Forex Trading for Beginners can be very difficult. This is because many forex trading beginners in South Africa don’t know where to start. The first step you must do as a beginner you must do research on how to start Forex from scratch. There are so many Forex manuals for beginners that one can read online. Some traders also end up taking online Forex trading courses. Forex Trading is recommended for beginners. Forex market is a profitable place for both beginners and experienced traders. The purpose of this Forex Trading Beginners South Africa guide is to educate people who are interested in Forex trading to know all about Currency Trading.
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Is forex trading for real? This is one of the most frequently asked questions Forex beginners ask us. The answer is yes, Forex trading is real in South Africa. Before we go any further, there are some forex terminologies each beginner must know.
Trading Terminology for Forex Trading for Beginners South Africa
Every beginner must learn these terms and ideas before beginning Forex Trading
- Spot Forex – is an agreement between two parties to buy one currency against selling another currency at an agreed price for settlement on the spot
- Currency Pair – is the quotation of two different currencies, with the value of one currency being quoted against another currency.
- CFDs – A contract for differences is a contract between a “buyer” and “seller”, stipulating that the buyer will pay to the seller the difference between the current value of an asset and its value at contract time.
- Pip – A pip is a standardized unit and is the smallest amount by which a currency quote can change.
- Spread – is the difference in pips between the BID price and the ASK price quote (buy/sell) in a currency pair.
- Leverage – is a strategy that companies use to increase assets, cash flows, and returns, though it can also increase losses
- Margin – is the ratio of profit to revenue.
Forex trading lessons for beginners
Below are basics of forex trading for beginners that each trader should familiarise themselves with. We will try our best to help you learn about forex trading the basics explained in simple terms.
Price and Quote
When you trade Foreign Exchange, you will see ‘Ask’ and ‘Bid prices’.
- The Ask price in Forex is the price a trader will buy a currency pair at.
- The Bid price in Forex is the price a forex trader is willing to sell a currency pair for.
Always keep in mind that when you learn forex trading for beginners you can trade both short and long, however, you must be aware of the risks involved in Forex.
A long trade is started by buying with the expectation to sell at a higher price in the future and make a profit.
A short trade is initiated by selling, before purchasing, with the aim to repurchase the stock at a lower price and make a profit.
There are three different options available to Forex traders using the MT4 platform when viewing the exchange rate in live Forex charts. We have line charts, bar charts and candlestick charts. This is very important for beginners to know.
A line chart or line plot or line graph or curve chart is a type of chart which displays information as a series of data points called ‘markers’ connected by straight line segments. It is a basic type of chart common in many fields.
OHLC bar charts
An open-high-low-close chart is a type of chart typically used to illustrate movements in the price of a financial instrument over time. Each vertical line on the chart shows the price range over one unit of time, for example, one day or one hour.
A candlestick chart is a style of financial chart used to describe price movements of a security, derivative, or currency. Each “candlestick” typically shows one day, thus a one-month chart may show the 20 trading days as 20 candlesticks.
Trading platform for beginners
A trading platform is software that links the trader to a forex broker and the relevant markets. To check trading platform for beginners, make sure that you visit this guide for trading platforms for beginners in South Africa. Trading platforms have sources of information including price quotes, market news and order types.
There are different types of trading platforms every beginner should know. There are trading software that can be downloaded directly to the computer and they are compatible with Mac, Windows and Linux Operating Systems. Another type is the web-based trading software which runs on Java. It is accessible from anywhere.
Risks every beginner should know
There are different types of risks that Forex Trading beginners should know. Here are some of them.
- Leverage Risk: Leverage in trading is believed to be high risk because it allegedly increases the potential profit or loss that a trade can make.
- Interest Rate Risk: Is the risk that arises when the unconditional level of interest rates fluctuate and directly affects the values of fixed-income securities.
- Transaction Risk: Is the unfavourable effect that foreign exchange rate fluctuations can have on a completed transaction prior to settlement.
How do beginners learn Forex trading?
Beginners can learn to Forex trading by starting with a micro account for as little as $100. Before you start trading, you should familiarise yourself with the market and the forex market terminology. If you have been trading stocks already, this will be easy for you to get started.
How do you trade forex for beginners?
Currency prices are always fluctuating against each, giving beginners trading opportunities every day. Now that you have your strategies in forex trading for beginners in place, it’s time to trade forex for beginners in South Africa. Once you know how to trade Forex, you will enjoy a financially independent lifestyle. Anyone with internet connection can begin to trade forex in South Africa. Learning the basics of how to trade forex in SA seem easy and should not create any problems if you’re already familiar with how forex works. Below are the FX Trading Steps for beginners South Africa.
Step 1: Connect Your Device with Internet
To begin trading forex for beginners South Africa, you must have connected your device to the internet. You can use your mobile device, computer, laptop or tablet. Many trading platforms are compatible with iOS, Windows and Android operating system. Check with your device if it supports these platforms.
Step 2: Choose A Forex Broker
All our listed Forex brokers in South Africa offer Forex trading. Make sure you choose the best forex broker that suits your trading needs.
Step 3: Open a Forex Account
Opening a forex trading account is not complicated, but new traders will need a few things to get started. Visit the online broker and click sign up. You will be asked to complete an application form. Upon completing the application, you will be registered with a username and password that will give you access to your trading account.
Step 4: Fund the Account
After registering, login to the brokerage’s client portal using your username and password. Fund the account by transferring funds from your bank into your account. You can use credit or debit card or electronic transfer from your bank account.
Step 5: Download a Forex Trading Platform
Most Forex brokers support popular trading platforms such as MetaTrader 4 and/or 5 platforms from MetaQuotes. You can download the trading platform and install on your mobile device or computer so you can trade forex. There are also web-based trading platforms that many online forex brokers offer from their websites.
Step 6: Enter Your First Trade
Once your account has been funded, you are now ready to start trading. Before you make your first trade, make sure that you practice using a demo account before you actually put real money into trading. This will make you learn how to enter and exit trades properly.
Tips for Forex Trading Beginners
Before you start trading online, make sure you start with the fundamentals. Below are some of the tips for Forex trading beginners. Make sure you read them before you start trading currency pairs.
- Know the Markets
- Make a Plan and Stick to It
- Know your limits
- Choose the Right Trading Partner for You
- Choose the Right Broker
- Keep Your Emotions Under Control
- Educate Yourself
- Choose the Best Trading Conditions
- Create a Strategy
- Know when to stop
You can also watch Forex trading for Beginners videos on YouTube if you want to watch the example of how Forex works.