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It is a contract used to represent the movement in the prices of financial instruments. In Forex terms, this means that instead of buying and selling large amounts of currency, you can take advantage of price movements without having to own the asset itself. Along with Forex, CFDs are also available in stocks, indices, bonds, commodities, and cryptocurrencies. In all cases, they allow you Forex trading to trade in the price movements of these instruments without having to buy them. To trade forex, choose a brokerage that is regulated by a major oversight body like National Futures Association or Financial Conduct Authority and open an account. Read and analyze international economic reports, then choose a currency you feel is economically sound to trade with, like the US dollar or Euro.

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👉 Each day, on average, just one deal takes place, and it is not held overnight. Intraday price movements in the relevant currency pair determine profit or loss. 👉 With forex scalping, the goal is to make modest but frequent profits while also trying to keep losses to a minimum while trading NGN. As a result of the huge leverage used in these short-term deals, a trader might still suffer large losses. 👉 While the CBN approves forex trading and provides a regulatory framework, it is the responsibility of Nigerian traders to ensure that they only use the services of regulated brokers. 👉 Every currency in the world is assigned a three-letter code, with the Nigerian Naira expressed as NGN in the forex market.

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However, the cost of the trade is reflected in the bid/ask spread. Additional information may be found in its NFA 2-36 and CFTC 1.55 Disclosure Document. This leverage https://www.dukascopy.com/swiss/english/forex/trading/ is great if a trader makes a winning bet because it can magnify profits. However, it can also magnify losses, even exceeding the initial amount borrowed.

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There are countless technical indicators that can help you analyze a Forex price chart. Additionally, you can use the MT4 to build your own automated trading strategy and backtest any kind of trading ideas you might have. Market orders aredesigned to open a trade immediately at the best available market price.

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👉 Traders can subsequently construct a more well-rounded trading strategy by combining elements of both technical and fundamental analysis. Nigerian traders’ primary goal is to maximize their profit while minimizing their exposure to market risk.

  • In other words, if you are viewing a daily chart you will see that every bar equates to a full trading day.
  • For context, a standard account lot is equal to 100,000 currency units.
  • For example, if the EUR/USD exchange rate is currently at 1.1500, and by tomorrow is at 1.1580, we can say the EUR/USD exchange rate has increased by 80 pips.
  • Next, we need to clarify how to read currency pairs and why we use a three-letter quotation system.
  • As with other assets , exchange rates are determined by the maximum amount that buyers are willing to pay for a currency and the minimum amount that sellers require to sell .
  • Your gains and losses will either add to the account or deduct from its value.

If traders believe that a currency is headed in a certain direction, they will trade accordingly and may convince others to follow suit, increasing or decreasing demand. The forex market is made up of currencies from all over the world, which can make exchange rate predictions difficult as there are many forces that can contribute to price movements. That said, the following factors can all have an effect on the forex market. The forex market is open 24 hours a day thanks to the global network of banks and market makers that are constantly exchanging currency. The main sessions are the US, Europe and Asia, and it’s the time differences between these locations that enables the forex market to be open 24 hours a day. Some of the most popular forex trading styles are scalping, day trading, swing trading and position trading. You might choose a different style depending on whether you have a short- or long-term outlook.

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Before making any investment decisions, you should seek advice from independent financial advisers to ensure you understand the risks. When the short-term moving average moves above the long-term moving average, it means that the most recent prices are higher than the oldest prices. Conversely, when the short-term moving average moves below Forex trading the long-term moving average, it suggests a downward trend and could be a sell signal. A breakout is when the market moves beyond the limits of its consolidation, to new highs or lows. Therefore, breaks are considered as possible signs that a new trend has started. An OHLC bar chart shows a bar for each time period the trader is viewing.

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Candlestick charts may be used to determine the direction and movement of the market based on the formations and shapes they display. 👉 Japanese rice dealers employed candlestick charts for the first time in the 18th century.

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We recommend writing down some of the things you learn here later as a set of DotBig testimonials notes that you can quickly refer back to. By the end of it, you’ll know all the most essential terms used in Forex trading so you won’t be confused at any point while you learn to trade.