Making Your First Forex Trade – step by step forex trading guide
Step 1: Open an account at a forex broker. Set up a demo or live account.
Step 2: Download Metatrader (or any other trading software). Install on the computer or your phone.
Using the Trading Platform
The first step while trading in forex for the first time is to log in to the forex account on the trading platform selected
Opening the chart
A currency pair should be chosen, and the chart should be opened. The trader should also choose a timeframe, with the time frame for D – daily, used since it represents candlesticks on the chart.
Adding indicators and plan the trade
Some technical indicators are added to the chart to help with decision making. Typically traders are adding the MACD and two hundred exponential moving average (EMA) indicators. For testing, let us assume (for example) if the 200 EMA is above the line, the forex rate will continue to rise, and if it is above the line, the rate will increase (this is a hypothesis).
MACD indicator we can set like this:
The MACD is also monitored to confirm the trend; we can see the GREEN UPSIDE direction of the MACD indicator below:
This is a long-term bullish signal.
Place the order
Trade idea :
BUY EURUSD for 1.094 because the price is above EMA 200 and MACD shows the bullish direction (green line)
After the trend is confirmed, the order will be placed. A stable, rising trend is noticed. Since the trader is making the trade for the first time, it is better to place a smaller order for 10000 currency units, and this is called a mini-lot. I am making 5 lots position below on my live account :
The setting takes profit and stop-loss levels.
Stop loss is 1.086 because it is the last swing, previous resistance, and new support.
Target is 1.2 – round number and strong resistance in the last 365 days.
Though specifying the take-profit and stop-loss levels are optional, traders should take this step. Based on their experience, traders have found that they can profit if they specify a stop-loss on the last swing (in this case, it is above 1.086). This ensures that even if the trader cannot predict the forex trend accurately more than half the time, he will still make some profit. If the stop loss level is specified, the trader’s losses will be reduced if the forex rates do not move in the expected direction. If the take profit level is specified, the forex trader exits the market, making a profit, when the market starts moving uptrend. It is usually advisable to set the levels when making the trade since the fluctuating forex rates make decision making difficult. Target is 1.2, but I plan to change this target level based on market condition.
Confirming the order
The trader can then submit his order and wait for a confirmation, which includes a ticket number. The forex broker will require the ticket number to resolve any trade-related problem, including an execution-related error by the broker. If there is an error, the trader will have to contact the forex broker, who will rectify the error and refund the money.
Waiting period
After the forex trade order is placed, there is usually a waiting period before the order is executed. Some traders will switch off the trading screen instead of worrying about looking at the forex rate fluctuation. Instead of worrying about a specific trade, it is advisable to think long term. After 4 months, the target is reached, and I am closing the trade.
Profit is more than 900 pips (around 5x$9.000= $45.000).
Completing the trade
The trade will be completed if the forex rates reach the take profit or stop-loss levels. Some trades cause a loss to the trader, and they should limit the risk they take. In our case, profit is positive. Trade will be automatically closed when the price reaches the 1.2 level.
