I want to learn more about forex trading

Forex Tutorial: How To Trade & Open A Forex Account.

So, you think you are ready to trade? Make sure you read this section to learn how you can go about setting up a forex account so that you can start trading currencies. We'll also mention other factors that you should be aware of before you take this step. We will then discuss how to trade forex and the different types of orders that can be placed.

Trading forex is similar to the equity market because individuals interested in trading need to open up a trading account. Like the equity market, each forex account and the services it provides differ, so it is important that you find the right one. Below we will talk about some of the factors that should be considered when selecting a forex account.

Leverage is basically the ability to control large amounts of capital, using very little of your own capital; the higher the leverage, the higher the level of risk. The amount of leverage on an account differs depending on the account itself, but most use a factor of at least 50:1, with some being as high as 250:1. A leverage factor of 50:1 means that for every dollar you have in your account you control up to $50. For example, if a trader has $1,000 in his or her account, the broker will lend that person $50,000 to trade in the market. This leverage also makes your margin, or the amount you have to have in the account to trade a certain amount, very low. In equities, margin is usually at least 50%, while the leverage of 50:1 is equivalent to 2%.

Another major benefit of forex accounts is that trading within them is done on a commission-free basis. This is unlike equity accounts, in which you pay the broker a fee for each trade. The reason for this is that you are dealing directly with market makers and do not have to go through other parties like brokers.

A trader looking to open a new position will likely use either a market order or a limit order. The incorporation of these order types remains the same as when they are used in the equity markets. A market order gives a forex trader the ability to obtain the currency at whatever exchange rate it is currently trading at in the market, while a limit order allows the trader to specify a certain entry price. (For a brief refresher of these orders, see The Basics of Order Entry .)

What is Forex Trading?

Quite simply, forex trading is the act of buying and selling currencies. This is the world’s largest financial market with a daily turnover of $5 trillion and it involves many people – and many currencies. Because you are always buying one currency using another currency, you trade ‘currency pairs’.

How can you benefit from exchange rate changes?

Exchange rates change all the time, and forex traders attempt to profit from these changes. Here’s a quick example:

Let’s say you travel abroad and you go to an exchange and use $500 to buy euros. After a week, you come back (without spending a single euro) and exchange your euros back to dollars – but you receive $505, because during the week, the exchange rate changed. This is a profit of 5 dollars, which you made by trading currencies.

Of course, nowadays you don’t need to leave the house to invest in the price of currencies – and you don’t even need to actually buy the currencies. Thanks to online forex trading anyone can invest in the price of different currencies from home - or even from their smartphone - and potentially profit from changes in price.

Which Currencies Can You Trade?

There are many types of currencies that you can invest in with iFOREX – in fact, there are over 80 pairs to choose from. Let’s take a close look at some of your options.

EUR/USD USD/JPY GBP/USD AUD/USD USD/CHF NZD/USD USD/CAD.

GBP/JPY JPY/CAD.

USD/ZAR USD/HKD.

For the full list of the currency pairs you can trade at iFOREX, please visit our trading conditions page.

Understanding Pips.

Pip stands for P ercentage I n P oint. For most currency pairs, it corresponds to the movement of one unit of the fourth decimal digit in a rate, but there are exceptions like the Japanese Yen pairs, where a pip corresponds to the movement of one unit of the second decimal digit in a rate.

If the EUR/USD moves from 1.1050 to 1.1051, this .0001 rise in value is one Pip.

When Can You Trade Forex?

The forex market operates 24 hours a day and is commonly separated into four sessions: The Sydney session, the Tokyo session, the London session, and the New York session.

Leverage Currency Trading.

In the past, only large investors participated in currency trading, but nowadays anyone can trade currencies from home – and you don’t need to be rich to invest. Thanks to a unique tool called ‘leverage’ you can open large deals with a relatively small investment. For example, with a €100 investment, you can open a deal of up to €40,000, using leverage of 400:1.

This means that for every euro you invest, we give you up to €400 in trading power. And remember: Because of iFOREX's Negative Balance Protection you can never lose more than your initial investment – your account will never go into minus, regardless of the leverage you choose.

How to Open Your First Currency Deal.

Are you ready to open your first currency deal? Great!

You can do so in three simple steps.

Let’s say you want to trade EUR/USD, for example. If the price of one euro is $1.1200, with a €100 investment, you could have bought $112, without leverage.

By using leverage you can open a deal worth up to 400 times your initial investment. For example, with a €100 investment, you can buy €40,000 worth of dollars, using 400:1 leverage.

When you trade currencies with iFOREX, you could profit even when you think prices will go down. In this example though, let’s assume you think the price will go up. Choose ‘Buy’. Now what?

Let’s say the rate of the EUR/USD rose - meaning that the price of the euro increased by 0.01 - and you decide to close your deal.

The key elements of Forex Trading with iFOREX.

Take part in the largest financial market in the world Open large deals with a relatively small investment Invest in a wide variety of currency pairs Receive free access to useful education resources Benefit from free training with a trading coach Trade in your free time from your PC or mobile device.

Want to learn more about currency trading?

Join iFOREX to benefit from our exclusive education package and start taking advantage of market opportunities.

Here are tools to help you learn about the trading world: Educational E-Books Interactive.

Our Education Package includes:

FREE 1-on-1 training with a trading coach A FREE PDF guide for beginners A €5,000 demo account for training.

Our Licenses.

The iFOREX Group includes the following licensed investment firms: Formula Investment House Ltd., an investment firm licensed and supervised by the British Virgin Islands’ Financial Services Commission. Click here for further details. iCFD Limited, an investment firm authorized and regulated by the Cyprus Securities and Exchange Commission (CySEC) under license no. 143/11 eBrókerház Befektetési Szolgáltató Zrt. an investment firm authorized and supervised by the National Bank of Hungary under licenses no. II/73.059/2000 and III/73.059-4/2002.

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Why You Need to Learn to Lose Properly to Win at Forex Trading.

I know it sounds cliché, but losing truly is part of winning, especially in trading. If you want to become a complete trader who truly knows how to trade properly, you must learn how to lose properly in addition to actually learning how to trade.

I know this isn’t perhaps a ‘fun’ topic to discuss, and you may not even want to read this article, but I promise you that is a huge mistake. You simply will never make money as a trader if you don’t understand the importance of losing properly in the market and how to do it.

So, for those of you who are looking for an ‘easy fix’ or ‘fast money’ without any losses, you may as well stop reading now. For the rest of you who truly want to have a chance of making consistent money trading the markets, read on…

Prime your brain for losing properly…

All too often, I see beginning traders trying to avoid losses in a number of different ways. It seems that people are pre-wired by nature to try and avoid losses, it’s a normal tendency. But, when it comes to trading, this pre-wired trait does us significant damage and will even result in blown out trading accounts and irreversible damage, if you allow it to.

Unfortunately, losses are part of trading, if they weren’t, everyone on Earth would be a billionaire, and we all know that isn’t possible. The simple reality of trading, is that you are going to have losing trades one way or another. If you don’t take predefined, calculated losses, you are going to take big, potentially account-blowing losses eventually. Remember; you can delay losses, but you cannot avoid them altogether, and there is typically a direct correlation between how long you delay a loss and how big it becomes.

As a trader, you need to simply view losses as a ‘cost’ of doing business in the market. Any business has costs that need to be overcome in order to turn a profit. If you own a restaurant you have operating costs like food, labour, rent, utilities, book keeping, etc. If your revenue surpasses all of these costs, you will turn a profit, if not, you lose money.

So, in trading, your costs are losing trades, broker fees / commissions and perhaps any equipment costs like a laptop etc. If you start viewing losing trades as just a part of the costs of trading, you will begin to shift your thinking from ‘trying to avoid losses’ into trying to MANAGE losses.

Why you need to learn to lose properly.

By learning to lose properly you will be learning to control your losses below a predefined dollar amount per trade; the trade’s ‘R value’. The great thing is that YOU decide how much money you risk on any one trade, so that ability gives you the power to eliminate any ‘surprises’ and thus any emotion from your losses in the market.

Traders experience pain and frustration from losers for two reasons:

They ‘expect’ to win on a trade but instead they lose. They lose more money than they are emotionally prepared to lose per trade.

Luckily for you, these two things are very easy to fix if you’re ready to be honest with yourself and face reality. To manage your expectations of a trade, you simply have to understand that any one trade can be a loser and that you never can know ‘for sure’ which execution of your trading edge will be a winner and which will be a loser. Thus, you should never ‘expect’ to win any given trade, no matter how ‘good’ it looks.

For the exact reason just discussed, you should never risk more money on any given trade than you are totally emotionally / mentally OK with potentially losing. That is to say, because you can’t know for sure WHICH trade will win and which trade will lose beforehand, you simply cannot go jacking up your risk beyond levels you aren’t totally emotionally / mentally Ok with losing. IF you do it anyways, it’s your fault you lost more than you’re OK with and all of the emotional trading mistakes you make in the wake of that mistake are your fault and yours alone.

The take away from all this, is the following: In order to lose properly you have to first prime your trading mindset to shift how you think about losses. You have to shift from trying to avoid losses to trying to accept them and learn how to manage them. You have to shift from expecting to win every trade, to remembering that you won’t win every trade no matter what, and you don’t know which ones you will win and which ones you will lose, so have no expectations and don’t ever risk more than you are OK with potentially losing on any one trade.

How to lose properly.

OK, so you’ve read the above section and you have accepted the nature of trading for what it is; a random distribution of winning and losing trades.

Now, let’s discuss in 5 simple steps how you can lose properly on any given trade that you take:

The first step to losing properly (as discussed in the above section) is accepting that you will have losing trades no matter what. Once you accept this, you can move on to the next step, which is about devising a plan to minimize your losses as much as possible.

Next, determine the dollar amount or R value you are comfortable with potentially losing on any one trade. As I’ve written about before, we do not measure risk in pips or percentages, we measure it in dollars or pounds, euros, etc.

Now, you need to calculate your position size on the trade. You do this by first finding the best place to put the stop loss, and then you figure out how many lots you can trade so as to not exceed your predetermined R value on the trade. Remember to place your stop loss based on surrounding market structure (price action / key levels) not on greed or emotion.

Set and forget the trade. After you have set the trade up and input all the parameters: entry, exit (stop loss and profit target) and position size, it’s time to forget about the trade for a while. One of the biggest steps to learning to lose properly is simply not interfering with your trades. Most of the time, simply removing yourself from the equation after your trade is live, is the best idea, and for all beginners it’s what I recommend.

Don’t try to avoid the loss. This is where psychology comes in and can mess you up. You absolutely cannot make huge mistakes like moving your stop loss further away as price approaches it. You have to remember you can’t avoid the loss, eventually it will catch up to you, even if you happen to ‘avoid’ it this time, you will be building a bad habit that will eventually result in a huge account-ending loss. You’ve got to stay true to your strategy and remained disciplined and accept that the market will stop you out sometimes for your predetermined 1 R loss. As I discuss in this article on risk management, a successful trade exit can be either a winner or a predetermined loser. If you take that loser as you planned, that is still a successful exit, even though it’s a loss. Success is sticking to your plan and being disciplined.

Final thoughts on losing properly…

Please do not blow this lesson off, if you do, it will be the biggest mistake you make as a trader. You’ve got to put your ego and your desire to win every trade aside, because both of those things are only going to cause you to lose money in the market, and I know you don’t want to lose money.

Trading is difficult for most people because they cannot come to grips with the FACT that they are going to have losing trades as well as winning trades. Most people screw up the losing trades by trying to avoid them, and by doing this they create a ‘monster’. This monster is bad trading habits that ultimately lead to an account-destroying loss.

The only way to win at trading is to control and manage your losses so that when you do have winners, they will be able to easily offset any recent losers you’ve had and then some, leaving you with profit. Remember, it’s just like owning a business; your revenue must exceed your costs to make a profit. To learn more about how to manage losses and build your own trading business, click here.

About Nial Fuller.

How to Bounce Back After a Losing Streak in the Market.

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27 Comments Leave a Comment.

So nice and helpful Thanks for your kind support Thanks again brother.

Thanks a lot mr fuller for sharing your information God bless you.

Thank you Nial Fuller.

I believe in this writeup as I used to take my losses as part of the trade but also thinking that I am lagging. Now this article has buttress my belef and I will now stand by it. Thanks for the advice.

Thanks Nial. You are truely God-sent. God bless you more.

Thanks for the reminder.

Set and forget is so important. I am guilty of letting in recent 2 trades a decent 5R winner on the table by extending the profit target and then getting way less out of it. Kind of “well it almost hit my target, so move it out further”. Now have a fix rule of taking 5R, when available.

In the past, I looked at my losses as a failure of understanding the market direction and a confirmation that I have no business trading. That I was just gambling my money away. Now I look at my losses as a strategic plan of capital preservation for another opportunity to trade again another day. Success is not always winning, but taking a loss, yet allowing yourself an opportunity to win next time. Thanks Nial for another great read.

This line in this lesson sums it up all for me.

“Please do not blow this lesson off, if you do, it will be the biggest mistake you make as a trader. You’ve got to put your ego and your desire to win every trade aside,”

Excellent article Nial’s!!

Mindset is the biggest part of successful trading!!

Hi Nial. Great to accept pre determined losses as a cost of doing business. However when your 2R TP has just failed to trigger. Do you scale out and at least make some profit or risk a losing trade? Would mean of course tampering with RR. Thanks for any advice. Chris..

I don’t scale out on most trades, perhaps I may scale out on a very big positions, but not often.

The maths in scaling out really doesn’t make sense when you look at long term statistics.

I prefer to exit a trade at the take profit area or just before, and sometimes I will move the take profit further out to let a trade run and move stop to break even.

Brilliant piece Nail. You’ve done great, drawing a relationship between losing trades and business operation cost. That’s the part of it I like the most. THANKS NAIL.

These are the articles I never wish to miss, great write-up, success driven ideas. You making impact.

Fear of losing is so deep in us that I need to read articles like this again and again!

Its been mentioned above as a advicè for beginners. .. I would say doesnt matter how much experience you got. . If somebody not agreed to follow above information.. they will be caught by the market somewhere in future.

Thanks nial to just remind again very basic rule.

Thanks Nial. I agree with what you say. Not even Warren Buffet wins every trade. But when I take a loss on the MT4 demo, I take that loss just as seriously as if I was trading live with real money. A loss is a loss either way.

It is a fact that as a trader you can’t run away from it. Nial, you are always precise. Thanks.

This is the topic I have never taken serious but.

I think it’s the key! I have been in lots of trouble in the past trying to avoid loses! Now I have decided to do things by the BOOK, not to disturb my stop loses, just to accept them as they come.

Awesome power in your words. Totally makes sense what you say.. But doing the right thing in trading consistently for long enough, for me and possibly lots of other traders is.

the biggest obstacle to success. Keep the education coming. Cheers Niall.

Thank you My trade proffessor. Sir Nial Fuller.

Thanks for this piece. Honestly after blowing up my first account, i almost started becoming afraid of loss but this article speaks volumes. Thanks once more, keep it up. More grease man.

Thank for that, I was just saying to my wife this week that she needs to start looking at losses as a cost of doing business in the real world and not as being negative when we talk about the amount we are planing on losing…. This is a very good article and I understand it as I have blows my account three time already in the past by just not following the rules and going some of the above…..

If you are following rules, you should not have blown your account.

Hi Nial, this is a brilliant article because i used to try my best at avoiding losses and ended up blowing my account 3 times!! Ive learned from all of that and now things are looking better. The article is very motivating thanks.

Nice article Nial. Kp up the good work.

Majority of traders are guilty of this. Thanks a lot .

so great sir now ur english is simple and i think all members understand properly what u want to say keep it up thanx sir.

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High Risk Warning: Forex, Futures, and Options trading has large potential rewards, but also large potential risks. The high degree of leverage can work against you as well as for you. You must be aware of the risks of investing in forex, futures, and options and be willing to accept them in order to trade in these markets. Forex trading involves substantial risk of loss and is not suitable for all investors. Please do not trade with borrowed money or money you cannot afford to lose. Any opinions, news, research, analysis, prices, or other information contained on this website is provided as general market commentary and does not constitute investment advice. We will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from the use of or reliance on such information. Please remember that the past performance of any trading system or methodology is not necessarily indicative of future results.

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What You Need to Know to Start Day Trading.

If you want to start day trading, here are five things you need to plan for.

Starting to day trade isn't a decision to be taken lightly. It is possible to be successful and earn a good living trading only a few hours per day, but that many months away for people just starting out. The first year is tough; there are lots of ups and downs and the only real goal should be not to lose everything. Still interested? If you still want to start day trading, then here are five things you need to plan for in order to put yourself on the right path.

To Start Day Trading, Create/Learn a Strategy.

Day trading isn't something to do on a whim. It requires a sound and rehearsed method that gives you a statistical edge on each trade you make.

Start by watching live charts (available for free) of an asset move. As you watch, ask yourself:

How would you get into a trade? How would you get out (for both winning and losing trades)? How much would you risk on the trade and what position size would you take (how many shares, lots or contracts)? After deciding all this, what are the odds that trade will be profitable, and if taking the trade 100 times what tendencies does the strategy show?

The only way to answer all these questions is by implementing the same method over and over again, and monitoring the results.

A strategy can be created simply by finding tendencies in the daily price action of an asset, or a strategy can be learned from someone else.

To Start Day Trading, Practice a Lot.

Practice is key in day trading. To be good at a sport, you practice. a lot! Even at a minimum wage job the boss usually makes you practice what you are supposed to do before doing it for real.

With thousands of your hard earned dollars at stake, practice is extremely important, yet new day traders rarely practice.

Practice is done in a demo account before a single real dollar is risked. Practice methodically, trading your strategy over and over again. What you will find is that no two trades are ever exactly the same. Today may be volatile, while tomorrow is sedate, today is trending while tomorrow is ranging. If you don't practice, you may miss seeing trade signals, or be inclined to make trades which aren't part of your strategy.

Practice only the strategy you are working on. Perfect it, and know it well. With the added pressure of trading real capital, when you switch to live trading, you don't want to still be thinking about whether you should take a trade or not.

Practice until you have been profitable in a demo account for several months. Only then consider opening a live account with real capital.

To Start Day Trading, Know the Capital Requirements.

Capital to a day trader is like inventory to a store owner. You need it to operate, and how much you have, and how you deploy it, will determine your income.

Capital requirements are discussed in the three articles: Minimum Capital Required to Day Trade Stocks, Forex or Futures.

In summary, you legally need $25,000 to start day trading stocks in the U. S. To give yourself a buffer, deposit at least $30,000.

Forex day trading doesn't have a legal minimum, but start with at least $500. Less than this and you're limited on the number of trades you can take. If you want to produce a monthly income, worth withdrawing, start with $5000 or more.

To day trade futures, start with at least $2500. $7,500 to $10,000 is recommended. Some contracts cost more to trade than others, but if day trading the S&P 500 E-mini futures this amount of capital will suffice.

Making an income is possible, but not easy, on these recommended deposit amounts.

Also, check out how much day traders can potentially make in each of the major markets: Forex, Stocks, Futures.

To Start Day Trading, Consider Goals and Constraints.

Before you invest time in learning and practicing a day trading strategy, consider your goals and constraints.

Do you have enough capital to day trade? If not, wait till you do (you can start creating and practicing strategies though). Day trading takes practice. Do you have several hours a day to commit to honing your skill? Once you are trading live, can you commit to trading two to three hours per day, accommodating for your job and other commitments? Don't give up your job until your trading profits replace your income. Therefore, given your other commitments, what time of day can you trade? Is your strategy designed for that time of day? Your strategy needs to fit your life. Becoming consistently profitable takes six months to a year when practicing several hours each day. It will take longer if you only put in part-time study/practice. Are you willing to put in that amount of time? Are you day trading because you want to quit your job? Trading will likely take a year or more to replace your income (based on capital deposited and performance).

Consider all these questions before investing a lot of time or money in learning to day trade.

To Start Day Trading, Choose a Broker.

While you are practicing and developing strategies, choose a broker. This may be the same broker you open a demo account with, or it may be another. Choosing your broker is the biggest trade you make because you are trusting all your capital to them.

Balance great execution with customer service, reputation and competitive fees. For some guidance on picking a broker, see Tips for Finding a Forex Broker.

Final Word on Getting Started in Day Trading.

Day trading takes a lot of time to master. Develop or learn a strategy, and then practice it thoroughly for a number of months until it shows consistent profitability. Consider your own circumstances: do you have enough capital and/or time to trade a live account? If you are profitable demo trading for several months, then switch to live trading with a broker you have chosen based on your research.

Note that many traders struggle with the transition from demo trading to live trading. To minimize these struggles, see Transitioning From Demo to Live Day Trading.