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    UNDERSTANDING FOREX TRADING FOR BEGINNERS

    The foreign exchange, also known as FOREX or currency


    trading is the act of buying and selling of currencies in the foreign
    exchange market.
    In forex trading, traders speculate on the movement of the
    currency pairs. A trading currency pairs consist of two currencies,
    where one is traded against the other. Examples of currency pairs
    are
    • EUR/USD: Euro and U.S. Dollar
    • USD/JPY: U.S. Dollar and Japanese Yen
    • GBP/USD: British Pound and U.S. Dollar
    • USD/CHF: U.S. Dollar and Swiss Franc
    • AUD/USD: Australian Dollar and U.S. Dollar
    • USD/CAD: U.S. Dollar and Canadian Dollar
    • NZD/USD: New Zealand Dollar and U.S. Dollar
    These currency pairs that include U.S. Dollar are the major pairs.
    Some examples of minor currency pairs include:
    • EUR/GBP: Euro and British Pound
    • GBP/JPY: British Pound and Japanese Yen
    • EUR/AUD: Euro and Australian Dollar
    • EUR/JPY: Euro and Japanese Yen
    • EUR/CHF: Euro and Swiss Franc
    • AUD/JPY: Australian Dollar and Japanese Yen
    • GBP/AUD: British Pound and Australian Dollar
    These pairs are typically less traded than the major pairs, which
    include the US dollar, but they are still quite popular and offer
    significant trading opportunities.

    The first currency pair called the base currency while the
    other one is called the quote currency, e.g EUR/USD. EUR is the
    base currency and USD is the quote currency.

    AS A BEGINNER,WHAT YOU SHOULD KNOW ABOUT


    TRADING IN GENERAL .

    Apart from currency trading (forex), there are so many things you
    can trade like Cryptocurrency, stock trading, gold trading,
    synthetic trading and so on.

    Cryptocurrency Trading: this is the buying and selling of digital


    assets like BTC, ETHEREUM, Litecoin, Cardano, etc on various
    platforms known as cryptocurrency exchanges. It’s a dynamic
    market that allows traders to speculate on price movement and
    potentially earn profit from the movements. You can predict on
    the rise of a crypto and buy the coin to hold until the price rises to
    sell and Make profit, such trading is known as spot trading and
    you can also trade on Margin like forex trader. ( we will dive into
    that soon).
    Unlike traditional market, the cryptocurrency market operates
    around the clock, providing continuous opportunities for trading.

    Synthetic Trading: synthetic trading involves creating custom-


    designed investment that can offer tailored cash flow patterns risk
    profile to suit the needs of the investors. It’s often used in option
    trading where synthetic positions can emulate long or short stock
    holdings using only options. Examples of synthetic trading is the
    synthetic index on deriv platform like V75, V25, V10, etc.

    As an experienced trader, I strongly believe that you can trade


    anything as long as it has to do with chart. If you are able to study
    and read your chart effectively to predict the movement of market
    to make you know when and where to buy or sell. It is called
    Technical analysis of the market. (We will dive into that soon).

    NEEDED TERMINOLOGIES IN TRADING.

    1. Bull Market : A Bull Market in forex trading refers to a market


    condition where there is a consistent rise in currency prices,
    indicating that the base currency is getting stronger compared to
    its quote currency.
    Traders in a Bull Market typically expect the prices to continue
    rising and may take long positions, meaning they buy a currency
    pair at a lower price in anticipation of selling it at a higher price
    later.

    2. Bear Market: A Bear Market in forex trading is characterized by


    a sustained decline in currency prices, indicating that the base
    currency is weakening compared to the quote currency. This
    downward trend reflects a pessimistic outlook among traders,
    leading to decreased demand for the currency and often results
    from negative economic indicators, political instability, or adverse
    news affecting a country or region.
    In a Bear Market, traders may look to sell currencies at a higher
    price before the market declines further, or they might engage in
    short-selling, where they sell a currency pair with the expectation
    of buying it back at a lower price to profit from the price
    difference2.
    It’s important for traders to recognize the signs of a Bear Market
    to manage their trades effectively, as it can have significant
    implications for trading strategies and risk management.

    3. Stop Loss: A stop loss in forex trading is an order placed with a


    broker to sell a security when it reaches a certain price. It’s
    designed to limit an investor’s loss on a position in a security.
    When a trader opens a buy or sell position, hoping the market
    moves in his favor to make profit but if the market starts in the
    other way and the trader starts losing money. A stop loss us an
    order placed to stop a losing position. Stop loss order execute
    automatically one the stop price is reached. It helps the trader
    manage their risks by automatically closing out their losing
    positions.
    4. Take Profit: A “Take Profit” (TP) in forex trading is an order
    that you set on your trade to close it automatically once it reaches
    a certain level of profit. It’s a way to lock in profits if the market
    moves in your favor. Here’s how it works. If a trader opens a long
    position (buys a market) TP is set higher than the opening price
    and for a short position, TP is set lower.

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