The Forex market is where the trade of foreign exchange occurs. It is the largest financial market globally, with an estimated daily turnover worth $6.6 trillion. The Forex market is decentralised, and trades over the internet. It primarily exists to facilitate the conversion of currencies, and it’s open 24/7. For retail traders, the Forex market is only open 24 hours a day only on weekdays.
Foreign exchange is the conversion of the currency of one country into the currency of another country. Say, if you want to exchange the Euro into Pound Sterling, that is foreign exchange. The price at which you convert one currency into another is the exchange rate for that currency pair. For example, if converting €1, you receive £0.89, then the EUR/GBP exchange rate is 0.89. In a Forex pair, the first currency is the base currency, and the second currency is the quote currency. In Forex trading, the exchange rate is referred to as the price of a currency pair.
Trading the Forex Market
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Forex trading involves a simultaneous purchase and sale of the individual currencies in a Forex pair. When you buy a Forex pair, it means you are selling the quote currency and buying the base currency. When you sell a Forex pair, it means you are selling the base currency and buying the quote currency. Let’s take the EUR/GBP pair, for example. When you buy this pair, you are selling the GBP to buy the EUR; and when you sell EUR/GBP, you are selling the EUR and buying GBP.
Keep in mind that the exchange rate is not constant – the fluctuations in price is how traders earn a profit. If you are new to trading, you can receive Forex trading signals from a Telegram expert advisor. In the Forex market, when the base currency becomes stronger or the quote currency weakens, the price of the Forex pair will rise. Conversely, when the base currency weakens or the quote currency becomes stronger, the price will drop.
As a retail trader, there are few Forex market terminologies you need to understand before you start trading:
MetaTrader is a popular Forex electronic trading platform, with the MetaTrader 4 being the most popular among retail traders.
There are several MetaTrader 4 Telegram groups where you can interact with the Forex trading community.
Lot: is used to measure the size of the position based on your account’s currency.
|Type of Lot||Size in Account currency|
Let’s say you buy one standard lot of EUR/USD pair, and your account currency is in USD. In this case, your trade is worth $100,000. In MetaTrader 4 Telegram groups, you will get to learn about how lots work and more.
Pip: In Forex, pip measures the smallest change in the price of a currency pair. Typically, most Forex pairs are quoted to the fourth decimal place. For example, the price of EUR/USD is 1.1772. Therefore, if the price changes to 1.1773, it means it has increased by one pip.
Pip value: The profits or losses made in Forex trading are measured in terms of pip. Different currency pairs have different pip values depending on the size traded. MetaTrader 4 Telegram groups have more information on the different pip values.
Here’s an example of pip values for EUR/USD.
|Type of Lot||Size in Account currency||Pip Value ($)|
Leverage: is the amount of money your Forex broker loans you. It is usually expressed in terms of a ratio or multiples. For example, if your broker gives you a leverage of 100X, it means that for every $1 you have, the broker multiplies that by 100. That means you’ll have $100 for trading.
As is with any other financial market, the goal when trading Forex is to go long when you anticipate a rise in the price of a Forex pair; and to short-sell when you expect that the price will fall.
Here’s an example.
Say you have $1000, and you believe that the price of EUR/USD will rise. If you buy one micro lot and the price changes by ten pips, the profit will be $1.
If you choose to use leverage, say leverage of 100, you can afford to open one standard lot position. In this case, a 10-pip change will earn you $100. Note that using leverage also magnifies any losses you might incur.
How to Make Money Trading Forex?
Making money in the Forex market depends on the accurate prediction of the price movements. So, how can you do this?
Firstly, note that the exchange rate is influenced by economic fundamentals such as GDP and employment rate. The release of these fundamental economic indicators is scheduled. For example, if you want to trade the EUR/USD, you can expect its price to change when the fundamental indicators from either the US or the Euro area are releases.
Say, for example, that the GDP in the EU has increased; this means that the EUR will be stronger compared to USD. Thus, the price of the pair can be expected to rise. On the other hand, if economic indicators show that the US economy is improving, the USD will strengthen, and EUR/USD can be expected to drop. Telegram expert advisors can help generate trading signals based on proper fundamental analysis to help you profit.
Secondly, you can use technical indicators to predict the direction and momentum of the price movements. Sometimes knowing a trend isn’t enough; momentum indicators can also help you see when the trend of a currency pair is dissipating. While technical analysis can be challenging for beginner traders, Telegram to MT4 EA and Telegram expert adviser are custom-made using the various Forex trading technical indicators that will generate a trading signal for you.
There are a lot of moving parts in the Forex market and Forex trading in general. If it sounds like a lot of work, don’t worry. MetaTrader 4 Telegram groups can help you get an in-depth understanding of Forex trading. Furthermore, with MetaTrader 4 signals Telegram, you will receive accurate trading signals which will advise you on the direction and size of the trade to make. You can find these groups by doing your research online or watch this space to know more accurate information regarding this.
We hope you found this article informative. Please let us know if you have any questions in the comments section below. Cheers!