Forex trading involves purchasing or selling currencies on the foreign exchange market. Currency prices fluctuate due to factors including geopolitical events (like natural disasters or elections) and economic news such as GDP reports; traders can make profits if their predictions prove accurate by buying one currency while simultaneously selling another one; to get started you must open an account with a forex broker and deposit some initial capital before beginning placing trades.
City Index offers over 80 forex pairs to choose from when starting forex trading, but most newcomers start out by selecting major pairs like EUR/USD, USD/JPY or GBP/USD which feature the US dollar – these majors tend to be cheaper to trade due to being traded so frequently.
Once you’ve selected your currency pair, the next step is placing buy or sell orders. The process for doing this is similar to trading stocks or futures: your forex broker will provide an online trading platform with real-time pricing information and charts; orders should be sized using lots, which represent 100,000 units of the base currency in each pair being traded; your order will then be executed at its current market price which depends on demand for base currencies from buyers and supply of quote currencies from sellers (known as bid-ask spread).
As with any market, it’s essential to develop a comprehensive trading plan before risking your hard-earned money. Your plan should encompass your profit goals, risk tolerance level and methodology for evaluating potential trades. In addition, it would be prudent to keep tabs on economic news or events that might impact market sentiment – you are most irrational before placing a trade and most rational afterwards; so keeping abreast of market news may help keep you on the right path.
After placing your trades, it’s essential that you understand how to manage risk effectively. Your stop losses must remain tight, while profit goals should remain ambitious. Furthermore, having an exit strategy ready means knowing exactly when it is time to take a profit or cut losses.
Before leaving your position open for too long, be sure to close it when ready. You can do this by going back into open positions and clicking on the pair that you’d like to close – your running profit or loss will appear in your trade ticket, along with options to exit or close out of it – giving you complete control. Once done, just wait for it all to settle before withdrawing profits!