how to trade Forex
Forex is short for 'foreign exchange', and it's where the trading of global currencies takes place.
The foreign exchange market is the largest, and most liquid financial market in the world. What forex traders do is purchase these currencies with the intent to make a profit from the difference between the buying & selling prices.
The major players in the forex trading market are the large international banks such as Citi, JP Morgan, UBS, Bank of America, Deutsche Bank, and HSBC, amongst others.
When it comes to forex trading, the most common currency pair you will hear about is the EUR/USD. However, with IQ Option you aren't just limited to trading that pair. You can also trade the USD/ZAR if you prefer looking at the South African currency, for instance. You can also find pairs such as the CAD/CHF, USD/TRY, USD/INR, GBP/USD, EUR/JPY, USD/JPY, and GBP/AUD, amongst others. Download the platform and put your trading skills to the test.
Before we continue, let's get you to download IQ Option so that you can have a broker's account already. Select the appropriate platform below.
Traders from the following countries are not permitted to use IQ Option; Australia, Canada, Syria, Latvia, Iran, North Korea, Sudan, Israel, Japan, Pakistan, U.S.A., Turkey, Russia, and Palestine.
When it comes to forex trading, the vast majority of people are totally clueless as to where to even start. It all looks confusing, with all the charts moving up and down. Now, before we continue it's important that you understand the difference between forex and binary options. With binary options, all you do is guess whether the price of a currency pair or asset will end up higher or lower after a set amount of time. For example, let's say you are trading the USD/JPY pair, and the price is at 110.50. If you place a binary option trade, all you do is say whether it will end up higher than that value or lower. You choose the amount you want to trade, select the expiration time (usually times under 5 minutes give a higher percentage win), then place your trade. When the time is up, you will either win or lose. If the price ends up at 110.62 for instance, you win the trade! If the percentage profit was 88%, and you traded $10, then you get back your $10, plus 88% of that, which is $8.80. Therefore, you get $18.80 back into your trading account. Forex trading works a little differently. Before we continue, grab a cup of coffee, or soda, or whatever floats your boat.
forex trading made easy
In essence, here's what you need to know about trading forex. The forex market is traded in something called lots. The most common lots are equivalent to 100,000 units of currency. Now, does everyone have $100,000 worth of currency to trade? Of course not. This is when you use leverage. What is leverage, you may ask? This is capital lent to you by the broker (in this case IQ Option). Whenever you use leverage, the money doesn't reflect into your trading balance, but the effects can be seen as the trade goes along. In IQ Option leverage is known as the multiplier. This multiplier is, according to IQ Option, a coefficient that allows you to increase both the level of return as well as the risk. When you're trading with IQ Option, in case of a losing forex trade, you only lose your initial investment. So, let's go through some introductory steps. When trading forex, unlike binary options, your trade can stay open for as long as you choose. There are 3 ways this can be done.
Take Profit/Stop Loss
With TP/SL (Take/Profit & Stop/Loss) you choose what percentage your trade closes. Most traders leave the SL at 95%. This leaves a maximum of margin for losses. The TP can be anything you want, even 1000%.
WIth forex trading, you have the option of also selecting the target price of an asset, unlike in binary options. Let's say you are trading the CHF/SGD pair, and the price is at 1.362. You can place a trade predicting that the final price will end up at 1.355 or 1.372, for instance. (N.B. This can only be done on a PC, and not on the mobile application).
You can also specify the amount (in fiat currency) you want to profit. However, the vast majority of forex traders just use the TP/SL or Asset Price options. Once again, this is only available on PC and not on mobile.
So, is that it for forex trading? No, of course not. How does one figure out whether an asset is appreciating or depreciating? By using indicators. IQ Option has 15 in total, and each is different in their own right. Since forex trading is all about following the trend, some of the preferred ones to have a look at include the MACD, SMA, EMA (Moving Averages), and Bollinger Bands. You can get the full list here.