A Step-By-Step Guide to Learning Forex Trading

July 15, 2019

 

 

Being a Forex trader allows you to work from home, be your own boss, earn a significant income and enjoy a career that is fast-paced and exciting. To help you on your journey to becoming a Forex trader, I have created this simple but extensive step-by-step guide that will teach you how to get started on your Forex trading career...

 

*Please note* this Forex guide contains a number of links to free Forex training and educational material. I suggest you bookmark this page so you can come back and continue with the steps after clicking on any links. 

 

Step #1 - Learn the basics

 

One of the great things about starting your Forex journey is that it won't cost you a penny! Most content that teaches the basics of Forex trading is free, in fact completing the majority of the steps in this Forex trading guide will cost you nothing at all!

 

The best place to start with Forex trading is to learn the very basics; what is Forex, why trade Forex, how to access the Forex market, etc, etc... 

 

What is Forex

 

Forex is the abbreviation for Foreign Exchange. The Foreign Exchange market is the financial market for currencies. The Forex market allows traders and investors to buy and sell global currencies, such as US Dollars, British Pounds, Euros and Japanese Yen. 

 

Why trade Forex

 

Currencies fluctuate in value. Being able to predict market fluctuations can be extremely lucrative. A successful Forex trader is able to make a consistent return from the Forex market, allowing him to work from home and earn a substantial income. 

 

How to access the Forex markets

 

Forex brokers provide access to the Forex market, enabling the public (you and me) to buy and sell currencies. 

 

What next

 

The videos below will teach you the very basics of Forex. This is a free Forex course that I have available on my Forex trading YouTube channel

 

If you prefer a written course, there is a fantastic free course that I completed for Technical Forex. The course will teach you the very basics of Forex trading, including common Forex terminology and trading basics. You can start the course by clicking on this page

 

 

 

Step #2 - Learn the basics of technical analysis

 

Profitable trading is all about predicting where future price will be. To help with these predictions, traders and investors analyse the Forex markets. There are 2 forms of analysis when it comes to Forex trading, these are technical analysis and fundamental analysis...

 

Technical Analysis

 

Technical analysis is the term used to describe the analysis of historical price movement. This movement is called price action. Price movement is shown on charts, which are called price charts. 

 

Technical analysis can be split into 2 categories; price action and technical indicators...

 

Price action - this is how price has behaved in the past. It includes how high price has been, how low price has been, patterns formed by price and the direction of price movements. 

 

Technical Indicators - these are are algorithms and formulas created by traders to help signal future price movement. Indicators can be shown in many ways, such as oscillators, moving averages and volumes. Indicators can also include technical tools that are used in analysis. 

 

 

 Fundamental Analysis

 

Fundamental analysis is the term used to describe the analysing of economic data.

 

Currencies should be a reflection of a countries economic health and outlook. Any economic and political news that can potentially change the economic strength of a country should cause the Forex markets to react. A trader that uses fundamental analysis reviews, analyses and predicts the future health of global economies by using economic indicators. These indicators are such things as GDP figures, inflation figures, unemployment rates, employment rates and interest rates. 

 

Which Analysis should you use

 

It is totally your choice. Some profitable traders rely heavily on technical analysis, whilst others rely of fundamental analysis. There is no right or wrong way to trade the markets, just as long as you are making money! 

 

What next

 

I specialise in technical indicators - I consider myself an expert in price action analysis - so, my content is mostly about technical analysis and trading using technical indicators. 

 

To learn the basics of price action, I suggest you watch the videos below. 

 

Once again, if you would prefer a written course, there is a free price action course at Technical Forex on this page and a free course on technical indicators on this page

 

 

 

 

 

 

 

 

 

 

 

If you would like to learn the basics of fundamental analysis, I suggest you consider taking 'Learn to Trade the News' at Udemy. Please use the link below...

 

 

 

Step #3 - Practice technical analysis

 

Once you have learned the basics of technical analysis, you will be eager to have a look at some price charts and try things for yourself. This is totally understandable and very encouraged. However, there is no need to start risking money at this point - you will likely lose it!

 

The best thing to do as this point of your Forex journey is to spend some time going through price charts. I highly suggest you open a free account with TradingView and see if you can identify the following...

 

- Trends

- Ranges 

- Swing highs and swing lows

- Horizontal support

- Horizontal resistance

- Trend support

- Trend resistance

- Head and shoulder patterns

- Pin bars

- Engulfing candles 

- Inside-bars

 

The more time you spend studying price charts, the more clear technical analysis will become. It is important that you spend time studying historic price information as well as watch current price movements. Once you have identified the above, I suggest you try adding the following indicators and identify how they can act as a trading signal...

 

- Moving averages

- Relative Strength Index 

- Bollinger Bands

- MACD

- Volumes

- Fibonacci Retracement

 

What next

 

TradingView is fantastic free software that can be used to analyse the price charts of almost any currency pair. All you need to do is open a free account - click here.

 

Technical Forex offers a free course all on technical indicators and how they can be used. The course is available on this page

 

 

 

 

Step #4 - Examine how the news impacts the Forex markets

 

Economic news can cause major volatility within the Forex markets. It is important that you are aware of market moving news events for 2 main reasons...

 

1. Risk - knowing when and how these events move the markets can prevent you from entering some risky trades

2. Profit - these events can create money making opportunities, you don't want to miss out

 

The news events that generally cause the most volatility are...

 

- Gross Domestic Product (GDP) figures 

- Consumer Price Index (CPI) figures

- Central bank speeches

- Central bank announcements and press conferences

- Interest rate announcements 

- Unemployment and employment figures

- Political and trade events

 

Economic calendars show when news events are approaching and which currency they will impact. I suggest using the free economic calendar at Forex Factory - click here

 

Once you have access to an economic calendar, watch how the markets react to news events. You will notice the increase in market volatility and also the widening of spreads. 

 

As mentioned in step 2 of this guide, if you are interested in learning more about news events and how they can provide trading opportunities, I suggest the following course...

 

There are a number of great websites (mostly free to view) that provide insights into economic news. Links below...

 

Bloomberg - perfect for detailed articles about current economic events happening across the globe - https://www.bloomberg.com/europe

Trading Economics - great for reports and economic data - https://tradingeconomics.com/ 

 

BBC News - breaking news for the UK and Europe - https://www.bbc.co.uk/news 

CNN - breaking news for the US - https://edition.cnn.com/ 

The Japan Times - news for Japan - http://the-japan-news.com/ 

News.com.au - news for Australia - https://www.news.com.au/ 

 

 

Step #5 - Develop strict risk and money management

 

By this step, you should have learnt all about the basics of Forex trading, the basics of price action and technical indicators and the basics of how news events impact the markets. You should have also had some hands-on experience with price charts. If you have missed any of these steps and feel that some basic knowledge is missing, please go back and learn; it's all free!

 

You may have a great trading foundation or the best trading strategy but your trading will result in failure if you do not stick to strict risk and money management...

 

What is risk and money management

 

Risk and money management is a set of rules that a trader follows in order to preserve and protect trading capital i.e the funds in the traders account. It can include things like the percentage of account to risk per trade, setting a stop-loss, leverage, overnight positions and major market moving news events. 

 

Why is risk and money management needed?

 

If a trader loses too much trading capital (funds), he will not be able to take any more trades. Following good risk and money management allows a trader to trade even after taking consecutive losses. 

 

What next

 

I highly recommend you watch the video below on Forex money management...

 

 

 

Step #6 - Start practising 

 

You are now ready to open a free demo trading account and try placing some paper trades!

 

Demo trading is a great learning experience, it allows you to apply what you have been learning. 

 

Below is some quick advice to help you get started...

 

Trading Platforms

 

MetaTrader 4 (MT4) is the most popular Forex trading platform amongst retail traders. If you like the TradingView software, you can continue to use TradingView for your chart analysis and use the MT4 platform for executing trades only. 

 

Spreads & Commissions 

 

Trading spreads and commissions vary from broker to broker but at this point in your trading career I recommend that you do not waste time shopping around. You can spend time comparing broker spreads and commissions once you are ready to open a live trading account and start trading with actual money. 

 

Regulation

 

It is important that the broker you choose is well-regulated. The most trusted and respected financial regulators are the FCA based in the UK and the ASIC in Australia. The US also offers great regulatory bodies for brokers. 

 

What Next

 

I personally trade with IC Markets and recommend you do the same. You can open a free demo trading account on this page

 

You can read my reasons for trading with IC Markets in my Forex Broker Guide - click here

 

 

 

Step #7 - Get inspired & keep learning

 

Once you understand the basics and are trading frequently on your demo trading account, it is important that you start learning from successful traders - without help you are going to struggle to develop further and make money. It is also important that you keep momentum going by keeping yourself motivated and inspired. 

 

Below are some links to motivational trading content...

 

Audio Books

 

I have 2 audio books that have received recognition how they motivate and teach listeners. You can listen to these below...

 

 

 

Chat with Traders

 

This is a great YouTube channel that contains hundred's of podcasts with professional traders. Highly recommended. Click here

 

Trading films and TV programmes

 

A short list below...

 

Wall Street Warriors - click here

Million Dollar Traders - click here

Rogue Trader - click here

We are Traders - click here

 

 

Step #8 - Take things more seriously 

 

Now that you know all the basics of trading and have some experience, it is time to gain the help of a professional. If you are experiencing success and are progressing well, you may want to continue on your current path until you feel help is more needed. If you are struggling to make Forex work for you, I highly suggest you let a successful Forex trader teach you how to become a successful Forex trader...

 

Mentor

 

Having a direct mentor is the ultimate way to become profitable - a profitable trader can show you what you are doing right and what you are doing wrong on a personal level. My mentor program includes 6 online training sessions with me, access to my exclusive trading course and unlimited support by email between training sessions. 

 

Full details about my Forex mentor program can be found on my Forex coaching page

 

Courses

 

A lot of trading educators have courses that teach you how to trade successfully. My course teaches you my trading strategies and how I trade the Forex markets. What is unique about my course is that my strategies have actual verified results, that is because I am an actual trader, not a trading educator. 

 

Full details about my course - click here

Verified trading results - click here

 

You may also be interest in my Forex trading room

 

Follow other traders 

 

I upload regular content to my YouTube channel and post frequently to my social media pages

 

I hope you have found this Forex guide useful, please feel free to email me any questions - samuel@love-the-pips.com. 

 

All the best

 

Samuel Morton

Professional Forex Trader 

 

P.S If you have enjoyed this post, please subscribe to my mailing list to be notified each time I publish a new post. You can subscribe at the bottom of this page...

 

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DISCLAIMER

 

*There is a very high degree of risk involved in trading. Past results are not indicative of future returns. Samuel Morton, love-the-pips.com and all individuals affiliated with this site assume no responsibilities for your trading and investment results. The indicators, strategies, columns, articles and all other features are for educational purposes only and should not be construed as investment advice. Information for Forex trading observations are obtained from sources believed to be reliable, but we do not warrant its completeness or accuracy, or warrant any results from the use of the information. Your use of the trading observations is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the information.You must assess the risk of any trade with your broker and make your own independent decisions regarding any securities mentioned herein. Affiliates of Samuel Morton and love-the-pips.com may have a position or effect transactions in the securities described herein (or options thereon) and/or otherwise employ trading strategies that may be consistent or inconsistent with the provided strategies. Trading Forex, Options on Forex, and any retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time. Samuel Morton and love-the-pips.com is not an investment advisory service, is not an investment adviser, and does not provide personalised financial advice or act as a financial adviser. love-the-pips.com exists for educational purposes only, and the materials and information continued herein are for general informational purposes only. None of the information provided in the website is intended as investment, tax, accounting or legal advice, as an offer or solicitation of an offer to buy or sell, or as an endorsement, recommendation or sponsorship of any company, security, or fund. The information on the website should not be relied upon for purposes of transacting securities or other investments. You hereby understand and agree that Samuel Morton and love-the-pips.com does not offer or provide tax, legal or investment advice and that you are responsible for consulting tax, legal, or financial professionals before acting on any information provided herein.

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