Use of Indicators in Forex trading

Here is would like to tell you something about indicators available on meta traders by default, I personally don't use all of them, but I use some of them, in which I personally like oscillators.

When you open your meta trader then you see indicators in your side column, just below the accounts link, click on that link and you will see so many indicators by default, you can double click them and when you click ok, you will see the indicators showing in your chart, but the main thing is to know what are indicators and what they work.

Actually, indicators are the script based on the average movement of market, they help traders to understand the market trend and expected direction, I personally use MACD, RSI and Stochastic indicators. But I never be dependent upon these indicators, because I know, market moves on its way, and sometimes these indicators turn wrong and if you open order on the basis of indicators then you might face some kind of financial loses. But sometimes these indicators become so much useful, especially when you are doing technical analysis and market is moving smoothly.

You need to know the divergence of market and if you are able to understand the divergence and point that out then you will be able to make good money from this market. I will show you divergence of market with the help of some pics.

High leverage and its importance

Dear Friend, I want to tell you that mostly brokers offer you high leverage and you can trade with small capital with the facility of leverage, usually I advice traders to set their leverage to 1:200, because in my view, it is best for them, but if traders use 1:500 then it is also ok, I think you all have noticed this thing that mostly good and regulated brokers offer not more than 1:500 leverage and when your equity increase, they reduce the leverage.

Another thing that I would like to share with you, mostly traders think that they will trade in gold with the same leverage, but they should keep this thing in their mind that whenever they open gold or any other metal order, the broker automatically set the leverage to 1:50 from whatever you set, and then you see that you can not open more than one or two orders, this all happen due to leverage, so it is better to understand how leverage works and what leverage is available. Gold market is different from forex market, mostly traders think that gold and stocks are available in one meta trader platform then it is included in forex, but it is a big mistake that should be highlighted.

I would like to advice my readers that you should set low leverage, to secure your trades and capital, it will be better if you do proper money management, we use high leverage, because our capital is too small, so invest big and set leverage low.

Can I become a successful trader

Mostly newbies ask this question, and I don't know why they don't have confidence upon their own skills and talent, they are fear of thinking that they will become a good trader, I want to get that fear out of them and want to tell them that everybody can be a good and successful trader, but what is needed? Of course, hard working and a lot of learning, mostly new traders don't know how to start learning and what to learn, so I would like to suggest them that they should start from the basics of forex, they need to learn a lot of things, they should keep this thing in their mind. Continuous learning is the main key to success, because with continuous learning a trader trade in market and gain experience. 

If you are a little bit educated and understand reading then you can learn a lot of things available in english language, but there is another solution for traders that they can also find their own home country man who is trader, I think he will teach people in their native language and this will help them to understand the forex trading better, but remember, forex trading is not a children play, it is a serious business to do.

First thing that all traders should keep in their mind is to learn and their first preference should be learning not earning, after learning they will have to practice a lot, so if a trader is joining this market for the sake of earning then he will have to make his mind clear that within approximately six months he will not earn a single penny from this market, and he will keep focusing on market and its learning, then I think a trader will perform better than other ordinary trader who jump in the market and think that forex is easy business to do and it is just buying / selling of currencies.

Difference between meta trader 4 and meta trader 5

Well, I have seen that so many traders ask about the difference between meta trader 4 and meta trader 5, I would like to tell them that there is a little bit difference between these two platforms, but some brokers have modified the meta trader 5. 

I would like to tell you some differences between these two platforms, in meta trader 4, you will see only four last digits and the movement of market in normal time you will see in seconds, but in meta trader 5, you will see the movements in Milli seconds, this is because meta trader 5 has 5 decimal in last of price, for example, if we see the price of Eur/usd, then in meta trader 4 it will show as 1.2990, but in meta trader 5 you will see this price as 1.29902 or last digit may vary, if you see the last digit in 5 then you will see same price as mentioned above, but if the price move to 1.29906, then you will see 1.2991 in meta trader 4. This is a difference that mostly traders pointed out, but I would like to tell you about other brokers.

If you see other brokers meta trader 5 platform, then you can not hedge with them, in simple words if you open an order whether buy or sell, and your order is in negative then you can not open opposite order to secure your capital, your order will be automatically close with loss, similarly, if you have an opened order and you are in profits, so whether you close that manually or open opposite order, your order will be closed, and if you close that order manually then you will see that broker will open another order against your order, but not in your account.

So, if you are a new trader then you should know these things so that you will not face any kind of difficulties or financial loses if you switch to any other broker offering meta trader 5.

Small lot with big profits

Here I want to discuss with you about the small lots and big profits, As you can see in the picture that the lot size is very small, this is a cent account and you can see that it is 0.50$ lot, which is equal to 0.05$ lot. 

Why I share this picture to you? because I want to tell you all that with the help of a good strategy and with patience anybody can make good profits with small capital and small lot, what was the strategy behind the whole scenario? What did I see? I am telling you in details. 

Actually I saw the psychological limit of the pair and made it in my mind that the EUR/JPY will not fall anymore, because there isn't any upcoming news in favor or Japan Yen, as you can see on the other chart, that is USD/JPY,  You can see that both of them are moving almost same, it means that yen is under pressure. So, its time to open buy order, but I opened only small lot, to make it long term, and that's why when market rose, you can see my profits in the above picture. but I haven't forgotten to use trailing stop in this strategy, and I will advice all of the people who are doing long trade, please use trailing stop, so that you may lose your money in case of market reversal. It is very much necessary, you can see the red line in the picture, that is indicating my trailing stop.

I think this is the best strategy for those who have small capital and want to do trade with minimum loss, I hope that will help my readers in their future trades.

How can you trade without investment?

If you are a new trader and you don't have money to invest in the market then you can trade in forex market without investment, you can trade in this market in three ways. 

Number one is open a demo account and trade in that account for the sake of practice, that will help you to understand the market behavior and the use of meta trader etc. for learning process. After learning by demo accounts, you can participate in demo contests where you can polish your trading skills and if you win the contest you may get bonus money to trade in real account with that money. Almost every reliable and renowned broker is offering demo contest to encourage traders to trade in real market as this market has become so much popular and attractive.

Secondly you can find through searching on internet, there are several brokers offer you no deposit bonus, where you can trade without investment, but there may be some restrictions, just like you will have to trade 5 to 10 standard lots, or you will have to double that bonus amount, but when you trade with those brokers who offer you no deposit bonus, beware of scam brokers, otherwise you will only waste your time with them, they will not give you money.

Third option is to bonus for posting, and this option is most popular nowadays, because you will need to only discuss with other traders or teach some newbies and get bonus money, and the admin of the forex forum will credit the amount of bonus in your real account, where you can trade with that money and you can withdraw the profits made by the successful trading over the bonus amount. I have found this third option very useful and I think if a trader or newbie accumulate bonus amount by just posting their comments and views regarding forex trading, then what you want more? I think every trader should try to teach others so that it will help him in his own trading.

If you want to signup with best forex forum then click here.

What is hedging?

What is hedge? so many people ask this question, and my answer for them is just opening two orders one is buy and other is sell with the same trading volume is called hedging, in simple words if you have opened a lot of 1$ size of buy, and you see the market is falling then you will open an order of 1$ lot size in sell, that step will neutralize your position and the fluctuation of market won't hurt your capital if your orders are open, I mean to say no stop loss nor take profit.

Some people say that it is to lock the position, yes they are right, this strategy locks the position, but sometimes it make you confuse that how to open that lock, so whenever you use hedge then you should know when to unlock that position and how to unlock, for example if we open an order of buy with 1$ lot size and see market is falling due to any reason, then it will reduce our equity quickly because of big lot size, to save our capital we will have to place another order of sell with the same lot size, that is 1$. Now, position has been locked, and market becomes neutral, now market is falling continuously, here you can take a chance, you can change the strategy. I mean to say that you can open the hedge if market is falling continuously. How, you may close the existing buy order and let the sell order open to make you profits.

Or you can do another thing, if you see market is falling then place another sell order similar to existing lot size or just reduce 50% of lot size to secure your capital if the market reverse. But whenever you trade in the market, it is very much necessary to focus on market trend.

What are strategies?

Well, there are a lot of strategies available on internet, mostly traders make their own trading strategies, according to their trading style, but in my view, the most popular strategies are only a few, in which most popular strategy is "SCALPING". 

Scalping is the most attractive and useful strategy I have found in forex trading, but I will not recommend anybody who is new in forex market. This is because it is very risky strategy. In this strategy you take only a few pips in profits, you don't wait for more, usually traders do it in neutral market trend, or sometimes traders do it when they see the market is moving between 20 to 30 pips, I personally do it while the market is moving between 20 pips. I don't wait for market rise up or fall down, when I see 2 to 3 pips in profits then I close the order, I usually try to swim according to stream, and it is better.

Other types of strategies are long term, short term, inverse trading, reverse trading, medium terms etc. These terms of strategies are popular, but I would like to inform my readers that read and learn all the strategies, but use them in demo account first, and after using them, try to memorize them, and you should be a sharp mind if you are trading in real market, because the real market involves your own money, and if you are trading in real market then you should prepare your mind for any kind of market bounce or reverse. 

Learning several strategies and changing them according to market trend is recommended. It will get you near to success and you will be able to understand the market trend. Although understanding market trend is not an easy task to do, but it will become easier day by day. 

In the short term you can be dependent upon news, usually I have seen that news impact on market partially and the impact usually reverse if the buyers / sellers are strong. So at that time short trades are recommended according to market trend.

In the long term, you open order according to signal and use big targets, in which you use trailing stop as target one to secure your orders and capital.

Why should we practice in demo account?

The title is simple, a question and suggestion is behind that question, usually people don't want to waste their time in learning process and they just want to make money from forex market, they don't want to learn more, they just want to have the basic knowledge of meta trader, they don't even know all the options in the meta trader, they don't even know the difference between meta trader 4 and meta trader 5, but they enter in forex market and try their luck.

Actually, if you have a mentor or a good teacher, then you will understand the importance of demo accounts, because in demo accounts, newbies can trade without investment, and new traders can try new strategies and expert advisers (robots) without any risk, because demo accounts are based on virtual money. So, nobody can deny the importance of demo account. 

Now, the question is, how much time a newbie should do demo trade? The answer is simple, a newbie should learn all the basics and then try to understand how to trade, all that can happen in demo account without any cost. After knowing how to trade in live market, a trader should learn some strategies, that are very much necessary to get success in forex market. After learning, practice is necessary, so demo account is suitable for practice. There are several strategies available in different forums, learn them and try on demo account.

What are benefits of trailing stop?

Trailing stop is the option that we use to secure our profits and minimize the loss in our trading, whenever we open medium term order then we can use trailing stop to secure our order, you can find this option by right click on your existing order as you can see the picture below:

Here you can see the trailing stop and the options available with trailing stop, actually we set the points or pips to secure our opened order for sudden market bounce back. for example, if you use 15 points, then you will see that when market move more than 15 points in your order favor then you see a red line just after your order, this is actually a stop loss, and if the market will reverse then your order will close on that limit. Sometimes it cause you profits and sometimes it secure your order to go to negative and secure your capital with sudden fluctuation. Now a question arise, if it is stop loss then why not set stop loss manually, what is the need of trailing stop? So, I would like to tell you that when you set 15 or any points of trailing stop then after those pips you will see red line, and if the market continues its movement in your favor then the red line or stop loss will automatically move with the difference of 15 or the points you set. if you set more than 15, like 25 or 35, then you will see that if the market move between 34 points nothing will happen, and after 35 points when the market move one pip, the trail stop will move one pip. you can say it is an emergency break. But it is for medium or long term tradings, not suitable for short or scalping.

What is buy stop, sell stop, buy limit and sell limit

This is a question that people ask, but they don't use it in their tradings, mostly people use only buy limits and sell limits, but it is very important to know about buy stop and sell stop, there is a little difference between these two options, but when you are trading in market then you will find them very much useful. Let me explain in my simple words, hope that it will be useful for you.

When you open order you can find pending order, in pending order, you can see these options in "type" box, first option will be buy limit, second sell limit, third buy stop and forth will be sell stop. 

The simple definition of buy limit is, you want to open order when the market is up and expected to fall and bounce back, so you place buy limit below the current market price, similarly, you set sell limit above the current market price. While you use buy stop when market is moving up and you want to open order on rising market. Similarly, sell stop is used to place pending order when market is falling and you want to place pending sell order. 

Let see it in simple example, if the market of eur/usd is on 1.3074 and you think that market will move up, so you can open order by instant execution or just use buy stop but remember you can set buy stop after the spread quantity pips, as you can see the last sentence in the picture above. You can not set buy limit above the current market. The difference between limit and stop is just above the current price and below the current price. The option buy stop and sell stop are useful when you see an economical news is expected and market may bounce face, then you may use buy / sell stop to get benefits from that bounce.

What are requotes? and how to prevent it?

Well, requotes are not good thing, when you are watching market and market is in your favor, and you want to open an order according to market trend, but the market is fast, so you will face an error or requotes. it means that the price has been changed and you will have to requote your order with new price, and when you press ok to that price then you see another requote error. So, if you want to save yourself from requotes then open pending order or if you want instant execution of order then click on the small box at the bottom of order window, you can see that in the picture below:

Here you can see the option "Enable maximum deviation from quoted price". click on that button will open the option "Maximum deviation" below. Here you can set how much pips do you want to set. There is 0 to 10 pips in that option, if you want to use it then ideal is 3 pips. It will prevent requotes and when you open an order in running market then it will place your order within 3 pips difference. 

Other thing is pending order. In the "type" dialog box, you can find three options, one is instant execution, second is pending order and third one is modify order. Click on pending order, you will find as below:

Here you can see options for pending order. use your desired option and prevent requotes.

How to execute order? What is sell / buy order?

Well, this is the most basic question that a newbie ask, when you start practicing or using meta trader, this is the most common thing that a newbie do. 

Below is the picture of order for newbies to understand what is order?

When you use meta trader then you have to open an order whether buy or sell, to trade in this market. To open order window you can do two things, either double click on any currency pair in Market Watch column, or just simply press F9 button and you will see order window as you can see above.

Here you can see two buttons, one is red and other is blue. The red button is called sell as you can see in picture, and blue is buy. Why these are sell and buy? let see an example, if you see the market movement, the market is going up, and if you think that market will go up more, then you will open buy order, when you will press buy order, you will see floating minus in your total. This is spread that you pay to broker. Now, if you have opened a buy order that is 1.3077 in Eur/usd, then you will have to follow the red line to cross 1.3077, when the red line will be on 1.3077, it means your loss of spread has been covered. If the red line cross 1.3077 then you will earn on per pip basis. Similarly, if you think that market will go down or fall, then you will open sell option (the red button). and you will follow the blue line.  

These all things are to open order, now how to close the order to get profits? it is very simple, you will see a yellow button below these two red and blue buttons. To find out that button, you will have to double click on your existing opened order. As you can see below:

Just click on this yellow button and your order will be closed. Whether negative or positive.

What are pips and spread?

Every new trader has a question what is pip? and what is spread? 

So, I would like to tell those newbies that pips is actually last digit of any currency price, for example, if you see eur/usd pair, and if its price is 1.3022, then the last digit will be called pip, and we use this word pip to evaluate the earnings. 

Now, lets talk about spread, when a trader start trading in meta trader then he see two prices, one is bid price and second is ask price, a trader will see the difference between bid and ask price, for example if the price of Eur/usd is 1.3022 in bid, then the price of ask will be 1.3025. Now, when a trader open an order of 1$ trading volume, then he will see minus 3 (-3) in his status bar, this is the spread that a trader pay to broker when he open an order. and if you want to earn money then you will have to cover that spread first then above that spread will be your profits, if you close that order.

In this picture you can see bid and ask prices, you can also see the currency pairs name. There are some categories of currency pairs, some of them are in major pair group, some of them are in minor, some of them are called crosses. If you see the spread difference then you will find major pairs have low spread, the spread will increase when you trade in minor, and the spread may go up to 350 pips according to currency pairs. Most of the traders prefer to trade with major pairs, because of its volatility, the high fluctuation, the high earning.

This picture has been taken from instaforex broker, and this broker has almost 350 pairs to trade, so I like this broker very much due to hundreds of pairs to trade.

Who is broker?

When you intend to trade in forex market then you need a broker for your intention, because without broker it is very difficult to trade with world market, a broker is a company or entity who attach you to the world market, and this is broker who give you leverage to buy big lots with small capital. So broker is very much necessary to trade in forex market.

Nowadays there are several forex traders available on internet, they will offer you so many things, some of them will offer you high leverage, and some of them will offer you welcome bonus, but what qualities you should see in a broker? 

A broker should be reliable, how can you judge him? by searching in internet. You just will have to type the name of broker and after name write scam or review, then you will find reviews on that broker. There may be some negative reviews and some positive reviews. If you find some positive reviews then you should invest a little to give him a try. What things you should see in a broker? You should see the payment options available with that broker, then you should see the withdrawal duration, that how much time will broker take to withdraw your money and how long does it take, the money arrive in your account? You should see if the broker is registered with concerned regulatory authorities? 

After all that research, now come on the offers he is giving you. First of all spread is important, If he is offering tight spread then you should see the spread first, then the swap or commission. If the broker is offering tight spread then how he is earning? these are the things that you should see in a broker? Is there any hidden charges? Is he execute the orders according to market or what? Therefore, you should see these things if you are going to choose a broker.

You should also see the minimum amount to invest in a mini or micro account. Is the account swap free? if the account is fixed spread or floating spread? how long a broker is in the market? How much bonus he is offering, and what are the conditions of that bonus? because there are several types of conditions brokers imposed on bonuses.

What is Forex?

The question is interesting, I will try to define it as much as I know about it, forex stands for (Foreign Exchange), this is the simple definition of this word, now I will not go in the depth of forex, but we do forex to earn money, forex is not an easy business to do, so many people say that forex is a job, so you should completely remove this misconception that it is a job, it is a business and every new trader should know this thing. This market is high risk market, but when you take high risk then you will see high returns, if your trade is successful, but it doesn't means that a new trader should take high risk, a new trader should learn all the relevant things that are very much necessary. 

Most people think that money management is the key to success, some think that good indicators indicate you where to open an order and where to close, so indicators play the main role, while some people think that good strategy is the main key to success. But I would like to tell you all that success is not based on one key only, there are several keys that a trader should have to open with the combination with. There are a lot of things that a trader should know and learn. Continuous learning is necessary if a trader want success. 

If you see the forex trading then you will find it just buying and selling of the currencies, but when you go in the depth then you will find that there are so many things that are needed to do forex trading, so don't ever underestimate this market. There are so many things that are needed in this business. I would like to mention some of them here:

1. Good money management.

2. Good risk management.

3. Use of meta traders. (MT4 and MT5).

4. Knowledge of history of currency pair.

5. Practice in demo account.

6. Good trading strategy.

7. Knowledge of hedging.

8. Understanding market trend.

9. Use of pattern, (bar, candle or line).

10. Discussion with experienced traders.

Why I started this blog?

Well, there are several blogs related to forex trading and forex market available on internet, so why I started this blog? 

The answer is simple, I want to share my experience and learning what I did in my past, with you all, that's why I started this blog. The main intention of this blog is to teach those who have just joined this market, everybody who join forex market think that it is high liquidity market, that's right. But most of the people don't know about the volatility of this market and the high risk involve in this market, this blog is for those who want to learn and gain experience. I will try to help all the people who are serious in learning and want to make it their career, as I did. It may take long time to learn but never lose your hope, I think all of you will who are reader of my blog will get success in near future, if they do proper training and learn what I say.