FOREX is an international investment market. Because it is the largest and most liquid market in the world, it has an average transaction volume of 5 trillion dollars daily. Forex markets are generally used as a system of exchange between currency units; but it has become a market that offers a wide range of investment possibilities for the purchase and sale of precious metals such as gold, silver, oil and various foreign stock indices over time. Just as it is individual investors in these markets, institutional investors, central and commercial banks, hedge fund managers.
1. With the Forex market leverage system, you have the possibility of trading up to the higher floors of your account. Today, leverage ratios of up to 1: 1 are available. Leverage rates may vary depending on the Broker you open your account with. So you can process up to 100 times the amount you deposit. You will be a partner in the loss of this figure in profitability.
2. As you know, in the stock markets, you earn while prices rise. The most profitable process you can do when prices fall is not to do anything! You just have to wait in the falling market. But at Forex markets, transactions are bidirectional. Except you can sell it open. You can invest in this bidirectionally.
3. With high leverage ratios, it is authorized to deal with even a small amount of capital. In this regard, investors who make small amounts for investment can even trade on the forex market. Low leverage ratio; you will be able to take less risk in your investment.
4. Forex market is the most liquid market in the world with an average daily transaction volume of 3 trillion US dollars. For this reason, the liquidity does not have to be the buyer and seller as in the low-end markets; your transactions happen instantly.
5. With the help of developing technology, you can make your transactions online from your screen and you do not have to use intermediary institutions or individuals to direct your investments immediately.
6. The Forex market is open 24 hours a day, 5 days a week. Investors can trade on weekdays if they wish.
7. Since it is the world's largest market, it can not be manipulated like various stock exchanges. There are predefined economic data, with opening times and dates enabling the parcels to move. The parallels move as a result of this incoming data. Investors also follow this data.
Forex market transactions are bidirectional. You can buy and sell on the same parity. With one example we can clarify these operations more clearly.
* Which currency name is in front of the book; o, base exchange. For example, in EUR / USD parity, the name of EUR is written in front of USD, so the base currency is EUR.
Suppose you are trading in EUR / USD. If we think that the price will move upwards, we have to do AL (Buy) operation. At this point we will receive the Euro (if the base currency is EUR). If we think that the price will move downwards, we will issue a Sell (Sell) order. So we sell the euro.
For new investors, the first question that comes to mind in the open sales process is:
The transaction that is made is not actually a value that is not available. When you issue an AL order on the EUR / USD parity, you will be selling other currencies when you buy the base currency. So you buy the Euro, you sell the USD. On the SAT order, you will receive the other currency when you sell the base currency. So you are selling the Euro, buying the USD.
Assume that the price is 1.2420 / 1.2422. Decide whether to buy or sell. The first price on your screen (ie 1.2420 in our example) is the selling price. The second price (ie 1.2422 in our example) shows the purchase price. Suppose we made a purchase; the investor enters 1.2422 dealing process. So it gives $ 12,422, it gets 10,000 euros. Let's think that the price is then 1.2600 and you close your position.
12.600 - 12.422 = $ 178.
However, if a different trader sells 1.2422 lots (10.000 euros) in the EUR / USD parcel and the price is later to 1.2600,
1.2600-12.422 = $ 178.
The above example is valid for 1 lot processing. As you increase the amount of lot you process, your profit or loss will also increase.
Since transactions are performed online, The main requirement for the investor to access his account is internet access. Computer, PDA (handheld computer), etc. technological equipment is another basic requirement.
What is the parity? The two countries are called the "union" of the currency. The investment value of two foreign currencies. Parallels, or currencies, are traded at the same rate.
In this article I will point out some important points to be successful in Forex markets. There is a lot of thought among the traders in the markets. Wait while your positions are carded to enlarge your belly and cut short the damage on the contrary when it is harm. We can say it's true, but it's a lot easier to do than to say it as you know it. The best way to maximize your stamina and limit your harm is to take a systematic approach to your disciplined and emotional decision-making.
Investors, especially those who are beginning to trade in Forex markets, may fail because they generally rely on their sentiments when they give out their trading profits.
Your psychology plays a very important role in the process. Our uncheckedness, fear and ambition make it almost impossible for the decisions we make while trading to be rational. And it raises our chances of failing. Fear prevents an investor from limiting the harm. Learning to stop loss is one of the most important behaviors for a successful investor and protect us from making big losses. Greed causes people to be overconfident, encourages too much risk, and disrupts your discipline.
To succeed, you have to act like a corporate governor and learn how to manage risk to make money.
The first step in maximizing your profits and limiting your losses is to prepare a trading plan in which money management is involved. Money management is actually a risk management and it is used to determine strategy, to protect your risk capital and to remain in the game.
At the very least, a trading plan should include a set of objectives, including a monetary management strategy that guides you to protect your capital and make disciplined trading decisions. The plan should include systems to set the risk / profit ratio, determine the profit taking and loss stop levels. This plan should, of course, be in the process of training with new knowledge about the self-sustained continuous market.
The objectives should include questions such as "Why Do I Process" and "What are My Targets When Making Transactions?". If you do not know what you want, Forex markets can be an expensive place to learn it. Some people trade for excitement or competition, some make it as a hobby, but the biggest part of the process is to make money and avoid big capital losses.
Money management is a concept of protecting yourself and is the key to distinguishing successes and mistakes in trading. The efficient money management strategy helps you to set aside a set of rules to protect discipline and capital, how much you will risk per transaction.
The amount you raise per transaction is usually determined by the risk / rate of return. The risk / profit ratio is the expected rate of return expected from a transaction. A good risk / benefit ratio is 1: 3. Risk / earnings ratios are not absolute fixed figures and can be adjusted according to your risk tolerance level, according to market conditions, the input and output levels you enter into process.
The Stop Loss order is one of the key parts of risk management and must be decided when you execute an order. Stop loss order is a type of order that both limits losses and guarantees profitable positions. The placement of the damage stop level is calculated on the basis of how much risk you intend to risk in that process, or on the technical analysis tools you use. The subsequent loss stopper is used to protect the profit you have earned and to wait for your card. Generally, the profit target is determined by the risk / profit ratio. For more information on order types, please see the Order Types in the Basic Education section.
Keeping the position small, especially for newcomers, lowering the risk / profit ratio and shortening your waiting time at the position are good ways of protecting your capital. It is very important to protect your capital because when buying and selling in Forex markets, there can be frequent declines in the capital. The aim is to manage these risks by risk management and prevent large losses.
In our next articles, we will give more space to issues such as money management and preparing a transaction plan.