In this tutorial, we will use the FXTrade trading platform, which is Oanda, as an example.
Step 1 – Open the trading platform
The first step in making your first Forex trade is to open the trading platform.
Step 2 – Open the chart
Choose a currency pair and open a chart. Select the time frame. In this case, we will use a 15-minute time frame. Each candle on the chart represents 15 minutes of time.
Step 3 – Add indicators
Add some indicators to the chart. In this chart, we will add the MACD indicator and the 200-day moving average. Using technical indicators is optional when trading Forex. They are useful for the decision-making process.
Step 4 – Place the order
Prepare to place the order. The short trade is worth 10,000 Australian dollars against the Japanese yen. This is also known as going short by one of the mini lots.
Step 5 – Set stop-loss and take-profit levels
Now set your stop-loss and take-profit levels. This step is optional but highly recommended.
Step 6 – Confirm the order
Submit your order and wait for the confirmation screen. Confirmation is important along with the ticket number since you may need to refer to the ticket number if you need to contact your broker about the trade.
Step 7 – Waiting period
Now the waiting period begins. This is one of the most difficult concepts in Forex trading. Some traders find it helpful to stop looking at the screen and step away from the market once they have entered so they don’t constantly worry about market movements. Regardless of the approach you take, adhering to a good risk-reward ratio is a favorable strategy, and whether your stop-loss or take-profit order is hit, you have done your homework correctly.
Step 8 – Completion of the trade
Finally, the trade is complete. This trade resulted in a profit through the take-profit order. The profit level for this trade was 98.00, and the price reached this level. This resulted in a profit of 63.60 dollars.
Frequently Asked Questions (FAQs)
What is Forex trading?
Forex trading involves making trades in foreign currency exchanges. Forex traders exchange one type of currency for another. Once that happens, the relative value of each currency changes. If a trader feels that a certain currency will soon lose value, they can take advantage of that weakness by trading it for a stronger currency.
What are pips in Forex trading?
A “price interest point” or “pip” is typically the smallest measurable movement that a currency pair can make in Forex trading. Many pairs are priced to four decimal places, making each pip worth 0.0001 of the base currency. Some brokers have introduced the “pipette” as an even smaller unit of measure, but most traders will measure movements in pips.
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Sources:
– National Futures Association. “Trading Forex: What Investors Need To Know,” Page 22.
– Oanda. “Price Interest Point (PIP).”
Source: https://www.thebalancemoney.com/making-your-first-forex-trade-1344921
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