The goal of this guide is to instruct and teach potential traders how to trade
the currency markets. The objective of trading is to trade the forex market and move to try to gain small to medium sized profits in any given trading
day. This is how this guide will help. Most readers will not have the time or
resources to ‘position trade’ like the major institutions and banks do. They (major institutions) tend to look at the big picture holding onto trades for weeks or months.
The Forex Profit System FPS, is specifically designed for use with the 1, 5 or 10
minute charts, with the goal of taking 5-20 pip profits per trade—closing
bad trades out using tight stops, or hedging any losing trades. The following steps will show you how to do this.
Step 1. Choose an online Forex Firm
What to look for in an online Forex Broker:
A. Low Spreads.
In Forex Trading the ‘spread’ is the difference between the buy and sell price of any given currency pair. The lower the spread saves the trader money. Most firms offer 4-5 pip spreads in the Major Currency pairs. The best firms offer clients 3-5 pips.
B. Low minimum account openings.
For those that are new to trading, and for those that don’t have thousands of dollars in risk capital to trade, being able to open a mini trading account with only $250 is a great feature for new traders.
C. Instant automatic execution of your orders.
This is very important when choosing a Forex firm. You want instant execution of your orders and the price you see and ‘click’ is the price that you should get. Don’t settle with a broker that re-quotes you when you click on a price or a broker that allows for price ‘slippage’. This is very important when trading for small profits.
D. Free charting and technical analysis
You need a firm that gives you access to the best charting and technical
analysis available to active traders. The firm that I recommend gives clients FREE professional charting services and even allows traders to trade directly on the charts.
E. High Leverage
You want high leverage—the ability to trade a large amount with a small
margin deposit. The brokers I recommend offer .25% or 400:1 such leverage.
F. Hedging Capability
You want the flexibility of opening positions on the same currency pair in opposite directions without them eliminating each other and without margin increase.
After a lot of research and personal experience, I have discovered forex brokers that will ensure your return on investment and enhance your stay on the trading floor of the forex market.
Step 2. Open a ‘Visual Trading’ Demo Account
The first step to trading the currency markets is to open a demo account. It is
important that you learn how to buy and sell the currency pairs, set stop losses,
set profit limits, and understand how leveraged margin works when you trade. I
found the best way to learn this is by constant practice.
To set up your FREE charting from FOREXNG, simply go to their website and open a demo account. The charting package in this demo account rivals any Forex Professional charting service and you will be able to set up the technical indicators that will aid you in your trading decisions. You can also reach me by email to send you a demo on CD.
Stop Order: Is a price you enter into an open position, where the trading platform automatically closes your position when the Exchange rate touches
that level. If you are in a winning trade, you can move your stop up or down
to protect profits. If the exchange rate never hits that level, then the Order
doesn’t get filled.
**tip1: If you are in a winning trade, you can move your stop to your entry
level, so that if your trade moves against you, the platform closes your
position without any losses.
**tip2: You should be comfortable setting your stop Order at 15-20 pips. If
you can’t handle a 15-20 pip loss, then you are need to trade smaller
amounts. This will help you from over leveraging your trading account.
Limit Order: Is a price you enter into an open position for the trading platform to automatically close your position at a profit. For example, you
might set your limit order at a 15 pip profit. If the exchange rate never hits
that level, then the Order doesn’t get filled.
Step 3: When to Enter and Exit Your Trades:
We will be looking at 3 different ways to trade in the Forex Market. In a
trading session, you may look for 1 or more of these approaches. The 3
techniques are as follows:
1. Trade the Breakout
2. Trade the Trend
3. Trading Tops and Bottoms
Before we look at these trading approaches, let’s answer a question or two that is often asked by new traders.
When is the best time to trade?
Because the Forex Market is open 24hrs a day, and traded on a global scale, the
question to ask is, ‘when should I trade?’. The good news is that no matter what
time zone or hemisphere you live in globally, there are always good opportunities
to trade.
The three major trading ‘sessions’ are as follows (all in Eastern Standard Time):
1. New York open 8:00 AM to 4:00 PM
2. Japanese/Australian open 7:00 PM to 3:00 AM
3. London open 3:00 AM to 8:00 AM
**Often, the best times to trade is at the beginning 3-5 hours of the above
mentioned opening times, because the major currency pairs tend to move
the most in a particular direction.
Wale Ketiku
COO Forexnigeria.com
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