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of retail accounts lose money when trading CFDs with this provider.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

of retail investor accounts lose money when trading CFDs with this provider.

You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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Regulated by the Australian Securities and Investments Commission (ASIC)

Regulated by the Cyprus Securities and Exchange Commission (CySEC)

Regulated by the Financial Conduct Authority (FCA)

If you close this window without choosing a firm, you agree to proceed under the FCA (UK) regulation.

Selecting one of these regulators/investment firms will display the corresponding information across the entire website. If you would like to display information for a different regulator/investment firm, please select it.

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Forex Trading for Beginners: The Ultimate Guide

Forex Trading for Beginners: The Ultimate Guide

Forex trading for beginners can be especially tough. This is mostly due to unrealistic expectations that are common among newcomers. What you need to know is that currency trading is by no means a get-rich-quick scheme. On this page, you will receive an introduction to the Forex market, how it works, and key terminology, along with the benefits of trading different currencies.

We will cover how you can start trading (including choosing the best broker and trading software), the fundamentals of risk management, the different ways you can analyse the Forex market, and an overview of the most populartrading strategies. By the end of this guide, you will have the knowledge you need to start testing your trading skills with a free Demo account, before you move onto a live account.

Forex, or the foreign exchange market (also called FX for short) is the marketplace wherecurrenciesare traded. At its simplest, a foreign exchange transaction might be, for example, when you transfer your local currency to a new one for an upcoming holiday. Across the market as a whole, an estimated 5.3 billion USD is traded every day between governments, banks, corporations, and speculators.

Knowing how the industry is mapped out is important, because the collective combination of all participants creates the market you trade in. The relative weight of the trading party to the market is measured by how much money that party manages from billion dollar hedge funds and investment banks, to private traders with a few thousand dollars in action.

Currencies are traded as pairs, and the movement of currency pairs measure the value of one currency against another. For instance, the EURUSD currency pair measures the value of the Euro against the US dollar. When the value of the pair increases, this means the value of the Euro has increased against the value of the US dollar. When the value of the pair decreases, this means the value of the US dollar has increased (or the value of the Euro has fallen).

By trading Forex andCFDs, traders can make a profit off of these currency movements.

Forex currency pairs are known as majors, minors, and exotics.

Major currency pairs are made up of the most frequently traded currencies, which are:

A major currency pair is one that contains any one of these currencies paired against the US dollar, such as the EUR/USD, USDJPY or the GBPUSD. Forex minors pairs made up of these major currencies that dont include the US dollar. These pairs include EURGBP, EURCHF, AUDNZD and so on.

Finally, exotic currencies are any currencies that we havent already mentioned, such as the Hong Kong Dollar (HKD), the Norwegian Krone (NOK), the South African Rand (ZAR) and the Thai Baht (THB). Exotic pairs include one exotic currency and one major currency.

When learning about Forex trading, many beginners tend to focus on major currency pairs because of their daily volatility and tight spreads. But there are numerous other opportunities from exotic FX pairs, to CFD trading opportunities on stocks,commodities, energy futures, toindices. There are even indices that track groups of indices, and you can trade them as well.

How many markets you scan for opportunities is up to you, but do not limit yourself to just one instrument or one market. Market limitation can lead to overtrading, so make sure to diversify your investment.

When trading Forex, youll see that both Bid and Ask prices are quoted. The bid price is the price at which you can buy the currency, while the ask price is the price at which you can sell it. If you are purchasing a currency in a trade, this is known as a long trade, and the hope is that the currency pair will increase in value, so that you can sell it at a higher price and make a profit on the difference.

If you are selling a currency in a trade, the opposite is true – the hope is that the currency pair will fall in value, so that you can buy it back at a lower price, which means you will profit on the difference.

The number quoted for these prices is based on the current exchange rate of the currencies in the pair, or how much of the second currency you would get in exchange for one unit of the first currency (for instance, if 1 EUR could be exchanged for 1.68 USD, the bid and ask price would be on either side of this number). Learn more about Forex quotes in this article:Understanding and Reading Forex Quotes.

If youre a rookie trader looking for a place to learn the ins and outs of Forex trading, our Forex 101 Online Trading Course is the perfect place for you! Learn how to trade in just 9 lessons, guided by a professional trading expert. Click the banner below to register for FREE!

If the way traders make a profit is by cashing in on the difference between the bid and ask prices of currency pairs, the next logical question is, how much can you expect any given currency to move?

This depends on how liquid the currency is, or how much of it is being bought and sold at any one time. The most liquid currency pairs are the ones with the most supply and demand in the Forex market, and this supply and demand is generated by banks, businesses, importers and exporters, and traders. Major currency pairs tend to be the most liquid, with the EUR/USD currency pair moving by 90-120pipson an average day.

By contrast, the AUD/NZD moves by 50-60 pips a day, and the USDHKD currency pair only moves by an average of 32 pips a day (when looking at the value of currency pairs, most will be listed with five decimal points. A Pip is 0.0001. So, if the EUR/USD moved from 1.16667 to 1.16677, that would represent a 1 pip change). The major Forex pairs tend to be the most liquid, and therefore provide the most opportunities forshort-term trading.

However, there are many opportunities among minor and exotic currencies as well, particularly if you have some specialised knowledge about a certain currency.

The spread, in Forex, is the difference between the bid and ask price of a currency pair. For example, if the Bid price of the EUR/USD is 1.16668, and the sell price is 1.16669, the spread will be 0.0001, or 1 pip. In any Forex trade, the value of a currency pair will need to cross the spread before it becomes profitable. To continue with the previous example, if a trader entered a long EUR/USD trade at 1.16668, the trade wouldnt become profitable until the value of the pair was higher than 1.16669.

In a currency pair with a wider spread, such as the EURCZK, the currency will need to make a larger movement in order for the trade to become profitable. At the time of writing, the bid price for this pair is 25.4373, while the ask price is 25.4124, so the spread is 0.0200, or 20 pips. Its also not uncommon for this currency pair to have movements of less than 20 pips a day, meaning traders will likely need to perform a multi-day trade to make a profit.

This means thatlow-spread tradingis often a priority for Forex traders, as their trades can become profitable quicker, meaning that they can make a high volume of smaller trades, rather than relying on larger trades to make money.

If youve been researching Forex trading, you might have seen the term Forex CFDs at some point. There are two ways to trade Forex: using CFDs or spot Forex (also known asmargin). Spot Forex involves buying and selling the actual currency. For example, you might purchase a certain amount of Pound Sterling for Euros, and then, once the value of the Pound increases, you may then exchange your Euros for Pounds again, receiving more money back compared with what you originally spent on the purchase.

The term CFD stands for Contract For Difference, and it is a contract used to represent the movement in the prices of financial instruments. In terms of Forex, this means that rather than purchasing and selling large amounts of currency, you can profit on price movements without owning the asset itself. Along with Forex, CFDs are also available on shares, indices, bonds, commodities and cryptocurrencies. In every case, they allow you to trade on the price movements of these instruments without having to purchase them.

If youre feeling inspired to start trading, or this article has provided some extra insight to your existing trading knowledge, you may be pleased to know that Admiral Markets provides the ability to trade with Forex and CFDs on up to 80+ currencies, with the latest market updates and technical analysis provided for FREE! Click the banner below to open your live account today!

Along with being able to access a wide range offinancial markets, another benefit of trading CFDs is that a trader can access a much larger portion of those markets, and increase their potential profits as a result. CFD contracts provide leveraged access to the market, meaning a trader can access a much larger portion of the market than what they would be able to purchase outright.

To use Gold CFD as an example, at the time of writing, to purchase an ounce of Gold you would need to spend 1,200 USD. However, with aleveragerate of up to 1:20 (which means a trader could trade up to 20 times the value of what they deposit), a trader could trade on the full value of an ounce of gold (equivalent to 1,200 USD), for a deposit of just 60 USD.

Similarly, if you wanted to purchase 3,000 USD with Euros, that would cost 2,570 EUR. With a leverage rate of 1:30, however, you could access 3,000 USD worth of the EUR/USD currency pair as a CFD with just 100 USD. The best part, however, is that the size of the potential profit a trader could make is the same as if they had invested in the asset outright. The risk here is that potential losses are magnified to the same extent as potential profits.

EUR/USD trade opens at 1.16766, closes at 1.16926, a difference of 0.00200

EUR/USD trade opens at 1.16766, closes at 1.16532, a difference of 0.00234

To see how different levels of leverage can affect your trading, take a look at our Forex leverage infographic below:

(The leverage shown in Trades 2 and 3 is available for Professional clients only. A Professional client is a client who possesses the experience, knowledge and expertise to make their own investment decisions and properly assess the risks that these incur. In order to be considered to be Professional client, the client must comply with MiFID ll 2014/65/EU Annex ll requirements.)

Now that you know the basics of how Forex trading works, including currency pairs, CFDs and leverage, why not see how a trade might look in action? Admiral Markets has a free Forex calculator for traders, so you can calculate your potential earnings online, for free.Calculate your potential Forex earnings now.

Before we move on, lets recap some of the key concepts covered so far with this list of key Forex terms:

A pip is the base unit in the price of currency pairs, or 0.0001 of the quoted price. So when the bid price for the EUR/USD pair goes from 1.16667 to 1.16677, that represents a pip change of one.

The spread is the difference between a currency pairs bid and ask price. For the most popular currency pairs, the spread is often low – sometimes even less than a pip! For pairs that arent traded as frequently, the spread tends to be much higher. Before a Forex trade becomes profitable, the value of the currency pair must cross the spread.

Margin is the money in a traders account. However, because the average Retail Forex trader lacks the margin required to trade a high enough volume to make a good profit, many Forex and CFD brokers offer their clients access to leverage.

Leverage is capital provided by a Forex broker to bolster their clients trading volume. For example, if you use a 1:10 rate of leverage and have $1,000 in your trading account, you can trade $10,000 worth of a currency pair. If the trade is successful, leverage will maximise your profits by a factor of 10. However, please note that leverage also multiplies your losses to the same degree, so it should be used with caution. If your account balance falls below $0, you may trigger a brokers negative balance protection settings (if trading with an ESMA regulated broker), which will result in the trade being closed. Fortunately, this means that your balance cannot move below $0, so you will not be in debt to the broker.

Now that weve shared an overview of the Forex market, why might you want to trade Forex?

There are a number of reasons why people choose to startday trading. Some of these reasons might include the potential to earn extra money on the side from the comfort of their own home, the opportunity to learn a new skill in their own time, or even the dream of achieving financial freedom, and having more control over their financial future. When it comes to Forex specifically though, there are a number of benefits that make this financial instrument a very enticing one to trade.

If you would like to learn more about the differences between the Forex market and the Stocks market, why not check out our comparison article on the topic? And find out which market is right for you!Forex Vs. Stocks: Should You Trade Forex or Stocks?

Forex is the worlds largest financial market, with over 5.09 trillion USD traded every single day (April 2016). To put it in other words, in a single day, more money will be traded in the Forex markets than Japans entire GDP! (Gross Domestic Product). Of these transactions, 254 billion USD is traded through CFDs and other derivative instruments.

Being the largest, most active financial market on the globe, it is also the worlds most liquid market, meaning it is easy for traders to enter into, as well as exit trades, and for the most liquid pairs, they can do so at a very low cost (even less than a single pip!). This also means that the Forex market is very volatile, creating many opportunities for traders to make a profit on both the positive and negative movements of currency pairs.

Forex is the one financial market that never sleeps, meaning you can trade at all hours of the day (or night). Unlike the worlds stock exchanges, which are located in physical trading rooms like the New York Stock Exchange or the London Stock Exchange, the Forex market is known as an Over-the-counter market (or OTC). This means that the trades take place directly between the parties holding the currencies, rather than being managed via an exchange.

Consequently, the Forex market has never been restricted to the business hours of any one exchange.

However, since the Forex market is a global market, it means there is always a part of the world that is awake and conducting business, and during these hours their currencies tend to experience the most movement. For example, currency pairs involving the US dollar experience the most movement during US business hours (16:00 to 24:00 GMT), while the Euro, Pound, Swiss Franc and other European currencies experience the most movement during European business hours, (8:00 and 16:00 GMT).

By contrast, the Australian Dollar, the New Zealand Dollar and the Japanese Yen tend to be more active between 00:00 and 08:00 GMT. As a trader, this means you can trade whenever it suits you – if you work during the day, there will be currencies available to trade before or after work. If you have children but are at home during the day, you can simply choose a different currency. In the Forex market, you can trade 24 hours a day, 5 days a week.

One of the most common trading and investment philosophies is to buy low and sell high – this is particularly the case with long-term investments, such as investing in stocks or bonds, which rely on the asset increasing in value. In the Forex market, you can also sell high and buy low. This way, you can potentially make profits on both downward and upward trends.

As mentioned earlier, in a long trade (also known as a buy trade), a trader will open a trade at the bid price, and will aim to close the trade at a higher price, making a profit on the difference between the opening and closing value of the currency pair. So if the EUR/USD bid price is 1.16667, and the trade closes at the price of 1.17568, the difference is 0.00901, or 90.1 pips. (When trading a single lot, that would make a 901 USD profit).

Traders can also make short trades (also known as sell trades), where they sell a Forex CFD at the ask price and, once the price drops, buy it at a lower bid price, and profit on the difference. In this case, if the GBP/USD ask price was 1.32265, and the trade closed at the price of 1.31203, the difference would be 0.01062, or 106.2 pips (which would amount to 1,062 USD in profit).

Due to Forex CFDs being leveraged, traders can access large portions of the currency market at a very low margin – sometimes as low as 1/500th of the size of the market they want to access (based on a leverage rate of 1:500). There are few additional costs as well – most Forex trading accounts have little (or no)commissions, order fees, and account management fees. If there are any trading fees, these are usually a markup the broker has added to the spread.

One of the greatest advantages of Forex trading is that it is one of the most developed financial markets in terms of technology. While many markets are accessible via old-fashioned trading platforms, there is constant competition in terms of the software available for trading the FX market.

The platforms offered by Admiral Markets includeMetaTrader 4(MT4) andMetaTrader 5(MT5) andMetaTrader WebTrader. MT4 and MT5 are both available for Windows, Mac, Android and iOS devices (for iPhone and iPad). In addition, Admiral Markets also provides traders with an enhanced version of MetaTrader, known asMetaTrader Supreme Edition. With access to all this software, Forex can be traded from anywhere in the world – and all you need is an internet connection.

Traders also have the ability to trade risk-free with a demo trading account. This means that traders can avoid putting their capital at risk, and they can choose when they wish to move to the live markets. For instance, Admiral Markets demo trading account enables traders to gain access to the latest real-time market data, the ability to trade with virtual currency, and access to the latest trading insights from expert traders.

To open your FREE demo trading account, click the banner below!

If youre still reading, your next question is probably, How can I become a successful Forex trader?

This is the main focus of the rest of this article – well outline not only how you can start trading, but also some of the most popular trading strategies for making a profit on the Forex market, which exercise risk management. The first step, of course, is getting set up to trade, which starts with finding the right Forex broker.

When it comes to choosing a Forex broker, it can often feel like an overwhelming choice, with countless options available. Here are the top criteria you should consider when making your choice:

It might surprise you to learn that the Forex market doesnt have a central regulator. However, that doesnt mean you should choose a broker without considering the question of regulation. Instead, we recommend choosing a broker that is regulated by the financial regulator in your area.

This would be the FCA (Financial Conduct Authority) in the UK, CySEC (Cyprus Securities and Exchange Commission) in Cyprus, ASIC (Australian Securities and Investments Commission) in Australia or SEC (Securities and Exchange Commission) in the US. A good broker will usually be proud of their licensing and will use this as a selling point.

The benefit of choosing a regulated broker is that this will ensure that you, as a trader, are protected to the full extent of the law in your country. For instance, in 2018 the European Securities and Markets Authority (ESMA) introduced a range of legislation protecting retail trading clients, which all European Forex brokers must abide by. This legislation includes limits on available leverage, volatility protection, negative balance protection and more.

If you would like to learn more about the ESMA legislation, we have several special webinars on the topic that you can access via the following links:

ESMA, Retail, Professional, Leverage & Margin – CFD Regulation in the EU from August 2018

CFD Trading Strategies After ESMA: Day Trading Live With New Leverage

New ESMA Regulation and Scalping: How To Go Ahead with Forex & CFD

Its also important to consider the security of your funds. With this in mind, we recommend choosing a broker that segregates their clients funds from their own, which ensures that the broker cannot use your deposits for any of their own financial activities.

It also ensures that your funds will be available for withdrawal upon your request. Finally, check whether the broker offers a financial services compensation scheme. This defines the amounts of funds that will be compensated to you in the extreme case that your broker or its bank is going bankrupt.

The service of the broker you choose, and the platform they offer, is essential in ensuring that you achieve the best trading results. If you were trading on a system that was slow and regularly crashed, for example, you might not be able to enter or exit a trade at the price you want. Instead, its important to look for a broker that offers high levels of liquidity, low spreads and the ability to execute orders at the price you want (or as close to this as possible).

Another element of the service provided is the margin requirements and level of leverage available. While there is no need to choose the highest level of available leverage when you start trading Forex, simply knowing that a broker offers the highest level of leverage approved by their regulator means that, as your experience grows, you can start to increase your leverage according to your preferences.

As Forex trading can be an income-generating activity, its important to treat your trading as a business activity – one where you consider both how to maximise your income, how to minimise your costs, and how to minimise the risks. With this in mind, make sure to consider the costs of trading with any Forex broker, before you ultimately select one.

Weve already discussed how the size of the spread influences your potential trading profits, as any currency pair needs to cross the spread before a trade will become profitable. With this in mind, look for a broker that offers low spreads.

Ideally you should choose a Forex broker that doesnt charge commissions, as commissions will cut into your potential profits.

Many Forex brokers will ask traders to make a minimum deposit when opening a live trading account, so it is best to find one with the lowest amount of requirements. Admiral Markets offers a minimum deposit of €200.

While searching for the cheapest Forex broker, it really comes down to a combination of spreads, execution quality, commission, and the minimum deposit. These should be the last points you consider when opening a long-term trading account. The best Forex broker for beginners depends on elements like the trading system, the quote feed, instrument portfolios, execution models, and the leverage offered.

When choosing a Forex broker, obviously you will want to make sure they have access to a wide range of currency pairs, including majors, minors and exotics. But what about other financial instruments? If you are considering trading with a Forex and CFD broker, its a good idea to look into the other instruments they offer as well.

This will ensure that if you decide to trade stocks, indices,ETFs, commodities, cryptocurrencies and other instruments in the future, you wont need to find a new broker to do so. Admiral Markets, for example, provides traders with access to over 7,500 financial instruments, allowing you to create a diversified trading and investment strategy from a single platform.

The quality of the trading tools a Forex broker offers can make a big difference to your trading experience. In most cases, the available tools will depend on the trading platform (or platforms) being used. For instance, Admiral Markets offers trading through the state of the art MetaTrader 4 & 5 Supreme Edition plugin, which include a range of custom tools and add-ons to improve your trading experience.

Its important to consider whether a Forex broker and their trading platform will suit your trading style. For example, you might be interested in following aForex scalping strategy, which involves making a high volume of small profits on small currency movements. In this case, you would need to ensure that any potential broker has minimum distance between the market price and yourstop-lossand take-profit.

Or, if you are new to Forex trading, you might not be comfortable using the maximum leverage the broker offers. With this in mind, check whether the broker allows nominal leverage – where you can choose the amount of leverage you use in your trading, anywhere up to the maximum limit.

Finally, consider whether the Forex broker offers education and support. Ongoing education is essential to a Forex traders development and achieving the best results. This is why Admiral Markets offers a range of free articles and tutorials,webinarsand online courses, includingForex 101andZero to Hero. In addition to educational content and materials, its also important to consider the availability of support, so you can get your questions answered, and any potential issues dealt with.

In particular, you should look for a Forex broker that has a major presence in your country or, at a minimum, offers phone and email support in your language. A broker with an efficient customer enquiry and complaints procedure will ensure that if an enquiry is filed by a Forex trader and cannot be resolved within a few hours, it is immediately forwarded to the customer support desk or compliance department.

If you would like to explore this topic in more detail, why not check out our in-depth guide tochoosing the right Forex and CFD broker?

Did you know that Admiral Markets offers traders the number 1 multi-asset trading platform in the world – completely FREE!? MetaTrader 5 enables traders access to superior charting capabilities, free real-time market data & analysis, the best trading widgets available, and much more! To download MetaTrader 5 now, click the banner below and receive it for FREE!

Alongside choosing a broker, you will also be researching theForex trading softwareand platforms they offer. The trading platform is the central element of your trading, and your main working tool. It is an essential piece of the puzzle, as the best Forex tools can have a significant impact on your trading results. So, what should you be looking for when considering your options?

When assessing a Forex trading platform, ensure it includes the following elements:

: Is the trading platform reliable enough for you to achieve the trading results you want? Being able to rely on the accuracy of prices quoted, the speed of data being transferred, and fast order exec