FX guide for novice

Trading forex for beginners can be difficult without knowing the basic concepts and terminologies used in the Forex market.

In this article, we are going to focus on the the general concepts and most essential terms used in Forex trading so you won't be confused at any point while you learn to trade.

What is Forex Trading

The term Forex is derived from two different words which is Foreign Exchange. When you heard the word Forex, its basically referring to foreign exchange. The foreign exchange (FX or Forex) market is a global marketplace where traders exchange national currencies.

Forex is simply the trading of one currency for another. Take for example, lets say you are in UK (United Kingdom) and you are going for a trip or holiday in USA (United States of America). If you want to spend money in USA you need US Dollar, and in order to get USD you will have to sell your British Pounds (GBP) which is the UK currency for US Dollar.

Who are Forex Brokers

Forex Brookers are Firms that gives us trading access to the FOREX MARKET. They provide us with a Trading account to commence our trading activities. Brokers also provide Support Functions to the traders to make trading smooth. There are various Brokers in the Forex Market, they include: XM, Deriv, OctaFX, FXpro and many more.

Forex Trading Sessions

There are Various Trading Sessions in Forex and These Sessions are named according to the major cities in which most of the Transactions are done during this time.

Forex trading season are: London Session, Frankfurt Session, New York Session, Sydney Session, and Tokyo Session

• London Session

  Represents trading activities in the United Kingdom and the countries around it, like Ireland, Iceland etc. It opens at 7am GMT & closes 4pm GMT.

• Frankfurt Session

  Derives it name from Frankfurt which is in Germany and represents Europe trading activities. It opens at 8am GMT & closes 5pm GMT.

• New York Session

  Derives it name from New York in USA and represents The Americas trading activities. It opens at 1pm GMT & closes 10pm GMT.

• Sydney Session

  Derives it name from the city of Sydney and represents Australia and other countries around that Time zone. It opens at 9pm GMT & closes 6am GMT.

• Tokyo Session

  Sometimes called ASIAN Session represents Japan and some of the Asian countries. It opens at 11pm GMT & closes 8am GMT.

Note

It is always best to Trade the Market when 2 Sessions are open at the same time

Volatility is always high when 2 or more Sessions are Open.

In Forex, More Volatility means More money. As a Forex Trader, you should never trade a Quiet market, because there won't be much movements and it's those movements that makes us money.

As potential Forex Traders, Always time your Trading to fall in periods when 2 or more sessions are active. Take For instance, London Session and Frankfurt Session would be open, and Tokyo Session will be with them briefly, so you would notice that Volatility would increase during these times.

Forex Terminologies

In every Field you find yourself, you will definitely encounter Terms that are unique to that field, Be it Law, Sport, Business, etc And you would have to get yourself acquainted with their Terminologies so as to be able to communicate properly.

Forex is no different. You need to learn about the Terminologies so as to be able to communicate with Market Analysts, understand the News and Flow with your Fellow Forex traders.

• Bullish Market

  This is a market that is going Upwards.

• Bearish Market

  This is a Market that is going downwards.

• Ranging Market

  This is a Market with no particular direction. It's neither moving Upwards or Downwards.

• Trending Market

  This is a Market that has a direction. It's either moving Upwards (Uptrend) or downwards (Downtrend).

• BULLS

  This are Buyers in the Forex market

• BEARS

  This are Sellers in the Forex market

All this above are just the basic terms used in Forex trading there are still more you should know about.

Types of Forex Trading Analysis

There are two types of trading analysis which are, Fundamental and Technical Analysis

• Fundamental Analysis

  This is also called News Trading, In this type of trading, Forex Traders analyse the Forex market with respect to News.

  Each day, different news are being released by major countries. These news affects these currency pairs negatively or positively. Traders take trading decisions based on the expected effect of the news.

  We see all these News on CNN, Bloomberg, CNBC etc.

  Also, sites like forexfactory.com, dailyfx.com gives traders summary and direction of the News.

As a Forex trader, whether the news is positive or negative, that doesn't concern you, because you make money both ways.

Crypto-Traders would tell you that you only make money when a Coin is appreciating, but in Forex, we make Money when it is appreciating or depreciating in such a way that If a currency pair is about to appreciate, We buy and when its about to depreciates, We sell.

My next article will tell how you can analyse the news in order the predict price movement like a Professional trader.

That is all for now do check my next post on how to analyse the market.

If you have any questions please let me know in the comments section.