- Tickmill $30 Welcome Bonus for beginners
- 3 Main Steps of Forex Trading
- 8 Basic Keywords of Forex
- Technical and Fundamental Analysis
- Practice trading after learning the basics
Tickmill $30 Welcome Bonus for beginners
Tickmill is giving away $30 No Deposit Bonus to welcome new traders to their service.
With the bonus, you can start trading Forex and CFDs without making a deposit by yourself.
Tickmill’s $30 No Deposit Bonus is a great option for traders who are just getting started in the Forex market.
If you are new to the Forex market, you can experience the real trading without risking your own funds.
If your trading goes well, you can even withdraw your profits made in the bonus account.
For the condition of fund withdrawal within the promotion, visit the page here.
Open Tickmill’s Real Trading Account and get 30 USD for free to start trading Forex.
In this article, we will also educate new traders of Forex market with some basic knowledge.
3 Main Steps of Forex Trading
Once you understand what FX is and how it works, the next important thing is how to put it into your trade.
In other words, how to improve your own FX trading is very important.
To do that, study is essential, but what exactly should be studied and in what order?
- Understand at least the technical terms you need to know
- Understand technical analysis and fundamentals analysis
- Gradually get used to real trading
If you think you can do this, there is a possibility that you can continue FX trading to start earning firm profit.
By becoming a trader of Tickmill, you can also get access to their educational courses to learn more about online trading.
8 Basic Keywords of Forex
As the first step, let’s see the FX technical terms that beginners should know.
These words often appear, and knowing the meaning of them all will give you an advantage in FX trading.
There is a mechanism in FX that allows you to trade more than the actual margin, which is likened to the principle of leverage.
For instance, if you have 500 times leverage, you are trading 500 times the margin.
Although some people misunderstand, it is important to note that you do not make a profit or a loss by a multiple of leverage.
It’s easy to think so because it’s displayed in multiples, but it’s okay to understand that leverage requires less money for trading.
In FX, it is important for FX trading to improve financial efficiency by utilizing the leverage mechanism.
Another point that should be added is that leverage is only a mechanism to improve financial efficiency, and does not make trading advantageous.
Those who are good at trading may be able to increase their funds efficiently, but if they fail to trade, they will only increase the rate of decrease of their funds.
In addition, the higher the leverage, the more likely it is that a loss will be cut if the market goes backwards, and the higher the risk.
Whether you can make good trades by taking advantage of leverage depends on how you study.
In case of Tickmill, you can utilize up to 1:500 high leverage for trading Forex.
There are two rates applied to Forex trading, the Sell Price and the Buy Price (called Bid and Ask respectively).
The spread is the difference between these two rates, which is a real fee for Forex companies.
For investors, the narrower the spread, the less the transaction fee will be charged, so Forex companies are competing for narrow spreads.
Although this spread is sometimes fixed in principle, it may temporarily widen due to sudden fluctuations in market prices and deterioration of liquidity.
Tickmill has reduced the cost of spread to the minimal to provide more benefit for its traders.
For more information about Tickmill’s improved spread, visit the page here.
3. Swap points
In FX, two different currencies are paired and traded.
If there is a difference in policy interest rates between the currencies that make up the pair, a swap point is received or paid to adjust the interest rate difference.
There are some countries in the world with high interest rates that far exceed the currencies of developed countries, so if you hold a pair of positions with those currencies, you will receive daily profits as swap points.
As long as there is a difference in interest rates, swap points will continue to be paid, so there is an investment method that aims to accumulate swap income by holding positions for a long-term.
However, keep in mind that some transactions pay swap points.
Tickmill has updated the condition of Swap Points, and now offers better rates across all Forex currency pairs.
For more information about Tickmill’s Swap Points, visit the page here.
The “possession of orders” when trading currency pairs in FX trading is called a position.
A transaction that buys a currency pair will hold a buy position, and a transaction that sells it will hold a sell position.
The term “position” is used to distinguish it from the fact that trading a currency pair with leverage is not actually trading the actual foreign currency.
The profit or loss is fixed by closing the position.
5. Stop Out
Stop out is a loss expansion prevention rule established by FX companies.
If the unrealized loss (loss that has not been finalized) reaches a certain level in the position you are holding, there is a risk that further loss will lead to a loss more than the deposit assets, so the FX company will activate the stop out and close all positions.
Basically, it is possible to prevent “a situation where you lose all your funds” by activating a stop out, but if the fluctuation of the exchange rate is too rapid, the stop out will not be in time and there is a possibility that more than the funds will be lost.
As a risk of FX, let’s know that it is not always guaranteed that money will be left.
In any case, the position will be automatically closed even though the investor did not place an order, so it is better to place a stop loss order before you encounter a stop out level.
In case of Tickmill, the broker supports NBP (Negative Balance Protection) which prevents all live accounts to lose more than the total balance.
With Tickmill, the maximum loss is limited to the total account balance.
A chart is a visualization of past currency rate fluctuations over time, and a tool that is used to predict future price movements is called a chart.
Chart analysis is an indispensable element and tool in Forex trading.
There are various types of charts, and in general, there is a line of bars called “candlesticks” that record the four prices (open price, close price, high price, low price).
Traders may also display technical indicators calculated from price movements such as “moving average line” and “Bollinger band”.
7. Ordering method (market, limit, stop loss etc.)
There are various ways to order in the FX market.
“Market Order” is to place an order “I want to buy or sell immediately” at the rate at the time of ordering.
On the other hand, “Limit order” is a method of ordering in which you decide the rate at which you want to buy and sell, and then activate the order when that rate is reached.
The “stop loss” is the same as the limit price in the sense that it specifies the rate, but the difference from the limit price is that the pending order is placed with a loss.
In addition to this, FX also has multiple ordering methods such as OCO, IFD, and IFO.
8. Trading Strategy
There are various trading styles in FX.
If you sort by time axis, it will be “swing trade” “day trade” “scalping” in order of the trading period.
Swing trading is a trading style that aims to maximize the profit margin rather than the time axis, and one trading span is from a few days to a few weeks.
On the other hand, day trading is a short-term trade that requires trades to be completed on the same day, and scalping is a very short-term trade that repeats trading in seconds and minutes.
Since each trading style has different purposes and characteristics, investors should select the optimal one based on their characteristics.
In addition, the super long-term style of trading in units of months to years is sometimes called “position trading”.
Technical and Fundamental Analysis
Forex trading requires analyzing market prices and predicting the future.
For that purpose, technical analysis and fundamentals analysis are essential when trading Forex.
These are the two important wheels of FX, and each has its advantages and disadvantages.
You will use both while complementing each other well, so let’s learn from the basics.
What is technical analysis?
Technical analysis is a market price analysis method that uses charts.
Candlesticks and moving averages are all charts that show price movements in the past, but based on these, we predict which direction the market will be heading.
This is based on the idea such as “current trends may continue after this”.
Of course, that doesn’t mean you can guess 100% price movements, but it allows for trades that are not grounded in luck.
Reading the price movement from the information on the chart is the essence of technical analysis, but there is another advantage of mastering technical analysis.
That is the fact that many of the investors participating in the forex market use charts for their technical analysis.
In other words, when a trading signal comes out from a technical point of view, many investors around the world will detect it and trade it.
Since foreign exchange markets are often subject to technical influence, mastering technical analysis means that investors around the world can participate in the majority vote.
Charts are visualized so it makes sense to study while looking at the actual chart.
What is Fundamentals Analysis?
On the other hand, fundamentals analysis is a method of predicting rate fluctuations based on the political and economic conditions of the countries that issue each currency, as well as the international situation.
Charts are the source of information for technical analysis, while economics announcements and news are sources of information for fundamentals analysis.
Now, let’s see three famous indicators that FX investors should know for their fundamentals analysis.
1. US Employment Statistics
Employment statistics are figures to know the unemployment rate of each country, and because it is judged that “the number of employees is high = the unemployment rate is low = the economy is good”, it becomes a factor to buy the currency of that country.
The employment statistics’ impact in the FX world are so high that the currency pairs related to the US dollar, such as the US dollar, will fluctuate significantly such as when the employment statistics of the United States, and the employment statistics are announced on the first Friday of every month.
If the price is unexpectedly high, the dollar is bought big, and conversely, if it is low, the dollar is sold large.
2. Policy interest rate
Policy interest rates are short-term interest rates set by the central banks of each country.
Since this policy interest rate affects the interest rate situation of the whole country, the formula of “high policy interest rate = high interest rate country” is established.
If you have a high interest rate currency, you can get the interest rate, so raising the interest rate is basically a buying factor for that currency.
Similarly, rate cuts are a factor for selling the currency.
Moreover, once the policy rate is raised or lowered, it often continues for a long time, and changes in the policy rate can be used to predict where the interest rate situation in that country will be.
The above swap points are basically determined by this policy rate.
GDP means gross domestic product, and GDP expansion means economic growth.
As the economy grows, so does the economy, which is a good buy for the country’s currency.
This is because countries with good economy often raise interest rates in order to reduce the amount of funds in the city by tightening monetary policy in order to control overheating.
In other words, if the GDP preliminary value announced by each country is high, it is buying material, and if it is low, it is selling material.
Practice trading after learning the basics
Up to this point, we have explained the essential knowledge for each step when starting FX trading.
The next step after learning the basics is a practice.
As you can see from the phrase “no practice is better than practice”, let’s practice once you have learned the basics of FX.
However, it is also true that if you suddenly invest a lot of your cash in hand, the damage when you lose the full amount is too great.
So there is a way to start with 1,000 currencies, as in trading with micro lots.
And with Tickmill, you can trade from 0.01 lots which equals to 1,000 currencies to reduce the risk exposure.
Or you can open a demo trading account with virtual money to experience the trading platforms and practice trading without risking you own funds.