The Ultimate Forex Trading Cheatsheet

26.06.2019

Forex trading is fast becoming a popular career choice for many around the world and it is something which is incredibly lucrative if you can do it right. Trading on the foreign exchange market is a smart way to make money each and every day and it can be something which allows you to break away from corporate life and forge your own unique career.

For those of you who want to get started with trading this year, we want to share with you a whole bunch of beginner tips and tricks which will bring you into the world of forex and allow you to begin trading today and build your career from today onwards.

Contents:

During our article you’ll gain a history about trading, some key information on orders and rules, and the key steps you need to take to make a trade today.

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So without further ado let’s get started!

stock, market, graphs

Forex: The Basics You Need To Know

Forex is a form of trading which stands for Foreign Exchange Market. It is the act of trading currency between countries and it is the largest market in the whole world for trading. So, if you aren’t too familiar with Forex and you are looking to learn, we’ve got a quick round-up of what Forex is all about and how we can trade currency on the stock market.

What is Forex?

As we mentioned, Forex is the market where currencies are traded around the world every single day by big banks, corporations and individual investors. But what does it mean to trade currency in the first place?

If you have ever been on holiday abroad you will likely be aware that every currency is worth a different value compared to your own local currency. So, for example, GBP currently (as of writing this) is equal to 1.28 USD. This means if you were to give someone £1 coin, you would get $1.28 in return. This difference in value is relative and is known as an exchange rate. Exchange rates exist because back in the mid-1800’s people used to use gold and silver as payment for items. Different parts of the world would have more gold and silver than others and this would mean that the demand for this commodity was lower, therefore decreasing the value.

Let’s imagine that you have 3 people. Person number 1 has no sweets, and they want sweets to eat. Person 2 has 4 sweets, and Person 3 has 10 sweets. It would be a bigger loss for Person 2 to give Person 1 a sweet and therefore they would charge more for the pleasure, whereas Person 3 has an abundance of sweets and therefore will offer them at a lower price. This works the same way with currency and other trades too. Exchange rates work in the same way and they always work in pairs. So you will see a different relationship between GBP/USD and USD/EUR because they have a different relationship when it comes to supply and demand of trade, currency, and other commodities etc…

Now we know a little about exchange rates we can talk more in relation to Forex itself. The Forex market is responsible for exchange rate values and this is why you will see them changing every single day as people trade currency between eachother. You may notice that a currency never has a specific value, and this is due to the fact that they are always counted in pairs, and the value you will see is the RELATIVE value between the two. For context, you will see that since Brexit, the value of the Pound against many other currencies has dipped because people don’t want to buy into the UK anymore.

The Forex market is one which runs 24 hours a day from Monday to Friday and is closed on the weekends. The reason it runs for 24 hours a day is that it is international and runs all over the world. Due to the scale and the fact that Forex is carried out everywhere in the world, there is little to regulate it because no single governing body controls it. This can be a great thing because it gives traders the freedom to trade at their own pace and use their own methods.

Currently. Forex traders exchange approximately $5.09 trillion every single day.

How does it work? 

Now that we have introduced the idea of Forex, its time to see how people actually trade on the market every day. Forex trading is something which can take a lot of practice, and of course there will always be a lot of complication involved, however, it is something which is actually straightforward, to begin with. If you want to trade Forex and try your hand at this game these are some of the initial things you need to do and need to know:

Choose a currency pair

Before you do anything else, you need to choose a currency pair to trade between. It is very common for people to choose their own local currency alongside another currency. So if you are from the UK you may decide to trade with GBP/USD or GBP/EUR etc. Have a little look online and see what your options are and which ones may be best for you.

Buy or Sell?

When you come to trade currency you will have 2 options: buying or selling. Which one you decide to do will depend on the relative values of your currency pair and how you predict them to change over time. For example, if you were to trade between GBP/USD, you would first want to look at the current values of these currencies. Let’s say that the values are as follows:

1 GBP= 1.28 USD

In the current situation with Brexit and the tumultuous relationship Britain has with the USA, it can be assumed that the value of the Pound will drop compared to the Dollar. In this case, it would be better to sell GBP and exchange it for USD, as this should increase in value over time and give you a profit. In the opposite direction, you would want to buy USD in exchange for GBP. It is always worth keeping on top of current affairs and news to give you an idea of this.

Orders

When you buy or sell currency on the forex market you will have the option to add an order to the trade. This is essentially a rule which you attach to the trade which states that if a variable is met, you close the deal. Here are the two main types of order:

  • Stop loss – this order is to close out of the deal if the value of your trade dips below its original value. It prevents the risk of you losing money on a deal
  • Limit order – This order is to close out when the value gets above a certain threshold to maximize your profit and ensure you get as much as you can out of a deal

Monitoring

It is always important for you to monitor your stocks as they go as they will be constantly changing every single day. Be ready to close out at any given time and always trust your gut instinct.

Closing

To close a deal all you need to do is the exact opposite of what you did when you opened it. So for example, if you opened by selling £100, close it by buying £100 back.

Trading Forex doesn’t have to be complex, however, it will require a lot of skill and risk management to make a success in the trading world. If you need more advice or want to take a training course. We offer a Free introduction to trading as well as an intensive course to give you all of the knowledge you need to trade in the real world. Visit our Trading Courses page to find out more at http://alphazone.com/alpha-trading-course/

Exchange Rates: What Are They And Why Are They Important?

Whenever we start to look into forex trading and its origins, one of the first things we see is exchange rates. Exchange rates are known these days as the difference in value between the two currencies. For example, if you were to take a currency pair such as GBP/USD, the current exchange rate at the time of writing this is 1/1.31. This means that if you were in the USA and you wanted to buy 1 British Pound Sterling, you would have to pay 1.31 Dollars for it.

Most of us are familiar with exchange rates in terms of going on vacation and swapping currency for our adventures, but how many of us really know why we have exchange rates in the first place? When it comes to learning how to trade on the foreign exchange market, these rates are essential and because of this, it can be a great idea for us to learn more about their origins and importance.

Throughout history, humans have always looked for different ways to exchange one thing for another fairly, and a lot of the time this would have been gold and silver pieces. Coins themselves have been around for thousands of years with people giving other people gold in exchange for food, clothes and other services. Logically you would assume that the whole world should have one universal currency, but this has never been the case. The main reason for this is that different parts of the world are gifted with different volumes of gold and other precious metals. We all know that gold is mined from the ground, and it stands to reason that there are hotspots for gold around the world, where others are sparse. The reason why gold is valued differently in different places is due to supply and demand.

Let’s think about a scenario:

There are three people in a group, looking to exchange apples between themselves. Person 1 has 20 apples, Person 2 has 5 apples, and Person 3 has 1 apple. If someone asked Person 1 for an apple, they would gladly give it for a lower price because they still have lots of apples left. Person 2 will give the apple for a higher price because they only have 5, and Person 3 would need a large sum of money to convince them to part with their only apple.

In this scenario, we can replace people with countries, and apples with gold. Parts of the world who have a lot of gold will have a lower exchange value than those who have less.

Now we can bring this into the current day, and we can now see why exchange rates exist and why people spend time trading currency on the foreign exchange market. In 1935 the USA set a specific value for 1 ounce of gold, and this value was set at $35. Most countries after the second world war, therefore, set their own currency values in relation to the dollar and this is where the differences built up, and the idea of trading currency really took off. Throughout the years, things have changed due to historical and political events, and by the ’70s the dollar didn’t stand for a specific volume of gold any longer. However, as things we already well established around the world, currencies still continue to fluctuate to this day.

In 2019, we can use the foreign exchange market to track the exchange rates of currencies and this is a wonderful world for traders to enter into in the New Year. If you want to learn more about forex trading and start working with exchange rates yourself, you can take our Free Course or Pro Course to learn some key trading skills.

Beginner Trading Mistakes You Need To Avoid

Trading Forex is a complex task, and it can take months or even years of learning and experience to truly be successful trading on the financial market. If you are starting out with financial trading and you want to try and become successful as a trader, here are some of the most common mistakes which you should avoid making.

Not Using A Stop Loss

When you open up a trading account on any platform you will be able to set up rules from which you will open and close deals. One of the things which you will have the option to do is have a stop loss from which you create an order for your trade to close if the value reaches below a certain price. This is a huge safeguard for yourself and it is a way to make sure you never lose out on your profits. Always make sure to order a stop loss and this will manage the risk you undertake as you trade on the financial market.

Going All In On One Trade

One of the biggest mistakes which a lot of new traders make in their first few months is to become too confident and place all money in one place. The term ‘don’t place all of your eggs in one basket’ really applies here and you need to make sure that you spread your funds between a few different trades. This will lower the risk of you losing out and it will make it much more likely for you to make back at least some of the money you put in if not all of it.

Predicting Pairs From The News

It is incredibly tempting when trading on the stock market to use the news as a guide. For example, when trading the GBP/EUR pairing you might look to the current chaos surrounding Brexit and use this to determine which way to bet your money. Although sometimes the news can help you to gain an insight into the stock market, it isn’t the be all and end all. Other things will always affect the trends so it is better to think tactically and make sure that you really take the time to plan out your trades.

Not Having A Plan

Speaking of plans, one of the biggest mistakes you might make as a first time trader is to simply let guesswork prevail and have no plan on when you want to cut and run from a deal. It is always a good idea to sit down and brainstorm your plan of action before taking action in the market. Decide what your stop loss will be and where to set your limit order. Think about whether to go for a short or long trade and consider spread betting. Make sure that before any money goes into the market that you know your plan of attack.

Trading For Beginners: The Best Resources You Can Use

When you start out with trading on the stock market, it can admittedly be a little bit confusing. There are a lot of words and phrases you will never have heard of and these can often make us feel even more confused than when we started. The good thing is that since trading is a popular pastime and career for many, there is no shortage of resources available which we can take advantage of. Today we are going to take a look at some of the many resources that every trader can use to help them be the best they can be.

Investopedia

Investopedia is a one-stop shop for investors at any level and it can provide a lot of handy tips and resources for traders to use. For example, it offers a glossary of terms which can be handy for first time traders who haven’t got to grips with all of the jargon yet. It also provides a blog with tips and tricks, a live forecast of the stock market and learning materials for all levels.

Think Or Swim

This is a handy tool to sign up for and is powered by Think Money. It is a tool which can offer you charting software for your trading needs, and it has a great scanner which can be used to indicate which stocks you should be investing in right now. They also have a simulator for new and inexperienced traders so that you can practice the art of trading without risking real cash straight away.

Alpha Zone Pro Course

A great resource for traders who want to widen their skills and experience is the Pro Course from Alpha Zone which offers an intensive training course where you can work with real money on a LIVE trading floor with the support of experts. It can be a good way to get straight into trading and get to grips with working in a real-time setting before attempting to go it alone. Plus, you can get a CPD certificate on completion.

The Stock Market Watch

For those of you who will be trading on the stock market each day: this tool will allow you to see values before the market opens for the day and this can allow you to prepare which stocks you’ll be trading on when you do start up for the day. You can see the biggest gappers too which can be handy!

Trading View

For any level of trader, Trading View really is one of the top resources you can take advantage of when trading on the stock market. You’ll have access to live information and you can even add indicators so you know where you stand with stocks. You’ll also be able to see press releases for any company you are trading with which is a great touch.

FinViz

For researching the stock market and deciding on which stock you want to invest in each day: there is no better tool than this. It has daily percentage gainers and losers, a stock screener and amazing options for statistical overviews on stocks. Within their daily chart is a chronological list of stocks which allows you to stay in the loop all day long.

These are just a few of the awesome resources you can use for your trading career, and there are plenty more out there which you can take advantage of this year!

Great Reasons To Trade With Alpha Zone

Now that the New Year is fully underway, a lot of you may be looking for some new skills to learn, and one great choice for 2019 would be Forex Trading. Forex Trading is the largest market in the world and it has an incredible turnover every single day. If you take the time to learn the ways of Forex trading you could stand to earn a lucrative income for yourself this year.

Today we are going to chat about Forex Trading and some good reasons why you should learn to trade with us this year.

We’re In The Heart Of Manchester

The first great reason to join us in your Trading journey is the fact that we are the only live trading floor outside London in the UK. If you are studying in the North West, Manchester is a great place to come to learn more about trading and the city centre has some amazing transport links to other locations. Manchester is a thriving and diverse city, so working and learning here can be a great experience for you.

Our Traders Are Experts

If you are new to trading on the foreign exchange market and you are looking for guidance as you learn the ropes, our traders are ideally suited to help you on your journey. We have a team of Forex Traders who are friendly and happy to help you with your work, and this will allow you to learn some tricks of the trade (pun intended) and become more confident in your skills.

We Have Two Different Courses

Whether you are fairly new to Forex Trading or you are an experienced trader looking to enhance your skills, we have a course for you. Our beginner’s course is Free and delivered by one of our experienced traders, and our Professional course costs only £999 and will give you in-depth knowledge for your future Forex Trading. We’ll provide all of the resources you need and you can even bring in your laptop if you want to try out some of the concepts we teach.

In short, if you are in the North West and you are looking for a chance to learn a valuable skill for your career, Alpha Zone will be the ideal place to come!

Just a quick note before we go, we now have an eBook with an even more in depth look into the world of forex trading, and you can purchase this from the Amazon Kindle store for only £9.99!

Make sure to keep in touch with us on social media to stay up to date with all of our latest news!

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