Forex trading for beginners: Test your instincts risk-free with Exness trading

The goal of forex trading is to buy a particular currency when the price is low, wait (or hold), and then sell after the price rises. The difference between your entry price and exit price determines your profit/loss.

To begin your forex trading journey, you’ll need an active trading account, a basic familiarity with a trading platform, and a general understanding of the global economy. Here are the steps to getting started.

Forex trading account

A trading account will give you access to forex, stocks, indices, commodities, and crypto. With Exness, you can set up your trading account without depositing money, and even practice trading on a risk-free demo account until you are comfortable and confident, which is what I will reference to get you started. Let’s get you set up so you can follow the steps. 

Click this link to register for a free (no obligation) trading account with Exness. Select the country that matches your personal documentation and address, provide a personal email (not a work email), and set your Exness password.

You won’t need to download or install any software. When you click the continue button, the Exness Terminal will open up on your browser asking if you want to use the demo account, or a real account. Since you are a forex trading beginner, select the demo account.

Now you see a trading chart. While the Exness Terminal is very user-friendly, it might seem complicated at first sight. It’s really not. Let’s go step by step. You want to trade forex, which is currencies on the foreign exchange market. There are three categories of forex. Exotics, Minors, and Majors. Let’s briefly explore these categories and see which is right for you.

Exotic forex pairs

Exotic currency pairs involve a major currency paired with a currency from a smaller or emerging economy. For example EURZAR (Euro vs South African rand).

Exotics are risky for traders but can offer greater profit potential. There are fewer traders in the exotics market, often referred to as low liquidity, which means big investors can tip the needle and make a sizable impact on prices. When prices are bouncing up and down, this is called volatility, which means there are plenty of ups and downs on the charts. This volatility is both good and bad. If you are starting with a limited amount of money in your account, exotics might not be a good place to start.

Minor forex pairs

Minor currency pairs, also known as cross-currency pairs, do not include the US dollar. They are more liquid than exotic pairs. Examples include EURGBP (Euro vs Great Britain Pound). Minors still have low liquidity as they are less popular than major currency pairs. This low liquidity can result in bigger differences between the buy and sell price. When the overall volume of active trades is low, the buy/sell gap or spread widens, limiting traders’ profit potential and increasing the probability of losses. Again, not the best forex category to start with.

Major forex pairs

Major currency pairs are the most traded and liquid pairs in the Forex market. Major currency pairs always include US dollar (USD) paired with another major global currency. The most commonly traded Majors are:

• EURUSD (Euro vs US Dollar)
• USDJPY (US Dollar vs Japanese Yen)
• GBPUSD (Great Britain Pound vs US Dollar)
• USDCHF (US Dollar vs Swiss Franc)

Major pairs have high liquidity, tight spreads, and a significant role in the global economy. They are favored by many traders because of their stability and a wealth of reporting.

Time to make a virtual trade

Now we know you will practice with a Major currency, let’s see the real-time forex market prices on the chart. To do this, you will open a new tab within the trading platform. Look for a + symbol above the chart. A list of categories will open. Select: Favorites >> Majors >> EURUSD

The chart shows the price of the first currency (Euro), if it were to be bought by the second currency (US dollar). On a EURUSD chart, a rising line means the Euro is becoming more expensive for dollar holders to buy.

You’ll also notice two prices to the right of the chart. The higher figure (blue) is the price you pay when buying the asset. The lower figure (red) is the price you get when you sell the asset back to the broker. This is the spread. The lower the spread, the better. Exness has the best spreads in the industry, especially on assets such as gold, oil, even Bitcoin. When you’ve been trading with real money for a while, you’ll realize just how good Exness spreads are compared to competitors.

Now it’s time to identify the current market trend and find out if the price is high or low. You’ll want to compare recent moves with long-term trends. Always use the big-picture first, then drill down to recent price moves.

The Exness Terminal supports chart stretching. Try sliding the bottom row of dates. Just click and drag left or right. With this function, you can zoom in to see today’s price changes, or zoom out to see the last few years. When zooming out, the price line may move out of the frame. Try sliding up and down on the price list to the right of the chart. Slide down to see less detail.

To keep things simple, the Terminal also offers preset timeframes that are popular with traders. On the left corner above the chart, there is a box that lists the common timeframe presets used by traders. 

Check the timeframe to 1m (one minute). Now ask yourself, is the current price (right side of the chart) higher than the left? 

Take notes. 

1m = Higher, middle, or lower on the right side.

Now go through all the timeframe presets. With each new selection, you perspective gets wider. Take note… higher, middle, or lower for each time frame.

Finally, you will select M (monthly). You may have to drag and stretch the chart each time you change the timeframe. Now you know the price long-term and short-term price range. For now, set the chart time frame at 1h (1 hour).

Assets and the market in general tend to rise and fall. If they didn’t, the market would be stagnant and the global economy would crumble. These ups and downs create a mountainous range with peaks and valleys running across the chart. Your goal is to buy in the valley and sell at the peaks.

Let’s buy EURUSD. Remember, we are using virtual money. You won’t have to pay if you lose, and you won’t get to cash out the virtual profits.

On the very right side of the platform are the buy (blue) and sell (red) options. Click the blue button. Some options will pop up. The first one is the size of your order. This is going to seem a little complicated at first.

Traders buy in lots. 1 lot of EURUSD is 100,000 euros (EUR). By default, you will see 0.01 lots as the size of your investment. 0.01 lots means a $1000 investment, but you don’t need to have $1000 in your account. Brokers offer leverage. The default leverage on an Exness demo account is 1:200. So a $5 investment get you a $1000 position.

As you can see, leverage allows traders to make bigger investments without making large deposits.. BUT… leverage also accelerates losses by 200X. Understanding leverage is an entire article in itself. Just know it is a multiplier and high leverage can generate incredible profits from small market moves, but it can also wipe out your trading account in minutes. The lower the leverage, the lower the risk, the lower the profit potential. That’s why the demo account is so useful. Just explore how your profit and losses react to market shifts. You’ll find the right risk appetite quickly.

Next up is Stop Loss and Take Profit

You can set both at the time you open the order, but with Exness you can also modify these settings whenever you want. First, let’s set Take Profit.

Take Profit is an automated action that closes orders when your profit hits the amount you desired and set. Since you are a beginner, let’s change the metric from “By asset price” to “In money” on the dropdown menu.

How much would you like to profit from this trade? Let’s make it $5 for now.

Now comes Stop Loss. As you can imagine, this is the limit you are prepared to lose on your trade. The worst case scenario. Stop Loss automatically closes the order when the price hits the limit. Stop Loss lets traders get a good night’s sleep, not worrying about waking up the next morning to see massive losses. Let’s set it (in money) to $5. Confirm when you are ready and you order will be executed.

To the top right you will see an “eye” icon. Click it to make sure the TP/SL is ticked/checked. If it is, you will see how high the price must go to reach your desired profit level, and how low it must fall to trigger the closing of the order as a loss.

Congratulations. You are now trading (virtually) EURUSD. You are a trader.

If you click the order (on the chart) a window will open where you can modify your preferences any time.

Time to exit the markets

At the bottom of your screen you will see the details of your open orders, pending orders, and closed orders. Let’s skip pending orders. You’ll want some experience trading before you set automated orders.

On the right of your OPEN orders, you’ll see a number in the P/L section. Green indicates profit. If you see red, it’s a loss. Let’s close the order by clicking the X to the right of the P/L amount. 

And you are out. The order is closed. You will no longer gain or lose from market price shifts. Switch the bottom tab to “CLOSED” and you’ll see the performance of your most recent traders. After an hour of exploring, you can look back and see the results. Don’t be fooled if you have plenty of green results. It’s possible that you have an investor's eye, but you might also be having a streak of good luck. Stay calm and stay smart.

Tips from me to you

I’m a financial journalist with a solid grasp of global economics and I’ve been trading for over a decade. And while I’m profitable overall, I’ve had big losses over the years. Nobody can predict the future with consistency. You will face losses… we all do. For this reason, I strongly recommend the following. 

Set up your real account. 

To trade the global markets for real, you will need to prove who you are and where you are. You’ll also need to verify your funding preferences. Remember, whenever you are withdrawing profits, the money must go to the bank from which you deposited… no exceptions.

When your real account is fully funded, you are ready to take advantage of the next big market move, but now is the time to go back to the demo account and test different assets, trading at different levels. Try 0.01 lot with 1:200 leverage. Try 0.10 lots with 1:20 leverage. Compare the risks and profit potential to see what fits your wallet and expectations best. You’ll know when it’s time to trade for real.

Last, there are forecasting methods. Some traders prefer technical analysis, others use fundamental analysis, and some of us focus on market sentiment. These three strategies for predicting price moves help avoid guessing, but they are not foolproof. I suggest you learn all three strategies and stick to the demo account to see which approach works best for you. But don’t wait too long. This year is going to be a rollercoaster full of real opportunities.

Forex trading terms for beginners

• Base currency = left currency (for EURUSD, Euro is the base currency)
• Quote currency = Right currency (for EURUSD, US dollar is the quote currency)
• Bid price = the higher price paid by the trader when buying an asset
• Ask price = the lower price that a trader can sell the asset back to the broker.
• Spread = the difference between the buy price and the sell price.
• CFD = A Contract for Difference is a financial agreement that allows traders to speculate on market price movements without owning the actual asset.
• Go long = buying the asset with the belief that it will rise
• Shorting = selling the asset first, then buying later, with the belief that the asset will drop in value.

This is not investment advice. Past performance is not an indication of future results. Your capital is at risk, please trade responsibly.

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Author:

Paul Reid

Paul Reid is a financial journalist dedicated to uncovering hidden fundamental connections that can give traders an advantage. Focusing primarily on the stock market, Paul's instincts for identifying major company shifts is well established from following the financial markets for over a decade.