Forex trading steps

1. Choose a currency pair to trade

2. Decide whether to 'buy' or 'sell'
3. Set your stops and limits
4. Open your first trade
5. Monitor your position
6. Close your trade and take your profit or loss

Choose a currency pair to trade

We offer more than 80 currency pairs – from majors like GBP/USD, to exotics like
HUF/EUR. When you trade with us, you’ll be predicting on these forex pairs rising or
falling in value with CFDs. These make use of leverage, which enables you to open a
larger forex trade with a small upfront deposit (called margin). However, this means
your losses as well as profits can far outweigh your margin amount as they are
calculated based on the full position size, not just your margin.

Before choosing an FX pair to trade, you should carry out fundamental

analysis and technical analysis on the two currencies in the pair. This means you should
assess how the ‘base’ (the currency on the left) and the ‘quote’ (the currency on the
right) move in relation to each other.
Decide whether to ‘buy’ or ‘sell’
Once you’ve chosen a currency pair to trade, you need to decide whether you want to
‘buy’ or ‘sell’, based on your analysis.

You would buy the pair if you expected the base currency to rise in value against the
quote currency. Or, you would sell if you expected it to do the opposite. That’s because
a currency pair’s price represents how many of the quote currency you’d have to spend
to buy a single unit of the base currency.

For example if the price quoted for GBP/USD is 1.28000, it means you’d have to spend
$1.28 to buy £1 – so the pound is stronger than the US dollar.

Set your stops and limits

The forex market is particularly volatile, which is why it’s important to have a plan to
guide the entry and exit points of your trades. There are various stops and limits you
can set to manage your risk when trading forex:
 Normal stops will close your position automatically if the market moves against you.
Note that normal stops do not protect against slippage.

Guaranteed stops will always be closed out at exactly the price you specified – even if
the market moves quickly or ‘gaps’. You’ll pay a small premium if a guaranteed stop is
triggered

Trailing stops will follow positive price movements and close your position if the market
moves against you

Limit orders can help you to achieve your profit target, and your position will be closed
when the price hits your chosen level

Open your first trade

If you want to trade on the value of forex pairs rising or falling with CFDs, why not open
an account with us? Once you’ve done that, simply go to our award-winning trading
platform,1 search for the forex pair you want to trade, enter your position size and
choose ‘buy’ or ‘sell’.

There’s no obligation to add funds until you want to place a trade.

Create live account

Monitor your position

Once you’ve opened your position, you can monitor your FX trade in the ‘open
positions’ section of the dealing platform. You can also set price alerts to receive email,
SMS or push notifications when a specified buy or sell percentage or point is reached.
Even with these alerts set, it’s still important to keep up to date with the latest news and
political events that could move the forex market.

Close your trade and take your profit or loss

Once you’ve decided it’s time to close your position, simply navigate to the ‘positions’
tab, select your position and click on ‘close’. Alternatively, just make the opposite trade
to the one you opened. In other words, if you went long on GBP/USD, go short by an
equivalent amount to close the position – assuming you’ve selected the ‘net-off’ option
on our platform, rather than ‘force open’.
Forex trading examples

1.

1
Understand basic forex terminology.
 The type of currency you are spending or getting rid of, is the base
currency. The currency that you are purchasing is called quote
currency. In forex trading, you sell one currency to purchase another.
 The exchange rate tells you how much you have to spend in quote
currency to purchase base currency.
 A long position means that you want to buy the base currency and sell the
quote currency. In our example above, you would want to sell U.S.
dollars to purchase British pounds.
 A short position means that you want to buy quote currency and sell the
base currency. In other words, you would sell British pounds and
purchase U.S. dollars.
  The bid price is the price at which your broker is willing to buy base
currency in exchange for quote currency. The bid is the best price at
which you are willing to sell your quote currency on the market.
 The ask price, or the offer price is the price at which your broker will sell
base currency in exchange for quote currency. The ask price is the best
available price at which you are willing to buy from the market.
 A spread is the difference between the bid price and the asking price. [1]
2.

2
Read a forex quote. You'll see two numbers on a forex quote: the bid price on the left
and the asking price on the right.
3.

3
Decide what currency you want to buy and sell.
 Make predictions about the economy. If you believe that the U.S.
economy will continue to weaken, which is bad for the U.S. dollar, then
you probably want to sell dollars in exchange for a currency from a
country where the economy is strong.
 Look at a country's trading position. If a country has many goods that are
in demand, then the country will likely export many goods to make
money. This trading advantage will boost the country's economy, thus
boosting the value of its currency.
 Consider politics. If a country is having an election, then the country's
currency will appreciate if the winner of the election has a fiscally
responsible agenda. Also, if the government of a country loosens
regulations for economic growth, the currency is likely to increase in
value.
  Read economic reports. Reports on a country's GDP, for instance, or
reports about other economic factors like employment and inflation will
have an effect on the value of the country's currency. [2]
 It's important to consider hedging out currency risk as well as looking at
the potential gain you can make in a different international market due to
changes in currency exchange rates.
4.

4
Learn how to calculate profits.
 A pip measures the change in value between two currencies. Usually, one
pip equals 0.0001 of a change in value. For example, if your EUR/USD
trade moves from 1.546 to 1.547, your currency value has increased by
ten pips.
 Multiply the number of pips that your account has changed by the
exchange rate. This calculation will tell you how much your account has
increased or decreased in value. [3]
Part 2
Opening an Online Forex Brokerage Account
Download Article
1.

1
Research different brokerages. Take these factors into consideration when choosing
your brokerage:
 Look for someone who has been in the industry for ten years or more.
Experience indicates that the company knows what it's doing and knows
how to take care of clients.
 Check to see that the brokerage is regulated by a major oversight body. If
your broker voluntarily submits to government oversight, then you can
 feel reassured about your broker's honesty and transparency. Some
oversight bodies include:
 United States: National Futures Association (NFA) and
Commodity Futures Trading Commission (CFTC)
 United Kingdom: Financial Conduct Authority (FCA)
 Australia: Australian Securities and Investment
Commission (ASIC)
 Switzerland: Swiss Federal Banking Commission
(SFBC)
 Germany: Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFIN)
 France: Autorité des Marchés Financiers (AMF)
 See how many products the broker offers. If the broker also trades
securities and commodities, for instance, then you know that the broker
has a bigger client base and a wider business reach.
 Read reviews but be careful. Sometimes unscrupulous brokers will go
into review sites and write reviews to boost their own reputations.
Reviews can give you a flavor for a broker, but you should always take
them with a grain of salt.
 Visit the broker's website. It should look professional, and links should
be active. If the website says something like "Coming Soon!" or
otherwise looks unprofessional, then steer clear of that broker.
 Check on transaction costs for each trade. You should also check to see
how much your bank will charge to wire money into your forex account.
 Focus on the essentials. You need good customer support, easy
transactions, and transparency. You should also gravitate toward brokers
who have a good reputation.[4]

Be careful. "Always make sure to research any broker you use, as there are lots of scams
out there. Never risk more than 2% of your money per trade so you can cover if there is
any downfall. If you do that, there is a lot of money to be made!" Chris, Age 32
Keep your eye on the market. "I’ve been trading Forex for a month now and have
managed to make $1500 US in profit. I’m diligent with my work and make sure to pay
careful attention to the markets." Jane, Age 39
2.
 2
Request information about opening an account. You can open a personal account or
you can choose a managed account. With a personal account, you can execute your own
trades. With a managed account, your broker will execute trades for you.
3.

3
Fill out the appropriate paperwork. You can ask for the paperwork by mail or
download it, usually in the form of a PDF file. Make sure to check the costs of
transferring cash from your bank account into your brokerage account. The fees will cut
into your profits.
4.

4
Activate your account. Usually, the broker will send you an email containing a link to
activate your account. Click the link and follow the instructions to get started with
trading. [5]
Part 3
Starting Trading
Download Article
1.

1
Analyze the market. You can try several different methods:
 Technical analysis: Technical analysis involves reviewing charts or
historical data to predict how the currency will move based on past
 events. You can usually obtain charts from your broker or use a popular
platform like Metatrader 4.
 Fundamental analysis: This type of analysis involves looking at a
country's economic fundamentals and using this information to influence
your trading decisions.
 Sentiment analysis: This kind of analysis is largely subjective.
Essentially you try to analyze the mood of the market to figure out if it's
"bearish" or "bullish." While you can't always put your finger on market
sentiment, you can often make a good guess that can influence your
trades.
2.

2
Determine your margin. Depending on your broker's policies, you can invest a little bit
of money but still, make big trades.
 For example, if you want to trade 100,000 units at a margin of one
percent, your broker will require you to put $1,000 cash in an account as
security.
 Your gains and losses will either add to the account or deduct from its
value. For this reason, a good general rule is to invest only two percent of
your cash in a particular currency pair.
3.

3
Place your order. You can place different kinds of orders:
 Market orders: With a market order, you instruct your broker to execute
your buy/sell at the current market rate.
 Limit orders: These orders instruct your broker to execute a trade at a
specific price. For instance, you can buy currency when it reaches a
certain price or sells currency if it lowers to a particular price.
  Stop orders: A stop order is a choice to buy currency above the current
market price (in anticipation that its value will increase) or to sell
currency below the current market price to cut your losses. [6]
4.

4
Watch your profit and loss. Above all, don't get emotional. The forex market is volatile,
and you will see a lot of ups and downs. What matters is to continue doing your research
and sticking with your strategy. Eventually, you will see profits.
Community Q&A
 Question

What do we usually trade here specifically?

Donagan
Top Answerer

Here we're talking about using one national currency to purchase a second national
currency and trying to do so at an advantageous exchange rate so that later one can re-sell
the second currency at a profit.
Not Helpful 21Helpful 159

 Question

Can I trade without brokers?

Community Answer

No. The brokers are the ones with the pricing, and execute the trades. However, you can
get free demo accounts to practice and learn platforms.
Not Helpful 39Helpful 323

 Question

Is Forex trading safe?

Donagan
Top Answerer

Not unless you really know what you're doing. For most people, Forex trading would
amount to gambling. If you can find an experienced trader to take you under his wing,
you might be able to learn enough to succeed. There is big money to be made in Forex,
but you could easily lose your whole stake, too.
Not Helpful 45Helpful 298