How to trade forex the right way? This question can be answered if you learn forex from scratch properly and structured. We write a guide to forex trading for beginners in South Africa as accurately as possible. Hopefully, this forex tutorials could help a new trader to understand currency trading.
When you learn forex trading, there are some fundamental topics needs to understand in advance. Please see the explanation below.
- Learning Forex For Beginners In South Africa
- Forex Trading Guides And Tutorials.
- What Is Forex?
- The Risks and Advantages of Online Forex Trading.
- How Forex Trading Works
- Trading Tools As Needed
- Understanding Forex Brokers And Traders
- Types of Perpetrators Of The Forex Market
- When Is The Forex Market Open?
- The Meaning of Pip, Lot, Margin, and Leveraged Forex
- The Meaning Of The Pair, Quotes, Bid and Ask in Forex Trading
- The Type Of Transactions In Forex Trading
- Forex Trading Software
- The Meaning of Timeframes In Forex Trading
- The Type Forex Chart
- An Introduction To Metatrader 4
- Money Management In Forex Trading
- Get To Know The Forex Trading System
Learning Forex For Beginners In South Africa
Learning forex for beginners is often considered difficult. But conceptually, understanding how to trade for beginners is not as complicated as imagined.
Only, most of the Forex trading tutorial circulating on the internet are not structured neatly. Not to mention the custom properties with the beginner traders who want an instant result and neglecting the importance of understanding the basics.
The Mindset In Learning Forex For Beginners
Materials in forex learning at an early stage are pretty clear, and pretty much everything is available on the internet. But more important is your mindset in learning forex.
You need to remember the following points when you start learning forex for beginners;
- Forex trading is not a quick way to rich. Just like other businesses, forex trading takes the process, knowledge, discipline, and practice.
- Mastering Forex trading can not be instant! You will need time to master it.
- Things that need to be learned for trading is not complicated. Almost all already available on the internet for free.
- The most importance thing in currency trading is not money but rather mental, discipline, and time.
A lot of myths in the forex world are questionable. For examples; technical indicators are wrong, the existence of a “God trading” that he said could make the broker went bankrupt, No loss forex trading system, holy grail indicators, and so on.
Don’t immediately believe it and swallowed it all, despite the fact that the info comes from another trader who trades forex for a longer period than you. The length of a person’s foray into the world of forex trading, it is not always directly proportional to the results obtained. Just because someone’s been trading for the past 4-5-6 years or more, doesn’t mean he succeeds.
You will indeed experience a loss in trading. It is natural, and you need to learn to accept that. The way we manage the loss is more important than the loss itself.
Discipline, discipline, and discipline. This is the most important thing you need to have to succeed in the world of Forex trading.
Should You Join a Paid Forex Course?
When learning the trade, should you join forex education program or paid course?
The answer depends on your personal type; are you able and accustomed to learning by themselves, or more effectively learn if mentored/supervised by others. If you feel capable of learning on your own, then not needed to join a paid forex course.
All the necessary material already exists on the internet for free, including the trading system. All you need is a structured guide to understanding what needs to be learned, and you can look it up yourself/googling the internet easily.
If you feel it would be better if join a paid forex courses, make the selection first. If necessary, try asking any material syllabus that is taught.
Remember! Don’t be tempted by the promise of high profit that often promoted by a fake school/forex course.
How To Trade Forex For Beginners.
Then how do I quickly learn forex for beginners? How to trade forex for beginners?
There is one thing that needs to held; Discipline.
You need to be committed to disciplined learning, disciplined practice, disciplined money management, and the discipline in using the trading system. Keep in mind that many traders fail due to not having enough discipline!
How Important Is Capital Money In Trading?
Then what about the capital money?
I think capital money is not the main thing. If you have good skill, a solid trading track record, then you can get the money you need easily.
There are many ways to get capital if you don’t have sufficient funds to deposit in your forex trading account;
- Use small deposit, and do the compounding. You can use online forex broker who accept a small minimum deposit, for example, $10. Then you trade with a system of compounding to achieve a considerable amount.
- Use the bonus account. Many online forex brokers launch promotions in the form of a free account for a new client without the need to deposit. The amount of the bonus account without deposits depend on the forex broker promotion program; starting from $5, $25, $40, even there are also up to $100.
- Sell your trading skills. You can sell your trading skill into the international market. Websites such as zulutrade.com provide an opportunity for traders to sell their trading skills without having to pay for a fee. The better your skills, the more money you can get. Also, many brokers who provided the PAMM-account to trade or for investment.
One thing is for sure in currency trading; only use the money you can afford to lose!
Forex Trading Guides And Tutorials.
We arrange this forex tutorial by important things that need to understand in advance. Not all the material you need to learn this Forex need to remember; some only need to know or understand.
Here are the basic of online forex trading.
What Is Forex?
First, you need to know what exactly is online forex trading. You need to know what is the fundamental things in forex trading online.
The Risks and Advantages of Online Forex Trading.
The risks of forex trading, among others, as follows:
- High risk – high gain. Forex trading can deliver big profits quickly, but can also cause huge losses quickly nevertheless. Therefore, you need to control your emotions, use a good money management, and discipline in trading.
- Forex trading tends to be difficult to learn. It’s difficult because of the limitations of yourself. In contrast to regular school/college, in studying forex, you need to set yourself without any mentors that keep watching. If you discipline, then this will be easy to overcome.
- The risk of fraud and scammers. Many new arrivals in trading that insistence on offer gets rich quick in the forex. Ultimately they instead became a victim of the money game in the guise of forex trading or persons who sell trading systems/indicators that cannot be accountable to his claims. Don’t be easily seduced!
Some of the advantages of forex trading, among others;
- Flexible hours of work. You could work anywhere as long as there is an internet connection. You can trade from a PC, laptop, Tablet or smartphone wherever and whenever. You could be trading 24 hours a day, from Monday to Friday each week.
- Opportunities are endless. The better your skill, the greater the profit.
Could start with a small capital. Now you can start trade forex with only $10, even with a free account without a deposit from a particular broker promotion.
- Easy access to learning materials. All easily accessible through the internet, ranging from indicators, trading systems, how to set capital/money management, trading help script, video tutorials, etc.
How Forex Trading Works
Online Forex trading involves several parties; we as client/traders, brokerage firms as intermediaries between us and market, and the marketplace where the order of our transactions are processed.
Easy steps to get started in forex trading;
- Choose the forex broker according to your consideration.
- Open a trading account there.
- Download trading software which is provided free of charge to a broker’s client. Usually, the software is Metatrader.
- Do capital deposit into your account.
- Start trading.
Trading Tools As Needed
Technically, three things are necessary so you can trade Forex.
- Tools to install and use trading software or forex trading platform. This tool can be a computer, laptop, tablet or smartphone. It is advisable to use a computer/laptop first because the PC version of the trading software is usually more complete than the mobile version.
- Internet connection. Wherever possible, use an internet connection that is stable enough to access data and charts, as well as to conduct transactions.
- Capital trading. You can also use the virtual account/demo account to learn first.
Understanding Forex Brokers And Traders
The meaning of a trader in the forex business, in a nutshell, are the parties doing the transaction. Traders could either be individuals like us, nor the institutions/companies such as hedge funds, banks, or banks.
Understanding forex brokers, in General, is a party/company that became the bridge between us and the forex market. Forex broker to facilitate our transactions with trading software, forward the order to the market and also provides the data needed for analysis through the trading software.
More details about the broker will be discussed in the particular pages later.
Types of Perpetrators Of The Forex Market
Several major parties work directly in the forex trading. The parties among others;
1. The Central Bank of the country
Every country has their respective central banks. Its primary function is to maintain the value of the currency of the country to remain stable. Not uncommon to achieve that goal, the country’s central bank to intervene in the form of a particular transaction to maintain the stability of its currency.
Central bank policies of developed countries in the world are the centers of attention and analysis of a trader because it shows the direction of the economy of a country.
The bank is an important intermediary in the economy today. Through the bank, the process of the transfer of funds from one country to another for business or other things can be realized. In practice, they did exchange currencies and became one of the protagonists in the forex market.
3. Hedge funds
A hedge fund is an investment firm with the aim of seeking the pure profit. One of them is seeking profit from the forex market, in addition to other markets such as stocks, options, and more. An example of a hedge fund is like Bridgewater Pure Alpha, J.P. Morgan Asset Management, Man Group, Brevan Howard Asset Management, and others.
The multinational corporation often does forex transactions. But the purpose is to meet their needs/interests only. Suppose a car factory in Japan imports iron/steel from Russia. The company will buy the Russian currency as needed to buy steel raw materials.
5. Speculators / retail traders
This group was made up of small fund managers, traders, and small investors. The goal is to seek profits from the forex market movements. We included into this category.
6. Ordinary Society
Many commoners who do Forex transactions unwittingly, but the numbers are relatively small. For example; we go to Saudi. We exchanged some dollars into Real to buy a gift. It’s included in the foreign currency transactions.
When Is The Forex Market Open?
Forex market moves and active 24 hours a day. This happens because the forex market is not physically bound by a particular place. However, the forex market remained influenced by the massive financial market in the world. Some of the major financial market in the world which is known and also become the center of attention for a forex trader is market Sydney, Tokyo, London and NewYork.
The price movement of each market has its character. Therefore, knowing the active forex market hours is quite useful for your forex analysis. The following table is opening hours and closes the market forex / online forex market hours south africa for mayor currency trading market.
At the time of the Sydney and Tokyo markets, price movements tend to be slow. In London and New York market, the price moving faster. This is due to the difference in the volume of trading in every market. London and New York market has a larger trade volume.
The Meaning of Pip, Lot, Margin, and Leveraged Forex
The meaning of Pips or points indicates the magnitude of the sum of the points of your transactions up to the point where your transaction in the chart. Suppose you buy the currency pair EUR/USD at price of 1.25500 and then close it at 1.25700. Your profit is 1.25700 -25500 = 200 pips. Conversely, if you close the buy in 1.25300, then you suffer losses amounting to 1.25500 – 1.25300 = 200 pips.
The meaning of the lot, show the unit of transaction contracts being used. A value of 1 lot sometimes differs between one broker with other forex brokers. A value of 1 standard lot is usually one lot = $10. So if your transaction of 1 lot, with a 100 pip profit, then your real profit is $10 x 100 = $1000. If using the 0.1 lot, your profit is $1 x 100 = $100, and so on.
The meaning of Forex Leverage showed ‘ capital ‘ debt relief provided by brokers so that we can begin trading forex even with small capital. The leverage provided by brokerage shown in figures 1:100, 1:500, 1:50, and so on depending on the policy of each broker.
About Forex leverage will be discussed in an individual article.
The meaning of Forex Margin was the size of the capital needed so that we could do a transaction. Suppose you open an EUR/USD transactions amounting to 0.1 lots with the leverage of the account 1:500. The margin of $30 is required to perform the transaction. So at least you have to have $30 in your trading account.
The Meaning Of The Pair, Quotes, Bid and Ask in Forex Trading
The meaning of Forex Pairs, is the pair of currencies are traded. In forex trading, the mention of currencies is done in pairs. Suppose the pair EUR/USD. This means EUR currencies paired with the currency USD. The EUR in this pair called the base currency, the USD in this pair called the quote currency.
The meaning of the Quote of Forex is the value of a particular pair. Suppose the pair EUR/USD currently exists in 1.12479. This means the Euro needed to get 1 US dollar are $1.12479.
The “bid” shows the value given when we do the buy/long transaction pair in particular.
The “Ask” show the value given when performing sell/short transactions. The spread indicates the magnitude of the difference in value between the bid with ask. More information sees figure below.
The meaning of the bid-ask spread
Suppose in the EUR/USD in the top picture. The value of the Bid is 1.1252 and Ask at 1.1255. Spread pair EUR/USD is the Bid-Ask = 1.1255-1.1252=3
The size of the spread one pair in each broker can be different. There are also brokers who use the system of floating spread. In a floating spread, the spreads vary depending on market conditions.
The Type Of Transactions In Forex Trading
There are five main types of transactions (forex orders) you can do in forex trading;
- Market orders. Market orders are used to buy, sell, or exit market immediately at the current market price
- Buy limit. Do this if you predict the price will move down first, then move up at some point on the chart.
- Sell limit. Do this if you predict the price will move up first, and then it moves down at a certain point in the chart.
- Buy Stop. Do this if you predict the price will keep moving up after reaching a certain point in the chart.
- A sell stop. Do this if you predict the price will keep moving down after reaching a certain point in the chart.
Forex Trading Software
Each broker provides platforms/software for use by the client to trade. There are a lot of trading software. Each broker could provide more than one trading software.
The following is the type of software/trading platform are commonly used;
- MetaTrader 4. MT4 Is the most popular trading software used by the trader. MetaTrader 4 free to use, user-friendly, easy to learn, and support trading robot or a custom indicator.
- Web-based. The form of access to the market using the browser.
- cTrader, software that is new and also utilized by a lot of traders.
- Ninja trader.
- Trading station from FXCM broker.
- Marketiva streamster from AGEA.
The Meaning of Timeframes In Forex Trading
The meaning of Timeframes in forex trading is a particular period in a chart which is used to classify data on price movements. In the end, it is shaping the forex charts/chart forex.
Units of time or time frame that is popularly used among others;
- Time frame 1 minute (M1).
- Time frame 5 minutes (M5).
- The 15 minute time frame (M15).
- Time frame 30-minute (M30).
- 1-hour time frame (H1).
- the time frame of 4 hours (H4).
- Time frame one day (D1).
- Time frame one week (W1).
- And the time frame of 1 month (M1).
The Type Forex Chart
The chart shows the forex price movement data in real-time. Chart or graph forex can be accessed by using trading software which is provided by the broker.
There are three types of chart forex traders often used;
- Bar Chart. In Bar chart, the price movement data is grouped in a particular time/time frame. Each bar has the value of open (starting point bars are formed), close (the value of the closing bars at the end of the time frame), high (the highest value in the bar), and low (the value of the lowest prices in the bar).
- Candlestick chart. Candlestick chart is the most popular chart used by the trader. The candlestick almost the same with the bar chart. The difference only its high and low connected and form a body.
- Line chart. Formed from the line that connects a particular value (high, low, open, or close price) in the timeframe that is used.
Forex candlestick chart such as bar chart or candlestick chart has certain movement patterns that could be recognized.
An Introduction To Metatrader 4
MetaTrader 4 is the most popular trading platform used by traders. Chances are you will also use MetaTrader 4 for analysis and trading.
Also, the meta trader trading platform also almost always provided by online forex broker. Many custom trading systems also use MetaTrader 4 as their platform.
The Advantages of Metatrader 4
MetaTrader 4 has a lot of advantages, among others;
- Easy to learn.
- Could use technical indicators homemade/custom indicators.
- Can use the script for trading.
- Can use trading robot/Expert Advisor for trading automatically.
- Free of charge.
To get MetaTrader 4, you can simply download and install from the broker you choose. When studying the MetaTrader 4, always use demo/virtual account, which is also free in your choice of forex broker.
Video Tutorials Metatrader 4
Here is a video tutorial using MetaTrader 4. This video teaches you how to start from install, make transactions, place the indicator, and others. Please see directly.
The video was taken from idforextrading.com’s youtube channel.
Money Management In Forex Trading
Money management in forex trading is one of the important things. A controlled use of money management will be able to maximize your profits and minimize your loss.
Many traders who fail due to lack of proper money management, in addition to a lack of discipline. Therefore, remember to always use a good money management.
The Meaning of Money Management Forex
Money management in forex trading can be briefly defined as follows; How to set up capital in the trading transactions in such a way, so as to minimize losses and maximize your profits.
Money management is one of the things that can not be separated from your trading system. Until whenever, for your trading, money management and discipline will continue to be required.
The Advantages of using money management are;
- The magnitude of loss received more controlled
- avoid the margin call happens quickly
- enlarge our money capital
- give rise to a sense of calm and comfortable when trading.
Type of money management that used are not raw; Depending on the character of each trader only.
Knowing The Risk per Trade in Forex
The meaning of risk per trade in forex in a nutshell is; how much money are ready to use for your stop loss. In other words how much you are prepared to lose money in one loss transaction.
Why should be regulated? So you better calm down in trading, and capital you are more awake. The time of loss, you will stay calm and immediately move on to the next transaction.
How To Set The Risk Per Trade;
- The percentage system. For example; your capital is $100. Risk per trade is designated by 5%. Then for each transaction, you set up such that when stop-loss is hit, only loses 5% of your capital. Because of the magnitude of the percentage, calculated from the stop loss will be changed following the amount of the capital.
- The Fixed System. In this system, you specify directly how large money ready to sacrifice for your stop loss on one transaction. For example; your capital is $300. You are prepared to lose $20 for each transaction.
Practice the Risk per trade must couple with position sizing.
Knowing the Position Sizing in Trading
The sense of position sizing is practical; How to determine how much of the lot to be used in a single transaction, to match the risk per trade which we have set. Also by the amount of the stop loss of trading systems are used.
- Determine the amount of the risk per trade from each transaction. Using a system of percentages or fixed/fixed system.
- Determine the amount of the stop loss; how many pips. This can be found from the trading system you use.
- Calculate the magnitude of the lot that is used to match the risk per trade and stop loss.
How to calculate the lot;
With a percentage system;
Suppose capital $100. Risk per trade to 5%. Using the Support resistance trading system, your stop loss is 500 pips.
5% of $100 = $5
Large 500 pips on the stop loss convert into the system first four digits in MT4, holds 50 pips.
The magnitude of the lot used worth; $5/50 = $0.1
Convert the value $0.1 is equal to how many lots in your broker. In InstaForex company, $0.1 is equal to 0.1 lot. In FBS accounts cent, $0.1 is equal to 1 cent account lot. Make sure you look at your broker.
With a system of fixed/fixed;
Suppose capital $1000. Risk per trade for $30. Support resistance trading system. Stoploss of your trading system is 500 pips (5 digits in MT4).
Risk per trade to $30
large 500 pips on the stop-loss convert into the system first four digits in MT4, holds 50 pips.
the magnitude of the lot used worth; risk per trade/stop loss = $30/50 = $0.6
Convert the value $0.6 is equal to how many lots in your broker. In InstaForex company, $ equal to 0.6 0.6 lot. In FBS accounts cent, $0.6 equals six lot account cents. Make sure you look at your broker.
The comparison of Profit-Loss, and Risk – Reward ratio
The comparison of profit-loss refers to how many times your profit transactions, and how many times your transaction loss. This comparison could be used to see whether a trading system is a good one or not.
How to determine quite is easy. Specify the number of transactions as a benchmark; Suppose ten, fifty transactions, etc. Make sure the transaction is done according to the rule of your trading system. Make a note of how many times your transaction loss, and how many times your profit.
Suppose; You trade using a trading system with support resistance. Of 100 transactions, 60 profit and 40 loss. The percentage of success of your system is 60%.
Risk – Reward Ratio is a comparison of the amount of the risk/stop loss compared to the amount of the likely profit that could be achieved.
Suppose you use a support resistance trading system, with the risk of stop loss 25 pips. From experience and history data in a chart, you can get the profit on average up to 50 pips. This means the amount of your potential profit bigger by double than the risk. In Other terms, risk-reward ratio of your system is 1:2.
The Benefits Of Knowing The Risk – Reward Ratio
By knowing the Risk – reward ratio of one trading system, we can make a better money management plan. For instance, as follows;
Example; the comparison of the profit-loss system in 10 transactions is 40% and 60% profit loss. Risk-Reward of your trading system is 1:2.
Suppose your trading capital is $100. Risk per trade is $10 for each transaction.
Calculations based on the data above;
- Loss you have experienced [60%] is; 6 x $10 = $60
- The received profit [40%] is; 4 x $20 = $80
- Total received by you is; profit-loss = $80-$ 60 = $20
As you see the results above, there are more loss than profit transactions, and it turns out that if we have a good risk-reward ratio, the final result is still great.
The Meaning Of Compounding In Forex Trading
Compounding in currency trading can be defined as techniques using some or all of the profit obtained for additional capital. Compounding in forex is one of the effective ways to enlarge your trading capital quickly.
If you use a compounding in money management, then you are only allowed to withdraw a portion of the interest/profit obtained. The rest will be used as additional capital. Thus, the results obtained will also be larger.
Here are a few things to know about compounding forex.
- You can start with a small capital, and continues to grow optimally using the compounding.
- Must be disciplined. You must continue to use discipline plan compounding an already designed.
- Obliged to be patient. If you use the compounding, the results you get will be noticeably smaller in the beginning. But over time will be fast growing.
- Focus. With compounding, you get an idea of approximately how much profit can obtain. Thus be able to focus more on objectives.
Examples Of Compounding Forex
There are many ways to do compounding. We could use a system of percentages, or use fixed model. The easiest way is to use percentages and position sizing.
For instance, as follows;
Suppose your trading starting capital of $100. Risk per trade transactions amounting to 5%.
To start, you risk 5% of your capital, for $5, for transactions carried out. If a profit, then the rest of your capital into initial capital + profit = $100 + $5 = $105.
For the risk per trade then you calculate 5% instead of the $100 again, but of the whole of the existing funds in your account, that is $105.
And so on.
If a loss, calculation of risk per trade is not taken from the capital loss, but still in the calculation of risk per trade before the loss.
You can move out flexibly. Can you recalculate the risk for a trade after five times profit, or according to other considerations.
Get To Know The Forex Trading System
Forex trading system is a set of action from the ways and steps that must be performed when trading.
A complete trading system usually consists of;
- How to analyze a chart (technical/fundamentals, or a mix of both)
- When and how to perform the transaction
- When and how to close the transaction
- A good money management plan.
Currently, traders usually use a technical trading system; using the data in the chart price movements as the primary tool of analysis.
How Do I Get A Trading System?
There are a lot of trading systems that shared free in forex forums, such as in www.kgforexworld.com, forexfactory.com And the like. Also, you can design your trading system, or modify the existing trading system as needed.
Typically, the shared trading system already has a clear rule. You can buy/sell transaction following the rule set, and also where the put the stop loss.
It’s just that often the trading system did not come with the a good money management, so you need to complete it by your own.
The example of a forex trading system
There are a lot of excellent trading systems. For example, here is some trading system that was already fairly well known and can learn free.
- How to analyze a chart ala kang gun. Can be found at www.kgforexworld.com
- cornflower-trading system.
- Fibonacci retracement trading system.
- System trading with candlestick pattern.
- Support resistance trading system.
- Pivot point trading system.
- And so on.
Discussion and examples of the trading system will continue in the specific articles.
So a brief material about Learn forex for beginners. Please also read other articles we provide.