How to Trade Forex

How to Trade Forex

Build your skills by practicing with available tools

To become proficient in currency trading you can use the free tools available through us such as our news stream, our real time charts with studies.

All this tools comes in the MIF demo account which is a very important tool as it allows you to test out various strategies that you have come up with and learn from your mistakes without loosing money.

You develop your strategies based on two types of studies technical and fundamental analysis.

For example with charts you can use technical analysis to make trading decisions. You can experiment with technical analysis by making use of the studies in our demo platform.

When you look at fundamental analysis you should look at economic releases, interest rates, and international trade which are important shifts in the currency market.

Analyze your risk

As a budding successful trader it is very helpful to look at your self and analyze what kind of a risk taker you are. This means the trader should calculate how much risk he/she is willing to take and when is the right time to cash in.

Calculating your P/L

The example below shows how your P/L is derived from conducting two trades; buying EUR/USD and USD/JPY.


Example:
If the Euro/USD is trading at 1.2400/05 and you buy Euro at 1.2405, you are “long” Euro and “short” the US Dollar.

In another trade, you decide to sell Japanese Yen, if the USD/JPY is trading at 107.20/25 and you buy at 107.25 you would be long the US Dollar and short Japanese Yen.Let’s assume that the Euro goes higher to 1.2537 but the USD/JPY falls to 106.76.

How did you do on these two trades?

Answer:
Your profit and loss for the two transactions would be as follows:
On the Euro trade you bought Euro 100,000 at 1.2405 and sold Euro at 1.2540:

Your profit is 0.0135 or $1,350 (.0135 x Euro 100,000 = $1,350).On the USD/JPY trade you bought $100,000 at 107.25 and sold it at 106.80

Your loss on this trade is 0.45 or $421.35 ($100,000 x 0.45 = JPY 45,000 / 106.80 = $421.35).
Your net gains on the two transactions is a profit of $928.65 ($1350 - $421.35 = $928.65).
Note: Your Profit will remain in the base currency till end of day which will be converted using the daily settlement price.