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What is hidden under the name "Forex" and where can I find real-time charts? Why do some get a good income, while others lose their investments and get only one disappointment?

Forex is a prominent representative of the over-the-counter foreign exchange market. It is not tied to any physical marketplace. All transactions are made here via the Internet or through the use of cellular communications. Thanks to a wide range of features, today it is perhaps the most convenient, affordable and profitable platform for trading.

The successful guarantee of any activity is the presence of a sufficient amount of knowledge and skills, an understanding of the causes and features of the ongoing processes. The same can be said about the forex market.

I decided to understand the nuances and principles of forex trading in order to try to get real income from this activity.

What you need to know before starting trading

Like many beginners, I was attracted by the seeming simplicity of trading. One click of the mouse - and I bought the currency, another click of the mouse - and I sold the currency, having received income. However, in practice, it turned out that in order to start trading (not to mention generating income), it is necessary to learn a certain minimum set of rules and terms.

Pricing

Here everything works according to the classical laws of the market. If at a certain point in the market the number of buyers exceeds the number of sellers, the price rises. If, on the contrary, the number of buyers is less than those who want to sell, the price decreases. During the day, the total amount of transactions can reach 5 trillion dollars. And the price of each transaction is formed based on the emerging parameters of supply and demand.

Basic terms

Table of basic forex terms

 Term  Definition
 deal the act of buying or selling a currency
 base currency the currency that is being sold
 quoted currency the currency you buy
 exchange rates an indicator that informs how much it is necessary to spend the available currency in order to acquire another (quoted) currency
 bit the price level at which the trader's broker is ready to buy the currency in exchange for the quoted
 bid price an acceptable price level at which a trader agrees to sell his currency quotes
 ask the price level at which the broker is willing to sell the base currency in exchange for the quote
 ask value acceptable price level at which the buyer agrees to make a deal
 spread indicator reflecting the difference between the offer price and the ask price
 trade an operation to purchase currency on the terms offered (set by the trader)

Features of choosing a broker

Choosing a broker is very important. It is he who will represent the interests of the trader in the future. Subsequently, all transactions made by the trader will go through the broker. When choosing a broker, you should pay attention to the following points:

  1. Brokerage license. Before conducting its activities, a broker must obtain an appropriate permit from the state - a license. And in order to obtain a license, a broker must fulfill the mandatory requirements in terms of having equity capital, compliance with business standards, etc. Information about the availability of a license must be on the website of the company providing brokerage services. It is also worth taking the time to check the validity of the license. This can be done on the website of the specialized organization that issued the license. It is worth remembering that choosing a broker without a license is a vain risk and a high probability of losing all your investments.
  2. Reliability. You need to carefully look at the broker. A good indicator is the age of the company. A young company may not provide the required level and quality of services. At the same time, work on the market for 5-10 years is in itself an indicator of the company's stability. Another indicator is participation in various associations that protect traders. Such brokers usually have insurance or compensation funds. It’s also a good idea to pay attention to the convenience of contacts with company representatives: phone number (preferably city), e-mail, personal account or separate forex trader website, the speed of response to questions asked.
  3. Reputation. Business reputation can say a lot about a company. The company must be well-known, be on the first lines in the results of search queries and be in the TOP-10 ratings of brokerage companies. You should also look at reviews of the company. And pay attention to both positive and negative. Participation in various forums, exhibitions, the presence of awards, certificates of honor and letters of thanks is another important point. A good, thoughtful website with up-to-date information also prepares about the company's serious approach to its activities.
  4. Work algorithms. All forex brokers work according to one of two algorithms - A-Book and B-Book. In the first case, all traders' orders are brought to the market and the trader uses the so-called "live schedule» – real quotes. In the second case, all orders remain in the broker's system and are not displayed on the real market. Accordingly, on the charts, the trader sees the picture that the broker shows him. This algorithm of work is called "forex kitchen". Since in such a system the trader trades against the broker himself, the latter can “prepare” any necessary picture for the trader.
  5. Terms of trade. Having selected several companies, it is necessary to carefully study the trading conditions they offer: tariffs and commission rates, conditions for replenishment and withdrawal of funds, the availability of financial instruments, the availability and functionality of trading platforms, etc. And after that, you can make the final choice.

I studied in detail each of the listed points, after which I made my choice in favor of, in my opinion, the most qualified and professional company.

By the way, the most rated companies today include the following: Alpari, Capital.com, FX.Pro, XM Group, Axi, Umarkets.

trading Strategies

Real forex trading has three types of trading:

  • positional, designed to hold a deal for a certain period of time;
  • scalping, which is an aggressive type of trading, which consists in making many transactions in one trading session;
  • intraday trading is a cross between the first and second types of trading.

Experienced traders have their Trading Strategythat are able to generate a stable income. You, like any novice trader, will first have to trade intuitively and painstakingly build your trading system. Another option is to use forex robot or signals special services. Before trading for real money, it is advisable to try different trading options on a demo account. In this case, I'm talking about the technical aspect of trading.

The second equally important component of successful trading is the psychological aspect, self-confidence, stability and strong nerves. You should not give up everything at the first failure, as well as fall into euphoria at the first serious successes. It is important to analyze your actions, identify successful and erroneous steps and adjust the applied strategy accordingly.

How much does Forex really earn?

The calculations here are very simple. If “today” you sell one million euros at a conditional price of 1,28 euros / dollar, and “tomorrow” you buy the same million euros, but at a price of 1,2 euros / dollar, then the income will be $ 80. Sounds great, but if you don't have that million euros, then you can't become a trader?

To our joy, it turned out that it is enough to have a few hundred dollars to start Forex operations. And to get additional capital, you can use the "financial leverage" of a brokerage company. The level of income of a trader directly depends on the size of the leverage. The size of the leverage directly depends on the size of the trader's deposit, a positive trading history, and the availability of certificates confirming the minimum knowledge of money circulation.

Theoretically, with a high coefficient, you can earn a lot of money. Of course, this does not mean that with a ratio of 1:100, the amount of income will increase 100 times. But the income will be very decent.

Although, of course, a more detailed study of this issue revealed serious "pitfalls". The main "pitfall" of Forex is what actually means "financial leverage". Here we must understand that fluctuations in exchange rates occur almost every second. And, for example, an investment of 1,5 million dollars under various conditions, depending on the exchange rate, can change (decrease or increase) by 10-15 thousand.

With an initial investment of 10-20 thousand dollars, under adverse conditions, you can lose all the money invested. And the larger the leverage, the greater the risk of losing the invested money even with minimal exchange rate fluctuations. When a client sees a loss, the broker will automatically close the position “in the red” in order to save the trader at least part of the investment.

Thus, it becomes clear that it is not worth chasing a large leverage, since even with a leverage of more than 1:20 it is extremely difficult to make money, and the risk of losing part of the investment is quite high.

By the way, brokers without a license often lure gullible traders with large leverage (1:200, 1:500 and even 1:1000), promising huge profits. However, here we must remember that under the current legislation of the Russian Federation, the amount of financial leverage cannot exceed 1:50.

Is the game worth the candle

Of course, Forex is an interesting tool that can become a stable source of income. Of course, trading here is quite risky, especially for beginners. But the prospects for earning are quite visible. Here you can make a good investment in foreign currency, earn on exchange rate differences, increase and decrease in exchange rates, perform export-import operations, etc.

I personally clearly understood that forex makes money only for those traders who go slowly, clearly thinking through each step. Therefore, for successful trading, you should pay a lot of attention to studying past trends and pricing factors, watching tutorials and videos, and studying specialized literature. And, of course, you need a desire to succeed and patience on the difficult path of becoming a currency trader.

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