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The foreign exchange market, or the forex market, is a risky place, full of potholes and pitfalls. If there are chances galore of earning profits, there are also innumerable traps into which one could fall and end up losing a trade. This is the reason that one needs to be quite well-informed and lose all the fantastic expectations of consistent profits. Below are listed a laid out for novice forex traders about the stuff one should look out for and the pitfalls one should avoid.

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adamsmiths

If you want to secure your future and want to retire peacefully, then the safest option for you is investing money in the financial market. It is up to you in which financial market you want to invest. You should invest in any financial market depending on the risk taking capacity. If you don't want to take a risk, you can invest in different mutual funds, if you can take a small risk you can invest in options. If you are sure that you can take a high risk, you can invest in the foreign exchange market or in the stock exchange. Whatever the financial market is, you should have adequate knowledge about the market. In order to take the right decision at the right time, one of the most important tools is the chart. Since your trading success and failure highly depend on charts, you have to learn how to read them. Below are discussed a number of trading charts, you can choose one according to your trading style (Information Credit - easyMarkets).

1.       Bar chart

This type of chart is a little complex. This chart helps you to find out the opening and the closing prices and the highs and lows of your trading. If you look at the chart, you will find a vertical bar at the top of the chart where you can see the highest traded price for that time period. At the bottom of the chart, you can find the lowest traded price. With the help of the vertical bar, you will easily understand the trading range of the currency pair. On the right side of the bar, there is a horizontal hash that displays the closing price, and on the left side the horizontal hash displays the opening price.

2.       Candlestick chart

One of the most popular trading charts is the candlestick chart. This chart is almost similar to the bar chart. The only difference is that this chart allows you to find all the information about the price direction. The body and the shadows are the two parts of the candlestick chart.

3.       Tick chart

This type of chart helps you to know the unit price changes. At the bottom of the chart, you will find the bid price and at the top, there is the ask price. With the help of this chart, traders can make the decision as to when to enter the market.

Above discussed are the top three charts that can help you to take the right decision at the right time.

adamsmiths

Every one of us is running after money but then very few are capable of making the decent amount of money. Although, every one of us is aware of Forex and learning Forex only a very few people become successful by trading Forex. What is the mere reason behind it? The visible reason is that they have not grasped the Forex knowledge properly. When we say Forex knowledge it is not only Forex strategies, trading methods, skills and etc. The Forex knowledge includes the good analysis of Forex accounts as well. You may already know that Forex is famous that it has reached the peak of its success and as traders, you should be aware of almost all the facets of trading accounts including the Forex trading account Singapore. It’s true that Forex popularity has reached higher so being part of the success you should be thorough in the field of Forex. So let us analyze the Forex accounts in the following article.

A good option-there is many accounts in Forex and which are offered by different brokers on the different basis. Anyways, the ECN trading is specially targeted for the experts in trading Forex. There are many benefits associated with the ECN accounts and also there is no broker involvement in these types of accounts. Moreover, it’s like a trading platform whereas it’s a good option for the traders to open professional trading accounts to trade Forex by getting along with social trading. For instance if you look at the professional trader then you will see that most of them are trading with high class broker like Saxo since they provide excellent trading conditions to their traders. Most importantly you can access to wide range of trading assets form a single trading account in the market. This will basically save a huge amount of your time and allow you fast execution in your trading.

A part of your success-Forex accounts are part of your success, when you are selecting the trading accounts make sure that it suits your trading style as an example you can select Forex swap free, Forex classic accounts, or even Forex trading account Singapore or any other accounts but it should suit your style of trading. Even if you are a beginner or a professional the conditions of the trading accounts will satisfy you anyway.  What is important is that landing on the right trading platform so make sure you do it perfectly.

Determine how to trade- Forex trading is complex when things are understood in the wrong manner, if you are in the Forex market makes sure you analyze each and everything related to Forex perfectly. As we mentioned above selecting the right trading account is vital to trade Forex successfully. If you are unable to determine which account to select and how to trade then there is a problem. There can be many Forex accounts such as Forex-interest free accounts, ECN accounts, Forex trading account Singapore, Forex trading account Australia or even classic accounts but you should be able to determine which account to select and how to trade it.

Summary-the most liquid market of Forex is full of risk and reward. If you are in the market then you should have the capacity to manage the risk associated with the Forex market.When we say risks it does not involve only when trading it means even when selecting the right Forex account to trade risk is involved so it’s you who should handle it wisely. Whatsoever, whenever you select an account to make sure to test drive it, it’s essential to do so.

adamsmiths

A forex spread is very important for traders who want to trade in forex market. Forex market prices change at a very faster rate. Like every market, foreign exchange market also has spreads that help the traders to learn about the price changes that have occurred in the market. Forex trading spreads consists of buying and selling prices of a currency pair.

What is a Forex Spread?

A spread is the difference between the bid prices and ask price for a currency. As all the trades are conducted by middlemen who charge commission for their services. The charge is generally based on the spread. A bid price is the price a buyer is willing to pay and ask price is the price at which a seller is willing to sell a currency pair.

Forex Trade Structure

To understand the forex spreads well, you must understand what the structure of a forex trade is. The currency market trades take place online like an over-the-counter market for smaller trades. The trades are facilitated by market makers. As the forex market operates across the globe, the buyer and seller can be from different countries. Thus, buyers and sellers might only be able to meet through a broker. It is a market makers responsibility to ensure that the buying and selling is being conducted in orderly manner. There is a reasonable amount of risk involved for market makers as they might sometimes not find sellers in right time. This is the why they retain a certain part of every trade for accepting the risk.

Importance of the Spread

Forex trade involves two currencies that are put up in a pair. Let’s look at an example, the currency pair used is British pound (GBP) and U.S. Dollar (USD) and GBP is worth 1.5340 times USD or GBP/USD = 1.1540. If you are trading this pair and you decided to purchase the pair at the given ask price.  GBP is the base currency and USD is the quote currency. But the broker might charge you 1.5344. This 0.0004 is the price charged for trade. It will be similar in case of selling, where you will earn 0.0004 less. Thus, the buyer buys at 1.5344 and the seller gets say, 1.5338, the difference will be the spread. Although the 0.0004 on one trade might appear to be minute, it becomes huge profit when the profit adds up.  Now that you have learned that spread is the difference between the bid price and the ask price, you can calculate it easily.

Tips To Manage and Minimise the Spread

Here are two simple ways which will help you to minimise the cost of spreads

·         You must trade during the most favourable trading hours when many buyers and sellers are active in the market.  As the competition in the market increases, market makers narrow down the spreads.

·         You must avoid trading the currencies that are thinly traded. If you trade the currency pair that is not so popular, there will be few market makers which will widen the spreads.

These are some important points about currency spreads that you must know before you start investing in the forex market.

adamsmiths

As the foreign exchange market is the largest financial market, the value of currencies goes up and down every day in this market. This market is commonly known as the FX or the forex market. Every day, an average volume of 5 trillion dollars is traded in this market, which is more compared to the New York Stock Exchange, where only 55 billion dollar is traded on a daily basis. Also, if you put together all the futures and equity markets, their total volume of trade will be less than that of the foreign exchange market. You will get many advantages if you trade forex. Of course, the size of the market is also an important factor. The number of buyers and sellers is huge, so the transaction prices are kept low here. In order to become a successful trader in this hugely volatile forex market, here are some tips that you may consider before opening your forex trade account.

1)   Make a strategy, analyse and keep notes

If you want to be a successful trader, what you have to do is to make a plan first, then follow the market trends and finally, keep notes of your trades. Once your strategy has been planned, always try to stick to it. It will be good for your trading, if you have solid knowledge about the currency pairs, as there are some currency pairs that are not only volatile but also move a lot intra-day. Also, there are other currency pairs that move slow over longer time periods but are steady. Choose a strategy that is perfect according to your trading style.

2)   Manage your risk

In order to be a successful trader, you have to be well-disciplined in your strategy, you have to take smart decisions regarding risk management and you need to take the best positions. You have to be very practical about gains and losses and on top of that, never ever let your emotions come in your way. You can set profit targets and loss limits for your positions. You can even use Stop/Loss and Limit Orders so that you can lock them.

3)   Select your approach

There are two main approaches, Fundamental Analysis and Technical Analysis, in order to analyse the foreign exchange market. You should know how to use them successfully. This will help you to earn more and more profit.

4)   Know what Fundamental Analysis is

 If you are a beginner trader, know what a fundamental analysis is. And for this, you need to have an idea of geopolitical events, interest rates, employment and many other things, as these are the factors that affect the foreign exchange market to a great extent.

5)   Keep your emotions away

You should always take your trading seriously, as this is your business. It is true that human beings are emotional, but try not to let your emotions come in the way of your trading.

In conclusion, it can be said that there are many risks in the forex market. So you should always keep your eyes and ears open and trade keeping your emotions away. And you will definitely be a successful trader

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