Let’s Learn Forex Trading in 2022
First of all, Forex is not something that can make you a millionaire by day. Also, Forex Trading is a business that has a big risk. This is a business. So first, let’s look at the history of Forex. Let’s learn forex trading in 2022 with new methods.
History of Foreign Exchange Market – Forex
The Foreign Exchange Market dates back to the beginning of the currency. Its believed that the earliest currency dates back 4,500 years to the Mesopotamian civilization (present-day Iraq). Like years ago. For learn forex trading in 2022 with new methods read full article.
Use of banknotes
These were first used in China, As early as the 10th century. At that time large coins were made in China, so it was difficult to carry them so people started writing on the numbered notes and exchanging goods for them. Then the Chinese emperor, Those papers have been given legal value and allowed to be printed. This is how notes came into being. So these are made into notes and kept in gold banks of the relevant size. The exchange itself has taken place.
Generation of checks
How checks came into the world. So that’s the story. Frank McNamara, a well – known American businessman, goes to a New York restaurant for a meal. Then he forgot to take his wallet. So at that time he wrote down the amount he had to pay, signed it and gave it to the manager of that restaurant. then paid the money. That is when the concept of a check first started.
What is Forex ? – learn forex trading in 2022
OK, so let’s see what Forex is all about in a little simpler way. Forex is a simple process of converting one currency into another. Buying and selling one currency against another currency can be simply called Forex. Nowadays, in addition to money, things like Cryptocurrency and Metals are traded in this market. So about 95% of other transactions in this market take place between the Central Bank and the Forex market Big Players.
Those who trade small like us are called Retail Trades. So small traders like us cannot influence the market. But those who have invested a lot of money in a big role in this market like the central bank can influence this market one by one. But here too we have the main advantage. If you can guess exactly where you want to buy and where you want to sell, you can make money according to how this market changes. Now then clearly three main roles in this market are clear: – Central Banks, Big Players, Retail Traders
Example to understand Forex – learn forex trading in 2022
Forex is money that sells or buys for another currency.
- Let us take the US dollar (USD) and the euro used in Europe.
- At this time we think we need USD 1.20 to buy one EURO.
- OK, suppose you have $ 1000 now.
- USD Assume the EUR / USD Rate is 1.20 at this time.
- Someone will tell you that in another two or three months the Euro will rise to around 1.25.
- You buy the Euro with the $ 1000 you have in your hand at the moment.
- $ 1000 / 1.20 = € 833.33
- So now you have 833.33 Euros .. You have been keeping this for months. As I said, the Euro rate will increase to 1.25.
- Now all you have to do is pay back the Euros and get USD.
- But this time the Euro is 1.25 USD.
- € 833.33 X 1.25 = 1041.66
So now you have USD 1041.66. Your profit is $ 41.66.
This is how Forex Traders seek profit. but you can also make a loss. If the Euro does not rise as we thought. you will make a wrong decision.
How is the Forex market today?
The current Foreign Exchange market dates back to the 1970s. So we call this Foreign Exchange market the Forex Market. Also known as Forex. This is the most liquid market in the world right now. The Daily Turnover is estimate at $ 2 trillion.
Forex Trading Brokers and Platform – learn forex trading in 2022
So according to the example above, suppose you have a thousand dollars. You buy this 1000 dollars and buy Euros. But, we can’t buy euros for dollars like we go to such shops. We have to do it through an online software. We call it a trading platform. So one of the most popular platforms today is called MT5 or MetaTrader. So through this platform we have to buy and sell Chart Analysis as well as Currency.
Who Are These Brokers?
The person who facilitates us to enter this market is called a broker. We need to open an online account with him and log in to this platform through it. A broker is simply like a bank. We open an account with them and deposit our money in it and trade Forex with that money. you can log in to this platform from your computer as well as your mobile phone. This way we can easily buy and sell or trade Forex. Simply put, even if you do not have all the money you have lost. So it is always said that this is a big risk. If we learn how to work properly, we can manage that risk and earn a lot of money.
What is liquidity?
This means that there is someone who can buy and sell the same currency at the same time. Very rarely there can be a small gap between these.
The Forex Market is active 24 hours a day, except on weekends. It is depending on the time zone. Paris and Sidney are the largest hubs. New York starts when the London market closes. This is how the Forex market operates 24 hours a day.
So brokers, dealers and traders are mainly transact through a computer system and a trading platform. So as a traders, we are able to use our computer and enter this market today.
What is Leverage Trading ?
Leverage is a very important topic. We can not enter the Forex market directly with a small amount of about ten dollars on average. Usually the minimum transactions are in the lot size of one hundred thousand dollars. So nowadays thanks to this computer technology we can easily enter this market by using leverage through this broker.
Leverage is given to us by the broker in the form of 1: 100/1: 200/1: 500/1: 888. This means, for example, that when we invest one dollar under a 1: 100 leverage, it multiplies by a hundred times and enters the market. The broker will use that increasing amount for us. This means that even if we have a small amount, we have the opportunity to trade in a large volume through this leverage.
So as we did in the example above we got a profit of $ 41.66 .but if we trade through a broker with 1: 100 Leverage this profit will increase a hundred times. that is like $ 4166. so what if you make a loss The other side of the coin is the same amount of loss. So leverage can sometimes be your friend as well as your enemy. As a Retail Trader, I recommend a Leverage of around 1: 100.
How Does a Forex Trader Make Money?
We talked about three main things above.
So the main question we have here is where do we sell or buy from. That is, questions such as which currency is increasing and which currency is decreasing. How to determine the direction of the market. Where will the market go back and forth? Will it continue to go up or down? If we can find the exact answer to these questions here, we can earn a lot of money through this market.
Forex Market Analysis – learn forex trading in 2022
In order to find the answers to those questions as we talked about above, we have to analyze the forex market in the right way. There are two main ways to do this.
- 1.Technical Analysis
- 2.Fundamental Analysis
Simply put, technical analysis is the process of looking at a chart or chart and using certain tactics to determine the price change assumption or direction. Line chat, bar chart, candlestick chart are the most widely used. In addition, candlestick patterns, price patterns, reversal patterns, continue patterns and many more are used.
What happens here is that we use some economic factors to study the economic news and assume that the direction of the market will be like this. So what happens here is that the direction of the market is determined by a careful study of the economic factors relevant to each country. For example, interest rates are a strong economic factor. Fundamental analysis is the study of changes in interest rates to determine the direction of the market. There are a large number of such economic factors. We have to be very careful about that.
So a lot of banks and big investors are paying attention to these fundamental factors and doing a chart analysis. So there are a lot of news websites today. We can easily see those things today through the internet.
Forex Trading Strategies
We talked about topics like forex, how a trader makes money, and so on. So, using any of the methods mentioned above, we can say that the trading strategy is to come up with the right methodology to decide where to enter the market, where to buy, where to sell, or where to exit. So there are a lot of trading strategies developed by one person in the world. We can study them and try to see if they work for us. Or develop one that suits us. We can also use things like indicators for this.
Demo Trading in Forex – learn forex trading in 2022
This is another very important part of Forex. That means we can use virtual money to trade in the real market without putting real money. So by opening a Demo Account and depositing some money (not real money) in it we can get a great experience of how this market behaves. Every broker offers this facility. So it allows us to practice enough. You can use this Demo account until you continue to make a profit in the market with a strategy or one you have learned. The best thing to do is to start the demo with as much money as you really want to put into it. Try to increase one by one.
This is a big problem for many people. Does this signal really work? Can you give such a signal? So what is really being done here is a signal that they have analyzed and decided. It cannot be said that it is 100% successful. There are times of failure. If you can give such an accurate signal, no one will tell you.
So a lot of what a signal service does is just give some prediction about the direction of the market that will be analyzed using some methodology. It charges a monthly fee. So the income of the signal givers is the same. They are not trading. It only does the market analysis needed to provide the signal.
So there are no shortcuts to success in forex. Someone who learns everything well and does it with a great understanding of it can benefit from this.
Terms applicable in Forex – learn forex trading in 2022
- 01 – Currency
- 02 – Currency Pairs
- 03 – Trade on Margin
- 04 – PIP
- 05 – Trend
- 06 – Spread
- 07 – Short and Long Positions
- 08 – Rates
- 09 – SWAP
- 10 – Charts
- 11 – Japanese Candlesticks
Currency is simply money. Money is a medium of exchange that we use for goods and services. It is a medium of exchange made by a government made of coins or paper, legally given value, and the exchange value of a face issued by a government.
This is an important topic. We pay money to buy shares issued by a company in the stock market. It simply happens in any market .. We pay money to buy a product. OK then in foreign currency exchange we trade currencies. That means buy something you want to give. In forex we simply give one currency and take another currency. So here we find the word Currency Pairs.
For example, EUR- USD is a currency pair.
In this case the first currency is considered as the commodity. The second currency is the currency we pay to get the first currency.
That means we pay USD to buy a EUR.
If we buy EUR-USD it means we pay USD and buy EUR. So I think this can be understood in relation to every other currency pair. This happens through our Broker Company. All we have to do is click the buy or sell button.
At present there are about 128 currency pairs. There are 8 main ones. EURUSD, GBPUSD, USDCHF, USDJPY, AUDUSD, NZDUSD, USDCAD are the main currency pairs.
Major and Minor Currency Pair
There are two types of Major and Minor Currency Pairs. Major is the USD link currency pairs and Minor currency pairs are the non-USD currency pairs. Minor currency pairs have less liquid.
Major – EURUSD
Minor – CADJPY
The most profitable currency pair is EUR-USD
The most valuable currency is the Kuwaiti Dinar
The weakest currency is the Bolivar in Venezuela
Most safest currency Swiss Franc (CHF)
I think you have a good understanding of a currency pair.
Trade on Margin
Ten or fifteen years ago the foreign exchange market (Forex) was traded by big financial companies as well as banks..that means a lot of money was needed for this work at that time. But nowadays trading as an individual in this market has become very popular. So the main reason for that is the ability to trade on the internet, computer technology as well as trade on margin or leverage.
So to really trade in the forex market we really need at least 100,000 currency units in our account. But most people do not have that much money. So to solve that problem he came up with the concept of trade on margin. That is leverage.Through this leverage even a small amount like $ 100 has the ability to trade in this market.example, let’s say leverage is 1:100. that means we can trade a hundred times more than the amount we invest. ($ 100,000)
So what happens here is that we borrow the extra money we need to enter the market or the arrears from the broker.
We call this PIP. PIP stands for Presentage In Point. That is, the smallest change in the exchange rate. Or simply put, a PIP is a change or decrease or increase in the 4th decimal place of the exchange rate. OK let’s look at a simple example.
Suppose the USDCHF rate is currently 1.2212. In a short time this value will be 1.2213. Then we say that the exchange rate increased by one PIP. If this is 1.2211 it is said to have decreased by one PIP. So our profit is determined by the change that takes place. Most exchange rates are in four decimal places. It varies from broker to broker. Some show a value of up to five decimal places. Depending on some currency pairs. (USDJPY)
If you can identify the trend you can be a very successful forex trader. Trend refers to the tendency of prices to move in a certain direction over a period of time. That is, the direction in which the market is moving. So here too we are talking about three main directions called Uptrend, Downtrend and Ranging.
Uptrend means rising price. That means the market is going up. We also call this Uptrend as “Bullish” market.
Also, when the market goes down, we call it a Downtrend. We also call it the “Bearish” market.
So many professional traders use the two words Bullish and Bearish.
What we call a Ranging market is a market in which the market moves without a large change in prices over a long period of time.
So the main thing we need to do is try to identify this trend somehow. If you can identify the trend you will definitely be a successful forex trader.
Bullish and Bearish Story learn forex trading in 2022 HISTORY
There is a story based on the use of the words bullish and bearish. In the first century, people used these bulls and bears to fight for fun. According to the behavior of these animals, the bull fights with its head down and its horns up. The bear has been fighting with its head down. So it is in this game that bulls are used in the forex market to represent the rising market and the bear is representing the declining market.
So we can easily remember that bulls go up and bears go down.
Bull for Uptrend | Bear for Downtrend
So the market is divided into bulls and bears according to the wishes of the traders. This means that some people prefer to trade uptrend and some prefer to trade downtrend. It is up to them to decide.
SPREAD is also a very important concept. So the main point here is the difference between the price the seller expects to sell and the value the buyer expects to pay for it. That is the difference between the BID and the buyer ‘ASK.
For example, if the BID price of USDCHF is 1.2212 and the ASK price is 1.2215, then the spread is PIP 03. This SPREAD varies from broker to broker and from currency pair to pair.
Short and Long Position
Here too, Short Position means selling a currency. Long Position means buying a currency.
Right now the main question here is how can I sell something I do not own. OK this is how this work happens. We ask the broker to lend us some financial instruments. Then we sell it through the leverage provided by the broker. After the sale, until the price goes down, we buy the financial instrument again and pay off the loan from the broker.
OK let’s take a good example of this.
Here we go Gold. We think the price of gold will go down. Suppose the price of gold at this time is $ 680 an ounce. We hope to sell gold at this time. So we ask our broker to give us an ounce of gold for a certain amount. OK, we’re selling the ounce we bought for the current price. That’s $ 680. So after the sale we have $ 680. As expected, the price of an ounce of gold will drop to $ 660. Imagine if we wanted to make a profit this time. OK then we pay $ 660 and get one ounce of gold and repay the ounce of gold we asked our broker .. OK then we get a profit of $ 20.
Keep in mind that the above example was used to understand this concept.
We are talking about three main rates.
Direct Exchange Rate
That is, the exchange rate at any other currency in dollars .. eg: EURUSD, CHFUSD, JPYUSD
Indirect Exchange Rate
That is the exchange value given by another currency to buy dollars. eg: USDEUR, USDCHF
Cross Exchange Rate
That is the exchange rate of two other currencies without the dollar. eg: EURCHF, GBPJPY, EURJPY
OK SWAP is the difference between the two countries’ interest rates. For example, the Bank of Japan’s interest rate is 0.5%. At the same time, think of the australian bank’s interest rate as 6.25%. So at a time like this, australian bank deposits are cheaper than Japanese bank deposits. So sometimes we can use this SWAP to earn some money.
So we use this chart extensively to analyze the market in forex trading. Mainly line chart, bar chart and Japanese Candlestick chart are used.In this too mainly Japanese Candlesticks Chart is used.
- – Credits : Manjula Buddharage –
Forex Learn YouTube Channels : https://youtube.com/c/TheMovingAverage
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