If you are just starting out in the online trading world it may seem daunting, AvaTrade has all the basics covered to put your mind at rest. We will teach you that trading is all about controlling your own destiny, you decide how much you want to invest, when and which trades to open and when to close them.
The very root of trading for a beginner starts with a clear understanding, that basic factors influencing market behavior and the prices are supply and demand. When supply and demand are not in sync this is when a price move is going to happen, if there are more willing buyers than there are sellers in the market then a price will go up and vice versa. This logic is simple and applies to the principles of trading currencies, CFDs, etc.
With AvaTrade when you register for a live or demo account you will find many articles, videos, webinars and other educational tools that not only introduce you to the basics of forex trading, but teach you how to build strategies, learn market analysis etc.
We will get you to start compiling a trading plan, seek out what you want as a trader, what you can absorb in terms of risk, establish your profit goals and the time you can devote to your trading.
Another element of trading online is to learn how to lose small but win big, managing your risk to reward ratio of 3:1 per trade placed.
How to trade forex
On the simple side, a currency exchange rate is the rate at which the basic currency can be exchanged for the quote currency. These currencies are quoted in pairs, such as the widely traded pair EUR/USD that is the Euro and the US Dollar. Economic factors such as industrial production, inflation, political events, etc. influence these exchange rates. These factors are the main market influencers for whether you buy or sell a currency pair.
A more practical example of a forex trade is illustrated as follows:
In this example of the EUR/USD the EURO is represented as the base currency and the USD as the quote currency, and it represents the number of US dollars that one euro can purchase. The quotation of EUR/USD 1.2000 in numbers means: That one euro is exchanged for 1.2000 US dollars.
If you believe that the euro will increase in value against the US dollar over the next 48 hours, you will BUY the euro. Should the exchange rate rise in your favor you would sell the euros back at a profit. Basically, this is how profits are made when you trade online.
Why would you trade currencies?
As forex trading is now known as the world’s largest market, with 24-hour operations and over 3.2 trillion traded in US dollars on a daily volume. There are a few differences between the forex and the equities markets and where AvaTrade is your broker:
- There is no commission charged for trades with AvaTrade you only pay the bid/ask spreads
- 24 hour 5 days a week trading, so you manage and control when and how you trade
- AvaTrade offers up to 400:1 leverage to magnify any potential gains
- Over 250 instruments to trade on which include Forex, CFDs for stocks, commodities & indices
- You can get started with only $/€/£ 100 and gain all the training and customer support in your language
How to perform a trade
Choosing the right broker to trade with is the most essential of all your choices when it comes to online trading. We offer you starter bonus of up to 100%, a free demo account and many forms of educational information alongside direct interaction from any of our customer support agents, 24 hours a day, should you require further services.
- Open your online real account, provide your banking and personal information that is totally secure, and without any commissions and fees. Now that that is covered let’s execute your first trade.
- After you have conducted your research and, in case of need, consulted with our team, head over to the trading platform where you can open a position on the chosen instrument. You will also be able to see the spread, and how many units you wish to buy on an implemented leverage (of your choice). Remember to start small and build up when you get the hang of trading. It is important to use stop loss orders each time you open a trade.
- Once your trade is opened you will need to monitor your investment and keep abreast of their performances. Should you see a decrease in the activity and the markets are trading against you, you should consider a sell, or wait for the stop loss to kick in to limit the damage on your account.
- Making changes to your portfolio from time to time is advised, you are constantly exposed to emerging markets and you can decide to diversify your trades. Whatever the case, follow your strategy, and do not over trade.
- Should your trade make a profit covering your goal, close it and take the profit. Executing a withdrawal request is simple and easy and can be done via the platform.
Learn how to trade online with AvaTrade
Want to learn how to trade forex? Potentially increase your gains on the financial markets? AvaTrade will teach you how to master forex trading. Start now! With all the tools of the trade at your fingertips there is no reason for a delay.