Learn Forex Trading Online Free

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The experts at ForexSQ would like to welcome you to know how to learn Forex trading online free and invite you to look through the site’s various pages to glean valuable information about every aspect of investment trading, including various market platforms, forex trading, managed forex accounts, hedge fund managers and more. As implied in our “name” and URL, we are investment experts who specialize in forex trading and help you learn how to trade forex free, which is defined below. The professional traders and investors at ForexSQ are available to assist with any questions you may encounter along the way in your trading experience. You will also learn to trade forex online free by Fxstay team trading course at the end of this article.

During this discussion, we will assume that you realize that most trading can be conducted from anywhere at any time using a computer with internet access.  It behooves a potential investor to familiarize him or herself with computers, software programs contained in computers and the internet (worldwide web), if you haven’t already done so. 

Forex Education

The investment field of foreign currency exchanges (known as forex) is quickly becoming one of the most popular trading platforms in the world. Investors from all over the world and all walks of life with varying financial means are making a lot of money buying and selling foreign currencies. 

The most popularly traded currencies are the U.S., Canadian and Australian Dollars, as well as the Japanese Yen and others. 

The professional team of investors at ForexSQ have compiled the following information to guide newcomers to the world of forex investments with opening managed accounts, as well as answering questions as to what to expect from your forex broker or hedge fund managers and to help direct you to the best managed forex accounts for your investment funds.

Since this web page is devoted to newcomers to the world of forex investments, let’s start at the very beginning by defining various terms that are used in the forex industry, as well as other financial markets. 

What is the Forex Market?

The term “forex” is a combination of the words “foreign” and “exchange” and refers to the worldwide trading platform of foreign currency exchanges.  

The forex trading market is similar to any other market in which goods are bought and sold (traded), except that forex involves only the exchange of foreign currencies, which are considered “goods” for sale or trade.  This trading platform enables you to use U.S. Dollars to purchase Japanese Yens, or vice versa, or any other combination of currencies.

The forex trading market is a global enterprise boasting over $4 trillion dollars in average daily trading, which makes it the biggest financial market in the world.  Both new and seasoned investors are making a lot of money from this trading platform because foreign currencies are so easy to trade, trades are conducted 24 hours a day on weekdays (only) and this platform gives you access to significant leverage and relatively low costs, fees and/or commissions.

Leverage

Now you may ask, “what is leverage?”  To answer that question, leverage is essentially borrowed money (a loan) from the broker to an investor for the purpose of increasing potential returns on investments.  Leverage can be in the form of financial instruments or borrowed capital and most brokerage firms use debt to finance their operations.  By doing so, brokerage firms can increase investments without increasing their equity. A company whose debt is higher than its equity is considered to be “highly leveraged.”

Leverage can be advantageous to both the investor and the brokerage firm since it intensifies both profits and losses, but greater risks are involved.  For example, if an investor uses leverage to invest in something and that investment then moves in a direction that is not favorable for the investor, the loss incurred by the investor is obviously much greater than it would have been if the investment had not been made with leveraged, or borrowed funds.

When you see that a brokerage firm offers leverage of 100:1, that essentially means that you can buy an asset that’s worth $1000 while only having an actual balance of $100 in your trading account.  You are essentially borrowing $900 from the broker. Higher leverage translates to more buying power for the investor or trader.

Margin Call Policies

Every brokerage firm determines its own margin call policies, which outline the minimum amounts of money (or other security) required to be maintained in your investment trading account.  A broker issues a margin call when your balance dips below that minimum required amount.  Once a broker issues a margin call, you have to deposit additional money (or other security) into your investment account to bring it back up to the minimum required balance.

If you fail to do so, the broker can choose to immediately stop all trades in your investment account.  Policies vary from broker to broker, but some follow the first in first out method (FIFO) of ending trades and others use the last in first out method (LIFO). 

The bottom line is that, if you don’t deposit additional security into your investment account when the broker issues a margin call, all trading done by the broker on your behalf will stop unless and until those additional funds are deposited. 

Asking Prices, Bids, Spreads

Simply stated, “asking prices” are amounts determined by owners who want to sell assets they currently possess.  

“Bids” are the amounts offered by other investors who want to buy an owner’s assets.

Spread” is the difference between the asking and bid prices or the fluctuation in value of an asset from the time of purchase to the time that asset is sold.

Spreads (in terms of profits and losses) are shared between brokers and investors in amounts specified in brokerage account agreements.

Long Buy and Short Buy

Going “long” on a currency means that you purchase it with the hope that the currency price will increase.  

To go “short” on a currency means you buy it with the hope that the price will go down.  

In forex trading, a trader who goes long on one position necessarily and simultaneously goes short on the other.

Base, Counter and Major Currencies

One of the most widely traded pairs of currency is the Euro in relation to the U.S. Dollar, which is designated as EUR/USD on forex trading platforms. A quotation of EUR/USD 1.2500 means that one unit of Euro currency is exchanged for $1.25 in U.S. dollars.

In this example, the Euro (EUR) is the base currency and the U.S. Dollar (USD) is the counter currency. Any currency can be base or counter depending on the position you take.   

Major currencies are those that are the most traded currency pairs in the world (i.e., U.S., Canadian, Australian and New Zealand Dollars and the Japanese Yen, etc.).

PIP

The acronym PIP stands for “percentage in point” (or “price interest points”) and refers to the smallest amount by which a currency quote can fluctuate.  With very few exceptions, foreign currencies are traded at 1/100th of a percentage point. A pip is when the difference between currencies fluctuates that one-hundredth of 1%.

For example, if the EUR/USD fluctuates from 1.2250 to 1.2251, the .0001 rise in the value of the USD is considered one “pip.”

Stop Loss

Stop losses are designed to limit the losses of an investor.  If you place a stop loss order with your broker of 10% below the price you spent to buy the share/stock, this means that you want to limit your losses to 10%. Another means of placing a stop loss is indicating to your broker that you want to buy or sell your share(s) when the price reaches a certain level predetermined by you.  

Full Service Broker Vs Discount Broker

Most new investors in the world of finance choose to open trading accounts with discount brokers. This type of broker only conducts trading of assets in your investment portfolio. A full service broker not only conducts trades on your behalf, but also offers the full range of his or her experience and knowledge of the investment world, full access to the brokerage firm’s investment research and valuable advice personalized to your particular financial situation and investment future.

You will pay more for a full service broker, but they provide a lot more services to you than a discount broker, who will be much less expensive. 

Advantages Of Foreign Exchange Trading

One of the most appealing aspects to individuals who engage in forex trading is that you don’t have to have an enormous amount of money to open a trading account to begin trading foreign currencies.  You can start with as little as $100 and begin making money online!

Another appealing aspect of forex trading is that traders in the forex market don’t charge commissions for buying or selling positions, which translates to commission-free forex trading. 

The biggest traders in the forex market include large financial institutions and international corporations. For many years, small and medium investors were not permitted to trade in the forex market.  Today anybody and everybody can trade in the forex market using online trading platforms offered by brokerage firms.

Managed Forex Accounts

A lot of people, especially newcomers to the investment world, don’t have the desire or time to properly research and investigate investment platforms for the purpose of investing their hard earned money.  These people are fortunate enough to have access to managed forex accounts.

With a managed forex account, you don’t have to know anything about any aspect of the investment world, including forex, and you can rely on the expert wisdom and knowledge of an investor who is employed by a brokerage firm to conduct trades in various financial markets.

These individuals are generally college graduates with bachelor’s degrees in marketing, finance or some other related field.  Account managers have chosen careers in financial investment and management and are well versed in every aspect of the stock market and other trading platforms.

Mutual Funds Vs Hedge Funds

A mutual fund is simply the bringing together of a group of people/investors who invest their money mainly in stocks, bonds and other securities, a portion of which is owned by each individual in the group.

A hedge fund is a legal limited liability partnership of investors that uses methods that are considered risky to invest in a variety of things in addition to stocks, CFDs, Commodities, binary options, Indices, and bonds.  The purpose of a hedge fund is to maximize returns and minimize risk for brokers and investors, which is why they use the word “hedge” (which means to qualify or limit something using certain conditions or exceptions).  Hedge funds were created as vehicles to make money whether the market climbs higher or drops lower.

Demo account

For new investors to financial markets, brokerage firms offer demo accounts from which newbies can practice buying and selling virtual shares of assets with equally virtual money. Demo accounts are free and you can open as many as demo accounts you want to learn to trade forex online free, You can practice trading currencies and shares with a demo account until you become familiar with Forex market.

Real Account

For new or experienced investors to financial markets, brokerage firms offer real accounts from which newbies or professionals can practice buying and selling real shares of assets with equally real money and making money online.

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