FX Beginner’s Guide
Master Forex Trading Easily With JJPROFX
First and foremost, JJPROFX would like to welcome you to our big family! Before you start your real trading, we would like to offers you some start up guide in good will basis, assisting you to get well prepared.
Financial Markets or traditionally known as “markets” can be a very wide terms, with this section, JJPROFX is going to provide you with an insight about the basics of Forex Investment about Financial Markets in relation to Forex Investment. For easy understanding, JJPROFX will try to limit our explanations to Forex markets and try to use more layman terms as much as possible. Forex market is considered as the largest markets and most liquid market in the financial world due to its wide operational domains and crossing geographical locations. “Forex” and “FX” are the abbreviations for Foreign Exchange Market where currencies are traded against one another (*Forex is traded in pair). Currencies are either bought or sold in respect to their beneficial exchange value or exchange rates. The differences between the movement in a currency pair is regarded as profit or loss.
For starter, the term “Financial Markets” or “Markets” in Forex usually means the economical markets conditions that related to two (2) specific nations. In this scenario, let’s said EUR / USD (Euro vs US Dollar); you actually need to keep an eye on EUR market condition as well as USD market conditions.
Commonly, the currencies that are listed for trading in the Forex market are those that have higher exchange rate and able to pertain stable economies. Frequently traded currencies include The United States Dollar (USD), Euro (EUR), Great Britain Pound (GBP), Swiss Franc (CHF), Canadian Dollar (CAD), Australian Dollar (AUD) and Japanese Yen (JPY); these are considered as major currencies. Other currencies will be considered as Exotic Pairs, such as Singapore Dollar (SGD), Mexican Peso (MXN), Polish Zloty (PLN), Czech Koruna (CZK), Danish Krone (DKK), Swedish Krona (SEK) and Norwegian Krone (NOK). Trading more than 5.3 trillion dollars of trade activities per day, the market is highly liquid and flexible working 24-hours a day opening Tokyo at 0:00 GMT and closing at New York at 22:00 GMT.
JJPROFX executes market orders 24-hours a day, 5 days per week on all major currency pairs and precious metals. Forex market can be divided into currency trading and commodities or precious metals such as Gold & Silver where currency market is a highly volatile market compared to its counterpart. The currency market is a not fully regulated or governed by any financial authority or board and any trader can freely enter or leave the market any time without any obligation. For further explanation, imagine the real life scenario where there is nothing to stop tourists from exchanging US dollars for Canadian dollars every day; or it actually means that traders are allowed to free trade all currency pairs without the need to go through dealers or counters, it means that orders can be placed via online software such as MetaTrader 4 or Web Terminal.
Starting With JJProFX Trader Demo:
After you had a basic understanding about what is Forex market, before you can start your real Forex trading venture we recommend you to start your second step by making yourself well-verse about the trading policies and practices that are followed in this field. As trading in Forex involves high risk (please have a look at our Risk Disclaimer section, ), it is regarded as safe to trade with a demo trading station first that will provide an overview of the market as well as how the trading software operates. Once you get familiar with the ongoing market and how to use MT4 software efficiently, then it becomes quite easy for you to actually start to trade with the real version.
With JJProFX Demo Account, all traders are allowed to in virtual environments without losing any money on their accounts; and the best part is that JJPROFX Demo Account is a virtual account that resembles the real trading account (price feed streamed between real and demo account are the same). The demo account operates more like a real account where you get to trade on currencies and precious metals directly from your trading termial. Live quotes of the currency pairs are displayed instantly and you can make your Forex trades online without the help of any dealer or broker. Beyond the general trading features the system also gives access to other trading tools like live multi-product charts, up-to-the-minute market news, frequent order alerts and trading account history records. Before you can start with real trading, it is recommended that you first register a demo account with us. Just proceed to JJPROFX trading platform download page, install the respective MT4 into your preferred device (Desktop/Laptop, Android Smartphone, Android Tablet, iPhone or iPad) and you are good to go for demo account registration in our MT4 software.
How to Open an Account:
Once you had done with your Demo Account training, you may proceed to open Real Trading Account with us. Opening an account with JJPROFX is fairly easy. Just go to 'OPEN AN ACCOUNT' menu and complete the registration process (insert your personal details and most importantly your preferred email address); eventually an email will be delivered to your registered email mailbox. Make sure that the information you provide is valid. Otherwise it would be difficult for us to reach you. You may then follow the steps in the email to complete your registration process. It’s very simple, the entire process only takes about 5 minutes!
Trading Order Management with JJPROFX:
Managing your Forex trading orders may seem to be complication at first, but don’t let that intimated you, just follow the provided steps and you will be doing just fine. We believe that with proper order management strategies most traders can handle themselves efficiently without running into major losses. JJPROFX shall provide various forms of order management facilities such as StopLoss, TakeProfit, Close Partially and Pending orders that will give full flexibility to our trader in managing their orders.
Managing your Trading Orders:
- FOR INSTANT ORDER
- Stop-Loss Orders:
The Stop-Loss order mechanism is exercised for controlling the loss on open positions. The stop orders or close orders executes when the specified price limit is reached in the market..
- Take-Profit Orders:
The maximum profit you wanted to ripped from a specific position order
- Stop-Loss Orders:
FOR PENDING ORDER
- Buy Limit Orders
Trader executes an automated order to open a BUY action when the currency pair price had DROP to a strategic price position.
*Execution Nature Alert: It means the trader is expecting the DROPPING PRICE to BOUNCE UP at a certain price position.
- Buy Stop Orders
Trader executes an automated order to open a BUY action when the price RISE to a higher price compare to current price position.
*Execution Nature Alert: It means that the trader is expecting the RISING PRICE to CONTINUE RISE to a certain price position before he can open a position.
- Sell Limit Orders
Trader executes an automated order to open a SELL action when the pair RISE to a strategic price.
*Execution Nature Alert: It means that the trader is expecting the RISING PRICE to DROP after it has risen to certain price position.
- Sell Stop Orders
Trader executes an automated order to open a SELL action when the pair DROP to a strategic price.
*Execution Nature Alert: It means the trader is expecting the DROPPING PRICE to CONTINUE DROP to a certain price position before he can open a position.
- Buy Limit Orders
Observing the Market:
The most direct answer to the commonly asked question of “How to Make Profit in Forex?” is that a trader managed to successfully understand the movement of the market or the market trend and to make trading based on it. Regardless of how amazing of your EA and indicators, these advanced programs are actually programmed to work commonly on general market conditions (means the period of the market condition where no news is released, nothing big has happened), once there are big news being released, things will go havoc and some wise traders will make great profit as they successfully seized the instant opportunities. Hence, it is very important for all traders to keep an eye on the market on the related currency pairs.
Analyze the Market:
Worried about where to start? Don’t Fred; you may start your analysis through our provided Economic Calendar, Forex News, Forex News Commentaries and some professional Forex news provider such as Bloomberg, Forex Factory or FX Street. For your information, the market is constantly followed and monitored by professional economists and research analysts; so let the professional does the job while you just relax yourself and make your analysis from their researches (you don’t have to do the heavy research!). Usually these groups have organized data and constant feed of reliable market insights with which they compare the market frequently and forecast its future movements. All these data's pertain to various periods and economies. Apart from these general information special market reports published by analysts during that period is also used for clear understanding. Performance of market analysis can be broadly divided into two types - Fundamental and Technical Analysis. We recommend you to adopt both methods to understand and evaluate the market clearly. Below is a small summary of fundamental and technical analysis and their use in Forex markets.
Fundamental Analysis actually means to speculate around common basic market elements that will affect the economy in general. Elements such as geopolitical (new rise government body, on-going or potential war & etc), economic (i.e.: new economic policies), environmental changes (landslides, earthquake, tsunami, tornedo disasters, volcano ruptures & etc) and social factors are of major concern under fundamental analysis. As these factors basically have a direct impact on economic growth and plays a vital part in evaluating the conditions of the market. Other factors that are constantly monitored include interest rates (i.e.: Risen to weaken a currency & etc), employment data, economic growth rates, inflation rate and consumer price index. Though these factors are of great importance in the evaluation process, there is however no specific principles or theories to decide the movements.
Technical analysis concentrates on the movement of prices rather than the financial market news element like what we covered previously. The movement of prices is calculated individually and their moves are determined instantly by applying some leading studies and past historical data. Since past statistical data are the main inputs in technical analysis experts rely on these calculations instead of general economic figures. This increases the chances of giving reliable and accurate forecasts as the experts believe that the market data would repeat the same level as the previous data demonstrated. Another major highlight of technical analysis is that statistical data's are expressed in form of graphical charts (line chart, candlesticks chart). Charts display specific trend and patterns that are easy to identify. Usually these trends have repetitive pattern or path that they seem to adopt whenever they reach certain points. Understanding and getting well-verse about these trends and patterns will help to make potentially profit making decisions.
JJPROFX believes trader will be able to perform trend analysis and market forecast IF they had equipped themselves with some basic knowledge about market theories and calculation. Implementing these theories in real-time improves the level of estimation and understanding the trend features.
Frequent Use of Analysis Tools:
There are more than 1000 if not 10,000 theories or strategies about how to trade forex in the market that one could purchase or to read, it is nearly impossible one could finish studying all these endless theories and by just studying these theories alone surely won't increase the success rate in making profit, the best way to increase the success rate of making profit is to select a few preferred theories and start to implement it in real-time cases. With JJPROFX, we provide traders with sophisticated analysis tools for instant evaluation. Check out some of the unique features that are available in our website.
JJPROFX Trader provides all essential analysis tools for immediate evaluation of the market such as Forex Economic Calendar, weekly Forex Commentaries, leading economic studies, Copy-Trading, online account management, live customer support and frequent market updates.
Knowing the Both Sides of the Market:
Forex market is deemed to reflect the status of two nations as it deals with trading of currencies (USD vs JPY – US Nation Financial Market News & Japan Financial Market News). Various factors influence the movement of the ongoing market. Get to study about all the basic economic factors that play their part in deciding the future of a currency.
The economy is built by various factors (geopolitical, economic, environmental & socially) that contribute to its growth and development. These factors form the core of the economy. Based upon the status of these factors an economy is judged as a strong or a weak one, hence it is advised to analyze news from both ends to determine which news impact supposed to be more severed. Indeed they have a direct or indirect relationship in deciding the future of the economy. The supply and demand of these factors are essential for undisrupted economic activities and are affected by social, political and natural events. Since money is a major factor its movements and exchange rates are also affected by various elements.
As the exchange rates of a specific currency might indirectly determine the nation’s economy as a commonly understand condition, however we must not forgets the part where the government’s intervention in the process of bringing up their currency for their own national benefits. Clearly understand these facts will help trader to make the right decision. Other than that, trader must also understand the fact that there are various reasons, for which currencies are exchanged, the major transfer of money results from foreign investment, foreign trading, travel and tourism. With that being mentioned, it means that the major sections of the trading activities are actually executed by speculators, banks, corporate investors and fund managers as there is only a small percentage of money is involved in trading. Though the trading sector is very less, the Forex market exchanges over $5.3 trillion per day making it the largest and highly volatile market. The Forex market involves buying and selling of currencies for yielding profit from their differences in value. Determining the value of a currency is done by evaluating various indicators such as interest rates, trade balance and offshore investments.
Determination of Supply and Demand Levels:
As we mentioned that government or central bank would perform a series of actions in order to bring their currency to an advantageous exchange rate for their nation. Sounds espionage and complex? This actually means that the value of a currency is determined based upon their actual demand and supply in the world. This is where the role of government and central bank come into picture as we mentioned. The Central bank of a nation is the sole authority to control the supply and demand of a currency in and out of the nation. This is done by setting the interest rate as stated in the monetary policy from time to time.
All regional banks are required to maintain a certain percentage of its total deposits with central bank (*as additional knowledge: this is where we heard the terms liquidity where bank’s liquidity is a measure of the ability and ease with which assets can be converted to cash. Liquid assets are those that can be converted to cash quickly if needed to meet financial obligations; examples of liquid assets generally include cash, central bank reserves, and government debt. To remain viable, a financial institution must have enough liquid assets to meet its near-term obligations, such as withdrawals by depositors). The percentage of a regional bank’s deposit with central bank is known as interest rate. After considering the status of the economy, the central government increases or decreases the percentage of interest rate. When a nation increases its interest rate the value of the currency appreciates as investors try to sell the assets placed outside the country. However stocks of the particular nation tend to fall as the outside investor may need to pay more than what was previously available. Before fixing the interest rates, the government initially compares various economic reports that are presented in statistical form. Thus status of an economy is reported in the form of Gross Domestic Product (GDP), Consumer Price Index (CPI) and Producer Price Index (PPI); these reports are published periodically.
Goes with the Market Trend:
Of all the topics we had covered so far, we mentioned previously in the technical analysis article that there are rhythms of patterns about a market’s behavior that tends to repeat itself during common times. If one understand the maximum stretch of price position (common highest price and lowest price from previous market data shown), the trader will roughly know how long a trading position that he supposed to hold before closing it as a cut loss measure; as he understands the fact that if the market condition has move out of the “formerly known zones” then the trader needed to make new analysis and planning. The trader also understands that a particular currency cannot move in the same direction more than a stipulated time period. If it continues to do, then it may lead to an unstable economy crushing the entire nation. So following the trend will provide the trader an overview of the future moves that the currency may take in its course.
According to JJPROFX survey based on 15,000 Forex traders globally, 65% of traders who suffered from MC were due trading behavior that trades against the market condition in expecting of a reverse of market condition after a high rise / major drop. Hence, JJPROFX sincerely advise all traders to not trade / gamble against the market condition as this is the main reason that cause trader to get their account MC.
Take the Profit While You Can & Limit Your Loss:
There are times where trader would constantly ask themselves, how long does an order shall remain in profiting state? Actually no one can gives 100% guarantees about it, hence all traders are advised to take their profit whenever they are comfortable, continue to make more profit as the market trend still in the clear mode and most importantly to continue work on a safer side by placing stop-loss and limit orders. This drastically limits the trader’s risk on positions.
Keep the order positions as long as the market goes within the “known zones”. However remember to take your profit (FYI, we know we are nagging) in case you had earned a substantial amount on that price position and at the same time fix your loss sustainability on all position that you have undertaken. If the market turns to lagging state, and your order does not show any signs of profit making, then you are advised to close the position as keeping losses on your account is not an “advisable move”. We advise all traders to be smart and alert at all time by closing early loss positions to minimize the trading loss and enhance the profit on other trades.