How to Trade Forex for Beginners: 3 strategies to

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   Forex Trading Beginners Guide
Forex trading for beginners can be difficult. In general, this is due to unrealistic but common expectations among newcomers to this market. Whether we are talking about forex trading for beginners in the UK or share trading for beginners, many of the basic principles overlap. In this article, we're going to focus on Forex trading. However, some of the same strategies, terms and general concepts also apply to share trading.

By the end of it, you'll know all the most essential terms used in Forex trading so you won't be confused at any point while you learn to trade. You'll learn all the basics, including which platform you use, how to execute a trade, 10 Forex trading tips for beginners who want to earn, strategies, and more.

Let's begin!

trading for beginners

Table of Contents
Forex Trading Beginners Guide
What is Forex Trading for Beginners?
How to Forex Trade for Beginners
Trading terminology: Forex trading notes for beginners
How to Trade Forex for Beginners - Making trades
How to read Forex charts for beginners
Learn how to trade Forex for beginners - Forex trading systems 
Forex Trading platforms for beginners
Is forex good for beginners? Risks every beginner should be aware of
3 Forex trading strategies for beginners
10 Forex trading tips for beginners who want to earn
This article can be considered a free forex trading course for beginners. We recommend writing down some of the things you learn here later as a set of Forex trading notes that you can quickly refer back to. It may take some time to remember everything we cover.

What is Forex Trading for Beginners?
Before we begin this Forex trading for beginners guide and learn how to trade Forex, we will quickly answer the question, 'What is Forex trading?':

The foreign exchange (FX or forex) market is a global marketplace where traders exchange national currencies
How to Forex Trade for Beginners
The next question that comes to everyone's mind is: how to learn Forex from scratch? Can I teach myself to trade Forex? Don't worry, this Forex trading for beginners guide is our definitive manual for all aspects of Forex and general trading. By the end, you'll understand the basics of trading Forex and how to begin. 

Trading terminology: Forex trading notes for beginners
Here's where your Forex trading notes for beginners can begin. I'm going to start this trading for beginners guide in the UK by presenting some of the most common terms you'll come across in trading that you'll need to know.

1. Spot Forex
This form of Forex trading involves buying and selling the real currency. For example, you can buy a certain amount of pound sterling and exchange it for euros, and then once the value of the pound increases, you can exchange your euros for pounds again, receiving more money compared to what you originally spent on the purchase.

2. CFDs
The term CFD stands for "Contract for Difference". It is a contract used to represent the movement in the prices of financial instruments. In Forex terms, this means that instead of buying and selling large amounts of currency, you can take advantage of price movements without having to own the asset itself. Along with Forex, CFDs are also available in stocks, indices, bonds, commodities, and cryptocurrencies. In all cases, they allow you to trade in the price movements of these instruments without having to buy them.

If you are interested in knowing how CFDs work in greater detail, we recommend the following article that explains CFD trading for beginners: What is CFD Trading?

3. Pip
A pip is the base unit in the price of the currency pair or 0.0001 of the quoted price, in non-JPY currency pairs. So, when the bid price for the EUR / USD pair goes from 1.16667 to 1.16677, that represents a difference of 1 pip.

pips

4. Spread
The spread is the difference between the purchase price and the sale price of a currency pair. For the most popular currency pairs, the spread is often low, sometimes even less than a pip! For pairs that don't trade as often, the spread tends to be much higher. Before a Forex trade becomes profitable, the value of the currency pair must exceed the spread.

What are spreads

5. Margin
Margin is the money that is retained in the trading account when opening a trade. However, because the average "Retail Forex Trader" lacks the necessary margin to trade at a volume high enough to make a good profit, many Forex brokers offer their clients access to leverage.

6. Leverage
This concept is a must for beginner Forex traders. The leverage is the capital provided by a Forex broker to increase the volume of trades its customers can make.

Example:

The face value of a contract or lot equals 100,000 units of the base currency. In the case of EUR/USD, it would be 100,000 euros.
If you use a 1:10 leverage rate and have 1,000 euros in your trading account, you can trade a currency pair with a $10,000 position size.
If the trade is successful, leverage will maximise your profits by a factor of 10. However, keep in mind that leverage also multiplies your losses to the same degree.
Therefore, leverage should be used with caution, regardless of whether we are talking bout trading for beginners or experts. If your account balance falls below zero euros, you can request the negative balance policy offered by your broker. ESMA regulated brokers offer this protection. Using this protection will mean that your balance cannot move below zero euros, so you will not be indebted to the broker.

7. Bear Market
This is a term used to describe the stock market when it is moving in a downwards trend. In other words, when the prices of stocks are falling. If a stock price falls deep and fast, it's considered very bearish.

8. Bull Market
The opposite of a bear market is a bull market. When the stock market is experiencing a period of rising stock prices, we call it a Bear Market. An individual stock, as well as a sector, can also be called bullish or bearish.

9. Beta
A metric indicating the relationship between a stock's price relative to the whole market's movement. If a stock has a beta measuring 1.5, this means the when the market moves 1 point, this stock moves 1.5 points, and vice versa.

10. Broker
A broker is a person or company that helps facilitate your buying and selling of an instrument through their platform (in the case of an online broker). They usually charge a commission.

11. Bid
The bid is the price traders are willing to pay per share. It is set against the ask price, which is the price sellers are willing to sell their shares for. What do we call the difference between the bid and the ask price? The spread.

12. Exchange
This is a place where trades are made. Two well-known stock exchanges are the NASDAQ and the New York Stock Exchange (NYSE).

13. Close
This is the at which an exchange closes and trading stops. Regular trading hours for the NASDAQ and the NYSE are from 9 a.m. to 4:30 p.m. Eastern time. After-hours trading continues until 8 p.m.

14. Day Trading
This when traders buy and sell within a day. Day trading is a common trading strategy. However, if someone day trades, they may also make long term investments as well (a long-term portfolio).

The following two terms only apply to share trading:

15. Dividend
A proportion of the earnings of a company that is paid out to its shareholders, the people who own their stock. These dividends are paid out either quarterly (four times per year) or annually (once per year). Not every company pays its shareholders dividends. For example, companies that offer penny stocks likely don't pay dividends.

16. Blue Chip Stocks
These are stocks in big, industry-leading firms. Many traders are attracted to Blue chip stocks because of their reputation for paying stable dividend payments and demonstrating long-term sound fiscal management. Some believe that the expression 'blue-chip' derived from the blue chips used in casinos, which are the highest denomination of chips.

Free Trading Webinars with Admirals

If you're just starting out with Forex trading and are interested in stepping up your trading game, there's no better way than to so than with Admirals FREE online Forex 101 trading course. It's one of the best ways to learn because each lesson is carefully crafted and delivered by two leading industry experts. With all 9 lessons available online, you can easily fit your learning around your life. Learn to trade on your commute, in a cafe, or after work - it`s up to you!