Forex Trading for Beginners

Are you tired of endless online tutorials and courses that promise the world so far as learning to trade but always fail to deliver? Would you like to learn to trade the way the most profitable traders do? Then we’re here to make a firm commitment to you. Nirav and the team at G7FX are here to teach any budding trader exactly what they need to know to trade successfully. You’ll progress through two courses where you’ll learn everything you’d learn in your first few months at a top institution.  Forget about those unscrupulous educators who only wish to hold you back while making themselves richer. Forget about those videos on YouTube that only lead you round in circles. No experience is necessary – all you need is the right attitude, an internet connection, and spare time. You’ll even receive a couple of expensive analytics tools, including in the course price! So, what are you waiting for? Learn to trade today! 

Are you interested in learning all about Forex Trading, but you have zero previous experience or knowledge? Have you been searching for a team that can help you learn everything you need to know about Forex and how to trade successfully? If so, you have certainly come to the right place, as we at G7FX are specialists in all things Forex Trading and we can teach you the strategies. 

Founded by Nirav, who himself has over 16 years of experience in the trading industry, we have the knowledge to educate you on all things Forex. You can trust that you are learning from the best as we have verifiable trading results and a history of successful trading under our belts. So, if you are interested in learning all about Forex Trading for beginners, you need simply get in touch with us today. You can fill out our form or email Nirav directly at nv@g7fx.com

Forex Trading: A Beginner’s Guide

Forex Trading is a popular sector of trading, and it is the process of trading currencies on the foreign exchange market. You trade one currency into another and, because currency is a worldwide institution, Forex markets tend to be the largest and most liquid in the world. This is the bare basics of what it means to trade Forex, and we at G7FX are here to go into further depth, ensuring you know and understand everything about Forex Trading. 

Contact Us

To get in touch regarding our learn to trade educational services, email nv@g7fx.com to arrange a call outside of market hours.

    What is the Forex Market?

    The Forex Market is otherwise known as the Foreign Exchange Market, and this is where currencies are traded. Because currency is required worldwide, you can trade on the Forex Market from anywhere; it is all conducted over the counter (online via computer networks).  

    The Forex Market is open 24 hours a day for five and a half days a week, with currencies traded in major financial centres, from London and New York to Tokyo and Zurich. This spans many time zones, so the market can be active any time of the day, with prices constantly changing. 

    A Brief History of Forex

    The Forex Market is quite a new market when compared to stock markets, which have been around for centuries. As more currencies have been allowed to float freely against one another, and the value of currencies vary, the Forex Market has risen so as to exchange and trade. However, this isn’t to say the process of exchanging currencies is a completely new one; this has been going on since currency was minted, with the Forex Market and the ability to trade so freely being the new part. 

    Spot Market and the Forwards and Futures Markets

    You will find that there are three ways in which any institution, corporation, or individual can trade Forex; the spot market, the forwards market, and the futures market. We will begin by explaining the spot market, which has always been the largest market; it is the asset that both the forwards and futures markets are based on. The spot market is now the preferred market for individual investors, and it is where currency is being bought and sold for the current price. 

    This price is determined by supply and demand, which depends on a number of factors such as current interest rates, political situations, and economic performance. These deals are known as spot deals because one party provides an agreed-upon amount of currency to another party and receives an agreed-upon amount of currency in return.  

    The forwards and futures markets are different in that they don’t actually trade in actual currencies. They both deal in contracts that represent a certain currency type, a specific price, and a future date for settlement of the contract. The forwards market is where contracts are bought and sold over the counter between two parties, and they determine the agreement terms between themselves.  

    The futures market handles futures contracts, which are bought and sold based on a standard size and settlement date, on public markets. These contracts have specific details, such as the number of units to be traded, the delivery and settlement dates, and minimum price increments, which can’t be customised. 

    Forex for Hedging 

    Any company doing business in a foreign country is at risk of fluctuations in currency value, but the foreign exchange market provides a way in which to hedge currency risk by fixing a rate for the transaction to be completed, hence Forex for hedging. A trader can buy or sell a currency in the forward market in advance, which then locks the exchange rate in place. This is known as shorting the currency, and hedging of this kind can be done on the futures market. 

    Forex for Speculation

    The supply and demand for currencies can be affected by factors such as interest rates, tourism, trade flows, economic strength, and geopolitical risk, which can create daily volatility in the market. However, there is an opportunity to profit from these changes, which may increase or decrease a currency’s value in comparison to another. Currencies are traded as pairs, so if one currency is forecast to weaken, it stands to reason the other currency in the pair will strengthen. 

    Currency as an Asset Class

    You will find that there are two features to currency as an asset class; earning the interest rate differential between currencies and profiting from changes in the exchange rate. Investors can profit from the difference between interest rates in two different economies. They do this by buying the currency with the higher interest rate, thereby shorting the currency with the lowest interest rate. 

    Why We Can Trade Currencies

    It is much easier now to trade currencies than before, thanks to the creation of the internet. This has opened the door to many more individuals looking to trade. In the past, most traders were multinational corporations or hedge funds. You will find that most online brokers or dealers will offer high leverage to individual traders, who can control a large trade with a small bank balance. 

    Forex Trading Risks

    Of course, Forex trading can be risky and complicated, with varying degrees of regulation and non-standardised instruments. In some parts of the world, you will find that Forex trading is actually almost completely unregulated.  

    The interbank market is made up of banks trading with each other all around the world, and they must determine and accept both sovereign risk and credit risk. They have processes to keep themselves as safe as possible, and these regulations are industry imposed for the protection of each bank that participates.  

    The market is made by each of the banks providing offers and bids on currency, and this pricing is based on supply and demand. With large trade flows within the systems, it is quite difficult for any rogue trader to influence the currency price, and this creates transparency in the market. 

    Many small retail traders will be trading with small and partly unregulated brokers and dealers, who can requote prices and trade against their own customers. There may be government and industry regulation depending on where the broker exists, but these are inconsistent safeguards. Any retail trader should fully investigate a dealer or broker and find out about any account protections. 

    Pros and Challenges of Trading Forex

    As you can imagine, there are many pros and challenges to trading Forex, and we will go into further detail about each, starting with the pros. First, the Forex market is the largest in the world when it comes to daily trading volume, so it offers the most liquidity. This makes it easy to both enter and exit a position in any major currency within a fraction of a second. 

    You will also find the Forex market is traded 24 hours a day, for five and a half days of the week. It covers many time zones, so the market is always open and busy somewhere in the world. 

    Now for the challenges of trading Forex, starting with the fact that trading in any currency will require knowledge of economic fundamentals and indicators. You will need to have a full, big picture understanding of the economy for the currency you are trading in and the factors that drive currency values. 

    Another challenge is that the banks, brokers, and dealers in this market allow a high amount of leverage, so traders can control large positions with little of their own money. You will need to understand the use and risk of leverage in your account, as extreme amounts of leverage have led to dealers becoming insolvent quite suddenly. 

    The Bottom Line

    The bottom line for Forex trading is that you need to understand the macroeconomic fundamentals which drive currency values, and experience with technical analysis will help any new Forex trader to become more profitable. Traders with limited funds will find that day trading or swing trading in small amounts is easier in the Forex market when compared to other markets. Those working with larger funds and longerterm horizons will find that long term fundamentals-based trading, or carry trade, is more profitable. 

    Forex Trading Lessons 

    Here at G7FX, we noticed a lack of quality Forex trading educators in the retail sector, so we worked to remedy it by creating our own Forex trading lessons. Nirav used his 16+ years of experience to create our courses, ensuring you will learn everything you need to know about Forex trading. Our courses cover the exact same education you would receive on the job from any of the world’s leading institutions, as we believe everyone should have the same opportunity to succeed as a trader. 

    Our Course

    We offer two courses here at G7FX, the Foundation Course and the Pro Course. The Foundation Course covers what you would be learning in your first three months on the job, and you can take this course even if you have zero prior knowledge or experience in trading; in fact, we assume you have none and teach you from the ground up.  

    Our Pro Course builds on everything you will have learnt in the Foundation Course, replicating what you would learn on the job in months three to six. Once you have completed our Pro Course, you will be set to begin trading successfully on the Forex market. 

    Below, we have gone into further detail on the types of information you will learn through our courses. 

    Long Trade

    Long trading in the foreign exchange market, as with all market trading, means buying currency with the expectation that your purchase will rise in value. As you know, when you trade currency, you trade in pairs, so one currency will be the base currency, with the other being the quote currency. One will always be stronger than the other, long and short; so, when you go long on one currency, you are betting that the base currency will strengthen against the quote currency, thereby rising in value.  

    Short Trade

    Short trading is the opposite of long trading, in that you are assuming one currency in the pair will decline in value as the other rises. With all currency being traded in pairs, one currency will always be stronger than the other, and short trading is when the trader speculates that the value of one currency will decrease.  

    They borrow shares of the stock they believe will decrease in value, selling these borrowed shares to buyers who are willing to pay the market price. As these are borrowed shares, they must be bought back, and the trader is taking the risk that the value will fall, so they can buy the shares back for a lower price. 

    Chart Types

    When it comes to trading Forex, you need to understand the technical and analytical side of things, and this is where charts come in. There are different types of charts used, the most common of which are line, bar, and candlestick charts. 

    Line Charts

    This is a graphical representation of an asset’s historical price action, and it is the most basic type of charts used. It visually represents the price history using a single, continuous line, which is easy to understand and interpret. However, it only depicts changes in an asset’s closing price over time.  

    OHLC Bar Charts

    Bar charts show far more information than a line chart does. Each bar on the chart shows how prices moved over a specified time period, with a daily bar chart showing the price bar for each day. These usually show OHLC prices – open, high, low, and closing, but can be adjusted to only show HLC – high, low, and close.  

    The vertical line represents high and low prices, with the horizontal lines representing open and closing prices. These bar charts can also be colour coded; if the close price is above the open price, it can be black or green; if the close price is below the open price, it will be red. 

    Best Trading Systems

    Forex trading system is a method in which to trade Forex, and it is based on a series of analyses. These analyses determine whether to buy or sell currency pairs, and they set the procedures for determining entry and exit strategy too, along with risk management. This is essentially a rulesbased approach to trading currency, and these can be automated or manual. 

    Trading systems consist of technical signals that create a buy or sell decision when pointing in a direction that has led to profitable trade before. It is a trending plan outlining what a trader should do when the signal has been identified and a journal that captures what was done and why, leading to future analysis. 

    A manual trading system involves the trader looking for signals and interpreting the data to decide what to do. An automated trading system is where the trader teaches the running software what signals to look for and how to interpret them. This reduces human error and reaction time, and more complex automated systems can include common strategies and signals loaded, so traders can combine approaches. 

    Trading Platforms

    A trading platform is the software interface that is provided by currency brokers to their customers. This gives them access as traders to the foreign exchange markets, and it can be online, a mobile app, or a downloadable program (or even a combination of the three). Most platforms are made available through broker firms, and Metatrader 4 (MT4) is a standard among platforms. 

    Analysis

    Analysis is used by day traders so they can determine whether to buy or sell currency pairs. They can use charts in order to technically analyse, but traders can also use economic indicators to analyse whether to buy or sell.  

    Technical analysis is both automated and manual, where the trader is analysing technical indicators, using resources like charts, and interpreting the data into a decision. This can be done both manually and automated.  

    Fundamental analysis uses factors such as interest rates, GDP, and other economic data to inform the decision as to whether to buy or sell currency.  

    Trading Terminology Made Easy for Beginners

    We understand that there is a lot of trading terminology to come to grips with, and we have gone into detail about the terminology below to make this easier for you. 

    Spot Forex

    Spot Forex, also known as a spot trade or spot transaction, is when a trader purchases a foreign currency with delivery on a specified spot date, usually within two business days. This market trades around the world electronically, and it is the world’s largest market. The spot price refers to the current price of the currency, and it is the price the asset can be sold and bought at instantly.  

    CFDs

    CFDs, otherwise known as a contract for difference, is a contract between a buyer and seller, and it states that the buyer must pay the seller the difference between the current asset value and its value at contract time. This allows traders an opportunity to profit from price movement without actually owning the underlying assets. A CFD contract doesn’t consider the underlying value, only the price change between entering and exiting the trade. 

    Pip

    Pip is otherwise known as percentage in point or price interest point, and it is the smallest price move an exchange rate can make based on Forex market convention. Currency pairs are quoted in terms of pip, and it is one-hundredth of one per cent. In simple terms, a trader will buy or sell a currency whose value is expressed in relationship to another currency, and the movement in the exchange rate is measured in pips, accurate to four decimal places. 

    Margin

    Margin trading is the process by which a trader makes a good faith deposit with a broker so they can open and maintain positions in more than one currency. It is essentially a portion of the trader’s account balance, which is set aside in an order trade. You will find the amount of margin required can vary depending on the broker, and it is important to understand margin trading. 

    In simple terms, it involves borrowing to increase the size of a position, usually to improve returns. It is trading with leverage which, as discussed earlier, can increase the risk along with potential returns.  

    Leverage

    Leverage in Forex trading is using borrowed funds in order to increase your trading position beyond what you can manage with your account balance. With Forex trading, you can usually get much higher leverage than with any other market, and you usually borrow from a broker. In the Forex market, leverage is commonly as high as 100:1, meaning you can trade up to 100k for every 1k in your account. This type of trading has the potential to increase your profit, but the same applies for your losses too. 

    Bear Market

    Bear market refers to a market that is experiencing prolonged price declines, generally with prices declining by more than 20%. A bear market can be either cyclical, which last for several weeks or a few months, or longerterm, which lasts for several years or decades. You can make money during a bear market with short selling, inverse EFTs, and put options. 

    Bull Market

    The opposite of a bear market, a bull market is the period of time where a market sees prices rise continuously. This is generally when prices rise by 20% after two declines of 20% each, and traders can employ several strategies during this period; increased buy and hold and retracement. 

    Beta

    Beta is the measure of a stock’s volatility in relation to the overall market. It measures the expected move in a stock relative to movements in the overall market. A beta greater than 1.0 suggests more volatile stock than the broader market, with a beta lower than 1.0 indicating lower volatility of stock. This is generally a better indicator of shortterm risk than longterm. 

    Broker

    A broker in Forex trading is a financial services company, and they provide traders access to a platform where they can buy and sell currencies. Clients of a Forex broker include retail currency traders along with larger financial firms trading on behalf of investment banks. 

    Bid 

    A bid is otherwise known as a bid price in Forex trading, and this is the price for which someone is willing to buy a currency. It is generally lower than an offered (ask) price, and the difference between the two is known as the bid-ask spread.  

    The bid price is the highest price a buyer is willing to pay, and it is generally arrived at through negotiation between seller and buyer. 

    Exchange

    Exchange refers to the process of exchanging one currency for another, which happens in the Forex market (foreign exchange market). You trade foreign currency in pairs, so when you buy one, you are selling another. 

    Close

    A trader is always opening and closing positions, and the term close position refers to cancelling out an existing position in the market. This can be either a long close or a short close; a short sale is buying back the security with a long sale selling the security. This is generally initiated by the trader. 

    Day Trading

    A day trader is someone who executes a large volume of both short and long trades, profiting off relatively short-lived price changes. They can employ a variety of techniques, often involving many trades a day and closing positions before the trading day will end. 

    Dividend

    A dividend is when a company distributes some of its earnings to shareholders, which is something that is determined by the board of directors. Shareholders are generally eligible as long as they own stock before the ex-dividend date. 

    Blue Chip Stocks

    Blue chip stocks are seen as relatively safer investments as they have a proven track record of success and stable growth. They are, however, still subject to volatility and failure, as with any stock. 

    Contact the Forex Trading Strategies Specialists

    As you will have learned from all of the above information, there is a lot you will need to be taught about Forex trading if you are a beginner. This is where we at G7FX come in with our Forex trading courses; Foundation and Pro. We are here to ensure you learn everything there is to know about Forex trading, so you can begin to trade successfully. So, if you have read all of the above information and would like to invest in our courses, you need simply get in touch. 

    You can get in touch with the G7FX team by filling out our online form, leaving your details and your enquiry. We will respond as soon as possible via your preferred method of contact to discuss your requirements and answer any questions you may have.  

    You can also contact our founder, Nirav, directly at nv@g7fx.com. He is always happy to talk to potential students, as long as it is outside of trading hours.