How to Start Forex Trading For Beginners

by Oct 23, 2021Forex Trading for Beginners

Start Forex trading in six steps:

  1. Download Metatrader trading platform
  2. Create trading account
  3. Set up the chart for trading
  4. Choose the currency pair for trading
  5. Learn Forex basics
  6. Learn which order type to use and when

In general, those are the steps you will need to include in your journey when you start Forex trading.

Will it be easy?

No, it will not.

Because you have a lot to learn about the Forex market, Forex industry, which broker to use, how to use trading platforms and so on. I will not list here all what you will learn, but in this article I will point you in the right direction.

If you need help with installation then here is a video that will guide you step by step to install trading platform.

When you start the trading platform you will see lots of data in front of you.

You will see charts which have green lines on it and on the left side and above you will have menus where you can select what you need.

Start Forex Trading With Trading Account

The next step is to have account open which will give you access to the Forex market. Without trading account you cannot see currency pair price on the trading platform.

There are two ways to get trading account.

One is to open demo account without broker or you can open demo or real account with broker.

In this tutorial I will show you how to open demo account without broker because that is the easiest way for you to start trading and learning.

Here is a video that will show you all steps you need to open trading account.

Set up the Charts to Start Forex Trading

When you start the trading platform you have four charts in front of you. And they are black with green lines on it.

Those lines represents the price of a currency pair.

Because you have open trading account you have the access to the price of all currency pairs.

I will show you how to prepare the charts for trading so you are ready for analyzing the chart which will be much more friendly.

In the video I will show you how to set up clean Metatrader 4 chart ready for analyzing.

Choose the Currency Pair for Forex Trading

When you start trading it is important not to trade highly volatile pairs which will destroy your account quickly.

You need to select trading pair with moderate volatility so you can practice until you learn what is needed.

A non volatile pairs are not good for trading because  the price does not change often so you end up stuck in that pair. And that means you cannot make money by trading.

One of the best pairs for beginners is EUR/USD currency pair, but there are also others you can select when you start trading on the Forex market.

In the video below you can see how to choose currency pair for trading in Forex.

Start Trading with Forex Basics 

When you have:

  • trading platform
  • trading account and
  • clean chart for selected currency pair

You need to know what are Forex basics which are important to start trading.

Now knowing them you will blindly open and close order and lose all money you have on your trading account.

So, what are the Forex basics?

Forex basic terms are:

  • Bid and Ask price
  • Spread
  • Pip
  • Leverage
  • Lot
  • Margin
  • Free margin

Bid and Ask Price in Forex

When you start analyzing the currency pairs on the chart you will have two prices. One price is Ask price and second price is Bid price.

Depending will you sell or buy currency pair you will use one of these two prices.

Here is the article about ask and bid price in Forex so you can read it and learn more about what happens when you buy or sell currency pair,

And, here is a video for you if you like to watch instead to read.

Spread

When you analyze the bid and ask price you will see that you have cost on each trade. And that cost is the spread.

Your goal is to find a broker with lowest spread on the currency pair you want to trade.

In the article about spread in Forex you can read more how to calculate the spread, what is low, medium and high spread.

So, take your time and read about the spread before moving forward.

Here is a video if you like to watch instead to read.

Start Trading With Proper Leverage

when you start trading on the Forex you will hear that leverage 1:100 or 1:200 or 1:500 is great because it allows you to make more money.

And that is partial true.

But, there is other side where you can lose more money if your trades are not profitable. And higher leverage allows you to open larger lot size which then destroy your trading account.

In the article about Leverage in Forex trading, I explain in details how leverage works

What you should pay attention to and how to be on the safe side.

Here is a video which will show you more details about Leverage which will help you in trading.

Lot Size in Trading Forex

When ever you open a trade you define what is the volume you will use. That means you define how much each pip will be valued.

You can define that one pip is equal to $1, $10 or more.

With using standard lot size, Volume = 1.00, you define that one pip is equal to $10.

If you want to reduce the pip value you just simply reduce the volume.

If you reduce it from 1.00 to 0.10 you will reduce the pip value by 10 times.

Here is a video that will show you examples in the Metatrader 4 so you understand how the pip value changes with volume.

Should I Start Trading Forex

Should you start trading Forex it is up to you decide, but let me help you with some information about Forex trading.

If you want to make money you should start trading on the Forex market. Because the Forex market is a lucrative business where you need to invest your time and skills to succeed.

You can make a lot of money trading on the Forex, and let me give you a few numbers on how much we are talking about here.

If you invest $1000 and start trading you can make $1000 in one day. And that is only if you predict the correct direction of the price of a currency pair.

If you invest $100 you can make $1000 or more. And again, only if you know how to use the trading tools and risk management.

If you invest $10 000 you can make $10 000 in a day or few days.

So, in conclusion you can make big money.

But, there is a huge but.

You can easily lose all what you have invested. And you can lose it in a minute.

If you trade highly volatile pairs and if you use large lot sizes you can destroy your account very quickly.

You should start trading Forex only if you are disciplined, patient, willing to learn and invest time to become a professional trader.

How to Start Forex Trading for Beginners

To start Forex trading as a beginner you should have these things:

  1. you need trading platform
    1. trading on the Forex market is done through a trading platform. Most known is Metatrader 4 so I have prepared an article with video how to download Metatrader 4 on your PC
  2. You need trading account
    1. When you download a trading platform you need a trading account. With trading account you define how much money you will have for trading and you get the access to the Forex currency pair quotes
  3. Prepare trading platform
    1. When you start a trading platform you will have a lot of things in front of you. That is why you need to get familiar with trading platform and prepare the charts for trading
  4. Learn Forex basics
    1. trading on the Forex has a lot of trading terms you need to learn. If you never read about Forex trading then all trading terms will be new to you. But, do not worry. I have covered you there. In the article about Forex basic terms you will find all what you need to know
  5. Open an order
    1. Now it is time to open an order. You open buy or sell orders in Forex. That means you need to decide where the price of a currency pair will move. Will it move up or down
    2. to help you with opening an order you can read more in the article about Forex order types and how to use them

And when you do all these five steps you will be a Forex trader. Even if you are a beginner in Forex trading, these will be steps you will need to do in order to start trading.

How to Start Forex Trading From Home

Starting trading from home is easy really if you have basic tools for that. And that is, you need to have a PC or mobile phone.

I suggest using a PC because it is much easier to get around and to learn the basics in trading.

When you learn basic steps then you can switch to mobile phone.

When trading from home you need to see when the market is open. Because the Forex market has working hours.

Forex market is not open on weekends. It is open from Monday to Friday.

Depending which trading session is active you can see which currency pairs are active so you can select them for trading.

When you have a PC for trading then you can start acquiring a trading platform and trading account.

When you have them set then you need to start learning. Learn all about Forex what you can and never stop learning and practicing.

How to Start Forex Trading for Free

If you do not have money to start Forex trading then you can start trading Forex for free.

Trading Forex can be learned by trading with virtual money. And for that you need a demo trading account which you use on the trading platform.

Here is the article where you can see how to open a demo account.

When you use a demo account basically you are trading Forex for free. There are no costs to you and if you lose all your money on the demo account you can easily restart the account balance and start again.

Trading platforms allow you to trade for free until you become profitable. Then you can switch from demo account to live account and start trading Forex with real money.

Trading demo accounts for free should be at least one month until you learn how to use trading platforms and what are Forex basics.

But, do not stay for too long on the demo account because demo trading is not the same as live trading.

Live trading includes emotions which have a high impact on trading results.

When you are done with free trading you can invest a small amount and taste how it feels when you make real money or when you lose real money.

To add a FREE tool you can use in your learning journey is to use FinTwit. It is a part of Twitter where many traders are sharing their knowledge.

How to Trade Forex With $100

When you switch to a real account with real money it is smart not to start with a large amount of money on your trading account.

I have written an article for you if you want to see if it is possible to get rich with $100 invested.

Trading Forex with $100, at the end, mostly, ends up losing those $100. The main reason is oversizing the trade and not using proper risk management.

But, if you want to trade with $100 because you do not have more than that, then prepare yourself for a long time trading to make another $100.

Why?

Because if you want to trade Forex with $100 then you need to follow proper risk management on each trade.

And that includes not risking more than 1-2% per each trade.

If you do not understand what that means then here is an example.

If you open an order with $100 invested you cannot lose more than 1-2$ per trade. With such a small loss you are seeking to make 3-6$ on that trade.

Depending how often you will trade you can calculate how long it will take you to get to $100 profit.

You need to have around 15-30 trades without losing trade.

15 trades x $6 of profit = $90

On average you will have at least several trades as a losing trade so the above number of needed trades to get to $100 increases.

But, it is possible if you are disciplined and patient. With discipline you can succeed for sure.

Conclusion

You have seen how to start Forex trading as a beginner. You have also seen what you need to have to start trading on the Forex market.

Let me remind you:

  1. trading platform
  2. trading account
  3. prepare charts for trading
  4. learn Forex basics
  5. open an order
  6. include risk management in trading

Maybe it is hard to start on your own, but I have made a video workshop to help you understand the steps you need to take in order to start trading on the Forex market.

Below is a link where you can join this workshop.

FREE WORKSHOP

For beginners who does not know how and where to start with trading

In the workshop I will tell you

what steps to do in order 

to transform yourself into a trader

“Disclosure: Some of the links in this post are “affiliate links.” This means if you click on the link and purchase the item, I will receive an affiliate commission. This does not cost you anything extra on the usual cost of the product, and may sometimes cost less as I have some affiliate discounts in place I can offer you”

Frano Grgić

Frano Grgić

A Forex trader since 2009. I like to share my knowledge and I like to analyze the markets. My goal is to have a website which will be the first choice for traders and beginners. Market analysis is featured by Forex Factory next to large publications like DailyFX, Bloomberg... GetKnowTrading is becoming recognized among traders as a website with simple and effective market analysis.

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