Is It Possible to Make Money on the Forex Market for a Trader with No Experience?

Published: 4 October 2021 Updated: April 21, 2023

Forex is widely known in the financial environment, but how to understand whether it is possible to make money on this exchange for a beginner trader? How multicurrency market is different and is it possible to understand currency trading without a long prior training? Maybe there are some special tricks? Hints, thanks to which beginners will be able to get a stable income from multicurrency trading?

The direct translation of the name: "international currency exchange. It appears to be a financial market, for trading currencies at market rates. Contrary to the assurances of advertising on the Internet, there is no one-size-fits-all guide to "How to make money on Forex from scratch" and each develops its own strategy. The starting point in the history of Forex is the abandonment of the "gold standard" by the world powers (1976) at which point countries switch to the Jamaican system, when exchange rates depend on market relations, rather than being established by the state (The whole truth about forex).

Top 3 best forex brokers: test their terminals

And now, we see the world economy as it is, when a change in exchange rates brings about a movement of the economy in almost all sectors. This has also led to the fact that the exchange of capital between countries has become possible, and the players were able to make money on the difference in the value of currencies. Forex is an international global trading system, which has its own language which is understood by every player. This is the language of currency price fluctuations. In general, you can apply a rough comparison to an exchange office, where one currency unit is bought (sold) for another. Before we explain the strategies and features, let us understand the characteristics of the market we are going to trade in. It will help to understand, Is it possible to make fast money in Forex?, or will it take time? The price of an asset is formed by agreement between bidders, depends on supply or demand (Forex Trading Training). Distinctive features of the market:

  • Forex is not tied to a local exchange, you can trade from any city or country, all you need is the Internet, your own terminal, the main thing is to make sure that forex charts were running in real time.
  • The exchange is functional, the site is used not only by traders, the central banks of all countries are working in this market, making currency interventions to stabilize the national currency units.
  • A diverse composition of participants, majority or traders, trading firms.

Having considered these features, we conclude that make money in forex If you want, everyone can do it, let's just add that this requires perseverance, the ability to collect, analyze information and excitement, the latter should not be confused with gambling addiction. The scheme of trading looks like this: the participant of the trading, using one of the programs, watching the graph of the selected assets, after analyzing it, he takes a decision to buy or sell and sends a command to the server to open a trading position. Platforms for trading provide Alfa Bank, VTB and other banks. Forex broker tracks data from liquidity providers, so it can provide information to the client's terminal almost immediately. Brokers track trades on Forex official website.

The trader observes the price of the asset and decides when to close the deal. The process can be automated, but it requires setting up profit limits and possible loss limits in advance. To gather information and select assets and multicurrency pairs, it is important to keep track of economic calendar. Another interesting point for understanding the mechanism of work: why does the market not have a trading floor and then how does it work? The exchange consists of regional currency markets, which interact with each other through the Internet. Even those who have never thought about currency trading have heard of the most famous ones: Pacific, Asian, European, American.

Who is bidding?

The development of the multicurrency exchange is rapidly promoted by the appearance of new trading participants. These are central banks and Forex regulatorsThey manage foreign exchange reserves by intervening in the foreign exchange market. The "big league" players include commercial financial institutions and federal reserve systems. The second league: investment funds. Their main job is to place funds in securities of corporations and governments around the world. The third league: brokers, currency exchanges and dealing companies. Currency exchanges do not take part in exchange operations as individual representatives of the market, forming its structure. Brokerage companies act as intermediaries, traditionally taking a percentage of transaction amount. And finally, the traders themselves, the most numerous league of Forex players.

Monetary units on Forex are displayed with a three-letter code, e.g. GBP/USD "British Pound/US Dollar". The currency on the left is the base currency and the currency quote on the right. It is always involved currency pair. Any asset can be sold or bought, but there are two prices:

  • The bid price - Bid, at which the seller is ready to sell the base currency and buy the quote currency.
  • The bid price - Ask (ask), at which the buyer buys the base currency and sells quoted.

Earnings, without which trading is impossible, the spread is the difference between the "bid" and "ask", is paid at the moment a trade is opened. The transaction volume is measured in lots. The standard of the base currency is 100 thousand units. The amount is very high for individuals, but thanks to the leverage, many participants can trade and make a profit even with a small starting deposit. Leverage is provided against the collateral amount (margin). That's how the name "margin trading" appeared. Trading operations are conducted through the trading terminal, a special platform for trading, access to which brokers usually give free of charge.

How to Start Forex Trading for a Newbie?

After registration and verification at the broker's website, you need to download and install the trading terminal on your computer, smartphone or tablet. New trading platforms open every day, and before choosing yours, pay attention to the following parameters:

The reliability of the brokerage platform will depend, among other things, on The size of earnings in Forex. Forex belongs to the over-the-counter markets with no specific trading venue, this circumstance does not involve buying or selling currency as in an exchange office, but the first steps in trading Forex, as well as other financial markets are not very different from each other. Again, a little bit of theory. In the forex exchange, the basis of pricing: bidding in an open market auction, where the price arises from supply and demand at a certain point in time. If there are more sellers than buyers the price goes down and consequently if it is the other way around the price goes up. Hundreds of thousands of transactions are made simultaneously.

When you have realized that you want to try your hand at the Forex market, you need to choose a trading platform. Your main tool will be the trading terminal, through which you communicate with your broker and give commands to buy and sell. When choosing a terminal, you should also consider how you plan to work with the exchange. From a laptop, smartphone or tablet. Whether there is a mobile application or only a desktop version. The trading software is installed on your computer, smartphone or tablet. Works with any operating system. Among the services: ordering robots to automate trading and constantly monitor trading pairs, technical indicators, the possibility of renting and buying.

Popular forex brokers

Let's get acquainted with the most famous brokers, where the beginning trader can try his forces.

  • Finam Forex (go online). The broker operates under license from the Central Bank. It specializes in multicurrency trading, but you can also work with other assets. Among the pluses: training for novice players, relatively low rates and a huge amount of additional materials on market analytics.
  • RoboForex (online). A well-known terminal among those who already have experience of playing on the stock exchange. On some tariffs there is no minimum deposit, 0% commission for deposit and withdrawal, more than 40 currency pairs. According to feedback from participants, order payouts on this site are relatively fast and loaded with analytics and training materials that will be useful to a beginner.
  • Alpari (go online). The broker was licensed by the National Bank, works with a huge number of assets, and has bonus cashback programs for regular participants. PAMM-account service, thanks to which, if you feel uncertain about the market, you can try to invest in the trading of other traders.
  • Evotrade (online). The broker has been a household name lately. It works with cryptocurrenciesIt works with MetaTrader5, stocks, currency pairs and other assets. Works on the trading platform MetaTrader5, the program is installed on your phone or tablet and will help you to trade in real time, track changes and get all the analytical data about the movement of assets.

Each of these online brokers can be used by traders of all levels. If you are just starting out, many sites offer training. Now let's understand the types of accounts and move on to the practical part. The best place to start, as on any other exchange, is with demo accounts. You can use it to practice opening and closing positions, setting order levels, and dealing with charts and analytics.

What are warrants?

For a beginner trader to start earning at the exchange, he needs to get acquainted with two types of orders:

  • protective order (Stop Loss) is set by a trader to limit the possible losses in case of a fall in the price of an asset, the levels of this order are adjusted depending on the situation in the market;
  • order, which automatically closes the deal when the quotes reach a predetermined level (Take Profit), levels can be set not only at the opening of the deal, but also later.

You can trade without the use of these orders, but it is better to start with them. One more tool you need to know - Tick (point). This is the minimum distance for the quotation of a currency pair when its price changes. As a rule, there are no limits on the duration of an open transaction at the Forex market. When placing levels of the Stop Loss order it is necessary to keep in mind that it is located above the current market price when selling. If there is a purchase, Stop Loss is placed below the operating prices. Take Profit has peculiarities too: when selling, the level is placed below the current price. When it comes to buying a financial instrument, Take Profit is placed above the existing price marks.

A simple example. One of the well-known strategies that is a success with beginners is trading on pending orders. Pros:

  • The transactions are opened automatically;
  • no need to follow the market while waiting trading signal;
  • requires a minimum of time;
  • is suitable for analyzing the behavior of currency pairs in the market.

You set the price point that the selected pair should touch and cross. This is the marker when you automatically open a trade. The trader places several orders in the market for an equal amount of time, most importantly, the number must be the same for both buying and selling. After the assets are put up for sale, you can safely go about your business, when the price reaches (or approaches) the set parameters, the deal will close automatically.

But there is a disadvantage. Not all brokers support simultaneous opening of opposite positions on a trading grid. Let's move on from orders to strategies and tips. It is recommended to spend time studying the existing platforms and strategies of work with them. You can practice on a demo account. The terminals allow you to trade in the manual mode or use trading robots. Many brokers have open forums where you can read about the errors and opportunities that arise, there is also advice from experienced traders. The system is important. Trading on Forex is the same work, with its own charts and rhythms. For beginner traders, the best bet is to look at the 4-hour trading charts, they are considered the most profitable. Watch out for correlations between major currencies. currency pairs. Get in the habit of taking profits systematically.

A useful tip is to keep an eye on what's going on in the world. The price of the national currency can suddenly fall or rise, depending, among other things, on the political situation in the country.

Trader's profit is composed of many parameters: a competent trading strategy, leverage, functionality of a trading platform, currency instruments, the ability to diversify markets and these are only basic keys that you need to know to start trading in the market. Earnings on Forex depends on the size of the deposit and the leverage of the selected site. You should not ignore trading signals. They will help guide you when to open a trade and keep an eye on rate fluctuation.

The training you've received and the manuals you've read won't give you a guarantee getting a stable profit on Forex. And experience, tracking rates of Central Bank countries (currency pairs), studying statistics of currency behavior on the market and your own strategy will be great helpers. Experienced traders do not recommend to start with large bets. It is possible to obtain the profit even with small deposit, all depends on the size of the leverage. And you should not forget about risk diversification. Conclusion: earn in the Forex market The newbie trader can also do it, but it will have to spend time on training and choosing an online broker, terminal and strategy, or try your hand at investing in the work of other players. In any case, even with careful play it is possible to make a profit.

5.00 / 1
Leave a review