Forex For Beginners

Forex For Beginners

If you’re ready to learn about trading on the Forex market, you’re in the right place. The Forex market can be complicated and intimidating to step into, but Guerrilla Trading offers a Forex trading course and plenty of articles like this one to help break the market down to the basics. The Forex market is more approachable than you may think, and with a little time and research, anyone can learn to trade. Let’s get started!

What Is the Forex Market?

If you’re ready to learn about trading on the Forex market, you’re in the right place. The Forex market can be complicated and intimidating to step into, but Guerrilla Trading offers a Forex trading course and plenty of articles like this one to help break the market down to the basics. The Forex market is more approachable than you may think, and with a little time and research, anyone can learn to trade. Let’s get started!

What Is the Forex Market? 

The foreign exchange market is a global market where you can buy and sell currency pairs online. These currency pairs are digital representations of the actual currencies belonging to nations around the world; for instance, the EUR/USD currency pair is listed when you are looking to trade the euro and the U.S. dollar.

When you trade on the Forex market, it means you are exchanging one nation’s currency for another nation’s currency. Any time you travel across a border to a country where a different currency is used and you pause to have your currency converted to the appropriate currency for the nation you are visiting, you are engaging in the foreign exchange market.

Becoming a master of trading on the Forex market is not something that will happen to you overnight. You should expect it to take weeks, months, and years of regular study of the market before you become an experienced trader, and even then, experienced traders can still make costly mistakes. The market can’t always be predicted, but you can certainly take the time to prepare yourself to react quickly to sudden swings in market value, which can help you stay on your toes and give you the opportunity to grab great trade deals when they pop up on your screen.

Why Trade Currency Pairs?

Every day, your nation’s currency fluctuates in value compared to other currencies around the world. This means that if you were to leave your country and exchange your nation’s currency for that of another, you would either make a profit or lose money on the conversion. For example, if you were to exchange euros for the U.S. dollar while on a vacation to the United States so you could purchase items, 1,000 euros might convert to $1,300 U.S. dollars one day, but it might convert to only $700 U.S. dollars a few weeks later.

The Forex market takes this idea of exchanging foreign currency to the next level by turning it into a hunt for profit. Many people watch the foreign exchange market and track which currencies are gaining and losing value. They buy into a currency pair while the value is low and sell it off when it rises in value, which allows them to make a profit. The fluctuations in currency pairs are known as pips, which stands for “points of percentage.”

The Forex market can be a frantic, fast-paced environment where you need to react quickly in order to make a great trade. Because currency pairs change in value so quickly, there is no reason to hold onto your currency pairs long-term. Instead, it is wise to sell them within a few days or weeks when you are able to make a profit on them. The Forex market greatly appeals to those who are looking to make a little extra income on a week by week basis.

Why Should I Trade on the Forex Market?

Although there is so much information about the Forex market out there, it is not too difficult to learn to trade. Trading can even be done from the comfort of your own home, making it a simple way to pick up additional income over the course of a few weeks once you get the hang of it. If you trade carefully, you can earn 5% or more of your investment per month.

There are many key differences between Forex and day trading that may make Forex more appealing to you than day trading. For instance, Forex trading is all about short-term investments and quick turnarounds to make a profit, which is a great incentive to trade on the Forex market if you are disenchanted by the slow growth of businesses you see while day trading. When you spend your time trading on the Forex market, you don’t need to study businesses and predict their future growth. Instead, you only need to examine the value of popular currencies from around the world and keep an ear out for major news in the two countries you are interested in trading between.

Is It Easy to Start Trading on the Forex Market?

Because the Forex market is open 24 hours a day, five days a week, it is easy for you to monitor anywhere in the world, regardless of your time zone or travel plans. This makes trading currency pairs very easy. Keep in mind that the Forex market is not open on the weekends, so if you are planning to start looking into the Forex market as a way to make a little extra income, don’t expect to pull an all-day shift in front of the computer on Saturday and Sunday.

It is easy to learn to trade on the Forex market, especially if you follow along with a Forex trading course to make the experience easier to digest. Additionally, it does not require much money to begin trading, so you can start out by investing the spare capital you have from just one paycheck and put it to use on the Forex market.

  • TIP – The EUR/USD currency pair is the most commonly traded of all currency pairs. This is because it is a very stable pair due to the fact that these currencies are used by large and powerful nations, so you can expect they won’t drastically plummet in value overnight. When you trade on the Forex market, market stability is key.

What are the Risks of the Forex Market?

How confident do you feel about your knowledge of trading? There is still so much more to learn, even if you feel like you’ve been keeping pace so far. Even after you complete a Forex trading course or spend months reading about the market, it’s always important not to become too cocky and let your pride go to your head. If you begin engaging in risky trades believing that you’re a great trader because you’ve done so well thus far, you’re in danger of losing a lot of money. Always trade cautiously and don’t allow your ego to draw your head into the clouds.

It is easy to become overly enchanted with the Forex market, which is relatively easy to get into compared to the stock market. The Forex market is also known for offering high leverage (much higher than leverage offered while day trading) which (if you aren’t careful) may sway you into leaping into bad deals that result in you losing a considerable amount of money. Generally, you are encouraged not to offer more than 1% of your capital in any one trade on the Forex market.

The Forex market is difficult for even experts to predict (although that doesn’t stop many people out there from trying). Trading with your actual currency can be intimidating for many people, especially those who are highly averse to risk or loss. Many people experiment with demo accounts to test the Forex market. While demo accounts are a great introduction to the Forex market, don’t forget that once you switch to a live account, all the money you are trading is suddenly real, and you should not take as many big risks with your actual capital as you might make with fake demo currency.

Tips For Trading on the Forex Market

As you learn to trade on the Forex market, you may begin wondering what different strategies to use with Forex there are and how you can take advantage of them. The truth is, there is not (and probably won’t ever be) a single Forex strategy that guarantees you constant profits all the time (Having a consistent, quality day job is still the surest way to guarantee a regular income). There are many different Forex strategies out there, but your preferred method will depend largely on your personality and lifestyle preferences.

  • For example, if you find it comfortable to spend long hours spent in front of the computer screen, then you may prefer to adopt a scalping strategy: a strategy which involves watching the value of currency pairs to change throughout the day, and you pounce on opportunity as much as possible in order to create several back and forth trades throughout a single day. Scalping is a great strategy to use if you are home all day and willing to watch the market, because all this rapid trading can allow you to make profit much more quickly than it would if the trades you are making were spaced out over the course of a week instead of a matter of hours.
  • Meanwhile, another person who prefers a casual Forex experience without looking at tons of data or a ton of screen time may prefer the full action strategy, which is a strategy taken by a person who prefers to study what they see before them and act upon their gut instincts, rather than searching for patterns in the market over time. For example, someone using the full action strategy will probably buy a currency pair while the price is low, even if that’s not the lowest price the currency pair can usually be bought at; this person is eyeballing their options and making choices based on what they personally experience, and not on what data suggests.

No matter how serious you are about Forex training, whether you are tentatively experimenting with it once a week or full-on trading every day, it is crucial that you learn to keep your emotions in check while viewing the Forex market. If emotions such as fear, greed, impatience, and anger begin taking over your mind, you could end up making some impulsive trades that horribly backfire (for instance, if you grow too impatient with the slow growth of your profits, you may turn to high leverage amounts and pour too much money into the Forex market that you may never get back). The Forex market is a place where you are hoping to make money, so give it time to grow your profits and don’t squander your opportunities with bad calls and debt. 

Everyone, even experienced traders, will experience mistakes while trading on the Forex market. The key to becoming a successful trader is to make as few as you can, and not to let the ones you do make weigh you down. If you struggle to keep your emotions in check, we recommend you set a hard budget for yourself with the amount of money you allow yourself to trade away each week. If you stick firmly to your budget (and your budget was prepared carefully), then you should never end up over your head and can trade in confidence, knowing that you are only trading with excess capital you can afford to lose if your trading experience goes poorly.

Still unsure whether or not Forex trading is right for you? Looking for advice on which Forex strategy might suit your personality best? We suggest you sign up for a Forex trading course to learn the answers to more questions about Forex than you ever knew you had. Once you start learning to trade, you will realize there is so much information out there, and it can be intimidating to sort through. A quality Forex trading course is a great way to learn all there is to know and stay on track to finish.

At Guerrilla Trading, we’re excited to be there as you find your way around the Forex market. We were all beginners once and we look forward to helping you learn Forex trading quickly, easily, and safely. The Forex market doesn’t need to be intimidating for beginners to learn, and we hope you have a positive trading experience that can help you make profit for years to come.

HAVE ANY QUESTIONS?

Do you want to learn more about Forex? Or would you like to understand how Forex experts achieve their trading goals? Speak with our team now and we will be more than happy to help.