Forex Trading Strategy For Beginners
Forex Trading is an easy concept; It means you want to make money by buying a currency and selling it when the price goes up or by selling and re-buying when the price falls.
Would not it be great if there was a way to figure out how the price would go before you bought or sold the currency?
Although there is no magic crystal telling you what the future will be for sure, you can make money by determining the direction of the currency market and then trading in the same direction.
So if you set the market trend as bullish, you can buy and if it is bearish you can sell.
Starter Strategy gives you an easy step-by-step way to determine the direction of the market and the moment you should buy or sell. The Starter Strategy has been developed with a focus on EUR / USD pair but can be applied to other currency pairs for training purposes.
Note that because of its simplicity, the Starter Strategy is not optimized to generate maximum revenue. It is designed to be an educational tool that helps you learn to trade, in a practical way. Therefore, we strongly recommend using the Beginner’s strategy. A demo account and deal with investment funds until you become experienced enough to use real money or more advanced strategies.
Move between Starter Strategy
Our strategies for Forex beginners consist of five easy lessons. You can navigate between the different lessons from the left-hand navigation menu.
Each lesson contains a tutorial video in the top right corner. We recommend you watch the video and read the lesson – but if your time is not allowed, watching videos alone is a great start.
At a quick glance and as a reminder, we’ve compiled the Starter Strategy into a comprehensive scheme where you can upload it as a PDF now or later whenever you want.
Before we start, a quick question:
Do you already have a broker account?
I already have a trading broker account.
In that case you can use the MetaTrader 4 (MT4) trading platform.
During the novice’s strategy, you will find a set of instructions for MetaTrader 4 so you can exercise directly the 5 steps of the strategy.
These instructions appear as follows:
Instructions for MetaTrader 4 View instructions
I have not done a broker trading account yet.
No problem, you can continue to learn the strategy. Just ignore the MetaTrader 4 instructions included in these tutorials.
Alternatively, you can open a trading broker account.
ready? If we start!
In order to learn strategy, you need to know some terms of trading online. We will explain these terms below.
Alternatively you can ignore the explanation of the terms and jump directly to the strategy.
Terms you should know
The currency pair is the exchange rate between the two currencies
Pair The price shown on a currency exchange basis is shown to another. So if the EUR / USD price is 1.30, then this means that EUR 1 is only USD 1.30.
The price graph shows currency price movement over time
A Price chart shows how the exchange rate has evolved between two currencies over time.
If you look at the chart on the right you can see that the exchange rate between the currencies appears on the right side as the time appears below the chart.
Japanese Candles show the price within a specified time frame
The chart type is called the Japanese Candlestick Chart. It consists of forms resembling candles.
Each candle shows how the price evolves over time – so time frame. The 5-minute time frame means that each candle indicates price evolution in the 5-minute range. In the beginner’s strategy, we use time frames 5 minutes and 30 minutes – later we will tell you how to change between time frames in MT4.
During the period in which the candle is formed, we will notice that its shape changes. After a while, the candle is closed and another candle starts to form or open.
Explanation of Japanese candles is going on:
The thick part of the candle shows prices at the beginning and end of the period.
The high part of the candle shows the maximum and the minimum during the period.
If the candle is blue, the price moves up during that period.
If the candle is orange, the price will fall during the period.
The point is used to indicate the price movement
You will find that we point to the points throughout the lessons. They are used to measure the price action.
If you contemplate the exchange rate between the euro and the dollar (EUR / USD), you can think of the hypothesis that a number, 1.31, has only two digits after the decimal point.
However, in the money trading markets, this number is spread further and we notice that the price has become 1.3100 the last figure – the last 0 – is the point. – If the value of this pair moves from 1.310 “0 to 1,310 1 we say that the price has changed by one point” point “.
Points are how traders calculate their profits. If a trader buys a pair of currency. , Again EUR / USD at 1.3100, and moving the price up to 1.3130, it is said to move up 30 pips or, the deal earned a total of 30 pips.
Some commercial software uses 5 digits after the decimal point, in which case the fifth number is called partial pricing or pipette
Make a deal
Doing a business means sharing something else. In the context of Forex, this means that we exchange a certain amount of currency against a certain amount of another currency, based on the current price of the currency pair. For example, if the EUR / USD pair is at 1.30, we can get 1 euro and pay $ 1.30.
Enter the pending order
Instead of waiting for a specific price level to trade, you can tell the trading platform to start the deal when you reach a specific price level, which is called the entry of the pending order. It also tells the trading platform the point of entry you want, the stop loss order and the target profit you want and the size of the deal or the volume you want to trade. WFP will do the rest. When using MetaTrader 4 it is important to know that when you want to buy you choose the type of stop purchase and when you want to sell, choose the type of stop selling.
The image shown above shows an example of a command window in MetaTrader 4.
Number_1 The size of the position / trade is the amount you buy or sell
When we refer to the size mode, we mean that this is the amount that you buy or sell upon arrival. We offer you the correct amount for buying and selling in the following lessons.
Number_2 The Stop Loss Order protects you from losing all your money.
If the transaction goes against you, that is to buy and then the price of the currency pair starts to take off, the stop loss order will automatically close the trading so that you do not lose a lot of money. When it comes time to enter your own pending order, we will show you how and where to place your stop loss before entering the pending order.
Number_3 The target profit means the amount of money you intend to make from the deal.
The target profit is a predetermined price that will close the deal to take profit.
Fractals are indicators that help you in the trading process
The meaning of Fractal is like a pointer displayed in the form of small triangles placed above or under a Japanese candle. When it is drawn above the Japanese candle it is a rising fractal and when placed under the candle it means a falling fractal.
Fractal pattern images help to determine a possible reversal of the price. However, if the price moves beyond the fractal, it indicates that the price may continue in the same direction.
Note that newly formed fractals can disappear again unless two full candles are formed afterwards. Thus, before using Fructal in the context of the beginner strategy, you should always wait for two candles to be closed on the right side of the fractal to “confirm” the validity of the fractal.
Broken fractals help us make decisions about the deal
Fractal break higher when the price on the right, has broken the highest price of the candle where it consists or form the highest. This is indicated by the line above the candle under fracture or fractal directly.
Fractal Break Down When the price is on the right, the lowest candle price may break where it consists or is formed. This is illustrated by the line below for a candle under fracture or fructal directly.
Note: Fractals can be broken either by the fuse or the body of the candle. There is no difference. In both pictures on the right fractals are broken.
Broken fractals play an important role in the beginner’s forex trading strategy.
The pivot points are used for the target profit
Pivot points are displayed as lines on the graph that is generated automatically by your trading platform; they are used to set profit targets. The pivot points are where the price is likely to stop.
The Pivot Points Index identifies these lines as a daily hub, R2, M4, R1, M3, Pivot, M2, S1, M1, S2, S2 etc. You do not have to worry about what these labels mean in a beginner’s strategy.