How to start Forex Trading ? (Trading foreign exchange)

          Forex Trading is trading currencies from different countries against each other. Forex is acronym of Foreign Exchange.

For example, in Europe the currency in circulation is called the Euro and in the United States the currency in circulation is called the US Dollar USD An example of a forex trade is to buy the Euro while simultaneously selling US Dollar. This is called the EUR/USD.

How to do Forex Trading ?

Trading foreign exchange can be a thrilling hobby and a great source of investment income. To put it into perspective, the securities market trades about $22.4 billion per day; the forex market trades about $5 trillion per day. You can make a lot of money without putting too much into your original investment, and predicting the direction of the market can be a real rush. You can trade forex online in multiple ways.

Forex Terminology.

          The type of currency you are buying, or selling rid of, is the base currency. The currency that you are purchasing is called quote currency. In Forex trading, you sell 1 type of currency to purchase another type.The exchange rate tells you how much you have to spend in quote currency to purchase base currency.

Ex: If you want to purchase some U.S. dollars using British pounds, you may see an exchange rate that looks like this: GBP/USD=1.589. This rate means that you'll spend 1.589 dollars for 1 British pound.

A long position means that you want to buy the base currency and sell the quote currency. In our example above, you would want to sell U.S. dollars to purchase British pounds. A short position means that you want to buy quote currency and sell base currency. In other words, you would spend sell British pounds and purchase U.S. dollars.

The bid price is the price at which your broker is willing to buy base currency in exchange for quote currency. The bid is the best price at which you are willing to sell your quote currency on the market. The ask price, or the offer price, is the price at which your broker will sell base currency in exchange for quote currency. The ask price is the best available price at which you are willing to buy from the market. A spread is the difference between the bid price and the ask price.

Decide what currency you want to buy and sell.

Make predictions about the economy. If you believe that the U.S. economy will continue to weaken, which is bad for the U.S. dollar, then you probably want to sell dollars in exchange for a currency from a country where the economy is strong. Look at a country's trading position. If a country has many goods that are in demand, then the country will likely export many goods to make money. This trading advantage will boost the country's economy, thus boosting the value of its currency.

Consider politics if a country is having an election, then the country's currency will appreciate if the winner of the election has a fiscally responsible agenda. Also, if the government of a country loosens regulations for economic growth, the currency is likely to increase in value.

Read economic reports. Reports on a country's GDP, for instance, or reports about other economic factors like employment and inflation, will have an effect on the value of the country's currency.

Learn how to calculate profits.

A pip measures the change in value between 2 currencies. Usually, 1 pip equals 0.0001 of a change in value. For example, if your EUR/USD trade moves from 1.546 to 1.547, your currency value has increased by 10 pip. Multiply the number of pips that your account has changed by the exchange rate. This calculation will tell you how much your account has increased or decreased in value.

Analyze the market

You can try several different methods

a.)Technical analysis: Technical analysis involves reviewing charts or historical data to predict how the currency will move based on past events. You can usually obtain charts from your broker or use a popular platform like Metatrader 4.

b.) Fundamental analysis: This type of analysis involves looking at a country's economic fundamentals and using this information to influence your trading decisions.

c.)Sentiment analysis: This kind of analysis is largely subjective. Essentially, you try to analyze the mood of the market to figure out if it's "bearish" or "bullish." While you can't always put your finger on market sentiment, you can often make a good guess that can influence your trades.

Determine your margin depending on your broker's policies, you can invest a little bit of money but still make big trades.

Ex:  If you want to trade 100,000 units at a margin of 1 percent, your broker will require you to put $1,000 cash in an account as security. Your gains and losses will either add to the account or deduct from its value. For this reason, a good general rule is to invest only 2 percent of your cash in a particular currency pair.

Place your order

    you can place different kinds of orders 

a.) Market orders: With a market order, you instruct your broker to execute your buy/sell at the current market rate.

b.) Limit orders: These orders instruct your broker to execute a trade at a specific price. For instance, you can buy currency when it reaches a certain price or sell currency if it lowers to a particular price.

c.)Stop orders: A stop order is a choice to buy currency above the current market price (in anticipation that its value will increase) or to sell currency below the current market price to cut your losses.

- wikihow

All The Best !!!