Things You'll Need:Additional bank account to fund your trading account FXCM trading account FXCM trading software
Step 1:
Practice trading currency before you open a real account. Open a practice account with FXCM (see Resources below). When approved, you will be given a demo version of their software. The demo and real version are identical, so that you learn to trade foreign currency in real time with monopoly money that won't hurt your account when you lose.
Step 2:
Focus on one currency pair if you are a beginner. Choose from over 2,000 currency pairs to trade. A currency pair consists a comparison of value between the base currency and the quote currency. Together, the pair of numbers resemble a fraction with the base currency on the left side of the divider bar and the quote currency on the right side of the divider bar. Read currency news to track the currency pair that interests you. Learn what moves the particular currency, whether it be the mining of gold and jobs in Canada or imports of Japanese cars. Consider news that includes presidential elections and war. The best time to read the news is early morning, preferably around 4 or 5 in the morning. You need to see the trends early on, and buy in low in order to sell high. Dealing rates window at the top of the screen shows live dealing prices.
Step 3:
Set up the charts in your software to follow currency movement. Click on the chart drop-down menu. Select "line chart," as this is the easiest chart to read. Select the time for each line. Most traders use three lines. Select "5 minutes" for one line and "45 minutes" for another line. Set your third line to read "60 minutes." Click the "view" menu, and then select a view for the "month." Take notes on the movement of the currency. Change the view to display the current week. How you toggle between viewing years, months, weeks, days and hours will depend on your trading style. Most new traders place short-term trades. This means you watch the currency for a few hours to a few days before closing your trade to take out profits quickly.
Step 4:
Place a trade in the dealing rates window. Click on the "buy" button. Set your order size to "100" in the "Create a Market Order" window. This means you will be controlling 100,000 units of money with your trade. Click the "OK" button. Buy or sell your chosen currency pair. Buying the currency pair means selling the quote currency. Selling the currency pair means buying the quote currency. All currencies move up or down in value. This value is referred to as a "pip." Your broker will usually give you a five pip difference from the actual cost of the currency pair. This means that your currency pair's value is always going to start at 5 pips less than the value of your purchase. The spread is the price. This is indicated by a red number between the currencies in a currency pair. Look at the open positions window. This window shows all the trades you have. This shows the price for closing and the amount you will gain or lose by closing. Close a trade by clicking on the current trade, the currency pair, in the open positions window. Click on the "stop" button. Click on "OK" in the close positions window. Your profit or loss is booked in the open trades window.
Step 5:
Set the stop loss to an amount you can afford to lose. This is your safety net should the currency move against your predictions. Set the stop loss immediately after purchasing your currency pair. Some software will let you set up a trading style. As software may not be foolproof, it is best to set your stop loss and other settings manually each time you trade a currency.
Step 6:
Set the profit margin for how much you aim to earn. Look at past trends in your charts for estimating the next peak.
Step 7:
Close the currency when you believe the currency has reached its peak. You will be able to see the value of your currency pair displayed in positive or negative numbers. Positive means the currency is being purchased by other traders. The trade is going good if you're buying that currency. Check the charts on your software for past trends. Read the news for those days when the currency pair was at its peak. Observe the currency's low points and high points on the charts. This will help you determine when to buy or sell back in to the market.
Step 8:
Open a real account with FXCM or try another 4X broker of your preference. Stick with the broker and the trading software you feel comfortable and competent using. One of the nice features of using FXCM trade station is that the software attempts to prevent your account from going below zero. This prevents you from going into debt.
Step 9:
Add a bank account to your 4x account. Go to your bank and open a separate account for trading currency. This will help you stay organized and keep on top of your investment money. Click the button on your demo account to switch to your real account.
Tips & Warnings
Investing is all about who you do business with. Trade currency only with brokerages you trust.
