Forex traders seek to buy a cheap currency and then sell it at a better price later. Let’s assume the euro vs. us dollar is priced at 1.4070, at present.

If a trader feels the exchange rate will increase in the future, they’d look to buy the EUR/USD pair at the current 1.4050 rate. If the exchange rate hits 1.4270 after a few hours or days, then our trader will have made a profit of 200 pips.

To start trading Forex is easy. What you need is internet access, a computer, a trading site and a brokerage account.

You’ll have to test lots of them to find the right Forex trading approach. You can narrow down the search by excluding any who definitely won’t match your criteria. If you don’t have a lot of time every day to trade, you won’t be able to trade with a scalping strategy or a day trading strategy.

Test the other two major strategies – position trading and swing trading to find a strategy that fits you taking into consideration your trading time and disposition.

Whether you’re a hedge fund with big pockets or an extraordinarily gifted currency trader, Forex trading can make you wealthy. Yet, for the average retail trader, Forex trading can be a rugged highway to massive losses and possible penury, rather than being a straightforward road to riches.

One of the most critical parts of Forex trading is to understand that you can suffer certain losses at some points in time. Also, even the most experienced traders will not often have their Forex trading strategy 100% correct so they must always weigh in the chance of failure with any trade. No strategy or technique has reliably proved superior.

What you should use is what works and what suits you. It is much more important to have a trading strategy that you can implement, rather than a flawless one.

Although the percentage of Forex traders that lose money differ significantly from study to study, the truth is that many traders are going to lose money and this cannot be stopped. There are all kinds of causes for the losses, including poor management of capital, bad timing or a poor strategy. Many traders will fail no matter what tools they use.

There are some people that make a living day-trading Forex for years. But the real question is whether this is possible for you. Studies on day traders have shown that most lose money in the long run. It is something you should think about deeply before venturing into it as a source of livelihood.

A stop-loss order suits the bill for sustaining upside potential. Although the word “stop-loss” sounds good for retaining value, this isn’t effective in reality. As a loss reducing device, a stop-loss may fail as reaching the stop price causes a transaction but does not guarantee the price at which the sale takes place.

The response to this question is yes because, before a defensive stop-loss, the market must sell by a limit order. One very popular trading approach is to enter the market on a limit order and at the same time put a defensive stop to better mitigate risk by providing a predefined risk parameter.

The truth is that most traders need to take advantage of stop losses to defend themselves against huge danger. But it is also accurate that a number of experienced traders are not using stop losses.

One of the best ways to place a stop-loss order while buying is to bring it below a “swing low.” If the price rises and then bounces, a swing low occurs. It shows the price found support at that point in the market. You want to flow with the trend. The swing lows should move up, as you buy.

Forex markets are the biggest in the world in terms of trade volume. Forex assets are known as highly liquid securities, owing to their high rate of trade. However, there is plenty of risks involved with Forex trades as a leveraged commodity which can result in substantial losses.

For certain traders, it may take about three to six months to learn the ropes of Forex trading. But there are certain things you need to learn from experience and that might take around a year. It all depends on how fast you learn and how much you devote to practising.

Usually, day trading strategies are the ideal Forex trading strategies for beginners.

Many traders Moving Average Convergence/Divergence (MACD) as a very effective indicator. It is designed to measure momentum. This not only finds a trend but also seeks to gauge the strength of the trend. It’s maybe the best predictor for Forex in terms of giving you a sense of the power behind a trend.

Moving average crossovers and other momentum oscillators are two of the better technical indicators to supplement the stochastic oscillator. Moving average crossovers should be used as an alternative to the stochastic oscillator’s crossover exchange signals.

One of the easiest ways to determine the end of a trend is by using a trendline. To be more precise, the trendlines’ breakouts. If you draw a downward trend line, and if price breaks and closes over it, you should take note that this means the downward trend is most likely over.

A false breakout is when the price goes briefly above or below a main support level of resistance, but then later retreats back to the same side as it started. It is the worst-case situation for a breakout trader who exits a contract as soon as the market breaks.

The Forex trading week starts at 6 p.m. EST Sunday and continues till 5 p.m. EST Friday. Not every hour of the day is equally perfect for trading forex. The best time to trade is usually when the market is most active.

Trading can be done at any time of day, and it’s really easy to do it part-time. If you are trained and well-coordinated, as a part-time Forex trader, you could make a very lucrative side profit.

The quick answer to this question is yes and no, Forex markets cannot crash entirely, but at any moment, different currencies will crash. Forex crashes are very different from stock-market crashes in that Forex crashes typically involve a single currency.

The pairs with the greatest volatility are GBP/CAD, GBP/NZD, GBP/JPY, and GBP/AUD. They all move by more than 100 points a day on average.

Based on high levels of volatility, Monday, Wednesday and Thursday are the best days for Forex trading. Fridays cannot be predicted. Mondays are stable. The rest of the week sees the most action.

The NFP report is an American employment indicator. As a result, the currency pairs that include the US Dollar are the most influenced by the publication of the report.

Although theoretically available around the clock, on Friday afternoon, Forex trading closes and does not reopen until Sunday evening. A lot of news reports and global events will happen during trading sessions that influence currency prices.

Autumn months are the perfect time of year for Forex trading. Trading activity slows down by the second half of December – just like in August. The slowest is the few weeks before and after Christmas. It is only in mid-January that the prices start to pick up.

Professional Forex traders do use certain technical metrics in their research but they do not generally use them in the same manner as they will be used by the average retail trader. Unfortunately, retail traders do not have this knowledge and instead look for other ways to forecast market  fluctuations.