First Steps To Trading In The Forex Market

Before anyone gets started trading in the forex market there are a few key elements to have at least a basic understanding and knowledge about before jumping head first. I say that because I find this is exactly what a lot of inexperienced and uneducated new traders do, jump in asking questions as they go along completely lost in the ocean with no raft and about to lose their rent money. So let's start from the beginning on getting you started correctly on your journey to becoming a trader.

First, getting a broker and learning the trading software. You will need a trading platform to set up a demo account to begin practicing trading on. As well as a live account for when you’re ready to “trade, trade.”

I am not going to recommend a broker because there are so many good ones out there. After you select one, you will then download the MetaTrader 4 platform and set that up with the sign-on and password credentials the broker will send you after you validate your ID. You will have one set for a “Live,” account and a different sign-on and password for the demo. So make sure you save that email.

You should also get a free account with Trading View. Personally, I love TradingView and all the tools and features it offers. You may always upgrade it to a paid account once you have some experience. But the free account is still excellent in my opinion for new traders.

You can have both your Metatrader 4 and TradingView on a computer, tablet or even phone so no matter where you are in the world, as long as you have an internet connection you can make some money. My personal preference is to look at the charts on my PC or laptop but place the trade from my app on my phone. I have no clue why. I just do it that way.

So now that you are set up and ready to go, what are you going to trade?

Currency is typically divided into 3 categories. Major, minor and exotic. Currency is always bought and sold at the same time. Hence why it’s called currency pairs.

There are 8 major currency pairs that make up the majority of the market and they are;

USD

EUR

GBP

JPY

AUD

NZD

CHF

CAD

Minor currency can be any pair that typically doesn’t include the USD. Such as GBP/JPY.

An exotic pair would be AUD/MXN (Australian dollar/Mexican Peso) or USD/HKD (US dollar/Hong Kong dollar).

You can trade any pair you like however I strongly suggest while learning you stick to the major pairs. And I will go a step further and even say just pick 1 or 2 and get to learn them. Some pairs are better than others for the beginner trader. I would recommend AUD/USD and EUR/USD. A pair that is a little more assertive would be USD/CAD and a pair with faster movement would be GBP/JPY.

Learn how they move. Learn how many pips each pair typically moves in a session.

This brings me to when to trade.

There are 4 trading sessions. Keep in mind you will want to trade accordingly. You would want to trade the US dollar during the NY session. The JPY during the Asain session etc.

London market 2 Am -11 Am

NY market 8 Am -5 Am

Tokyo market 7 Pm -4 Am

Sydney market 4 Pm -1 Am

The trading session times are based on the EST time zone.

The London market tends to be the busiest and Sydney the slowest…Typically. Not a rule set in stone and with the market remember when I say this to you, anything can happen at any moment.

Overall, I would suggest getting familiar with each session.

If you can be up all hours of the night, by all means trade the London session. Another personal preference of mine is when the London session overlaps into NY.

As with anything you will come to find what pairs you enjoy trading and what time frame. I have a friend who only trades USD/JPY. And another girlfriend who only trades EUR/USD and then I have other friends who have 6 computer screens and watch different charts looking for great setups on different pairs throughout the day or night. So it will come down to what your comfort level is and what you enjoy trading and maybe how often you want to trade. You can essentially trade 24 hours a day if you include trading crypto throughout the weekend.

My next article will cover how to place a trade using the Metetrader 4 app, the different types of executions, lot sizes and pips.