How Forex Trades Work

Understanding how Forex trades work is essential for anyone who wants to get involved in the Forex market. The purpose of these trades is to accumulate Forex pips. Here are the basics of what you should expect when placing a trade in the market.

Purpose of Forex Trades

The purpose of Forex trading is to win pips and then hang on to them. Pips are the smallest increment of a unit that you can get in the Forex market. when trading in Forex currencies, you are essentially buying one currency and selling the other at the same time. Your hope is that the one you buy will go up in value against the other one.

forex trades

If you choose the right currency during your Forex investments, you will win pips. Once you do this, you have to figure out how to hang on to them. If you win 100 pips and then turn around and lose 200, you will not do very well in the long run.

Types of Forex Trades

There are two different types of trades that you could place in the Forex market. The first type of trade that you can place is a "long" trade. This is a trade that means you are buying the base currency and selling the other currency. This means that you expect the pair to go up in price.

Another type of trade is a "short" trade. When you take this kind of trade, it means you are selling the currency pair. When you sell, it means that you expect the currency pair to decline in value.

Kinds of Orders

When you decide which direction the market will go, you can choose between a few different types of orders in your trading platform. The first type of order that you can place is a market order. When you place a market order, it simply means that you are taking the currency pair at the current market price. Your order will be filled almost immediately.

Another type of order that you could place is a limit order. With this kind of trade, you specify the maximum price that you are willing to buy at. This gives you some control over how much you will pay for a trade.

You can also use a stop order when trading in Forex currencies. With this kind of order, you can specify at which price you will sell a currency pair. This allows you to limit your losses and lock in profits on a trade.

How Forex Trades Work

To place a trade, you will need access to a Forex trading platform such as Metatrader. This should be available through your Forex broker. When you want to place a trade, you can usually do so through a few different places on the platform. For example, in Metatrader, you can trade directly from your chart, from the quotes box in the upper left corner or you can press the "+" sign in the tool bar.

Let's say that you wanted to trade from your chart so that you can see what's going on in the market first. To do this, you can right click on a currency pair in the quotes section of the platform in the top left of the screen. Then select "chart" and the chart you want will open.

You can then review what is going on in the market from your chart. Then you can right click on the chart and choose the type of order that you want. If you choose a "buy market" order, your order will be processed immediately as a buy order.

At this point, your live trade will show up down in the bottom of your trading platform in the trades section. You can watch the trade move into profit or, Heaven forbid, move into negative territory.

You may also wish to add a take profit and stop loss level to your trade. This will allow your trade to run its course and close out automatically when the market reaches that level. You can do this when you place the trade, or you can enter the values by right clicking on the trade in your platform after placing it.

When the trade has reached the level that you want it to, you can click on the "close" button on your trade. This will close the trade out in profit or loss, depending on how it is going. Hopefully, your Forex trades will bring you more winners than losers.

If you want to find out Forex traders and how they tick, check out the site Best Forex Trader . They have some good info about traders in general and can help your journey to become a professional trader.

Leave Forex Trades and go to Forex Market

Leave and go to Home Page

New! Comments

Have your say about what you just read! Leave me a comment in the box below.



Top Rated Free Forex Indicator...

You May Also
Be Interested In

Subscribe to Forex Trading Rookie Roundup! Enter your E-mail Address
Enter your First Name (optional)

Don't worry — your e-mail address is totally secure.
I promise to use it only to send you Forex Trading Rookie.

Custom Site Search

Custom Search