The Forex market is a fast paced, high-risk market that trades currency 6 days a week, 24 hours a day. This happens because there are 4 markets overlapping around the world: New York, Tokyo, Sydney, and London. The first Market (Sydney) opens on Sunday at 2pm PT and the last one closes on Friday at 2pm PT.
Most countries have a currency, or have a currency designated for trade. Not all currencies trade on the foreign exchange market. Major currencies offered on the market are:
A major pair is when you compare any of these currencies to the USD. When paired, the first currency is what you are buying in Lots (or quantity). This is the “base” currency. The second currency, (or “quote”), is what you are using to wager against.
In the chart below, EUR/USD shows a bid, ask and spread. The bid is the price for opening a buy trade. It’s the lower of the asking price range. When you open a buy trade, you want the price to go up. “Buy low, sell high”. You can order a market to instantly open the trade at the price, or get crafty later with a pending order to open the trade when the price hits the price you want. Another option is to open a sell order. There's just as much money to be made on the way down a chart as there is on the way up. When you open a sell order, you want the price to go down.
Please note the prices below are for example only. It is a screen shot from FXCM’s website, but the prices change constantly.
Before I decide on the direction of a trade, I read the news and read reports. I pay particular attention to the US reports and news, but really review a few charts too. USD is compared to everyone, like it or not, and affects every market. You’re either for or against USD. I’m usually for it. When Gold is rising, I’m against it.
Charts for each currency pair should be available through your broker for every Tick (price movement), M1 (1 minute), M5 (by 5 minutes), M30 (by 30 minutes), H1 (by the hour), D1 (by the day), W1 (by the week), and M1 (my the month). Some offer multiple platforms like Meta Trader (MT4, MT5) or have their own proprietary platform like FXCM’s Trading Station. Often, they will quote cheaper prices for using their own platform instead of Meta Trader because it saves the broker from having to pay for a license fee and IT support. Meta Trader is great for automating trades, but I prefer to trade manually.
My newest manual strategy does not require a trade server or MT4. In fact, I usually just trade on my phone through an app. I started with $300 in an account. That's about the minimum you can start with because of margin. It might look like EURUSD only cost 1.12981 for a buy trade, but that's not true. It really cost more. It cost:
1.12981 X 1000 (lot) = 1129.81 / 50 (margin) = $22.596
The broker will build in a cushion so they can account for daily interest (rollover fee) and anticipated volatility. They claim it cost $24-28 for EURUSD at FXCM. The broker does not keep the money, they just expect you to have that much available in the account in order to place the trade. I trade up to 10 currency pairs:
To make money, price has to move up for a buy trade and down for a sell trade. It only needs to move 10 pips to make $1.00. A pip is percentage in points. It's the 4th number to the right of the decimal, or 1,000 place.
Typically, I open a trade and set the limit to close the trade at 20 pips in profit.
I am not a financial advisor, broker, agent and in no way offering any financial advice. I am sharing what I am trading for fun, as a hobby. Please research your own strategies and explore how fun this market can be for you. It can become complicated very quickly. I am familiar with the different ways and styles. I am just having fun and am not looking for advice on how to get rich quick. No matter how you trade, it's high risk! If you can't afford to gamble, don't! BUT, if you can take an educated risk - there are a ton of demos you can download to try before you use real money. Always demo the broker before you use them anyway.