Foreign exchange market called also Forex is based on exchanging currencies. You buy one currency for another one. Olymp Trade offers 28 currencies, 7 indices, 35 stocks, 9 cryptos, 2 metals and 4 ETFs in the forex section. This variety gives the traders a great opportunity to be in the market actively 24 hours for 5 days in the week.
We will focus today on the biggest market – currencies. This guide is written especially for the beginners so they can start to earn profits on the foreign exchange market.
The overview of the foreign exchange market
Forex builds on exchanging currencies so there has to be a pair of different currencies. You buy one for another. But the price you will pay changes all the time. It depends on demand and supply. And these are powered by global trade.
If, for example, an Australian importer plans to buy something from Japan, he will need to change AUD to JPY, which is the Japanese currency. The more goods Australian importers buy in Japan, the bigger demand for the JPY. At the same time, the value of the JPY will grow in comparison to AUD.
This is how the law of demand and supply works. Your job, as a trader in the forex market, is to try to predict price fluctuations generated by two currencies’ supply and demand changes. Forex Smart Trade can help you to simplify this job.
Simply put, you need to define whether one currency’s value against the other will increase or decrease at a certain time.
Let’s go back to the AUDJPY example. When AUDJPY is 76.6055 you know that you can buy 1 AUD for 76.6055 JPY. Now you have to determine how the price will change. If you think it will go up, you press the UP button. If you speculate that the asset’s price will decrease, you click the DOWN button.
You do not have to specify the expiry time, as in the fixed time trades. You just open a position and it will close when a certain price is reached or when you close the transaction manually.
Trading on the forex market on the Olymp Trade platform
The Olymp Trade platform is a great place to trade forex because it provides many technical analysis tools that will help you in speculations on the prices of the assets. Also, the prices on Olymp Trade are fairly accurate. This gives you a chance to earn high profits. You ought to be, however, careful because a huge loss may occur as well.
Conduct a detailed analysis of the market, pick a stable currency pair and choose the trading strategy and money management plan that is adapted to your needs. Get to know the platform well. It should not take much time because it is a user-friendly one.
Below, I present a few steps that will smooth your path to forex trading.
The steps you should take to start trading forex like a pro
You have to begin with opening an account on the Olymp Trade platform. Registering is easy and fast. You fill the details, then you will receive a confirmation of your registration. Moreover, it is free to open an account and you receive a bonus in the form of a demo account. This is an account which is supplemented with virtual cash. You should use it as a practice field. Try new assets, indicators or strategies there.
Olymp Trade offers also trading via desktop and mobile apps. Download them on your PC, Android or iOS and use the platform wherever you want.
You have already registered with Olymp Trade. Now, log in to your account and find a small arrow in the top corner just next to the instrument’s name. Click on it and you will have two options: Fixed Time or Forex. Choose the latter and a whole list of available assets will unfold. Select Currencies at the bottom or write the word in the search box below. The last step here is to choose one currency pair that you wish to trade during this session.
The interface of the Olymp Trade platform
As I mentioned before, the interface is very intuitive. Nevertheless, you should know it well and thus I have provided a screenshot from the platform below. I have marked the main elements which I am describing below the picture.
- Trades. Here you may review all your past transactions as well as those currently open.
- The name of the currency pair that is presently selected. You can also access the other instruments here.
- The types of the chart. There are four options: Japanese candlesticks, bars, Heiken Ashi and area chart.
- All the indicators and drawing tools.
- The period of the candles.
- The amount of money you invest in a transaction. You will not lose more than the defined investment amount.
- The multiplier increases your investment amount accordingly.
- Auto-closing where you set the levels of the price at which your trade will be closed automatically. You can decide on the Take Profit and Stop Loss levels or leave them empty, so you will be able to close your position manually.
- Up and Down buttons allow you to open a trade in the desired direction.
- The amount of commission taken for this transaction.
4 simple steps to open a position on the forex market on Olymp Trade
- Choose the right instrument. I recommend major currencies such as EURUSD, GBPUSD, AUDUSD, USDJPY, USDCHF at the beginning.
- Set the chart type and add the indicators, if needed. Trading with candles only can also bring good results. As for the chart type, I always advise choosing the Japanese candlesticks. It is very transparent and easy to analyse. A 5-minute period for the candles will be a good choice.
- Write the amount you desire to invest in line with your money management method. Do not place too much money in one transaction. 1 – 5% of your account balance will be enough. Now, set the multiplier. Choose wisely, as this tool not only significantly increases your profit but also your loses. Then, decide on the price levels on which your trade will be automatically closed. This is a very important step that will protect your money. When a preset profit or loss is reached, the transaction will be over.
- The last thing is to press the Up or Down button in accordance with your speculations. Click the Up button when you predict an increase in the price. If you think the price will decrease, choose the Down button.
- You can still close your trade manually. You will see the amount of money this move will cost when you hover the mouse over the opened position or choose the corresponding button in the Trades window available on the left side of the platform. Give it some thoughts, though, because in some cases you will get more if you wait.
Benefitting from take profit and stop loss
The very first rule of trading you should know is to protect your money. You can start thinking about making profits after you are able to keep the balance in your account stable. Setting stop loss will help you to achieve this goal.
Take profit and stop loss are meant to protect your account balance. Choose the amount you are ready to lose as a stop loss and the amount of money you wish to profit from the trade as a take profit.
In the example below, 100 virtual cash was the invested amount. A trader has decided not to lose more than 20 so a stop loss is set at exactly such amount. Awaited profit is set at +50. At these levels, the transaction will be closed automatically.
Check the details of your transaction in the Active Trades window on the left side of the trading interface.
Switching between the Olymp Trade accounts
Olymp Trade offers a free demo account. This is an excellent place for your practice. You can use it as long as you need to and you can always come back to it with a new strategy or technique. Nevertheless, you will not earn real money on a demo account. That is why you ought to move to the live account at some point.
On top of the platform, you can see whether you are currently using a demo or live account. Click the chevron icon to switch between them. Once you are in a live one, you will be able to make a deposit. Click on the Deposit button and then choose a payment method. Then, just continue with the on-screen instructions and complete the required data.
The verification process
Olymp Trade will want to verify your data in order to ensure compliance with anti-money laundering regulations. Another purpose of verification is to protect your account from unauthorised access.
The verification process is quite simple. You will just need to provide your details. It may be your ID card, confirmation of the address or telephone number.
When your details are checked, Olymp Trade will send you an e-mail with information about the end of the verification process.
Exchanging the currencies on the forex market is a great opportunity to earn profits trading. The Olymp Trade platform offers a wide variety of assets and tools. Its interface is very intuitive and with today’s guide, you know the basics of forex trading.
Remember the first rule which is to protect your account balance. Always set a stop loss and you will never drain your account completely.
Use a demo account provided by Olymp Trade to check new currency pairs, indicators or try a new approach.
I encourage you to write in the comments section below about your thoughts about trading on the forex market. I will be happy to hear from you.
Enjoy forex trading!