Forex Trading Basics + Step by Step Beginners Guide

Trading Forex in the financial markets has never been more accessible than it is right now. With just an internet connection and a laptop or mobile device, traders can make a start.  But, with so many choices available, over 3,000 tradable markets – the decision where to start and how to do it can be quite intimidating and overwhelming. For this reason,  it is very important to learn the basics of trading the market in a structured way. Through step-by-step trading training, a beginner trader will have a far better chance of knowing how to trade with confidence, purpose and eventual success.

Before starting off, it is extremely important to have the right setup from the get go.  Here are just some of the trading tools a trader will need in order to start learning how to trade:

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Find a Reputable, Regulated Forex Broker

If an investor wants to buy the euro, gold, or even shares, they will need to find supplier who owns what they are interested in and is willing to sell it. This is where a Forex Broker steps in. Through a brokers trading platform, investors will be connected to other buyers and sellers in the currency, stock or futures exchange markets.  Thanks to super-fast and innovative technology, a trader can buy and sell in the world’s financial markets in seconds using market orders placed with their broker. As a broker is where investors deposit their capital, they must make sure they offer the highest regulation possible.

Here is an overview of the 5 Best Forex Brokers and Trading Platforms for Beginners.

IG

IG Group was founded in 1974 and is regulated by the Financial Conduct Authority (FCA) in the U.K. and the Australian Securities and Investment Commission (ASIC) in Australia.

Pros and Cons

The country of a traders residency will determine which account type they can open. In most countries, they will only be able to trade forex, CFDs and options.  Traders can choose between two trading platforms, IG’s proprietary trading platform or MetaTrader4.

Trading Benefits

Customer Service is available 24/7 via Phone, Live Chat and Email.

eToro

eToro is an online broker which was founded in 2006 and offers CFDs and Social Trading, with a head office based in Cyprus, UK.  eToro is supervised by the Financial Conduct Authority (FCA), Cyprus Securities and Exchange Commission (CySEC) regulatory bodies and has been in operation for over 14 years.

Pros and Cons

eToro offers traders two ways to trade: CFDs, Social Trading and eToro traders will need to make a minimum deposit of $200 and the platform can accommodate various levels of traders from beginner to expert.  Traders can trade in a wide variety of over 100 instruments and over 50 currency pairs on eToro’s user-friendly custom trading platform which is available as a browser-based web application. eToro also offers traders mobile apps for Android and iOS, making it easier to keep an eye on and execute trades.

Trading Benefits

eToro supports a wide range of languages including English, German, Spanish, French, and Italian.  24/6 customer support is available via telephone and support ticket.

AvaTrade

AvaTrade is an online broker which was founded in 2006 and offers Forex, CFDs, Spread Betting and Social Trading and is a global broker with their head office situated in The British Virgin Islands. AvaTrade is regulated in Europe, the British Virgin Islands, Australia, Japan, and South Africa by ASIC, CySEC and FCA.

Pros and Cons

For those who are looking to start out with AvaTrade will need a minimum deposit of $250 and a demo account is available for those who want to get acquaint with the popular MT4 forex trading platform.  AvaTrade also offer mobile apps for Android and iOS.

Trading Benefits

Customer support is available by email, phone, or live chat.

CMC Markets

CMC Markets is a multi-asset class spread betting and CFD broker which is regulated by the UK’s Financial Conduct Authority (FCA). Clients have the ability to trade on more than 9,000+ trading instruments covering Indices, Forex, Cryptocurrencies, Commodities, Shares and Treasuries, all on the MetaTrader4 platform or the broker’s own proprietary, web-based Next Generation platform.

Pros and Cons

CMC Markets offers a wide range of instruments to trade on covering all major asset classes such as 300+ Forex instruments, 60+ Indices, 15 Cryptocurrencies, 90+ Commodities, 30+ Treasuries and 9,000+ Shares and ETFs.

Trading Benefits

Customer support is available 24/5 via Live Chat, Telephone, and Email.

XTB

XTB is a European broker which was founded in 2002, and has offices in 13 countries across the globe.  XTB is regulated by the UK Financial Conduct Authority (FRN 522157) and has been listed on the Warsaw Stock Exchange since 2016.

XTB is a fintech company which combines financial services with innovative technology and it offers clients two platforms to choose from:

• xStation5
• MT4

Pros and Cons

Traders can choose from 25 crypto CFDs (9 individual coins or 16 crypto pairs) which are available 7 days a week (from 3am Saturday to 9pm Friday). Traders can buy or sell digital coins with 2:1 leverage and 365-day expiry.

Trading Benefits

XTB support a wide range of languages including English, Spanish, Czech, Chinese, German, French, Italian, Polish, Portuguese, Romanian, Slovenian, Turkish, Arabic, and Russian.

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The Forex Trading Platform on offer

A trading and charting platform will help traders to view historical price charts of the instrument they are trading, as well as provide them with the order tickets needed in order to place and manage their trades. Some traders may make use of a charting platform which is separate from their brokerage platform. With the initiation of advanced trading technology, an investor can now have their charting platform and brokerage platform all in one place with the MetaTrader suite of products.  Through trading platforms, investors can trade across a variety of markets such as indices, commodities and shares. If a trader is keen to learn how to trade forex, most trading platforms will also offer forex trading and a demo account for practice purposes.  Once a trader has set themselves up correctly, they can move on to trading courses and trading training.

Learning how to Trade

Before a trader makes a start, it may be useful to spend some time to look at all the areas within trading which a trader actually needs to learn about. For a beginner trader, it may seem obvious, and they would want to learn everything! But, even if that was possible (which it isn’t), most investors will find it extremely overwhelming. The key is to break it down into manageable sections.

Here are just a few of the most important elements a trader will need to think about when learning how to trade:

Which timeframe to trade

Most traders may have a full-time job, a business or a family to look after, which makes structuring their trading time essential when learning how to trade. Creating a routine will save investors a lot of stress in the long run.  Knowing which times should be looked at in the markets and which timeframes a trader can analyse will help them with making trading decisions as it can structure an investors day. Many beginner traders check charts at random times and jump between different timeframes. If a trader looks at the markets without a specific purpose, it will most likely lead to rash decisions or a higher chance of trading losses.

There are three main trading sessions an investor can plan to trade in:

• The European session (6am – 5pm GMT)
• The US session (1pm – 9pm GMT)
• The Asia session (10pm – 5am GMT)

On a charting platform traders will have access to nine different chart timeframes:

• Monthly chart
• Weekly chart
• Daily chart
• 4-hour chart
• 1 hour chart
• 30-minute chart
• 15-minute chart
• 5-minute chart
• 1 minute chart

Markets to Focus on

Once a trader has established which trading sessions and time frames will best suit their work and personal life, the next step will be to identify the best markets to trade on during those times. Here are just some of the markets available for investors to trade:

• Foreign Exchange
• Stock Market Index
• Commodity European Shares
• UK Shares
• US Shares
• Stocks and ETFs

It is difficult to learn to trade on all of these markets at the same time and traders should create a plan to start learning and trading on just one or two markets at first.

Which tools to use when deciding to place a buy or sell trade?

When making trading decisions to buy or sell, most traders will make use of either technical analysis or fundamental analysis or possibly a combination of both.  Technical analysis refers to the study of price charts and trading indicators. There are multiple different chart patterns and trading indicators available to traders.  Fundamental analysis on the other hand is the study of economic data, or company news in order to identify trends and turning points.

What risk management techniques should be used to exit a trade at a loss or in profit?

Opening a trading account and placing a buy or sell trade is not difficult at all but, placing trades that are profitable,  will require some training and serious skill. Most traders will never consider how to exit a trade, to minimise losses or maximise gains, but rather choose to trade on how they feel and get their emotions involved.  Long term, this could be a massive mistake to make as anything can happen in the market at any time. It is very important for traders to use the best tools in the business to help them manage their trades in the best possible way.

How to stay up to date

For traders to immerse themselves in the trading world can help to accelerate their trading training. Seeing how professional traders view the markets will give especially beginner traders the confidence needed to succeed.

Once a trader is more aware of how to learn about trading and the key elements to be aware of, here’s how they can make a start in four simple steps:

Read everything available!

One of the best ways to learn how to trade is to read as much as possible, printed or online. Traders should ensure that the information is trustworthy and only from professional traders.

Watch the Professionals

One of, or perhaps even the best way to learn trading is through seeing how the  professional in the field do it in live market conditions. Live webinars hosted by professional financial traders is an excellent opportunity to get the inside scoop on the latest market developments.

Practice and Repeat!

While it is great to learn trading through trading courses, reading books and watching webinars, having the ability to practice is essential. Setting up a free demo trading account is a step in the right direction. A demo account offers a risk-free trading environment in which to practice.  Once a trader is confident in their trading methods, opening a live trading account will be the next step.

In Conclusion

Traders do not need to be great in order to get started, but they will need to make a start to become great. The best way to start is to find a reputable broker and getting stuck into self-education.