Understanding technical Jargons in Forex TradingForex trading is quite interesting once you get the hang of it. But before even considering to open a trading account, first let’s go over some technical jargons or terms that you might run into when trading with forex.
realized you have been working your entire life yet your income barely
suffices. As per Robert Kiyosaki, “Don’t work for money. Let your money work
for you.” What he simply means is that it’s alright to work but you have to
work smart especially when you are dealing with money. The next question would
be, how do you get your money work for you? There are countless ways of letting
your money grow even while you’re sleeping. The most popular one is becoming a
financial trader. All you have to do is learn how to make your money work
through trading forex.
or Foreign Exchange is the biggest financial market in the world. It is a place
where a nation’s currency is exchanged for that of another. Anyone can be a
forex trader but not all are wizards in forex trading. Is your ultimate goal to
become a successful forex trader? Then you’ve come to the right place! Welcome
to Expert Advisor MT4 EA.
Leon Suttles and I work from the comforts of my own home. I have made a huge
realization few years ago after working so hard on a job that sustains my
family’s daily needs. I have been investing time to acquire money yet my income
was just average. So I thought of becoming an investor and trader in the forex
market. This completely changed my life. The great thing about forex trading is
that you can make money anytime, anywhere. Thanks to the developers of trading
platforms. Forex traders can now quickly access money movements right at their
I will teach you
everything about Forex trading and make you from newbie to expert and make your
hard earn money grow. Forex trading has been very popular and everyone should
also go with the flow and make money out of it.
Another popular term in the forex world is Expert Advisor or EA or simply
Experts. In essence, it is a piece of software made specifically for the
MetaTrader Platform. An EA has the functionality of advising traders which
trade to make or it can also be programmed to automatically execute the trades
on a live account on behalf of the trader. Experts can take any information
into account that is available on the MetaTrader platform and are written in a
programming language called MetaQuotes Language 4. After creating, setting up
and launching an Expert Advisor, it automatically does the trading for you.
So, are you now ready to become the next big thing in the Forex market?
Read on and let Expert Advisor MT4
EA walk you through the basics to
jumpstart your way to becoming a pro in trading.
To gain profit in trading, you must familiarize
yourself with the markets. To recognize the markets, you must first identify
your risk tolerance. You have to be aware that your risk tolerance and
allocation of capital to forex and trading are not excessive or lacking.
You must carefully study and analyze your own
financial goals before engaging in forex trading. Know what you want from
trading and define a timeframe and a plan for your trading career. These are
just some guide questions you for you when setting your goals in forex
trading: “Do I have the time to do it?”,
Do I want to have financial independence?” or “Do I want extra income?”.
Choosing a broker.
It is imperative to make the right choice in
selecting a broker. You may use the checklist below in choosing a broker.
my expertise level and trading goals match the details of the offer made
by the broker?
does the forex broker aim for my client profile?
the trading platform meet my expectations?
efficient is my broker in terms of customer service?
Select your account type
and leverage ratio according to your needs and expectations.
It is important that we choose the account
package that is tailored-fit to our expectations and knowledge level. The
different types of accounts offered by brokers can be quite confusing at first,
but generally, the rule is that lower leverage is better. Having a standard
account is advisable if you have a good understanding of leverage and trading.
If you’re a beginner, you must go through a period of study and practice by the
use of a mini account. Keep in mind that the lower your risk, the higher your
chances, so make your choices in the most conservative way possible, especially
at the beginning of your trading career.
Start with small amount
and increase your account through organic gains not by bigger deposits.
One of the best ways for trading forex is to
start with small amounts and low leverage to generate profits. It is not
guaranteed though that a bigger account will yield greater profits. You may opt
to increase the size of your account from your trading choices but if you can’t
do so, there’s no point in investing money to an account that is burning cash
Begin with a single
world of currency trading is a myriad of intricacies due to the
unpredictable movements of the markets and the distinct characters and purposes
of market participants. It’s quite difficult to master all kinds of financial
activities that take place in this world so it would be beneficial to a trader
to restrict trading activity to a currency pair which you understand and with
which you are familiar with. You may opt to start with the currency of your own
Do with what you know.
If you are not sure about what you’re doing,
then do not trade right away. Take time to understand both the positive
consequences and the negative results that may result from opening a position.
Do not gamble by adding to
a losing position.
Common sense will tell you not to be ignorant
of the principles in trading. No one can exactly predict where a currency pair
will be heading and even educated guesses cannot tell where the price will be.
Do not gamble by adding to a losing position because the only definite value
about trading is now. A losing position can be allowed to survive on its own
but adding to it is never an advisable practice.
Control your emotions.
Human emotions can play great part in directing
your career in trading. But extreme emotions such as too much excitement and
greed should be controlled by the trader before making calculated decisions.
Although emotions are inevitable since traders are human beings, mastering the
art of controlling your emotions when trading can save you heaps of money.
Applying a logical approach rather than an emotional-driven one is the best
forex trading tip to a become successful career.
Learn from your success
Keep track of your trading activity and
identify your mistakes in calculations and trading strategies. You must be able
to assess what works out and what does not.
Take advantage of
automated trading but do it with caution.
We already emphasized the importance of
controlling one’s emotions to have a successful and profitable trading career. Atomization of your trading
choices and trader methods has become popular. Thanks to the development of
forex robots, trading can simply be done even while you are away. Although
automated trading can make many wonders for you, you also have to be cautious
in being too dependent with forex robots as some are developed to rip you off
in the end.
Simplicity is the key.
Experienced traders will agree
that trading in every sense of the word is not rocket science. To lead you
to a respectable career in trading, you must avoid the temptation to over
explain, overanalyze and rationalize your failures. Set trade plans that is simple
and is easily understood for you.
Don’t go against the flow.
Never go against the markets unless if you have
the resilience to stick to a long term plan. It is never advisable to trade
against trends or bet against the main forces of market momentum. Do not
jeopardize your trading career and go with the trends so that you can have a
peace of mind.
Forex and probabilities.
Forex is synonymous to probability. No definite
method or strategy can guarantee profits all the time. Managing risk
allocations by understanding the probability and risk management is a sure and
safe way to trading.
Be a patient trader.
Only risk what you can afford to lose. Take
your time to understand the markets, the fundamentals and technical factors in
trading. Be persistent and have patience with forex trading because it is very
unlikely that you will become a trading wizard overnight.
The foreign exchange market has loose barriers to entry which makes it
one of the world’s most accessible day trading markets but this is also one of the reasons why a lot
of traders make mistakes. Some novice traders fail to accept the fact that they
are human beings and this makes them prone to making mistakes just as the
greatest investors do. Here are common mistakes that one must avoid:
Sticking to one trading plan.
Expert traders get always start with a well-defined plan while newbie
traders may be unlikely to have a trading plan in place before they even commence
Underestimating your abilities.
If you think you can never succeed in the trading market, then don’t
even bother to trade at all. Having doubts and low self-confidence about your
ability to trade will lead to poor critical thinking in buying and selling from
Trading Multiple Markets
Beginner traders may also jump from market to market. However,
trading multiple markets can be a great distraction and may stave off the new
trader from gaining the experience necessary to become a specialist and excel
in one market.
Not using Stop-Loss Orders
You should have a stop-loss order for each trade that you have.
Stop-loss order is an offsetting order that lets you out of a trade if the
price moves against you by a specified amount.
Averaging Down or Up in Redeeming a
Averaging down is adding to your position as the price moves against you
and this is definitely a bad practice.
Risking more than you can afford to
It is recommended that you should only risk 1% or less of your capital
on any single trade Having a coherent approach to forex trading will let you
establish how much of your capital you can afford to lose.
Previsioning the news
Many currency pairs rise or fall rapidly at the onset of economic news
releases. Instead of foreknowing the movement news will take the market,
prepare for a strategy you can use after the news.
Becoming a smart trader in the forex market entails a lot of experience
and know-how to learn how to minimize losses and maximize your income. Here are
five basic steps that will kick-start your way to forex trading:
Educate yourself with Forex trading
Learning the theories before applying it is a fail-safe solution to
starting your trading career. Forex trading only needs less understanding of
the forex market but it does take time to familiarize yourself with it. Forex
trading is not tantamount to gambling.
It has own rules and as a trader, getting all the knowledge from different
resources will equip you in making the right decisions.
Select a broker
A broker is simply the middleman between the trader and the market. A
broker provides currency traders access to a trading platform that gives them
the option to buy and sell foreign currencies. When choosing a broker, consider
A forex broker’s reputation also tells its stability as an
intermediary between the trader and the market. You can look them up online or
research about i before selecting one.
Check for certifications and make sure they are valid.
Check for the kind of trading accounts being offered. Is it spread, leverage,
initial deposit or commission?
What kind of trading system or platform a broker can use? See if they
have versions for mobile and brow
A broker’s response is one way to tell if it is the right one or not.
Try contacting the broker’s support team and assess if they respond
appropriately and provide great customer service.
Security and reliability
If the URL has HTTPS protocol, then it’s a good one. In case you are
using Chrome or Mozilla, you will see a green padlock to the address bar which
means you have a secure connection. It is required both for password entry and
Practice trading using a demo account
To apply theories you have learned about forex trading, practicing
trading using a demo account helps. There are many trading platforms available
online that allows you to trade using virtual money.
Open your own trading account
After trying on the simulation with a demo account, you are now ready to
start your trading account found on the broker’s website.
Install a trading platform
The last step before starting your trading activity is to install a
trading platform. You can choose any software like MetaTrader 4 and ZuluTrade.
Forex trading is quite interesting once you get the hang of it. But before even
considering to open a trading account, first let’s go over some technical
jargons or terms that you might run into when trading with forex.
1.PIP –you will often hear traders say
this or see such term on any forex trading site. It means “Percentage In Point”
or also referred to as Point. It is the most fundamental unit of measure used
when trading currencies.
PIP is the minimum price change of a Forex
trading rate. The most common Pip is 0.0001.
2. Ask price – in the context of forex trading, ask
price is the price you can buy a currency pair at. It is the price at which the
trading market is willing to sell the currency to you. It’s basically the
minimum price that you are willing to receive as a seller.
3. Bid price – The bid price is the price that you
can sell a currency pair at. It’s the maximum price that a buyer is willing to
4. Spreads – Spreads are the difference between
bid price and ask price and is parallel to trading cost. If the spread is
tight, the trading cost is low. If the spread is wide, the trading cost is
5. Currency rate – This is the price/rate of a nation’s
6. Market order – When you place an order either
you are buying or selling, there are two fundamental execution options
namely: place the order at market or at
limit. Market orders – these transactions are to be execute fast with the
current market price.
7. A limit order – sets either the maximum or minimum
price in which you’re willing to buy or sell and lets you put a specification
on the trade entry price.
8. Leverage – is the ability to control a large
amount of money in the forex markets. It allows the trader to make meaningful
profits on the normally miniscule daily currency movements while risking only
minimal capital on a given position.
Leverage may exponentially increase your
profits as well as your losses so it is very important that traders be careful
when using leverage.
9. Margin – Margin is the amount of money
required in your account in order to open a trade. It is calculated based on
the current market quote of the base currency of the trader’s account versus
the base currency of the trader’s account, the volume requested, and the
leverage level of the trader’s account.
The formula for margin is: (Current Market
Quote * Volume) / Leverage = $Margin Required10.
Expert Advisor (EA) – is
basically an electronic system that you install onto the platform that
automatically follows a trader’s instructions after meeting a certain criteria.
In a simpler sense, it will do the trading without the trader touching the
computer or mobile phone.
If you are just a beginner and still a little
bit overwhelmed in the forex market, this post is for you. I have
scoured the internet to find the most helpful sites to guide newbies with their
Abnormal Returns is a “forecast-free investment
blog” which has been up and running for a couple of years and provides a clear
picture about what financial trading is.
Investing.com is a famous global financial
portal owned by Fusion Media Limited and provides real time quotes for free
DailyFX is one of the world’s leading site for
forex trading that provides comprehensive review, news on global financial
markets and analysis. It offers every tool you need to trade in the foreign
Finance Magnates was known as Forex Magnates
which had its initial focus on the Forex B2B sphere. It is the world’s only
multi-asset online trading knowledge hub. Finance Magnates literally caters to
the trading needs of the entire global trading industry.
FX Street is a leading source for real time
forex analysis where you can get the information you need to make the best
decisions in the currency markets.
Baby Pips is the most common go-to site and one
of the top viewed traders educational site and community. It has established
itself as the premier destination on the web for learning how to trade the
Investopedia is also a leading source of
financial content and provides easy to understand articles and the basics about
Forex Factory provides high-quality information
that traders can apply in starting their trading career
Earn Forex is a helpful website that provides
visitors with tools and information to become successful Forex traders. They
explain the basics of Forex trading, giving you free e-books and articles that
help to learn more about trading and offer online calculators, downloadable
indicators, and free expert advisors.
Trading Economics is also an excellent website
because it provides readers with precise information covering 232 countries from around the world.