Forex Trading Masterclass | How to Trade with Forex Successfully Without A broker & Earn $5000 Per Hour?
The functioning of markets can sometimes seem complicated. In order to remedy this, we suggest you follow these few steps to start trading on forex:
- Choosing the ways to invest in forex
- Find out how the forex market works
- Opening an account
- Develop a trading plan
- Select your Forex trading platform
- Open, monitor, and close your first position
1. Choosing the ways to invest in forex
The vast majority of forex trading is done between big banks and international financial institutions, which buy and sell massive amounts of currencies every day. For retail investors who cannot afford to invest billions of dollars in forex, there are four possibilities to speculate in this market: via options, turbos, CFDs or via a forex broker.
What is forex options trading?
Forex options trading allows you to take a position on the price movements of a currency without having to hold the currency itself. With IG, you can trade two types of options: barrier products and vanilla options.
Barrier products are call options that are priced on a one-to-one basis against the underlying currency pair. They are closed when they reach a level that you have preset, the knockout level. Vanilla options are contracts that give you the right to acquire a currency at a specific price and date. However, you will not actually receive the currency on the due date but will be able to take advantage of the difference in price between when you opened the position and when you closed it. Forex is one of the many markets available with options trading.
What are forex turbos?
A turbo sometimes called a turbo warrant or turbo certificate is transferable security whose quotation is derived from the price of an underlying financial asset. They offer a transparent way to invest up or down in forex and several other markets while controlling its leverage and risk.
Each order includes a predefined knockout level which can be chosen from a list of several available levels. Each order includes a predefined knockout level which can be chosen from a list of several available levels. If the underlying market reaches this level, the turbo will immediately be deactivated and you will lose the initial sum locked in to open your position, but never more. The choice of your knockout will determine the amount you will need to deposit to enter a position, and therefore your leverage.
With IG, you can take a forex position with turbo24, the world’s first 24-hour listed turbo, without any commission.
What is a forex CFD order?
A forex CFD is a contract that allows you to trade the difference in the price of a currency pair between when you open a position and when you close it. If you open a long (long) position and the price of the pair increases, you make a profit. Conversely, if the price falls, you suffer a loss. If you choose to open a short (sell) position then the opposite applies.
CFDs are subject to capital gains tax, but you can offset your losses with the help of the gains. Along with forex, you can also invest in thousands of other stocks.
What is forex trading through a broker?
Investing in forex through a broker, or sometimes through a bank, works in a generally similar fashion to trading in CFDs. It is about speculating on the movements of a currency pair, without owning the currency itself. If you think that the price of a currency pair is going to go down, you can go short rather than buy.
When you invest in forex through a broker, you do not have access to other values.
2. Find out how the forex market works
It is important to know how the currency market works when investing in forex, as it is very different from regulated markets such as stocks or futures.
Rather than buying and selling currencies on a centralized exchange, forex is bought and sold through a network of banks. This is the over-the-counter (OTC) market. These banks act as market makers, offering an ask and a bid price for a particular currency pair.
Investing through a forex broker
Most retail investors will not buy or sell forex directly from major banks but will use a forex broker. Forex brokers interact directly with banks on your behalf to find the best prices available and add them to their own market spread.
Some brokers will give you direct access to the order book of market makers. This is Direct Market Price Access , or DMA, which allows experienced investors to buy and sell forex without paying a spread. However, the use of the rates offered by currency suppliers results in the application of a variable commission.
3. Opening an account
If you wish to invest in forex through options or CFDs, you will need to open an account with a broker offering leveraged trading.
Opening an IG account is quick, easy, and without obligation. Our form only takes a few minutes to complete.
4. Develop a trading plan
This is a crucial step, especially if you are new to the markets. With a trading plan, you will not be at the mercy of your emotions and will be able to make informed decisions based on objective rules to open and close your positions. You can also consider employing a forex trading strategy that will help you spot opportunities in the market.
Once you have chosen a forex trading strategy, it will be time to apply it. Use your favorite technical analysis tools and decide which will be your first order.
However, even when using technical tools, you will need to remain alert to events that may cause volatility in the markets. Upcoming economic announcements, for example, could impact the currency market and not be factored into your technical analysis.
5. Select your Forex trading platform
Our trading platforms allow you to trade forex efficiently and quickly. You can trade from:
- Our IG trading platform
- One of our mobile apps
- Advanced third-party platforms like MT4
These forex trading platforms may suit your style and preference, with customized alerts, interactive graphics, and risk management tools.
6. Open, monitor, and close your first position
Once you have chosen the trading platform you want to invest in, you can place your first order. By opening an order ticket for the pair you are interested in, you will see the available sell and buy prices. You can set the size of your position and add stops or limits that will automatically close it when prices reach a specific level. Select “Buy” to open a long position or “Sell” to open a short position.
You can monitor the gains and losses of your position in the “Positions” tab of the platform.
When you want to close your position, you need to do the opposite. Now let’s analyze an example of a forex order and its possible outcomes.
Examples of Forex Trading
Trade GBP / USD with Knockout Barrier Products
When you trade the deactivating barrier products with IG, you are dealing with four different prices. These are our underlying market prices for puts (if you think a market will go down) and calls (if you think it will go up), and our opening and closing prices. closing of the option contract.
The opening price is the difference between the price of the underlying and the knockout level you set (the level at which your position will automatically close if the market turns against you), at which s ‘adds the cost of the knockout. The cost of knockout represents the cost of protecting the knockout from slippage. It is only billed if the knockout is triggered.
The closing price is calculated in the same way and includes the market spread.
Suppose the underlying market price for a GBP / USD call barrier is 12784.0 and you believe the market will rise. You decide to buy ten contracts, each equal to $ 1 per movement point and set your knockout level to 12,600. The amount to pay to open your position is calculated as follows:
((12,784 – 12600) + 2) = 186
(x 10 contracts) = $ 1,860 premium
You must also pay a low commission of $ 0.10 per contract, here $ 1. You bought 10 contracts, so you will earn $ 10 per movement point in your favor. When the markets opened, the closing price amounted to 185.02, including 0.8 points of spread.
If your prediction is correct
Suppose the price of GBP / USD increases by 100 points during the day to reach 12884.0. To close your position, you sell it at the new sell price of 285.2 (which has increased by 100 points alongside the market price) and pay a commission of $ 1 for the close. Your net gain is calculated as follows:
295.2 – 186 = 99.2
(x 10 contracts) = $ 992
(- $ 2 commission) = $ 990
In this scenario, your net gain is $ 990. If you had held your position overnight, you would have had to pay overnight funding fees.
If your prediction is incorrect
The maximum loss you can incur by trading the knock-out products with IG is the premium you pay to open your position. Suppose the market drops to 184 points, which is the level at which your knockout is triggered. You will only lose the $ 1,860 premium paid at the opening. You will also need to pay a $ 2 commission and an overnight funding fee if you have kept your position open overnight.
Trade the GBP / EUR pair with CFDs
The price of the GBP / EUR pair stands at 1.1284, with a buy price of 1.1285 and a selling price of 1.1283. Here, the spread is therefore 2 points. You think the British Pound is going to appreciate against the Euro, so you decide to buy at 1.1285.
The size of a CFD position is measured in contracts. Each CFD contract is equivalent to a single slot in the base currency. Here, buying a GBP / EUR CFD contract is equivalent to trading £ 100,000 for € 112,850. You decide to buy three CFD contracts. Your position size is therefore € 338,550 (£ 300,000). This means that for each movement point you will earn 30 €.
CFDs are leveraged products, so you don’t have to advance the full value of your position. Suppose the GBP / EUR pair has a 3.33% hedge, so you only have to advance € 11,273.71 for the margin (or hedge).
If your prediction is correct
The British Pound appreciates against the Euro, and the GBP / EUR pair now stands at 1.1309, with a buy price of 1.1310 and a selling price of 1.1308. You do the opposite trade to close your position, so you sell three contracts at 1.1308.
Your £ 300,000 is now worth € 339,240, since 1.1308 x (100,000 x 3 CFD prize pool) = € 339,240. € 339,240 – € 338,550 = € 690, this is your gain. You can also calculate it as follows: 11308 – 11285 = 23 multiplied by 30 € per point or 690 €.
As always, you will have to pay a fee if you have kept your position open overnight.
If your prediction is incorrect
The British Pound depreciates against the Euro, and the GBP / EUR pair is now at 1.1259, with a sell price of 1.1258.
1.1258 x (100,000 x 3 CFD lot) = 337,740, which means that your three contracts are now worth € 337,740, € 810 less than when you opened your position. You can also subtract 11258 from 11285, which gives you a loss of 27 points. 27 x 30 € per point = 810 €.
If you kept the position open overnight, you will need to pay a fee.
Similarities Between Options, Turbos, CFDs, and Investing Through a Broker
While there are some important differences between forex CFDs, forex options or turbos, and trading through a forex broker, there are also many similarities. Whichever solution you choose, you will always be speculating on the price changes of currency pairs rather than individual currencies.
Retail forex investors can take advantage of leverage. The leverage effect allows them to gain exposure to large amounts of currencies without having to pay the full value of the position upfront. If you buy an option, you will need to pay a premium to open the position. This is the option premium. It represents your maximum risk if the market were to move against you. Conversely, in the event of a rise in prices, your earnings would be potentially unlimited. Writing options works differently. You receive the premium when you open the position, and it represents your maximum gain. However, this exposes you to potentially unlimited losses should the market turn against you.
Turbos work the same as call options when it comes to the initial down payment. This is because what you deposit to enter a position represents your maximum risk and you will not have to pay anything else. The price includes the spread and fees, and there are no additional funding fees (or overnight fees), these will be reflected in a daily adjustment to your knockout level. Please see our trading conditions for more information.
In the case of CFDs, you only need to lock in part of the position, known as a hedge, to open your position. Your gains and losses, on the other hand, are counted on the basis of the total value of your exposure, which means that they can occur more quickly and to a greater extent than your initial deposit.