In our last lesson we continued our forex trading course by learning about the bid ask spread. Now that we have some of the terminology and basic logistics out of the way it is going to get a little exciting as we look at actually placing some forex trades.
At the end of our last lesson I gave the homework assignment of placing a trade which reflected an opinion that the Euro is going to strengthen against the US Dollar.
If you remember from our lesson on currency rate movements, if the rate for a particular currency pair is going up this means that the base currency in the pair is getting stronger and the counter currency in the pair is getting weaker. With this in mind, if we are seeking to place a trade which reflects the opinion that the Euro is going to strengthen against the US Dollar, then we want to place that trade so we benefit from an increase in the quote for the EUR/USD currency pair.
If you think of all currency pairs in terms of the base currency then you can use the same rationale to trade the forex market as you would any other market. If my analysis tells me that the base currency should strengthen against the counter currency, this means that I am expecting the quote for the currency pair to increase, which means I want to buy to enter the position.
Conversely, if I my analysis tells me that the base currency should weaken against the counter currency then this means I am expecting the quote for the currency pair to decrease, which means I want to sell to enter the position.
With this in mind we should now know that to execute a trade which reflects the opinion that the Euro is going to strengthen against the US Dollar, we are going to buy to enter the position.
Let’s go ahead and login to our real time demo trading accounts and do just that. If you have not registered for a free demo trading account yet then I encourage you to pause this video and click the free demo registration link directly above this video if you are watching on InformedTrades.com or to the right of this video are watching on Youtube so you can get a free demo and follow along as well.
Luckily, most forex trading platforms including this one make it very easy to execute a trade once logged in. There are several ways to do this on this particular platform but the easiest in my opinion is to simply left click on the buy rate for the EUR/USD currency pair in the dealing rates window, which will bring up a market order window already filled out with everything you need to enter the trade. Once that is up simply click ok and you have executed your first real time virtual currency trade!
As noted above we will now benefit if the quote for the EUR/USD increases which would indicate that the Euro has strengthened against the US Dollar.
If we were expecting the Euro to weaken against the US Dollar this would have meant that we were expecting the rate to decrease so we would have sold to enter the position. The key thing to remember here is that if you are expecting the base currency in any currency pair to strengthen then buy to enter. If you are expecting the base currency in any currency to weaken then sell to enter.
For tonight’s homework assignment establish a fake or real opinion on what you think is going to happen with a particular currency pair and place some trades which reflect that opinion. If you would like to list your trades in the comments section below we would love to see them.
That’s our lesson for today. In tomorrow’s lesson we are going to be covering something which is known as a PIP as well as the different contract sizes in the forex market so we hope to see you in that lesson.
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Actionable trading levels delivered to YOUR charts in real-time.
Live trading strategy sessions.
Market Updates with Trading Tools.
Sign Up now for a free Trial now using the form below:
20 Feb Mon
00:00 US- Holiday 21 Feb Tue
All Day flash PMIs 22 Feb Wed
09:00 DE- IFO Survey
09:30 GB- GDP
10:00 EZ- Final HICP
13:30 CA- Retail Sales
15:00 US- Existing Homes Sales
19:00 US- Fed Policy Minutes
20:30 US- API Crude 23 Feb Thu
13:30 US- Weekly Jobless
14:45 US- flash Service PMI 24 Feb Fri
13:30 CA- CPI
15:00 US- New Homes Sales
15:00 US- final Univ of Mich Survey
Odds are Monday will ba a subdued trading session with no major data slated and U.S. markets closed for the President' Day holiday. Key data are due over the week with the first round of PMI releases (flash) along with the German IFO Survey. These tend to be important items for analyst but not as much so for the markets in terms of price fluctuations.
As for where the forex markets are headed, my focus is on market sentiment vis-a-vis economic growth in the U.S. The Fed appears to be embarking on a policy "normalization" path starting with a rate hike on March 15. Market odds on a hike are only 38%. Traders simply don't believe the Fed has the courage to go through with a rate hike. For Yellen to have any future credibility she should hike rates. I'm not sure what this Fed is made of. A 25bp rate hike will not decimate the economy. We will see.
I feel that equity markets are currently of two minds about U.S. economic growth. They are hopeful that the new U.S. administration will be able to come through with its promises, primarily a significant tax cut. However, the establishment opposition (in both parties) are doing all they can to sabotage and obstruct major reform. They have a lot to lose. In addition to tax reform, Obamacare is a quagmire. It is a financial disaster that is going to be nearly impossible to fix in the short run. Whether it all can be fixed will depend on how well Trump delegates power and on how strong his Cabinet will be.
So the equity markets are of two minds. One is optimistic about growth and the second is pessimistic that major change will sabotaged by the establishment. The USD will be suported by positive prospects for growth and undermined by fears of no change.
As of late Friday Fed Funds futures odds for a March Fed rate hike were 38% (44%). Markets now place the odds for rate hikes by June at 112% (12%). That is 100% for one hike (March?) plus 12% for a second move.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.