Today’s Forex trading is known as one of the most profitable ways to make money online. All you need to trade Forex is a computer with an Internet connection and an account with a Forex broker. Because the market is open 24 hours a day (5.5 days a week), Forex traders are mostly free, regardless of place and time. Despite the high daily turnover (about $ 2 trillion per day), it is surprising to know that only a few currencies are actively traded: the US dollar, the Australian dollar, the Japanese yen, the British pound, the Swiss franc, the Canadian dollar and the euro dollar.
As a matter of fact, since FOREX trading was opened to the public in 1998, it has been traded mainly in large international banks. According to the Wall Street Journal Europe, 73% of trading volume is covered by ten major banks. Deutsche Bank, the leader in the table, covered 17% of total foreign exchange transactions; UBS in second place, Citi Group in third place; occupies 12.5% and 7.5% of the market. Other major financial partners on the list are HSBC, Barclays, Merrill Lynch, JP Morgan Chase, Coldman Sachs, ABN Amro and Morgan Stanley.
About half of the transactions for the market participants segment were strictly between dealers (ie the Bank or a major currency dealer); others are mainly between dealers and non-financial institutions.
In practice, traders often use one or more trading systems / programs for online Forex trading. These programs are often included in the package when you open an account with Forex brokers. In short, this software works as follows: The Forex trading program connects to the brokerage system via the Internet, currency prices are updated live, and you call trading through the program. Such a trading program often requires a minimum of computer power, so it can be used on most home computers today as long as it is connected to the Internet.
Here are some key things to look for in most Forex trading programs:
1. Dealing Rates window: Display the prices of currency pairs with live updates. This window usually shows the high and low market.
2. Open the Tasks window: Indicate the number of tickets (trades) you have purchased. Basic information such as ticket number (trade reference number), trade amount, currency, open positions, current close position and orders are usually displayed in this window.
3. Closed Tasks window: Indicate the number of tickets (trades) you have sold. A good trading program will show you in this window a summary of your deal, for example, gross profit / loss, open / garden positions, the amount of the trade, as well as the amount of interest.
4. Account window: A window showing your general status. Your account balance, capital balance, daily profit / loss, gross profit / loss, usable margin and real capital. Note the usable margin of this window. Always keep enough margin to avoid “margin calls” that force you to close all deals.
5. Automated Trading Orders: Normally trading order functions are included in Forex trading software. For Forex trading, the stop loss order and the limit order are the two most commonly used functions.
Automated trading orders in Forex trading
Limit orders:
As a trader, you can place these orders whenever you want to buy / sell the currency at a better price compared to the current market. Limit orders are used to automatically win when the price reaches a certain level. For example, the current EUR / USD is at 1.2693 and your pre-set limit order is to sell it all at 1.2700. When the price reaches 1.2700, the order will be processed automatically.
It is important to learn that limit orders can only be placed at a minimum distance from the current market price. Also, if the limit order price tag is set more than the minimum allowable distance, such order can be canceled or changed at any time.
Stop orders:
These are automated orders, known as stop orders, or sometimes stop damage orders, used to limit and limit open position losses. It can also be used to make a profit in your trade when the market goes in the direction you like.
Stop orders work in the same way to limit sales orders, pre-determining what the lowest price will be sold in certain deals. For example, with the EUR / USD stop order at 1.2685 at 1.2693, if the price touches 1.2685, the system will sell your USD share. In this case, the price is guaranteed at 1.2685, which means that even if the market sinks very fast and falls below 1.2685, you can still sell your money at the price you set earlier.
The Stop command works perfectly for managing your risk profile. However, it is recommended to use the order carefully, because it provides a room for the market maker to deceive your money.
Since the article is intended for beginners in Forex trading, you are probably one of the beginners looking for some learning resources in Forex trading. Apparently, there is no immediate solution to make you a professional trader. The answer will only be education. Take everything you need to learn this new trading skill well – practice everything you learn with a demo account before you think about being “alive” with your own money. All you need to attend seminars, e-books, the Internet, as well as video courses.