There are many ways of trading the FX and CFD markets, and the difference is many times subtle but the money outcome is not. In the first free forex trading course by InvestingCube we have produced articles that quickly get you up to speed on what Forex and CFD trading is all about. The first few articles are for the very new traders trying to understand what the markets are all about, but then we delve deeper into analysis styles, trading systems, and key trading concepts used by traders over the years. To top it off we conclude with an introduction to money management which is a core topic and skill to understand as no matter how good your trading system is, because if you trade too aggressively, you stand to lose all. We have arranged the course to build up your knowledge about the markets but you can start to read any section.
Learn about the basics of the markets with our Forex trading course. Who are the players, reasons to why people trade, FX’s advantages, how currencies are quoted, and about the major Foreign Exchange pairs.
Analysis of the FX and CFD markets is crucial to minimize loses and gain profits. Like all the things in life, you must have a proper plan to forecast and predict Forex rates. In order to achieve success in forex and CFD trading, one also needs to show patience, discipline and have experience. Besides the many analytical disciplines mentioned in this article, techniques of risk management also play a crucial role in determining success.
Learn how to use charts and technical analysis to derive entry and exit points for your trading, and what are time frames, and how you can use them to construct a trade idea.
The ratio between a particular trade’s potential profit and its potential loss is known as the reward-risk ratio of a trade. It is an important concept, that every trader should know, and interlinks with the profitability ratio.
Almost all financial markets will trend and taking advantage of these trends is a popular way of trading Forex. The general idea behind a trend following strategy is that once a while every financial market will produce a very strong bias. The reason for the trend is typically a fundamental reason causing the price of an asset to strongly move upwards or lower.
One of the most simple and less ambiguous way of entering into the direction of an underlying trend, is to trade breakouts and breakdowns out of resistance and support levels, respectively. I call it less ambiguous because it is usually very clear what is an important low or high in a chart. Trading breakouts is possible even if you miss the start of the trend.
Every trend will experience short-term setbacks when the price trades against the main trend, and the purpose of this strategy is to enter in line with the trend when a correction or pullback is about to end. The pullback can be used to enter the existing main trend at a favorable price, and better good risk-reward ratio than trading breakouts. However, the risk of trading a pullback or correction is that it can be the start of a trend reversal.
Using a range bound trading strategy is another way to trade. Financial market prices tend to either trend or be range bound, or a state between range bound and trending. Knowing how to trade both types of markets can be advantageous.
Chart patterns could be an excellent way of trading the markets if they suit your personality and if you are good at identifying them. A great benefit of chart patterns such as rectangles or the head and shoulders pattern is that they provide almost everything you need to have a structured way of trading. They provide an entry price, stop loss level, and take profit level. However, they do not provide rules for money management. Learn more today.
Trade risk management is an essential part of trading. One needs to protect their trading capital before trying to seek profit. One can manage trade risk effectively by using two crucial ratios – the risk-per-trade ratio that refers to the maximum bearable loss and the risk-to-reward ratio that refers to the ratio between the possible profit and loss of a specific trade setup.