Forex Trading: How beginners can play in the foreign exchange market?

Forex is a virtual platform for trading currencies on a global scale. Many people are considering starting to play on the Forex market, especially during economic cataclysms. And, if such a decision is made, you first need to master at least the basic principles of trading, and then you can start by using cheap forex vps. For that purpose, we have made this guide!

How did it all start on the Forex market?

The Forex platform first appeared in 1971 to conveniently exchange currencies of different countries between banks. Today, it is a space for private individuals to make transactions with currencies to make a profit due to the difference in exchange rates. Due to the vast number of participants and many economic and political reasons, the Forex market is subject to constant fluctuations, which creates all the conditions for playing on changes in exchange rates. Individuals have been allowed to play on Forex since 1986. Since 2007, trading has been conducted exclusively via the Internet.

 Players in the Foreign exchange market

Like all other markets, the Best Cheap Forex VPS market also has its players, which we have mentioned below:

Commercial banks: They participate in transactions on the market to ensure the liquidity of their funds and to fulfil orders from clients (companies engaged in foreign trade operations and in need of different currencies). The main volume of currency on the market comes from sizeable international banking corporations.

Central banks are engaged in currency regulation, limiting the ups and downs of their national currencies.

Investment funds: They invest in securities of foreign companies, for which they need the currency of other countries.

Currency exchanges: They are in demand in countries with economies in transition whose currencies are unstable, and the population is forced to exchange currencies constantly.

Brokerage companies are intermediaries between sellers and buyers of foreign currencies, providing clients with comfortable access to exchange and over-the-counter markets.

Private individuals: They participate in the foreign exchange market to make a profit (traders) or to purchase foreign currency for personal needs.

Just think about the financial machinations a private trader has to deal with. Of course, the basics of this game are complex. Mastering them on your own is a questionable undertaking.

What does a trader need to know?

Let us spill some secrets!

Fundamental trading strategies: Buy currency or sell? When to buy and when to sell, and how much? When to stop and exit the market? It’s all a matter of the strategy you choose. But to determine correctly, you need to know what from.

Main types of transactions: The words CFD, option, spot, forward and futures should be clear to you. As you master the trader profession, particular terminology will gradually become commonplace.

Computer trading platforms: Which programs will be convenient for you to work with and why? Which are the most popular? About ten of the most popular trading platforms and client applications exist; the rest are “variations on a theme.”

Technical analysis: This operational market research uses graphs built on accurate digital data. For technical analysis, many computer programs have been developed based on methods of primarily visual recognition of price trends; they are provided by any trading platform. Technical analysis answers the question, “What is happening at a particular point in time?” and helps to roughly predict “what might happen?”

Fundamental analysis: Technical analysis data is relatively superficial, although you can successfully trade based on it briefly. However, you need to consider global economic factors affecting the market to avoid ending up in a puddle. Fundamental analysis answers the question, “Why does something happen at a particular point in time?” and helps to more accurately answer the question “, What can happen?” Fundamental analysis is used for long-term trading and adjustments to current trading tactics. Its study usually involves obtaining a higher education in economics.

Choosing a Forex trading strategy: many options

The entire mass of strategies is divided into short-term (valid for a maximum of one day), medium-term (up to a week or a month) and long-term (several months). Choosing the type of strategy and a specific option to stick to can only be done based on personal experience. However, personal experience is always a trial-and-error method. To prevent mistakes from becoming fatal, you can try a few simple strategies, which are usually suitable for beginners.

So, what are the Forex strategies?

London Explosion: Although the over-the-counter Forex market operates 24 hours a day, knowing the opening hours of the world’s currency exchanges is useful. Thus, the London Currency Exchange opens at 10:00 Moscow time, and in the first hours of its work, you can technically track where currency rates are moving. As a rule, the trend continues throughout the day. The London Blast is a short-term, or intraday, strategy.

Moving averages: When implementing this strategy, the average value for the period you select, for example, 21 days, is superimposed on the graph of fluctuations in the exchange rates of your chosen currency. This value is taken as the reference scale. Next, you monitor price fluctuations around this value and when the market turns upward, you begin to buy the currency, and when it falls, you begin to sell. This strategy sometimes produces good results in the medium term.

“Three Indians” or “Three Candles”: The strategy is based on the principle “Where there are two Indians, there is a third.” Its essence boils down to the fact that if you see two extremes of the same direction on a steadily growing or falling chart, you can catch a third one. This strategy plays best as a long-term strategy, although it can also be used for shorter periods since the trick is to track the extremes.

Conclusion:

As a rule, the longer the strategy you follow, the less risk you take because you filter out market noise. But another risk here is not being able to withstand the intensity of change and jumping off the chosen course.