How much do I need to start Forex Trading in Kenya? A comprehensive guide
Forex trading has become increasingly popular in Kenya in recent years, as more and more people look to take advantage of the opportunities offered by the foreign exchange market. However, one question that many new traders in Kenya have is how much money they need to start trading forex. In this article, we will take a closer look at the costs involved in starting to trade forex in Kenya, and provide some guidance on how much money you should realistically expect to need.
The first cost to consider when starting to trade forex in Kenya is the cost of opening a trading account. This will typically involve paying a deposit to the broker, which will be used as collateral for your trades. The amount required for this deposit will vary depending on the broker, but you can expect to pay anywhere from $100 to $500. It’s important to note that, while some brokers may offer “mini” or “micro” accounts with lower minimum deposit requirements, these accounts usually come with higher spreads and less favorable trading conditions.
Guide for the new traders
Once you have your trading account set up, you will need to consider the costs of trading. These costs include the spread (the difference between the bid and ask price of a currency pair) and any overnight financing charges. Spreads can vary greatly between different brokers, so it’s worth shopping around to find a broker with competitive spreads.
Another cost to consider is the cost of trading tools and resources. Many traders find it helpful to use trading software and indicators to help them make decisions about when to enter and exit trades. These tools can be costly, with some packages costing hundreds of dollars. However, some brokers offer their own trading tools for free.
In addition to these costs, you will also need to consider the cost of education and training. While it is possible to learn to trade forex on your own, many traders find it helpful to take a course or attend a seminar to learn the basics and gain a deeper understanding of the market. These courses can be expensive, so it’s important to choose one that fits within your budget.
In summary, how much money you need to start trading forex in Kenya will depend on a number of factors, including the cost of opening a trading account, the cost of trading, the cost of trading tools and resources, and the cost of education and training. Generally speaking, you should expect to need at least $500 to get started, but you should be prepared to invest more if you want to have access to the best trading conditions and tools.
A guide for the new traders
It is also important to note that Forex trading carries a high level of risk and may not be suitable for all investors. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. You may also consider consulting with a financial advisor before making any trades.
Taking partial profits is not unusual in the trading world. In a typical scenario, successful trades are allowed to run their course and return full profits. However, global markets are hardly known for their stability and more so the FX scene.
Partial profits are taken early on before the trade runs to completion. Under normal conditions, you wouldn’t want to interfere with a seemingly successful deal. However, some circumstances force traders to take partial profits.
Since a significant number of active traders lose money, taking partial profits could be the lifeline that will help protect your capital. In this writeup, find out how you can take partial profits off your trade. This article will only consider the MT4 platform owing to its popularity.
Understanding Partial Profits
Partial profits point to a reduction in the size of expected revenues. Partial denotes something that isn’t complete and hence taking partial profits means that you will only get a portion of the expected income from your trade.
Traders are often aware of the status of their trade by merely gauging the market environment. They are thus capable of telling a winning trade from a losing one early on and therefore, can mitigate against the potentially loss-making one by taking partial profits.
However, you don’t need to see a potential loss to take partial profits. If you have a potential winner among your trades, there are several possibilities you can consider moving forward.
Allow the trade to run to the end and reap the full profit from such a trade
Close the trade and lock your profits
Allow the trade to run while taking profits
But even if you are in a winning scenario, taking partial profits is still an option on the table. But why?
Clearly, allowing your winner to complete its course will ultimately reap much larger profits. All you need is some time to wait it out. However, if a reversal were to happen along the way, then you will lose out.
On the other hand, if you close your position, you are likely to realize much more profits had you allowed the trade to run its course. As such, taking partial profits is still a viable option if you have a winning trade on your hands.
How To Take Partial Profits On MT4
So after creating your trading platform on MT4 and activating an order, here’s how you can take partial profits from the trade.
Reduce the trade volume in the order window. Take it down to the amount you would wish to draw a profit from. What remains will continue to run the trade to completion.
Reducing the trade volume is a modification of the initial trade. Therefore, head to the terminal window at the bottom and locate your trade. A simple right-click will give you several actions which you can perform on the trade. You can close, modify, or even open a new order.
Once you opt to modify your order, you will receive a dialog box in which you shall select ‘Market Execution’ on the Type Section.
Now you can scale down your order so that you can close a portion of it. What you select is the amount you wish to close and not what will remain. Once selected, engage the ‘Close’ button to complete the order. At the terminal window, you will see the portion of your volume that remains.
The MetaTrader platform allows you to partially close some of your trades. Remember, to take partial profits from the order, you need to settle on a section of your position. To do so, you will have to reset your lot size so that as you take a portion of the profit, the trade continues to run.
Why Should You Consider Taking Partial Profits?
One of the primary reasons for taking partial profits is to protect your earnings in case a reversal in the market occurs. However, other situations can necessitate a premature take profit order such as news releases. We shall consider these later on.
To protect your earnings
While trading, the end goal of any participant is to grow their portfolio. Profitable trades do a stellar job of increasing your investments. While losses are not uncommon, mitigating them is a worthwhile endeavor since you don’t want to lose money.
Taking partial profits is a frequent move traders employ to secure their earnings from a promising trade. Your earnings could often be significantly more if the trade was left to complete its predetermined course.
However, market reversals occur, and as a result, you could lose not just what you have accumulated over time, but also what you had riding the trade.
While the market trends regularly, your asset will be increasing in value. However, as the market begins a downtrend, it loses value with every dip in the price curve. Taking partial profits acts a sort of insurance policy against market reversals and comes in handy to make sure you get to keep what you earned during the rally.
For beginners, premature Take Profit orders are not uncommon. Newbies usually operate on limited capital and market reversals could potentially wipe away anything they had held up. If you want to guarantee that your market presence long enough to realize meaningful gains, you will ultimately have to take partial profits.
Other reasons why you might consider partial profits?
There are other motives for taking partial profits. Most of these, however, point to an uncertain market in the future. An unreliable market cannot be predicted and it is likely to trend downwards. This will ultimately bring about losses hence the need to grab what you already made in the trade.
Here are a couple more reasons why traders take partial profits.
Ø Overbought and oversold market conditions
Because of oversold or overbought conditions, asset prices tend to move in a given direction for longer than anticipated. This situation cannot hold forever, and traders can always expect a reversal in the market.
Ø You have spotted another more rewarding move
While you aren’t advised to be hasty when taking on new positions, you cannot ignore potential winning trades. Gauge the possible outcomes patiently, at first. Afterward, after all the indicators point to a promising move, you can take partial profits and engage in the new trade.
Ø News release
Because trading often has a global reach, the markets are highly susceptible to the effects of global news releases. Events taking place on one side of the globe usually affects the value of a currency elsewhere.
For example, since the US economy is the largest in the world, fluctuations in the value of USD has far-reaching consequences in other markets. That is why traders are usually keen on any news that upsets the market.
News releases can make or break the value of a currency. If you were trading the affected pair, then taking partial profits is a probable move to make after significant news events.
Ø Commitments elsewhere
Traders are continually monitoring the performance of their trades. If, however, you aren’t in a position to do so, you might cut it and return another time. Traders who are committed to constant monitoring and analysis of the markets routinely make money off the activity. So if you are committed elsewhere and are unable to see your moves to fruition, you can close the trade and grab whatever profit the move generated.
The Downside To Taking Partial Profits
Taking partial profits often guarantees you a positive outcome in your trade. On the other hand, however, this move severely limits your trading potential.
From the start, you will be opting to close a successfully running trade prematurely. It is not uncommon for markets to reverse. Then again, what if the current situation that benefits your trade holds out?
If you opted for partial profits, you would get your money back with interest. However, in an ideal situation, this value will definitely be lower as opposed to waiting out the trade.
If you are sure the market is heading in the right direction, then taking a partial cut should be a non-issue. At this point, you should consider increasing your position in the market.
Finally, prematurely profiting from a trade bears some upsides as well as shortcomings. On the one hand, it is a foolproof way to benefit from your trade, however early it may be. Also, other fundamental factors come into play and necessitate partial profits. News releases, for example, are notorious for having a significant impact on global markets.
However, to really get the gist of how much money you can make, you will have to allow your trade to reach completion. Taking partial profits involves closing a part of your position prematurely, and you will not realize your trade’s full potential.
So is taking partial profits advisable? If you are a beginner, partial profits are necessary, especially if you are unsure if what the future holds. Seasoned traders operate sans partial profits. However, these trading gurus have been in the industry for long and, throughout that time, have gained valuable experience in predicting market trends and outcomes.
If you are a trader, then you must have come across TradingView’s real-time price charts. These diagrams are often a regular thing on your computer screen. At the onset of trading, these diagrams look incredibly complicated, especially to the untrained eye. However, traders must overcome this outward show of complexity and work to understand how it all works.
Why Trading Charts Are Essential To Forex Trading
Trading charts are a valuable resource for any trader. The lines cutting across any trading display indicate trends that are essential when it comes to making trading decisions. You see, with charts, you can visualize the market dynamics and pick out investment positions.
Without charts, traders would be hard-pressed to point out where to put their money. The data received from markets is immense and visual aids like trading charts help to decode it all into investment decisions.
Moreover, the visual appeal charts offer to make trading enjoyable. Just imagine having to trade with raw data; the information would be overwhelming and most people would instead do without the numbers.
Several websites offer charting capabilities, and as a trader, you are spoilt for choice. These chart offers are endowed differently with varying timeframes as well.
As a newbie in the trading world, deciding on which chart to aid your trading can be confusing with all the options available. However, TradingView stands out as one of the best real-time chart providers out there, and here is why.
What Is Tradingview
For starters, TradingView, like other charting options, offer real-time charts that span several trading options. With TradingView, you can chart stocks, bonds, forex, cryptocurrencies, Contract for Differences (CFDs), global data et cetera.
If you are on TradingView, you won’t have to pay anything to use their services. This makes it suitable for beginners in the trading scene. As a newbie getting on TradingView, your primary concern would be to learn all the different features, steps and tricks to use when trading and the platform contains plenty of those.
Why You Should Choose Tradingview As Your Charting Platform
There are several different charting applications available, but TradingView’s offering stands out from the rest more so for newbie traders. Here are a couple of reasons why.
1. Real-Time Charts
Having access to real-time information is a big boost for traders. Knowledge is power, especially in the trading line of business. Such data enables you to track price movements while trading currencies. That said, if you are using the TradingView app, then your feed will be populated by current stock and forex market charts.
Moreover, charts on the TradingView app are appealing to the eye. Trading is notorious for its seemingly complex point of view, and nowhere is this clearer than on the charts. As a layman in this field, you will struggle to make heads or tails from the data presented. However, whatever charts you will design on the app, processing the information will be easier than on most other sites.
2. In-Built Strategy Tester
Newbie traders are encouraged to study different trading strategies and see what works best for their needs. The TradingView forex app is best suited for this with its in-house strategy tester.
As you try out alternative trading strategies, some of which you will find on the TradingView app, be sure to use the strategy tester first and see how that approach works. Fine-tune the tester to assess a stock for a specified duration of time first.
Furthermore, TradingView also hosts Pine Editor. This added feature allows you to create unique strategies that you can test out as well. Testing is crucial so that you can use the approach with confidence the next time you trade.
3. It Also Doubles Up As A Social Media Site
TradingView is also a social media website. With this addition, the TradingView forex chart maker allows you to interact with other traders drawn from all parts of the globe. Besides making small-talk, you could learn a thing or two from other seasoned traders on the platform.
While on the TradingView app, you can share your ideas and even charts that you use while trading. You can just as equally access other charts and trading strategies from fellow traders online. These offer vital lessons and experiences that often prove crucial as you aim for success in the field.
However, as with other social media sites, you ought to be cautious with the kind of information you share and consume. The internet is a vast space with millions of people having access. Even on TradingView, be slow to trust other people’s ideas and opinions until you can verify their profitability in trading.
4. Hosts A Broad Range Of Market Data
One of the major selling points for TradingView is the availability of a wide array of market data for you to chart. You will access different currency markets, stocks, crypto, CFDs, bonds futures, et cetera.
With such a collection of data, you are spoilt for choice on which option to trade. While you should ideally have a settled plan, all this data points to the comprehensive manner TradingView app covers trading as an industry.
To note, however, data for futures is sometimes not real-time. Nevertheless, TradingView allows you to pay for upgrades to your package. On payment, additional features are available, as well as instantaneous data for the global futures and stock markets.
The cost of charting is sometimes tolerable due to the wealth of features that these platforms have in store for traders. However, free charting platforms such as TradingView are a welcome alternative to those who are learning the ropes in stocks and forex trading.
Learners have a pretty decent application on which they can routinely practice trading stocks, test strategies, and even gather different ideas on trading from experienced traders on the same stage. Furthermore, TradingView allows you to make trades when you link up with a broker.
Unfortunately, not all brokers are linked with the tradingview. You can as well use the tradingview and MT4 hand in hand just as I do. I use tradingview for chart analysis and them my broker Mt4 for trading.You can do that as well.
Therefore, for real-time price charts, head on to TradingView, and create your account. Get a feel of how the platform looks and works by navigating the different sections. Also, you can even customize your newly created charts with the available ‘Chart Settings’ option. Now you know why TradingView offers the best free real-time trading charts.
AFFILIATE LINKS
Affiliate Links
I love that you are curious and that you are checking out this page right now. You know me, I love to help and teach aspiring traders something new! You will see throughout the website and in my blog posts links that go to outside sources (other websites and services).
These links may be what is referred to as an affiliate link which means I could earn money if you end up clicking on one and purchase/sign up for that service/product. If I am sending you to an outside source know that it is only because I have tested it myself and believe in it. I am all about sharing my recommendations and providing you with the best service/product and even excellent support.
The money earned through my affiliate links is just another way for me to earn a little extra income so that I can continue doing what I love which is helping aspiring traders with the right resources. If you choose to purchase something through me and use my affiliate links it is greatly appreciated and I thank you!
“I Wish You Well In Your Journey & In Your Trading.”-
Arguably the most crucial element in the entire forex trading process is a forex broker. If you are just starting currency trading, then be sure that you will require the services of a forex broker. As a beginner, besides navigating through the complex world of forex trading, you should know how to tell apart forex brokers and only go for those who guarantee fair dealing and success while at it.
The global forex market is the largest of its kind as players trade trillions of dollars daily. To achieve this brokers are always making play aimed at turning a profit for their clients. The sheer scale of such a market points to a massive team of experts driving the FX market.
With so many forex brokers operating in the global arena, it can be challenging to select your preferred agent. For starters, their numbers make it a slow process since few brokers are keen on your interests. Unfortunately, a large number of them are only in it for their profit. You should be able to identify these types early enough to avoid losing your money.
Who Is A Forex Broker?
Selecting Your Forex Broker, An Ultimate Beginners Guide
A forex broker can be a person or institution that completes trades on a trader’s behalf. Brokers have access to trading platforms on which you can buy and sell currencies. These platforms allow you, as a trader, into the currency markets via a mobile app, web-page, or downloadable software.
Why Do You Need A Forex Broker?
A good FX broker has the potential to turn your investment into a tidy profit. Additionally, they are trustworthy entities that offer not just your portfolio’s security, but also a peace of mind when trading in currencies.
So how does a beginner get about finding a forex broker or brokerage firm? There are certain factors traders need to consider to get a good broker. Keep on reading to find out.
Brokers, like many businesses, offer a service in exchange for a share of the profits and in the case of FX, the spread. So essentially, you are paying these guys to make you more money.
The kind of customer support offered can, to some extent, determine whether you are making money or not. How responsive are they to your emails and calls? If they are not picking or are hard to reach, chances are they will ignore you during an emergency or even worse, when you lose your money.
Brokerage firms are supposed to encourage you to invest wisely. Be careful not to fall for salesy brokerage firms that are only out to pocket your money.
When opening a trading account, brokers tend to be supportive during the process. Don’t be blinded by this but instead test their after-sales services.
They Must Be Legal Entities That Comply With Regulatory Bodies
Trading in the forex market entails handing over your hard-earned money to a secondary party who then facilitates the actual transaction. Outside the FX arena, you wouldn’t consider handing out your cash to anyone and expecting it to accrue some interest.
The same applies to forex transactions. Before you give out your money, due diligence is essential. Any broker or brokerage firm must be a legitimate business.
Additionally, there are regulatory bodies all around the world that distinguish legitimate brokers from dishonest parties. So before you give away your money, take the time to find out if they are recognized by state regulatory agencies and permitted to do business in the region.
Trading Platforms
A large share of trading activity takes place on the broker’s platform. This is where the actual business goes down. The trading platform is essentially the interface on which you can interact with the actual FX market.
As a new trader, go through this space and check out its ease of use. Remember, you are just starting, and you would want a platform that is user-friendly, easy to navigate and remember and most importantly, has enough information which you would use to trade.
Selecting Your Forex Broker, An Ultimate Beginners Guide
A good trading platform, for instance, ought to avail real-time information. The Forex world is continuously shifting every minute and is characterised by its unpredictability. Having the right information and on time could mean the difference between a profit and a loss.
Leverage
Leverage entices retail traders into the FX scene. This is because, with limited capital, one can still control a sizeable position as opposed to their earlier figures. There is an increase in the reward to be gotten albeit at an equally higher risk.
Forex brokers offer leverage at varying ratios. Higher ratios point to similarly more significant trading risks. Most times, brokers avail capital that traders use to amplify their profit-making possibility. On the flip side, however, devastating losses may occur.
Traders need to understand the implications of using borrowed capital when trading. Additionally, brokers who offer higher than average leverages ought to be ignored.
Loss Protection
Forex trading is a risky affair, and the potential to lose your money is real. That is why traders in this market require a level of passion to continue trading even in the face of uncertainties. Nevertheless, you can offset your fears via loss protection availed by the broker.
A stop-loss order is a means of loss protection initiated by your forex broker. The broker will commence the sale of a security at a particular price, further acting as a sort of insurance policy against the trade making a loss.
As a beginner, it would make sense to go with a broker who mitigates against losses. Doing so ought to raise your trading confidence as your money is protected. Once you get the hang of the risks involved, you can take on even more significant challenges. Even though you will eventually lose money trading currencies, it is always preferable to have a soft landing.
If you are getting started with FX trading, brokers are essential players in the FX market. Because you won’t escape them, master these parameters so that you are aware of your requirements in a forex broker.
AFFILIATE LINKS
Affiliate Links
I love that you are curious and that you are checking out this page right now. You know me, I love to help and teach aspiring traders something new! You will see throughout the website and in my blog posts links that go to outside sources (other websites and services).
These links may be what is referred to as an affiliate link which means I could earn money if you end up clicking on one and purchase/sign up for that service/product. If I am sending you to an outside source know that it is only because I have tested it myself and believe in it. I am all about sharing my recommendations and providing you with the best service/product and even excellent support.
The money earned through my affiliate links is just another way for me to earn a little extra income so that I can continue doing what I love which is helping aspiring traders with the right resources. If you choose to purchase something through me and use my affiliate links it is greatly appreciated and I thank you!
“I Wish You Well In Your Journey & In Your Trading.”-
I know you might be wondering how to change Meta Trader 4 Passwords for user-friendly platforms like MT4 and MT5 (MT4/MT5) when the need arises. In case you are one of them, I am here to show you how to do it. Necessity for strong security is growing high for trading accounts and other financial market.
As a beginner trader who does not have a lot of expeince in this financial market , you need to be responsible for your personal data by ensuring that your credentials and banking data is transferred via safe and encrypted channels. In additional to this, you also need to ensure that your private data is stored correctly as per the agreement with a licensed trading company.
With many brokers out there, it is now easy for the traders to be in control and have authority over their account by changing this password when one feel like to. In this article, I have provided you all the steps on how to change password on metaTrader 4
When you want to change your password for the MetaTrader 4 platform, please go to the “Tools” main menu and select “Options” from there.
Step 2 – Select an account
Select the first tab in the “Options” window – “Server” and make sure the correct account and server (Demo or Live/Real) are selected before you make any changes. Click the “Change” button to start the procedure. Another window will pop up.
Step 3 – Change your Meta Master Password
In this window, you will notice that the login is the same as your account number with hotforex and it cannot be changed. To change your password, you need to know your current login password (Meta Master password). Make sure that “Change master password” is selected. Write in your new password in both fields – the password fields are encoded, so make the changes carefully.
Select “Change investor password” only in case you want to change your Investor password (it allows others to enter your account and see your trades without executing any themselves).
Confirm the changes with the “OK” button.
Click “OK” in the “Options” window as well.
Your password is now changed. Make sure you save it. Only you have access to it.
You can continue trading right away and safely with your new credentials with my best the recommended broker.
AFFILIATE LINKS
Affiliate Links
I love that you are curious and that you are checking out this page right now. You know me, I love to help and teach aspiring traders something new! You will see throughout the website and in my blog posts links that go to outside sources (other websites and services).
These links may be what is referred to as an affiliate link which means I could earn money if you end up clicking on one and purchase/sign up for that service/product. If I am sending you to an outside source know that it is only because I have tested it myself and believe in it. I am all about sharing my recommendations and providing you with the best service/product and even excellent support.
The money earned through my affiliate links is just another way for me to earn a little extra income so that I can continue doing what I love which is helping aspiring traders with the right resources. If you choose to purchase something through me and use my affiliate links it is greatly appreciated and I thank you!
“I Wish You Well In Your Journey & In Your Trading.”-
Everyone has heard about forex trading from a friend, relative, colleague, or even via various social media platforms. Can you really make money trading forex? Yes, you can make as much money as you want. However, you should read the forex trading starter kit before proceeding to risk your money. Do not be one of those who set unrealistic expectations and get frustrated when money does not start trickling into your account within minutes.
Forex trading is, without a doubt, difficult for every beginner. Usually, newcomers set such high expectations, and when they are unmet, they give up quickly. Like any other craft or skill, you need these tips and insight that I have compiled for you in this forex blog. I hereby give you a forex trading starter kit that is foolproof.
Most people have read various topics on forex, but they still ask, “how do I start forex trading as a beginner?” If that is your biggest worry, relax because I have your back. Follow the guide below to know how to start trading today.
Have a basic understanding of what it is all about
The first step to mastering how to become a trader is to seek information, insight, and knowledge on how to sell and buy online. You also need to familiarize yourself with the terms that are commonly used in this field.
Luckily for you, there are numerous books and online resources from which you can get this information. Even so, this is not adequate. Be conscious enough to realize that trading is a journey and not a destination from where you can mint free money. For this reason, avoid people who start talking about how much money you are supposed to make from forex forums out there. You are not ready to quit your job to become a full-time trader, so why do you allow yourself to listen to lies? Instead, seek more insight into how to trade.
A good way of gaining this knowledge and skills is by contacting a genuine trader, especially one who has authored a book about it. Conduct thorough research and analysis as you learn from them. In this digital era, you can take numerous forex trading courses or any other course that is available online. You have to be thirsty for knowledge and skills for you to master forex trading.
Reading books and taking online classes have, over time, proved to be inadequate. If you are a determined person, now is the time to join a forex traders forum, where there are numerous like-minded people. The best thing about such groups is that they comprise of novices, amateurs, and pros. Everyone will assist you in their own way on this journey to becoming wealthy. They will listen to you and allow you to ask questions. It is always a great idea to get a mentor on such platforms. Remember, birds of a feather will always flock together, so mingle with greatness to become great.
A group that is genuine about nurturing beginners like you will allow you to watch live forex trading. Your mentor may ask you to sit and watch as the pros show their skills and prowess in a forex day trading room. You can also reach and even surpass their level if you remain focused and ready to learn.
Do you remember that I mentioned terminologies up there? Well, here are some of the crucial terms that are a must-know;
Spot Forex
This is a term that refers to selling and buying real currency. For example, when you buy 1,000 USD and exchange it for euros, you wait for the value of the euro to increase before changing the money into American dollars again. In the end, you get more money compared to the value you spent on the original purchase.
CFDs (Contract for Difference)
You can expect to come across this acronym many times as a trader. It represents how the prices of financial instruments move. With time, you will come to understand that instead of selling and buying substantial amounts of currency, you can observe the price movements without owning the assets. CFDs are also common in bonds, stocks, indices, and cryptocurrencies. They allow you to trade in price movements without the need to buy anything.
Pip
This term refers to or 0.0001 of the quoted price or the base unit in the price of a specific currency pair, usually in non-JPY currency pairs. If, for instance, your price bid for the EUR / USD pair rises from 1.15556 to 1.15566, the difference is 1 pip.
Spread
Spread refers to the difference between the cost of purchase and the sale price of a currency pair. Usually, this difference is low for the common currency pairs, so the spread is low. Pairs that do not trade very often have a much higher spread. In this field, you can only make a profit if the value of the currency spread is higher than the spread.
Margin
This is the money that is retained in your trading account whenever you open a trade. Usually, the average forex trader does not have the required margin to trade an amount that can lead to a good profit. To deal with this limitation, many brokers offer their clients some leverage.
Leverage
Leverage capital refers to the capital that a forex broker offers a trader to increase the volume of trade that the trader can make.
Come up with a well-deliberated strategy
The second step after gaining basic knowledge is having a strategy. You cannot go to war without a plan on how to conquer your opponents. You will need a set of rules of engagement to guide you on when to buy and when to sell. You also need to know how you will manage all your trades. When developing a strategy, I can assure you that you will need to KISS. This is not a romantic set-up, so let not your mind wonder. It means Keep It Simple Stupid. In simple terms, create a simple strategy.
At this point, you are still fresh in the game, so you do not require all the technical analysis that you have read about. Confidence in your strategy will yield better results. As you create your plan, be sure that it will not be flawless. Hey! I also failed a few times before my strategy caused me profitable trades. You will, sometimes, have a losing streak, and that is okay. What is not okay is failing to learn something new from each of your losses. Adjust your strategy along the way, for it is not cast in stone. It is always a good idea for beginners to do many back-tests on demo accounts to create the discipline of following the strategies they make.
There are three easy strategies that you can use;
The breakout strategy
In this technique, you use breaks as signals. It is not unusual for markets to be between support and resistance bands, a state called consolidation. A breakout happens when the market moves beyond the confines of the consolidation phase. It, therefore, has new lows or highs. Before any trend can be observed, there is always a breakout. As a result, breaks can signal the start of a new trend, but not all breaks lead to new trends. You can avoid making a loss using a stop loss.
From the above illustration of what a breakout trading strategy is, I have indicated the sell signal,but note that, it should be only confirmed if there are some candlesticks closing below it. In this daily chart, if the price closes below the orange line, then its a confirmed sell trade.Again, you can add one more idea to your confirmation by failure to make a new HH. Consolidation is a point where by the big banks are loading up orders.
The moving average cross strategy
This strategy is commonly known as SMA. Moving strategies refer to the lagging indicators that use historical price data. They not only generate forex signals, but they are also used to confirm trends. Usually, many people combine the breakout signals with SMAs to make better-informed decisions.
From the above chart, its well shown that when the price ais on the upper side of the 100 moving average many forex traders would confirm that as an uptread and when the price is below its a downtrend. I am just helping them who are searching ”how to trade the forex market using simple moving average or exponential moving averages?” I am not a fan of indicators. The moment you get used to get signals from indicators you will never learn how market works. I prefer price action to this moving average strategies, but its a good tookkit for the beginners who are yet to identify a trend by use of HHs/LLs sequence.
Donchian channels
Richard Donchian invented these channels, whose parameters are easy to modify. In this technique, a trader uses a breakdown for a certain period to guide their decisions. The breakdown helps them to establish if the prevailing market price excessed the highest high in the selected period. It also helps in knowing if the same price surpasses the lowest low during the same period. The direction of the shorter-term moving average guides the direction that the trader chooses.
Find a broker
Without a broker, you will not achieve much, and you can take my words to the bank. In simple terms, a broker facilates trading as they execute your trades when you place a buy or a sell.. They are instrumental to your success. There are numerous brokers who can assist you. However, you have to be very careful when choosing one. Look out for the following things before settling on one;
Avoid brokers who offer you extreme leverage. If a person offers you a considerable percentage profit on your capital, run! This is a broker who understands the human desire to make money. They will get you excited by promising a higher profit margin. My friend, if you pick one like this, you will lose money as they celebrate their profits. Do not fall prey to their tactics.
Be keen to note the amount of commission that they charge. Avoid those who charge extreme commission amounts.
Be wary about the spread, that is, the variance between the buying price and the selling price. A good broker has a tight spread, meaning that the cost of trading will be less for you.
Depending on your location, you need to ascertain that your preferred broker has met the regulations in your country.
Observe the customer service and be sure that it is excellent. You need to relate well with your broker, and you have a right to get answers to any questions you have. Take note of their withdrawal and deposit speeds. A reliable broker is one who helps you to get your money out whenever you need to.
Now that you have spotted a good broker, how much do you need to start trading forex? You are not there yet, so hold your horses. Before you start trading, use a demo trading account for practice. You cannot afford to lose your hard-earned money yet. Remember that you are on a journey and that you are still a student, so be patient. This is not a get-rich-quick scheme! Trading using demo accounts can sometimes be boring, but you need to be serious about it before you making any decision of having a live account.
Do you want to make trading using your demo account more fun? If so, write down all your rules of engagement, when you will buy and sell, when you will make a profit and how you will manage your risk. This is the strategy I mentioned earlier on.
You need to treat this demo trading account as a real account. You have to know that, if you do not treat it with respect and discpline it deserves, it might develop bad trading habits which will be very hard to change.
Note that, mind is involved in trading, many traders who use this do not pay attention to the following,
Starting capital,
Leverage
Risk management strategy
Trading plan.
In case you trade demo for a long time without paying attention to the above, you will duplicate all those bad trading habits into your live trading which might cause losses and burn your trading account.
Take this from me, treat demo account as a real account, having a trading plan,write down all the reasons for entry and exit. The moment you train your mind to be discplined, it obeys your orders. Train it to follow those trading concepts for your success.
Look out for more articles of how mind intefere with your decision making when trading. I know it will be a game changer for many new traders like you.
Always start with low leverage
How do I trade forex with $100? While this is undoubtedly an amount that you can risk, the leverage is more important. You are still a beginner, so do not go beyond a 5, 10, to 1 leverage. This will allow you to get a feel of both losing and winning a trade. It will teach you how to conduct your trade without taking very high risks that can ruin your financial life forever.
Always have a written plan
You cannot succeed in a forex trading live stream or any other forex-related activity without having a plan. When you start dealing with real money, you will need a plan before you make life-changing losses. You must have a journal in which you record all your trades. Keep it organized.
Over time, you will learn that losing is part of the game in this field and that it is not always a bad thing. Each loss will teach you something new. Go through your journal and observe the trend in all your losses. You will know your weaknesses and think of a plan to mitigate them. From your wins, you will learn the tips and tricks that you need to capitalize on. Do not forget to write down the points you got from the forex live trading group and your mentor.
Getting started in forex trading requires self-belief, a reasonable thirst for wealth, and an ever-willing mind to learn. While it may seem very difficult at first, the above forex trading starter kit offers you ample insight on what to do before risking your money. These steps worked well for me, so they certainly will for you.
AFFILIATE LINKS
Affiliate Links
I love that you are curious and that you are checking out this page right now. You know me, I love to help and teach aspiring traders something new! You will see throughout the website and in my blog posts links that go to outside sources (other websites and services).
These links may be what is referred to as an affiliate link which means I could earn money if you end up clicking on one and purchase/sign up for that service/product. If I am sending you to an outside source know that it is only because I have tested it myself and believe in it. I am all about sharing my recommendations and providing you with the best service/product and even excellent support.
The money earned through my affiliate links is just another way for me to earn a little extra income so that I can continue doing what I love which is helping aspiring traders with the right resources. If you choose to purchase something through me and use my affiliate links it is greatly appreciated and I thank you!
“I Wish You Well In Your Journey & In Your Trading.”-
Deciding to invest in the foreign exchange market is the first step to becoming wealthy. However, this investment is not all roses and diamonds. Today’s exchange rate is almost certainly different from what it will be tomorrow because numerous factors affect forex trading, which I will sensitize you about.
Some of the factors that affect forex trading have a more significant effect on the exchange rate compared to others. For this reason, I have compiled the top five factors which influence the exchange rate to educate you and make you a better investor than before.
Having this information will not only increase your knowledge base but also help you to understand the things to look out for to avoid making a blunder. Below are the top five factors which influence exchange rate;
International trade
If you have been asking yourself what affects the forex market, then you should know that the main factor is the trade between countries, which happens daily. The importance of exchange rate in international trade is because the amount of commerce that one country does with another automatically affects the local currency.
If, for instance, your country exports more items than it imports, it is said to have a trade surplus, which in turn increases the currency value. The increased value is because of the increased revenues, which means that there is a higher demand for the country’s currency.
When a country exports less than it imports, it has a trade deficit. This means that the value of its currency decreases due to decreased revenues. In turn, the exchange rate depreciates. The importance of the exchange rate in international trade, therefore, cannot be overlooked.
As an expert trader, I can also advise you to be aware of your country’s current account, which shows the balance of earnings versus trade. If the current account has a deficit, the government is spending more on imports and making less on exports, which leads to a trade deficit.
Natural disasters or phenomena
What are the five major factors that influence foreign exchange rates? Natural disasters or phenomena that affect the world have a great impact on the value of different currencies. In 2020, for example, you and I have already witnessed the effects of the COVOD-19 outbreak.
Disasters such as earthquakes, tsunamis, novel diseases, floods, and the like instantly affect the currency of any country. How global events can affect the foreign exchange market? When these events occur, the citizens and residents of the affected region, spend less money on investments to deal with the prevailing circumstances. Some of them are rendered unable to continue investing because of the loss of jobs. The loss of loved ones also shifts attention from investing to grieving.
The affected government also redirects its funds to salvaging the country instead of conducting international trade. In such moments, all political leaders unite on a common mission to rescue their people. They use a lot of money to mitigate the impact of the catastrophe. The central bank shifts its attention from making significant monetary exchanges to provide the basic amenities for its citizens to rebuild their lives.
Political instability and government policies
Political instability and government policies impact of exchange rate fluctuations in various ways. Every year, the government comes up with a well-deliberated annual budget that dictates the amount of money that will be spent on different industries. As a result, the country’s currency is affected.
One of the other top factors that affect the value of money is the central bank of a country, which invests and moves hefty sums of money around. Each decision made by the central bank has the power to change the value of the country’s currency.
On the other hand, the political leadership of a country can significantly alter the value of a specific currency. Some leaders from certain countries are believed to be one of the causes of currency depreciation, while others are more beneficial to the forex market. As an expert in Forex trading, I can say with certainty that most brokers closely monitor national elections to predict what will happen to a particular country economically.
How does news affect the Forex market? A good forex trader knows the importance of monitoring news, especially political news and any changes in economic policies. This is because even small changes in rules can have a significant impact on markets. If civil war erupts in a country, for instance, its economy is affected within minutes, which could potentially make you lose your investment if you are not careful.
Economic factors
The economic status of a country influences the value of its currency, and it can be one of the causes of currency appreciation or otherwise. All expert traders will tell you that you should study your country’s debt ratio, employment rate, purchasing power, gross domestic product, and even the interest rates. When you fail to do this research, I can assure you that you risk losing your investment.
How does Forex affect economy? It primarily influences capital flows. You should not invest in countries with a deteriorating currency. If you notice some dwindling in the value of your money, you should liquidate your stocks and bonds to avoid making losses.
Inflation and interest rates
The currency exchange rates are affected by the inflation rates in any country. Under normal circumstances, countries with lower inflation rates witness an increase in the value of their currencies and vice versa. Countries with higher inflation rates also have higher interest rates.
The fluctuation of interest rate also affects the value of your country’s money. When the interest rate is high, the value of the currency increases because the lenders have a higher borrowing cost. They, therefore, attract more foreign capital that ultimately leads to a higher exchange rate.
There are numerous factors that affect forex trading. If you are a serious investor like I am, it is essential to know how each of these factors will affect your financial status. This will help you determine the optimal time for conducting international money transfers and shield you from making losses in your trade.
Today, I am going to show you ”How to Read a Forex Quote” in case you have been asking yourself how.
In forex, currencies are always grouped in a pair, such as GBP/USD ,USD/JPY or EURUSD. It’s grouped this way because in every foreign exchange transaction, you are simultaneously buying one currency and selling another.The example below shows what is the base and quote currency for easier understanding.
As a trader, its important to know how the pairs are grouped. The pairs are categorized as major or minors.
All the major pairs are 8 in number;
USD, EUR, GBP, CAD, JPY, CHF, NZD, and AUD.
Its very good to understand how these pairs are grouped for one, if you group them correctly you will save on the spreads for example
if you say NZDGBP will have a higher spreads than GBPNZD. Many brokers out there have different arrangements and some just want to have a higher spread. I have found a reliable broker who will conventionally group these pairs as they are supposed to be, IC Markets ECN Broker
USD
EUR
GBP
CAD
CHF
JPY
AUD
NZD
EURUSD
EURUSD
GBPUSD
CADJPY
CHFJPY
USDJPY
AUDCAD
NZDUSD
GBPUSD
EURGBP
GBPCAD
CADCHF
EURCHF
EURJPY
AUDCHF
NZDCHF
AUDUSD
EURCAD
GBPNZD
USDCAD
GBPCHF
GBPJPY
AUDJPY
NZDCAD
NZDUSD
EURNZD
GBPJPY
EURCAD
CADCHF
CADJPY
AUDNZD
NZDJPY
USDJPY
EURJPY
GBPNZD
GBPCAD
AUDCHF
CHFJPY
AUDUSD
EURNZD
USDCHF
EURAUD
GBPCHF
AUDCAD
NZDCHF
AUDJPY
EURAUD
GBPNZD
USDJPY
EURNZD
EURGBP
NZDCAD
USDCHF
NZDJPY
GBPAUD
AUDNZD
From the example of the British Pound versus the U.S dollar; the first currency to the left of the slash is called base currency while the second one is the on the right is called the counter or quote currency. (USD).
The first currency determines if you are selling or buying. If you place a buy trade, it means that you are buying GBP while at the same time selling the USD. In case you place a sell trade ( short position) you are selling GBP while at the same time buying the USD. When buying, the exchange rate will determine how much you need to pay for one unit; this means that, Base currency is always 1 equivalent to something.( quote currency.)In the example above GBPUSD=1.51258 it means that for you to buy 1 GBP you need 1.51258 of the USD.
When selling, the exchange rate tells you how many of the quote current you get when selling one unit of the base currency.
As per the example above, you receive 1.51258 U.S dollars when you sell 1 GBP.
In simple term, you buy the pair if you believe the base currency will appreciate (gain value) relative to the quote currency. Again, you will sell the pair if you think that the base currency will depreciate or lose value relative to the quote currency.
Buy/ Short Position.
What is the first thing I need to know is if I want to buy or sell?. If you want to buy it means that you will be buying the base currency and sell the quote currency simultaneously. In this case, you will want the base currency to appreciate and then sell at a higher price. When you hear traders saying ‘going long’ they simply mean, buying so, long = buy.
If you want to sell; that is, you are selling the base currency while buying the quote currency, you want the base currency to fall in value and then you would buy it back at a lower price. This is called ‘going short’ or taking a short position. Short = Sell.
The bid, ask and spread.
All forex quotes are given into two prices that is bid and ask. You as a trader should know that, bid is lower than the ask price.as shown below.
The bid price. This is the price your broker is willing to buy the base currency in exchange for the quote currency. The ask price ( offer price) on the other hands is a price at which your broker will sell the base currency in exchange for the quote currency. Spread is define as the difference between the bid and the ask price.
On the EURUSD quote above, the bid price is 1.34568 and the ask price is 1.34588.
To simply this as per our definitions above, if you want to sell Eur. You click ‘sell’ and you will sell euros at 1.34568 and in case you want to buy EUR, you click BUY and you will buy euros at 1.34588.
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The illustration below will summarize all what we covered.
Understanding basics of how to read a forex quote in trading is important as you will always be ahead of the game by calculating the spread your broker is offering. Always use brokers that provide reasonable Spreads.
AFFILIATE LINKS
Affiliate Links
I love that you are curious and that you are checking out this page right now. You know me, I love to help and teach aspiring traders something new! You will see throughout the website and in my blog posts links that go to outside sources (other websites and services).
These links may be what is referred to as an affiliate link which means I could earn money if you end up clicking on one and purchase/sign up for that service/product. If I am sending you to an outside source know that it is only because I have tested it myself and believe in it. I am all about sharing my recommendations and providing you with the best service/product and even excellent support.
The money earned through my affiliate links is just another way for me to earn a little extra income so that I can continue doing what I love which is helping aspiring traders with the right resources. If you choose to purchase something through me and use my affiliate links it is greatly appreciated and I thank you!
“I Wish You Well In Your Journey & In Your Trading.”-
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