{"id":8066,"date":"2022-09-06T09:00:49","date_gmt":"2022-09-06T09:00:49","guid":{"rendered":"https:\/\/www.vtmarkets.com\/?p=8066"},"modified":"2025-03-26T09:13:22","modified_gmt":"2025-03-26T09:13:22","slug":"how-to-trade-forex-2","status":"publish","type":"post","link":"https:\/\/www.vtmarkets.net\/pt\/learn-forex\/how-to-trade-forex-2\/","title":{"rendered":"How to trade forex"},"content":{"rendered":"\n
How to trade forex<\/strong>: A beginner’s guide<\/strong><\/h5>\n\n\n\n

Getting started in the forex market can be daunting, and traders may feel unsure of how to grow their understanding and develop their skills. Following a few simple steps can help traders to begin, although all would-be forex traders should recognise that this is a gradual process \u2014 sustainable and responsible trading requires care and caution, even among more experienced individuals.<\/p>\n\n\n\n

Set up a trading account<\/strong><\/h6>\n\n\n\n

Traders will need an account on a trading platform as they learn FX<\/a>. This platform will provide the charts and tools required to analyse the market and will also offer the functionality required to open and close trades. The trader will also be able to manage their capital balance via this platform, adding and withdrawing funds when required.<\/p>\n\n\n\n

Use a demo account to understand market movements<\/strong><\/h6>\n\n\n\n

The trading platform will include a demo account, and traders are advised to use this demo version as they learn how to trade forex. The demo account is risk-free as there is no capital involved, which means no potential profit and no potential loss.<\/p>\n\n\n\n

Analyse pips<\/strong><\/h6>\n\n\n\n

When the value of a currency pair moves up or down, this movement is measured in pips. Pips in FX<\/a> are incremental movements, usually at the fourth decimal place \u2014 and sometimes at the second decimal place for quote currencies with smaller denominations. While past performance does not guarantee future success, pip movements can help traders as they forecast which direction the market will travel in.<\/p>\n\n\n\n

Choose a strategy<\/strong><\/h6>\n\n\n\n

As individuals learn to trade forex, they will need to adopt a strategy and stick to it. Forex decisions are always strategic and will need to be aligned to a predetermined target, so traders will have to decide whether they are going to adopt a very short-term scalping strategy, a short-term day trading strategy or a longer-term approach. Short-term trading has smaller returns but also involves less risk.<\/p>\n\n\n\n

Select a currency pair<\/strong><\/h6>\n\n\n\n

With the strategy defined, traders can choose which currency pair they want to trade with. They will refer back to their strategy and their pip analysis as they decide this \u2014 a scalping strategy requires a currency pair exhibiting swift price movements, while longer-term strategies are more suited to currency pairs displaying consistent, aggregate growth over time.<\/p>\n\n\n\n

Protect against losses<\/strong><\/h6>\n\n\n\n

Traders can use stop-loss features that will automatically close the position if losses reach a certain level. This helps to keep the trader on track and within the bounds of their predetermined strategy. Take-profit tools are also useful here, as these will close the trade once a specified profit level is achieved \u2014 again, this helps to keep trades sustainable.<\/p>\n\n\n\n

Decide on leverage ratios<\/strong><\/h6>\n\n\n\n

Leverage in FX<\/a> essentially involves borrowing money to supplement the amount of capital put forward. This is expressed as a ratio \u2014 in the example of 20:1 leverage, the trader borrows $20 for every $1 they commit from their own capital reserves. Exposure is increased, which means a greater profit potential, but also a greater risk of loss. Because of the increased risk, beginners should keep leverage low when they learn how to trade currencies on the forex market \u2014 inexperienced traders should <\/p>\n\n\n\n

never go beyond 10:1 leverage. They may use an even smaller ratio.<\/p>\n\n\n\n

Open the position<\/strong><\/h6>\n\n\n\n

Once everything is ready, the trader can open their position based on the current spot trading<\/a> price, represented in real-time on the platform’s dashboard. They can open a buying position if they expect the value of the currency pair to appreciate \u2014 also known as going long \u2014 and can open a selling position (going short) if they expect it to fall in value. Ongoing analysis of price movements in pips, as well as the take-profit and stop-loss features, will help to make sure the trade remains sustainable.<\/p>\n\n\n\n

Close the position<\/strong><\/h6>\n\n\n\n

When the trader decides the time is right, they can close their position. Once the position is closed, the trade is no longer subject to rises and falls in the market, and the trader will take any profits and absorb any losses that have occurred while the position was open.<\/p>\n\n\n\n

Different types of forex derivatives<\/strong><\/h6>\n\n\n\n

Above, we’ve looked at what traders need to do as they open and close positions on the forex market. This is designed to be a relatively simple rundown of how you can make trades on the market, but there are other techniques and trade types that you may decide to incorporate into your strategy as you develop your skills.<\/p>\n\n\n\n