Guide Round-Up - Key Points and Takeaways

Here we are, the final part of the Complete Guide to Trading Forex. We are sure you'll agree; it's been an incredible journey learning about Forex. By now, you have gained the foundations for how to become a professional Forex Trader. Maybe that's not what you want. Perhaps you simply want to make a little extra money each month? Either way, with this Forex guide, you are equipped to get started and make your mark on the Forex market.

So, let's recap what you have learned.

What is Forex Trading?

In Part 1, you learned that Forex is NOT a way to get rich quick. You know that your success with Forex is dependent on developing consistent discipline and patience. The Forex market trades $6.3 trillion a day, and you understand why the Forex market exists and how you, as a retail trader, can learn to profit from the trillions traded on the Forex market.

You understand that Forex makes it easier for companies to conduct international trade. Businesses, Banks and Governments can easily convert one currency to another.

You appreciate the role of the Market Makers, Central Banks and large corporate companies. These big boys can make the price move on the Forex charts because of the significant amount of money they deposit into the Forex market.

You are a Retail trader, a comparative tadpole in a vast pool of hungry pike. You are not trying to trade against the pike. No, no, they'll swallow you up. The aim, your goal, is to get behind the movement of the big boys, so you can glide along, gathering up your profits in their wake. In this Complete Guide to Forex Trading, we teach you how to do this.

How to Get Started with Forex Trading

In Part 2, we looked at all of the things you need to start as a Forex trader. Firstly, you should have a place where you can set up your trading station, a quiet corner in your house where you won't be disturbed.

Then you choose a Forex broker. You open up a demo account to practice trading Forex. We gave you a list of our recommended brokers. Here it is again - https://trading-education.com/brokers.

You open your Forex trading account with a regulated broker and if necessary download the trading software to your PC, laptop or Mac. Then, you apply the training from this guide, and you commit to your ongoing Forex education.

As you practice, you will make many mistakes. Don't worry. Mistakes are part of your education. This guide will help you to recalibrate to understand how to learn from your Forex blunders. After completing the guide, you will spend time studying Technical Analysis and Fundamental Analysis and explore the range of technical indicators available.

You have strict risk management in place and know the exact entry, stop-loss and take profit areas BEFORE you place your trade. You know which currency pairs you prefer to trade, and you understand how economic news can impact the Forex market.

How to Understand Forex Jargon

In Part 3, you grasped the meaning of Forex terminology. We listed the most commonly used Forex lingo. So, now, nothing in Forex sounds weird to you, right? You can at least speak like you know what you are doing, even if you don't, yet.

Please get familiar with the Forex jargon until it becomes second nature.

How do Forex Brokers Work?

In Part 4, we discussed the different types of brokers and how they work. The overriding importance was on how crucial it is to choose a regulated broker. There are so many horror stories of unregulated brokers disappearing with customers' money, and we don't want this to be you.

You know the difference between Dealing Desk Brokers (DDB) and No Dealing Desk Brokers (NDD). DDB brokers take the opposite side to your trade. In effect, these brokers are trading against you. Therefore, their interest is in their trade winning, not yours.

NDD Brokers do not take the other side of a client's trade, so there is no conflict of interest. They simply link two parties together, and your order goes straight through to the interbank.

Underneath NDD Brokers,  you have a choice of STP brokers or True ECN – Both options make their money from the spread, not from competing against your trades. This set-up is good because it means there is no conflict of interest. You can check our recommendations for a broker at https://trading-education.com/brokers

What is Forex Leverage and Should You Use It?

In Part 5, we disassembled the seemingly complex subject of Forex leverage.

We explained leverage and how to use it sensibly. It's not recommended to over-leverage your Forex account, not even in a demo account where it can be easy to get carried away trading large sums of (pretend) money. This practice does not prepare you for trading with a live Forex account.

The simple explanation is that leverage is a way of trading with more money than you have in your trading account. That's it. As tempting as it may seem to trade with the broker's money, we advise choosing low leverage when you open your broker account.

Novice traders can quickly get into a mighty mess with over-leveraging. It is better to trade with what money you have, so you are reducing your risks of losing your capital.

What’s the Difference Between a Pip, a Point and a Tick?

In Part 6, you learned the difference between a pip, a point and a tick. You understand how to calculate profits in pips but realise you don't need to know the mathematical equations to profit from the Forex market.

How do Forex Currency Pairs Work?

In Part 7, we taught you about currency pairs and how they work.

There are thousands of different currency pairs, but they don't all work the same. Some are more volatile than others, depending on whether you are trading a Minor currency pair or a Major currency pair. We listed all of the currency pairs, including some of the exotic currency pairs.

Become familiar with the Minors and Majors. In time, you will likely find your currency pair favourites. The more you understand how one particular currency pair moves in the market, the better chance you have of following the movement, rather than finding yourself on the opposite side of the price action.

What is Fundamental Analysis?

In Part 8, we looked at Fundamental Analysis, which, briefly, considers the economic standing of a country at the time of trading. This information can help you assess the probability of a weak or strong currency, giving you an edge in the Forex market.

What is Technical Analysis?

In Part 9, we looked at Technical Analysis. This technical study of the charts identifies price action patterns, support and resistance areas, trendlines and other patterns. Technical Analysis follows the premise that what has happened before will happen again. History often repeats itself in the Forex market, which creates areas of sentiment on the charts where the price may react.

How to Understand Forex Risk Management

In Part 10, we discussed how to assess and manage your risk. Good risk management is the key to success as a novice Forex trader. It's too easy to direct your focus on how much you can win and forget to acknowledge how much you can lose.

Managing risk involves clarifying the risk percentage of each trade against your capital balance. You may choose to risk 1% or 2% of your capital for each trade, which is an excellent percentage because you would have to lose many, many trades before you busted your account.

As part of risk management, we discussed your Risk to Reward ratio (RTR) on each trade. For instance, if you had a 60% win rate with a 1:1 RTR, your account would be losing capital overall. On the other hand, with an RTR of, say, 1:4, one win will wipe out four losses. That's a good plan. With a 60% win rate and a 1:4 RTR, your account WILL grow.

The objective is to find trades with the best possible return.

Do You Need a Forex Trading Plan?

In Part 11, we looked at trading plans and discussed whether you need one or not. You wouldn't take a journey without a plan, would you? The primary benefit of a trading plan is CLARITY.

Forex can sometimes make you feel like your head is spinning on your shoulders, the market spits you out, and you're reeling from the fact that your nice profit just got sucked down the drain after a BIG spike in the price action. It happens. It's a part of Forex, and we cannot escape it. But, with a trading plan, you simply back off, have a cup of tea and get back to your trading plan.

There is always another trade. $6.3 trillion, remember?

How to Understand the Different Types of Forex orders

In Part 12, you learned about the different types of orders in Forex. You can take live, instant market trades or set a pending order such as a Stop Entry — a buy stop or sell stop. Or you can place a Limit Order — a sell limit or buy limit.

You also learned how to use a Trailing Stop loss on open trades.

Where to Set Stop-Loss and Take-Profit?

In Part 13, we taught you about how and where to set a stop-loss and take profit. Most novice Forex traders initially get this wrong. The typical habit is to get into a trade too early and then get stopped out. Once your trade is closed, the price action then travels to the exact spot you had planned for your profit area. Frustrating, yes. But, if you are aware of a habit, you can change it, and, from what you have learned in this guide, we believe you will.

How to Use an Economic Calendar

In Part 14, you learned the benefits of understanding how to use an Economic Calendar.  It can be a way to avoid volatile movement in the Forex market following important economic news. Understanding the potential impact of financial statements can help you to become a better Forex trader.

We advised focusing on RED news, which has the most significant impact on the economy.

How to Install and Use the MT4 Trading Platform

In Part 15, we showed you how to install and use the MT4 platform trading software. This popular software comes with multiple options for technical indicators. You can add expert advisors and many other external indicators you can find outside of the MT4 platform.

Five Top Forex Trading Strategies

In Part 16, we got down to the nitty-gritty of learning five of the most popular Forex trading strategies. You will find a Forex strategy that suits your temperament and personality. We advised picking one or two strategies and sticking with them. Having a clear strategy makes it easy to spot when a trade entry signal appears in the price action.

Do You Start with a Demo or Live Trading Account?

In Part 17, we compared the benefits of starting with a demo account or a live Forex account. Our advice was to start with a demo account and aim for consistent growth of your demo capital before going live. Some professional Forex traders advise doubling your demo account before venturing into live Forex trading.

Conclusion

Our intention for this guide was to educate, to make you a better Forex trader.

Many novice traders throw themselves into the Forex market, believing they can work it out by themselves. YOU are way ahead of the vast majority of novice Forex traders. You have taken the road less travelled and committed to your learning.

The fact that you have made it through to the end of this guide is fantastic. We are so proud of you!

Remember that, in the heat of the moment, faced with the flashing lights and rapid price movements on the charts, you may feel like a deer in the headlights. Hey, this is normal. It's OK. If you feel yourself getting frustrated or worried that you may never become a successful Forex trader, come back to this guide and reread it.

Never be afraid to walk away for a day or a week to remind yourself that you are playing the long game. Consistency takes time and (much) practice.

It's also OK to go back to demo trading for a while. There's no rush, so take your time to perfect your strategies, fine-tune your trading plan and work on your patience and discipline. If you can do that, you are, once again, ahead of the majority.

Continually doing what most novice Forex traders don't do is the sure-fire way to increase your chances of joining the 5% of successful Forex traders. Let the failing 95% scrabble around, hoping they'll figure it out. They won't. But you will, because YOU made it to the end of this guide.

Well done!

Now, it's time to get started trading Forex!