The word "stock market" is most often associated with forex trading (Figure 1). This is because it is easiest to start trading currencies. There is a huge number of trading platforms, the price of entry into the market is almost from zero, there is a lot of information on this market on the Internet: forex analytics, forex trading training, lectures by qualified traders.
What is Forex market?
Forex is an over-the-counter market, as it does not have one or more specific places to trade, an exchange. Trading is carried out via the Internet. However, forex is still influenced by the part of the world where trading takes place, so we distinguish between Asia-Pacific, European and American trading sessions. But the same feature provides an opportunity to trade on Forex 24 hours a day. Since the forex market is over-the-counter, there is no need to actually buy or sell currency. Forex is the most liquid and most volatile market, the main role in which the largest participants - banks and funds. Individual traders occupy about 5% of the daily market turnover.
Forex is the most dynamic of the financial markets, but it also has the largest number of fraudsters (feedback from traders). Another peculiarity of the market is that it is considered by novice traders as a simple way to earn money. But it is far from being so. The impression of simplicity is the result of active promotion of this type of trading by companies that are interested in as many participants as possible. You should start trading on the Forex market after passing the following stages:
Mastering the theory of forex trading;
Choosing a brokerage company (FinmaxFX, Alpari, RoboForex);
Trading on a demo account of a broker: learn how to open and close positions confidently, set Stop Loss and Take Profit, possess technical analysis tools;
Developing a plan for trading on a real account, testing forex strategies;
Activation of live account, crediting of small funds, first trades;
Analysis of the first trading session results, making adjustments.
Like any other business, forex requires proven skills and professionalism. To work with profit, you will need to invest a lot of effort in training. You need to be prepared for the fact that at first most transactions will be unprofitable (forex without investment and risk). As for the choice of brokers, please use our rating of forex brokers.
Forex market strategies
Trading on the financial market is not chaotic, but in accordance with a certain strategy. At the first stage of a trader's career it is some standard strategy or a strategy of an experienced trader - all this is available on the Internet. There are three main strategies: trend trading, Flat trading and counter-trading. The trend is called the price direction. Accordingly, the trend can be upward (price rises), downward or develop in a sideways movement, flat (weak price fluctuations). The main task of a trader who trades in a trend is to predict entry points in an uptrend, so that it is possible to profit from the rise in price, i.e. to buy cheaper and then sell more expensive.
Counter-trend strategies are implemented on the so-called corrections and kickbacks - price movements that briefly interrupt the trend in the opposite direction: on an ascending trend there is a short-term downward movement, on a descending trend - upward movement. The trader needs to understand that this is a correction, not the formation of a new trend. And get a quick profit from a correctly placed position. Trading during a sideways price movement implies earning profits on weak price fluctuations for a long time. A flat is a situation where lows and highs are not updated, and the price moves in a certain stable "corridor". And a trader must be able to make a profit on positions placed on the borders of this "corridor".