Five First Steps to Trading Forex Professionally

After conducting online and offline Forex trading seminars for over 150 students nationwide, Ambrose Ebuka has developed a useful roadmap that can take a Forex beginner to a professional level in Forex trading.

These steps are featured on a recent radio show and can take you from beginner to pro in Forex trading if followed wisely.

Step 1: Learn the Basics

The first stage of the Forex learning journey begins with the basics. What is forex ? How it works? How can I use it?

Term derived from the abbreviation of exchange, Forex is the market where people and institutions, such as banks and investment funds, exchange currencies. The Forex market is the largest financial market in the world, open 24 hours a day, five days a week.

The broker helps make the Forex market accessible to millions of retail traders around the world. Brokers also allow traders to access leverage, which traders can use to augment their initial investments with borrowed funds. While this may increase profit potential, it also increases the risk of losing trading capital. Therefore, ensuring proper risk management is paramount.

In Forex, one currency is always exchanged for another, forming currency pairs. Two common examples of currency pairs are GBPJPY (the British pound against the Japanese yen) and EURUSD (the euro against the US dollar). In each pair, the first currency is called the base currency, followed by the quote currency. In our GBPJPY example above, GBP is the base currencywhile JPY is the quote currency.

Forex profits come from the movement of currencies in a trade. These moves are measured in pips, which are usually the last decimal place of a quote.

Head to the OctaFX YouTube Channel where you will find many detailed videos by Forex trading experts that will enhance your forex trading knowledge.

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Step 2: Pick the right time

Traders enter the Forex market to make profits. The best time for this is when volatility and liquidity are highest in the Forex market. Four trading sessions called by the names of the cities where the major exchanges operate—New York, London, Sydney and Tokyo— run for nine hours each. The peak trading period occurs when trading sessions overlap (i.e. when multiple trading sessions are open at the same time). This period offers the most liquidity and increased price movements for the most traded currency pairs during these sessions.

Considering the overlaps and opening hours of different trading sessions, Nigerian experts have concluded that the best time to trade is between the opening time of the London session and the closing time of the session. from New York (8:00 a.m. to 5:00 p.m.). :00 pm Nigerian time). During these hours, there are many chances of a successful trade as liquidity is highest for major currency pairs like EUR/USD and GBP/USD.

Economic data tends to be one of the biggest drivers of short-term movements in the Forex market. Another important factor is the timing of the publication of hurry press releases and other influential statements. A major press release has the power to spur a period of fast-paced trading.

Although traders should not be concerned with all the news, there are important events that traders should not overlook. You can find each of these events in the country-specific OctaFX section. economic calendar. They provide you with past, present and future updates regarding economic news of a country.

Step 3: Analyze the market

Professional Forex traders create a combination of systems to analyze the Forex market, which then inform their trading decisions.

Forex traders use three well-known methods to analyze the market: fundamental, technical and sentimental analysis. The last is the rarest of the three. Feeling analysis is to analyze the movement of currencies based on popular opinion among Forex traders.

Fundamental analysis breaks down the impact of political, economic and social factors on the relative value of a currency. Factors such as epidemics or high unemployment rates, among others, can cause a country’s economy to decline. In this case, the currency of this country will probably fall. The reverse would be the case for positive economic growth and appreciation of the national currency.

OctaFX offers an easier way to keep you informed by sharing reports on key events.

Technical analysis studies historical price movements to identify patterns and predict future price movements. Using trend lines, support and resistance levels, indicators and various chart patterns, Forex analysts and traders decide on the most favorable trading decisions..

Here are some reliable market analysis practices:

  • Apply both technical and fundamental analysis
  • Identify daily and weekly trends. Is it an uptrend or a downtrend?
  • Mark support and resistance levels.
  • Look for swing highs/swing lows.
  • Identify key price areas where a retracement may occur. Then apply the Fibonacci retracement indicator to confirm.

Developing the strategy that works for you requires that you have a plan, work on it constantly, test it on historical data or a demo account, and develop it over time. Browse the Analysis and education section of the OctaFX site (don’t forget the Youtube channel) for educational materials on all the technical terms and tools mentioned in this article. On the YouTube channel, you can watch professionals analyze the markets. You can explore their practices and test which one works for you.

OctaFX Ambassador, Ambrose Ebuka on Inspiration FM in a show called “Forex Talks with OctaFX”.

Step 4: put onI don’t believe in business myths

There are several trading myths that you should stop believing if you want to become a professional Forex trader.

  • Forex will make you money fast

Forex is not a get-rich-quick scheme. It’s like any other business that requires its own set of skills and techniques that you need to learn.

  • You need huge capital to start trading Forex

As a newbie trader, you have the option to start small. Many brokers offer retail investors minimum deposit requirements to enter the Forex market. For example, with OctaFX, you can enter the Forex market with as little as $40.

  • Spend more time watching your trades

Although trading requires a lot of commitment, it does not necessarily require you to stare at the screen all the time.

A fatal misconception often made by novice traders is that the more risk you take, the higher your reward can be. Leverage is a double-edged sword that can magnify your profits while exposing your trading account to a high level of risk if not used correctly. Never use leverage blindly.

  • More trading means more profit

It doesn’t matter how many trades you open. What matters is how much you earn on each trade.

The Forex market is an international financial market where world currencies are traded. A lot of money is usually involved in Forex activity, so scammers take advantage of the situation to defraud unsuspecting traders who expect high profits. Do your research before venturing into any business, whether it’s Forex trading or not.

  • You will be right all the time

Losses are an integral part of trading. Accepting this and implementing risk management strategies plays an important role in helping traders achieve their goals and objectives.

Develop a solid trading plan that you have tested and convert your losses into lessons.

Step 5: Avoid common trading mistakes

The journey to professional level in any business involves making mistakes and learning from them. Learning from the mistakes of others will save you a lot of trouble. Here are some common trading mistakes and how to avoid them.

Forex is not a bet. Placing a trade with a bad analysis or guess is a short road to bankruptcy.

While it’s tempting to use extreme leverage to make quick profits on a single trade, the risk of losing everything you have isn’t worth it. It is wise to make proper assessments before using leverage and placing risk management orders.

  • Let emotions influence your trading

Trading in anger and in a frantic attempt to get your money back after a loss can ruin your investing experience. Keep your loss per trade to a maximum of 25% and stop it once it gets there. Switch to your demo account for a while if trading gets difficult.

Always ensure that you have appropriate risk management plans. Place your Stop losses to limit losses and take profits to close your orders immediately after reaching your profit target. The use of conservative lot sizes and risk-reward ratios are also indispensable tools for managing risk.

Once you have a trading strategy that works for you, stick to it strictly. Don’t let impatience get the better of you.

You could lose all your money if your trading account is mismanaged, your broker is in financial trouble, or it’s a real scam. Consider your trading profit goals and what a broker offers.

Hey! If you have made it to the end, you are serious about this journey and becoming a Forex trading professional. To keep you motivated, OctaFX is giving you a 100% bonus on your deposit when you use the promo code INFORM100 by the end of August.

Follow the steps outlined in this article, and you’ll be unstoppable in the world of finance.

Garland K. Long