Don’t waste your time – keep track of how NFP affects the US dollar!

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How to trade?

Information is not investment advice

To ‘trade Forex’ means to buy or sell different currency pairs.

For example, suppose the current price of EUR/USD is 1.1000. If you expect the euro to appreciate against US dollar, you buy EUR/USD. This is a common Forex transaction. To perform it, you need to open a trading program (MetaTrader 4 or MetaTrader 5), click ‘New order’ and then choose ‘Buy’.

As some time passes and the price of EUR/USD rises, you close the position and get the profit. The amount of profit depends on how much the rate of this currency pair has increased as well as on the size of your position.

If your assumption was wrong and EUR/USD declined after you bought it, you will have a loss. Same as with profit, the size of your loss will depend on your position size and how much the rate of this currency pair has fallen during this time.

Traders who expect the prices to rise are called ‘bulls’, while those who expect a decline are referred to as ‘bears’. A buy trade is also known as a ‘long position’, while a sell trade is also called a ‘short’ position.

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Currency pairs tend to move in trends, i.e. to rise or fall for significant periods of time. ‘A trend is your friend’ is a common saying among traders. If you see a series of higher highs, it’s an uptrend and you should focus on buying. If you see a sequence of lower lows and lower highs, it’s a downtrend and it’s necessary to consider selling. The idea of trend trading means opening positions at the start of the trend and making a profit as it progresses.

It’s sensible to buy at a lower price and sell at a higher price. Notice though, that one currency is always strengthening against another. The same is also true: one currency is always weakening against another. As a result, you have an equal opportunity to buy or sell to enter the Forex market. All you need to do is to analyse the chart and the economic potential of the individual currencies, forming a pair, and make a forecast about which direction they will move next.

The currency pair rates are volatile and constantly changing. Whichever movements were on the chart in the past, don’t worry that you’ve missed your trade – there will always be another opportunity.

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