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Learn How to Use Forex Trading Platforms

By Edited Dec 14, 2015 0 0

Using FOREX trading platforms can be overwhelming at first due to the terminology used that many people don't understand. Using these systems is actually quite simple once you have a basic understanding of the terminology and what each term means.

Understanding the basic terminology:

a) Pairs are the sets of currency that are being traded against each other such us USD/JPY, GBP/USD, OR EURO/USD.

b) Margin or spread, this is the difference between the price you pay and the actual current trading price, which basically is the brokers portion.

c) Leverage is the multiplier the broker allows you to use when trading. For example, if you have $100 and the broker lets you use a 100:1 leverage, he is actually letting you trade as if you have $10,000.

Once you get the main terms used in trading, you must understand how the terms are used. Pairs of currency are traded against each other based on your opinion of whether the base unit or first unit in the pair will rise or fall against the other. Take USD/JPY for example, if you feel the yen will gain value then you should trade the dollars for yen, then when the yen value goes up you can trade them back and get more dollars than you started with.

Using trends and leverages can be risky, so be mindful of what you can afford to lose. Watching trends is the best indicator of long term performance. However, short term performance is harder to predict and should be left to experienced traders when attempting to make a quick buy/sell transaction.

Most platforms offer stop orders that basically allow you to set the highest profit and lowest loss you want to go before closing your trade. This allows you to set a goal, and if the price reaches that goal it is automatically sold, granting you that profit before it begins to drop. Likewise, the down side of this allows you to set a bottom point at which the trade is closed and you lose money, but it is done before it goes any lower.

Use reputable brokers and reliable platforms. When trading currency in a market that moves so fast, it is imperative that your "buy and sell" orders are made instantaneously to prevent slippage. Slippage occurs when you place an order to buy or sell, but by the time it is processed, the market has already moved dramatically, which causes lower profits and sometimes extreme losses.


For further assistance, learn how to evaluate day trading systems.

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