How to Trade Forex and Make Money in 2021? Best Trading Guide

How to Trade Forex

Table of Contents

In the pandemic, several traders have become active with the financial markets at a boom. Traders have invested in various markets to maximise their profits. The forex market is one of the most traded markets with high trade volume. Investors find the market fruitful, providing them many market opportunities to enhance their trade and profits at the same time.  

The financial markets are full of risks, but they can earn high returns if the traders are confident and trade with good market research and study. Forex market trade has uncertainties that make it risky but also offers ample opportunities.

How to trade forex and make money through investments requires an understanding and knowledge about the market and factors impacting it. The article discusses what the forex market is and how to trade forex and make a profit.

What is the forex market?

The foreign exchange market is the decentralised market that has all its operations online, connecting millions of traders. In the forex market, traders have a global market to trade with high liquidity. Using the over-the-counter market to trade the international currencies. As the forex market is related to currencies trade exchange, it has various exchanges to facilitate the trade. 

The market helps traders determine the exchange rate for the currencies and execute the trade. It includes banks, corporates and individuals who trade in the market to optimise their profits. A global marketplace working 24 hours with various currency pairs that traders can invest in. 

The market has no central place for foreign exchange and uses electronic means to conduct transactions and secure trade. There are some major currency pairs that have high market value including, EUR/USD, GBP/USD, AUD/USD, USD/JPY etc.

How to trade in the forex market?

We have understood about the forex market, and the next step is to know how we can trade in the forex market profitably? 

For that, traders must follow certain steps to trade successfully and earn profits from the trade: 

The first step is to select an authorised and regulated online broker that offers all the required services. The broker should have trading platforms, trading tools, different account types, commission-free trading with low spreads and high leverage ratio etc. One such online trading broker is TradeATF. The broker has the best forex trading services that enhance the trade and makes it convenient for traders to connect with the market. 

The second step is to get registered and open a brokerage account with the broker to access the market and the services with an exchange for the trade execution. For this, traders have to open an account using the account option of the trader. Then, they fill in details for registration, like name, contact details, email address and set a password for protection. 

Once the account is created, traders next deposit the funds to begin the trade. They can deposit funds according to their wish or as per the required minimum deposit of the broker’s account. 

The third step is to pick the currency pair trader wants to invest the funds to maximise the profits. In the forex trade, traders exchange one currency for another, which are in pairs. Mostly, traders invest in the major currency pairs available in the market. 

The fourth step is analysing the market; research and analyses are significant for trading in currencies. A trader has to do a good market study before investing. They should not invest emotionally; otherwise, it would be a complete risk and a big failure for traders. With research, traders understand and know the market that would help them invest in the currency pairs that are in an upward trend and will make them profits. 

The fifth step is to read the quotes; the currency pairs have their base and quote price, which determines the value. Traders study the quote prices and invest in the currency pair that would make money. The currency pairs have a bid and an ask price, and the difference of the two is termed as spreads. 

The spreads are the amount that a trader charges for the trade. Again, this may vary with the traders. 

The sixth step is to choose the trade position; traders can go for a long market position or a short position depending upon the trade currency and the market movements. Traders also use strategies and analysis to have a confident approach towards the trade. 

The last step is to invest and monitor the trade; they can use different devices to monitor the market with the broker’s help. For a good trade, traders should invest regularly and keep monitoring the market at intervals.

Forex Trading Strategies

So, now we know how to trade forex profitable. Let’s move towards the next significant part of the trade that is money. As the title of the article is How to trade forex and make money? The trade is nothing without earning a good return. Traders invest money to have high profits. 

For a better understanding of the topic, how to trade forex and make a profit, the forex trading strategies are important. A trader cannot succeed in the forex trade without using correct trading strategies. There are a number of forex trade strategies; we’ll be discussing the major ones. 

Forex trading strategies are the techniques that help traders to determine the buying and selling decisions of the currencies traded. There are several strategies in the market that are suitable for the forex trade. The strategies are based on technical and fundamental analysis. Traders can use both or one of the two to have profitable forex trade. 

Let’s understand the forex trade strategies:

Price Action Trading

The technical trading strategy, price action studies the historical market prices of currencies. It indicates the traders about the buy and sell factors. The strategy could be used as a stand alone technique. The indicators of the strategy help traders know market changes and take actions accordingly.

The strategy is mostly related to price fluctuations and, therefore, rarely uses fundamental analysis. It is suitable for both long and short time periods depending on the trade requirement. However, traders use multiple time frames to analyse the price changes. 

Price action strategy also helps traders analyse the entry and exit points that are the support and resistance levels. These could be used as the factor to understand when traders open a market position and close it as per the support and resistance level position. 

In the price action strategy, the traders have an analysis of the previous prices and accordingly predict the movements in future.

Range Trading Strategy

Range trading strategies help traders identify the support and resistance levels to place their investment and hold market positions. An effective trading strategy of forex trading without volatility. The strategy uses technical analysis to study the market and is the primary tool for the market. 

The strategy could be used for long and short periods and does not have a defined

length. It works for all time frames and manages the risks of the market. The

market has uncertainties and other risks like breakouts that could be

identified with range trading. 

Oscillators are used for timing tools; they could be relative strength index, stochastics etc. It benefits the traders with trading opportunities and risk and reward

ratios. However, it has some drawbacks, requiring time periods for investments. 

Trend Trading Strategy

The trend is the necessity for investing, and trend trading is the easiest and most

valuable strategy. As the strategy is simple, forex traders can use the

strategy, be they novice or expert. The returns from the strategy are positive

with having a directional momentum of the currency market. 

The trend trading strategy is usually medium or long term with trend fluctuations

in length. Trend trading could be used with multiple timeframes and helps

traders know about the price direction. 

For example, if the price of EUR/USD increases, the trader will buy the currency

pair to make money. Similarly, if the prices are falling, the trader will sell

the currency pair for limiting the future loss. 

It is a technical analysis that studies the market price direction or momentum to

know the market trend. The strategy helps to know the entry and exit points,

give ample market opportunities and a favourable risk-reward ratio. 

However, it requires good market research and study to understand the trends and long periods for the investments. 

Day Trading

A strategy designed for the day traders of the forex market, who know how to trade forex and make money. The traders of day trading are quick with their actions and have multiple market positions in a day. The trade usually lasts for an hour, starting from minutes. A trader may even hold a market position from the opening of the market to its closing. 

The strategy helps traders enjoy short term profits with investments in the forex

market. However, the strategy requires professional traders who have years of

market experience and are confident with the trade decisions. 

It provides traders with opportunities to invest and earn with quick decisions,

which is difficult for a beginner in the market. 

Scalping

Another essential forex trading strategy is scalping, taking small profits from the

frequent trades. Traders open and close multiple positions in a day to earn

money. For this, traders may use the algorithm or do it manually; however,

nowadays, there are software’s that make it easy to trade. 

The scalpers prefer major currency pairs with high liquidity to avoid tight spreads

and make profits. The strategy is usually for short term studies on charts

ranging from one minute to 30 minutes. 

With the strategy, traders find opportunities to invest and require quick decisions,

which may be a challenge. 

Forex Trading Platforms

Trading requires a lot of other things to be successful and earn; the strategies, market and instruments with the best trading platforms make it a complete package for making money. Here, discussed are the best forex trading platforms: 

MetaTrader4:

MetaTrader4 is a user-friendly interface trading platform that has huge popularity among global traders. The trading platform was created by Meta Quotes in 2005, electronic trading software used by online traders. The online brokers provide the trading platform for a smooth trade experience. It has the following features that make it worth the use: 

  • 30+ built-in indicators 
  • Expert Advisor 
  • Trading system 
  • Charts and patterns 
  • Technical analysis 
  • Fundamental analysis 
  • Security and convenience 
  • Web trader
  • Mobile application 
  • Real time balance 
  • One clicks trade 
  • 9-time frames 
  • Trade history 
  • Fast execution modes 

Web trader

Another significant forex trading platform is web trader, which is part of MT4. It is the direct browser of the MetaTrader4 and allows traders direct market access. The web trader is easy to use with no installation and download. However, the MT4 requires download as per the device used. It has the following features: 

  • One click trade 
  • Convenient trading 
  • Simple to use 
  • Works as a browser 
  • No installation 
  • Multi- market trading 

Mobile Application

Mobile application is the handy part of the trading platforms that connects the traders from the forex market any time and anywhere. It requires downloading the application of the broker whose trading account is used for investment online and accessing the market. It is part of the trade that makes the trade accessible with one click. 

Traders can easily download the application and then login to regularly monitor their trade. The easy accessibility makes it user-friendly with fast execution of the trade orders. 

Conclusion

Trading is a complex market that requires a lot of time, research and study for proper market analysis with a successful trade. A trader can not invest blindly; how to trade forex and make money discusses it in detail. A trader can make a profit with the market knowledge, strategies and analysis with the best trading platforms.

How to trade forex and make profit requires a lot of research and market analysis. Traders can earn only when they have the basics clear with skills polished over time and good trading tools and strategies at the correct time. Thus, how to trade forex profitable depends on the strategy and the timing of the investor.

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