Hello readers, and welcome to the first feature of the path of the victory In Forex.
The Mission and Vision statement of the conduct of this column is to make the balanced knowledge of Forex trading widespread and easily accessible in our country that Nigeria will become a profitable forex trading community with over 1 million active traders in the year 2015 with over 100,000 of these making profit of at least $10,000 annually.
The approach that we will adopt in this column is the use of methodologies in order to explain what may seem like difficult terms/concepts of forex.
The market of Forex, for the well-trained is one of the most profitable home based business in the world today. The journal of the annual turnover of this “business without borders” is currently estimated to be $4trilion traders, more than 40 times larger than that of transactions on the New York stock exchange(NYSE), which is the largest stock exchange in the world.
In this column, we will teach forex trading from the bottom to the ground level, and then start to build the super structures that will help them to become a cost-effective Advanced forex Trader.
Requirements For The Forex Trading
For you to trade forex, you should
*Have a computer with internet access. The minimum acceptable speed should be 115kbps as anything below this is not going to do good trading. What is more important than your Internet Service Provider(ISP) must provide more than fair for the quality of service for you to do well. Poor quality of service will affect your trading psychology….and as the Mantra goes “psychology is almost everything in forex”
*Good Training and Mentoring. This is the basis on which to build any other structure if you are going to do well in the forex market. The components of the type of education and continuous updating of the gain are crucial to your success in the forex market. Market patterns are sort of seasonal and if you don’t understand the nuances of market moves, great money making opportunities that come and go and it will beat your recognition.
*Open a trading account with a reputable forex broker. Before you go live, you will be expected to have done demo trading for a minimum of 4 weeks.More on this in the following.
*You need to open a foreign currency domiciliary account with a efficient system of the bank for the purpose of the transfer and remittance of funds to and from your trading platform/broker.
A LOOK AT THE MARKET
The Forex market currencies are traded in pairs, e. g EUR/USD, GBP/USD, USD/CAD, etc., The first currency in the pair is called the base currency and the second currency is called the currency. The trading market for any currency pair is usually 2 different values known as the bid(sell) and the ask(bid) rates. The first price in the quote to the sale(offer) price and the second quote is the ask(buy) price. The difference between these 2 values is known as the spread and this is the commission that your forex broker takes from your account at any time trade, regardless of market outcome, if you lose or win!
For example, if you buy 0.1 lot EUR/USD at 1.5759/1.5762.Your Open Trade in your trading platform will show that you entered the market at 1.5762 and the platform start reading your market 1. 5759 with the opening of the Gain/Loss of$4.
On the contrary, if you sell 0.1 lot USD/CHF 1.0345/1.0348, your trade open on your platform you will show that you entered the market at 1.0345 and the platform will start reading your market to 1.0348 with an opening, the P/L of$4.
HOW TO REPRESENT PRICE MOVEMENTS IN THE MARKET
The price movements in the market are represented graphically using lines, bar charts, renko and candlesticks. The most popular means of representing price action in the foreign exchange Market is the use of candlesticks, made even more popular by the Legendary Trader and Trainer Steve Nison. This means of representation of market price action towers head and shoulders above other means of market representation since “candlesticks are pregnant” and a good understanding of the different types of candles along with other parameters is the passport to great profits in the forex market. Candlesticks are representative of price action in a certain period of time, can be 5 minutes, 10 minutes, 15 minutes, 30 minutes,1 hour, daily, etc
When the opening price is lower than the closing price of a specified period of time, which is bullish price action and the standard convention for representing such is a white or green candlestick. It also indicates that the base currency is gaining strength against the currency and the buyers are winning, that is to say, the market is in sell mode.
When the opening price is greater than the closing price of a specified time frame, this is a bearish price action and the standard convention for the representation of such is a red or black candlestick. It also indicates that the base currency is the loss of strength against the currency and that means that the market is in sell mode.