For MetaTrader 4, the calculation is as follows: Equity / Margin = <20%

For cTrader, the calculation is as follows: Equity / Margin = <50%

Hedging

Headging means opening a new position in the opposite direction to an existing position with the same type of instrument.

For example: in order to prevent the risk of the head buy buy position for AUD / USD 0.1 lot size, you must open Sell position for AUD / USD to 0.1 lot size.

There will be no additional margin calls for headings. However, please be aware that You will not be able to open new positions if there is not enough margin.

Rollover / Swap (Rollovers / Swaps)

Forex trading, in addition to receiving a return on investment value increases, Can also generate returns in the form of interest as well Because Forex trading is a pair currency trading which involves the value of both currencies and the interest rates of both currencies.

If the interest of the currency that the trader bought is higher than the interest rate of the currency that the trader sells Traders will receive interest or rollover. (Positive rollover)

But if the interest of the currency that the trader bought is lower than the interest rate of the currency that the trader sells The trader has to pay the rollover. (Negative rollover)

Rollover or swap can increase a lot of costs or profits in trading. In which the rollover size increases or decreases as the size of the position increases or decreases

Rollover will occur at 5pm EST (New York City time).

Commission

Here are the fees that Pepperstone charges from the Razor account only:

Lot SizeCommissionnote
0.01

0.1

1
AU $ 0.07

AU $ 0.70

AU $ 7
Round turn means that commission will be paid when positions are closed.

** The commission will increase / decrease according to the size of the position.

Expert Advisor (EA)

EA is an algorithm program developed for using positions for investors on the MetaTrader 4 platform.

Expert Advisors work by capturing signals from various technical indicators that can be received online.

Virtual Private Server (VPS)

VPS is used to enable the Meta-Trader 4 platform to continue working even if the trader has logged out. This will reduce the chance of system crashes due to connection errors or system errors.

MAM / PAMM account

The Multi Account Manager account on the Meta-Trader 4 platform is designed for money managers. Which trades on behalf of investors and manages multiple accounts from one screen. In addition, financial managers can manage multiple accounts using Expert Advisors (EAs).

Safe Haven Currencies

This is a term used to replace currencies or other instruments that are less volatile. From the effects of the crisis and the instability of the financial market Which this safe haven currency Is a currency that has low risk. Because the currency-producing country has a stable government and a strong economy But that doesn’t mean that these currencies are always safe.

One-Click-Trading

You can easily open a new position using just one click.