The Basics of Forex Trading Broken Down for Beginners

By Gergios Vergakis - on December 19, 2016

The essential basics of forex trading boil down to understanding things such leverage, swap rates and pip value. These are important for trading accurately.

Accurate Trading through the Basics of Forex Trading

In many trading strategies, beginners fail to measure risk and overall exposure to the market. Because they don’t know the basics of forex trading. In order for someone to refine a trading methodology and look for ways to mitigate risk. They should know these few basics well, and beyond basic definition. The concepts of interest rates, and pip value alone are so important in every carry trade. But also still important in day to day hedging trades. Using a forex calculator leverage and pip value can be calculated accurately and fast. Traders unaware of these definitions will sooner or later suffer from some big losing trade, due to inevitable miscalculation of risk. And equally, on the winning side, good hidden trades await those who understand markets in greater depth. If you take things further and start studying probability patterns. You can combine the inner workings of the forex market with probability based methods. And you could adjust your trading size according to that probability number, in every trade. Probability is based on volatility and market indicators. But it’s all basic definitions. Everything starts at a basic level. The average trading online course will introduce you to these definitions. But traders need to gradually take things further, one variable at a time.

basics of forex trading
It takes a lot of initial effort to start working with the basics, and figure out more new variables, and finally uncover profitable ways to trade. It’s very mathematical too. But it does pay in the end. Just remember to look beyond the daily market movements and into the basic variables. Obvious profit margins exist because of high market risk, which keeps the crowd away. Whereas hidden profit margins exist because very few traders know their existence.

Beyond the Obvious Basics of Forex Trading

Beyond the usual basics of forex trading there is a lot traders can do, to gain an edge. Once you understand the basics. And also what is forex broker liquidity and what is forex trader objectivity. You can start experimenting with your variables, to see how it could benefit your trading. Volatility, trade size and pip size are just 3 such variables. Whereas there are also derivative-variables when you take a closer look. And good profitable trades can be made possible through such analysis. Where a subtle small change in one variable, can result in asymmetric risk-reward figures. So it is wise to pay attention to the small and not so obvious. Rather to the obvious and the easy. Take scalping trading for example. Volatility studies, and LSS pivot analysis can help you develop an amazingly accurate scalping day selection system. And the forex market’s inner workings will show you which pair is best for trading this way. The whole scalping concept is severely overlooked by most traders. It’s not even visible on the daily charts. That’s why most traders don’t even suspect there’s a profit margin there. Everybody wants to catch the next 300 pip daily move. Because that’s the obvious profit margin. And yet, probability favors the not so obvious trading systems. Where profit margins are determined by small changes and asymmetries in basic variables, and their derivative variables.

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