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The foreign market appeals to both traders who are trading small size and larger size because it is relatively easy to get your trades filled and cost of doing business is much lower. It is a 24-hour market – when the USA is wrapping up the business day, Japan prepares to start the whole thing all over again. It is simultaneously tempting and unnerving when you first start looking into it. But if you seriously consider giving it a go, you should approach it with a plan.



Throughout your trading education and later on as well, you will be using the Forex talk. Just like in any other field, medicine, technology, sports – to mention a few, knowing the professional lingo gives you opportunity to understand experts/commentators. Getting accustomed to the market operates requires figuring out the basics, what the complicated terms actually mean.
On the whole, the terminology can roughly be divided into these categories:

• Technicals have to do with charts, anything you use for actual trades.
• Fundamentals are about news, data, opinion, predictions, key speaker, events that are taking place outside of the technical sphere of speaking.
• Economic/political- these two points of view are closely connected to Forex market since most of things that affect currencies happen in these two parts of life.

These three terms are synonymous in the context of Forex trading and describe an item being traded. Whether it is natural gas, gold or currencies, you can call them anything from the above.
With the Forex market no currency moves in isolation. When we look at currency pairs, it is all about relative value: is one currency stronger or weaker? Also the first item in the currency pair is referred to as base currency, the other one - as quote currency. Meaning if you want to buy EUR/USD pair, you will have to pay 1.17986 dollars for every euro as dictates the exchange rate. You can purchase the trade pair if you believe that the base currency is going to appreciate (gain value) in comparison with the quote currency. If the situation is reverse, you sell. As FX market deals with pairs, many of them acquired nicknames over the time. It is not essential to know them but if do learn them, you will not be confused when see all these abbreviations.

• Euro/US dollar – Euro, Fiber;
• Euro /British Pound – Chunnel;
• British Pound /US dollar – Cable;
• US dollar /Switzerland Franc – Swissy;
• Australian dollar / US dollar - Aussie or Ozzie.

Pip represents 0.0001%, which is the narrowest price change that a particular exchange rate can make. Currency movements are measured with pips, which are short for percentage in point. If there was a upward change in pips, it is a profit; otherwise it is a loss.
Margin
A margin account allows you to invest a lot more money than you actually have. This way, you do need a large capital to start. With this account let you add an extra dollar to every dollar you have. Margin tells you how much money is available in your account that is not tied up in any open trades.


It is how much of your broker's money you can use. Here is an imaginary situation, you have €5,000 to invest and you decide to purchase €500,000 worth of EUR/USD at 1.3140. If the pair moves up and you want to close your deal with a 10 pip profit, you gain $500. If you had not traded with the leverage, your profit would be only $5. Most people use 100:1 leverage but other variations are also possible.
Bid and Ask prices

When trading Forex, whether through a forex account or using spread betting, a broker does not charge you a fixed fee. They do not gain anything directly from the trade in the forms of fees either. Instead, they offer two different prices for a trade. The bid price is what you are trying to get the order at, meaning it is the price you as a buyer want to purchase at. And the ask price is the minimum price a broker accepts to sell with. So you, as a trader, sell at the bid price and buy at the ask price.


When you look at ask and bid prices, you can see that they are not the same. It is called the spread and is a broker's profit margin. It is expressed as a number of pips. To calculate a spread, move the decimal point four places to the right and simply deduct the bid price from the ask price. Let's say the bid is 1.2612 and the ask is 1.2614. Then the currency pair is trading with the spread of 2 pips. Spreads vary by currency pair, broker and market conditions.


It is an industry term to describe the size of a bet. There are micro (1,000), mini (10,000) and standard lots (100,000).


A stop loss order tells the system to close a position when it reaches a certain price. It is designed to limit a trader's potential loss. Setting a stop loss for 10% below the price you paid for the trade will limit your loss to 10%. The opposite of a stop-loss action is a stop limit. It closes your position after it has reached your desired profit level. While it may sound counterintuitive, the very essence of Forex trading is not to make pips but to keep them. So terminating your trade may protect you from losing your gains in case the market takes a sharp term.


If we go long on, for example the GBP/JPY pair, we make an assumption that the  British pound will strengthen against the Japanese yen; or if we go long on the GBP/JPY pair, we assume that in this case it will be the yen that strengthens. Reversing the situation, if we think that in the JPY/ GBP pair pound will lose value, then we short the pair (i.e. sell it).


It is a proportion between the amount of money you accept to risk and potential profit target. 1:3 ratio is widely recommended by professional traders, in other words, that your reward is three times larger than the risk. So if you lose once, you still have another two trades worth of winnings to rely on.



When you are satisfied with your theoretical knowledge, it means you can move on and the theory into context. There are so many brokers it seems impossible to make a choice. Before you can decide on that you need to determine how active you are going to be: three times a week, three times a day. That piece of information is going to guide you into the right direction. If you are going to be a casual trader, a couple of times a week at best, you can go for any big-name broker. Even with higher commissions you will be fine. However, if you plan to trade on amuch bigger scale, as a day trader, you need to be searching for direct access brokers. They and their pricing structures are geared towards very active traders.
Another thing is that some brokers have minimums so before you go to anyone establish the amount of money you can start with. If you do not have enough money yet, save up; do not go to big-name brokers just because they might not have minimums. As a day trader, you will be stuck paying fees and commissions just because you did not wait.


Once you find a broker it is time to log into a demo account with virtual funds. It is identical to a real one; the layout, the functions are not going to change. The difference is any wins and losses are in pretend money. You get to look around the platform without doing damage. Remember to treat it like a real one unless you want to waste your time. It can be difficult to some people because they need to have an emotional attachment to that money to motivate them. And since it is all pretend, use this opportunity to trick your brain into believing and treat it like it matter. At the end of the day, it does matter in a way.

If you know you are going to start with a moderately small account, your demo account should be just that. Avoid going into practice with hundreds of thousands dollar if you know it would be a real case. Put that amount of money that you will have saved up and you will not to adjust your style.

Some people try to skip this step because they want to feel that anxiety of losing, just like when they will trade for real. What they do instead is creating a live account straightaway and put a small sum into it and practice this way. It might be counterproductive because if they decided to start with a couple of dollars, they still would not feel that anxiety and emotional connection. And if they do not care about their losses, they would not be motivated to actually learn. That mentality applied to bigger numbers can be dangerous. Having never traded, you need to focus on you trading style. If you start with a demo, you can focus on the system you are developing and not making money.


When you go into the system you are going to see a tab with pip costs. For you to determine your possible profit or loss you need to take that number and multiply by the number of pips you have on the trade; after that multiply that by the number of contracts and this would give you the total amount. Why you need that part figured out is because in the practice account you can afford losses without much hesitation. Only when you can hit continuous profit and become confident that you can keep that up, you can consider going live.
This is the part when you gain priceless experience that you cannot get anywhere else. People say that you should learn from your mistakes. The trick here is to learn from them while they do not cost you real money.



It can be difficult to know when the right time to create a live account is. One of the main points would be realization that you can manage it. If you are still feeling intimidated, do not rush into it and give yourself some time. It depends on how much knowledge you digested, how long you have been practicing, what your results are so far and whether you are as dedicated as you used to be.
Remember that you can no longer afford to be playful with your trades when you convert to a live account. But if you were serious during practice, you should have already made up a technique that works for you perfectly. Having said that, the main advice would be to concentrate and do nothing different.


Similar to entrepreneurship, you start a small business and set achievable goals. With a small account if you have profits, they are obviously small and steady, which is the best environment to get acclimated. Most experts suggest risking no more than 2% of capital per trade but even with small amounts you should take them seriously. Try to keep focus and determination within your trading strategy. It is important to forget about the monetary return and shift your attention toward the percentage. If you focus on the actual money, you lose that sense of excitement; but you have to see the longer term.

To get to the long-term comfort you have to accept short-term pain. While you are still small, look after your cash flow. That involves having a part-time job, sticking to a budget, etc. Before you have the comfort you need to make some sacrifices. You cannot just wake up one day and decide that you are going to become a day-trader for a living. Many people have tried and failed because of all the mental dynamics that go with it. You need to make rent payments or put food on the table. Before you can do that with your trading profits, you need to see if can even make any in the small scope.


When the timing is right, you should start consider how to grow in the market. The sad truth is that no one can make that happen for you. So do not attempt following someone else's systems blindly. Sure, make some notes but the responsibility is on you.
To make your Forex account grow, you can use a structured plan. Let's say you have a starting point of $5,000; then your goal can be earning 100 pips per week however challenging it might sound. Some weeks you will not be able to reach that but on average it is attainable. Trade one standard lot during the next 8 weeks and then double the position size. On week 17 you can upgrade to 3 standard lots and so on. Obviously, these numbers may not apple to your situation, adjustments can be made. The point is that an effective method of expanding your account is to move steadily and continuously. What you need to succeed in this business is skills and discipline; and the ability to take every advice with a pinch of salt.